Eugene Fama, Lars Hansen and Robert Shiller have won the Nobel Prize for economics this year for their empirical analysis of asset prices.(Link here)

Image from http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/2013/popular-economicsciences2013.pdf

The trio tried to get a grasp on the nature of the determinants of asset returns empirically. They have proposed that stock prices behave randomly on short term horizon, and that any effort to time the market in the short term is probably counterproductive. Their research also showed that the markets can become broadly mispriced for long periods of time due the the mysteries of human psychology. This implies that any effort to determine prices in the short term will be futile and will be analogous to a bet in the casino. Their findings have led to skepticism on the multibillion dollar mutual fund industry and may in turn led to the potential growth of passive fund management ......