Nick Fountain

You hear that?

Yep.

We played Robin from Harvard Business School.

Some of that conversation between former Planet Money host David Kestenbaum and Eugene Fama.

What would prove it to you that there were bubbles?

Empirical evidence.

Such as?

We asked Robin for his take on Fama's hot take.

So are you familiar with that view?

Robin and his colleagues at Harvard said, game on, challenge accepted.

And they set out to prove Fama wrong, to find a way to detect bubbles before they pop, before it's too late.

Yeah, what Robin and his colleagues wanted to figure out was what did these popped bubbles, what did they tend to have in common?

Were there any clues that could tell you when a bubble situation was happening?

They laid out those clues in a paper they called, and I love this, they called it Bubbles for Fama.

It's kind of cheeky, right?

Right.

This is the classic price to earnings ratio.

You look at the value of the company and compare it to how much money it's making right now and say,

Does this make sense?

So?