Opening Bid Unfiltered The truth about bubbles, FOMO, and why stock valuations defy logic
Oct 22, 2025
Richard Thaler, a Nobel Prize-winning behavioral economist and co-author of "The Winner’s Curse," joins Brian Sozzi to unravel the quirks of market psychology. They explore why investors flock to weak companies and overlook strong ones. Thaler highlights the challenges of identifying bubbles and the role of FOMO in rallies, despite economic headwinds. He contrasts stock picking with index investing, emphasizing it should be a hobby. With insights on the AI bubble resembling the dot-com era, listeners gain a fascinating perspective on market behaviors.
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Behavioral Economics Fixes Broken Assumptions
- Behavioral economics adds psychology to economic models to make them less wrong.
- Thaler argues simple, realistic assumptions beat elegant but unrealistic math.
Field Gained Traction, Not Total Conversion
- Behavioral economics is now taught and published broadly but hasn't replaced standard textbooks.
- Thaler says the field influenced many young researchers even if older economists didn't change.
Prices Aren't Always Right Even If Markets Are Tough
- Market efficiency has two claims: correct prices and no free lunch.
- Thaler accepts difficulty of beating market but disputes that prices are always correct.
