Innovation must lead infrastructure for a simple but compelling reason: Innovation produces new types of products and markets, and it is virtually impossible to know how to run those markets efficiently before they are created.

I was involved with Wells Fargo Bank as a consultant in the late 1960s and early 1970s, when I suggested to them that they develop a product that has become known as index funds.

If someone says to you, Go to an old-folks home, thats kind of ridiculous, because a lot of old people are doing terrific things for society.

Innovation must lead infrastructure for a simple but compelling reason: Innovation produces new types of products and markets, and it is virtually impossible to know how to run those markets efficiently before they are created.

All models have faults - that doesnt mean you cant use them as tools for making decisions.

My career in academic research has not been involved with active management of securities. I've tried to understand risk-and-return relationships; also the pricing of derivative securities.

A bank needs models to measure risk. The problem, however, is that any one bank can measure its risk, but it also has to know what the risk taken by other banks in the system happens to be at any particular moment.