On Real Estate: “Housing bubbles are rarer than stock bubbles, and right now it’s at its highest point ever. It’s not as volatile an asset as stocks, but we’re in the early stages of housing coming down more than it ever has before. In some markets, like Boston, it may go down 20 percent; in other markets, prices may simply flatten.”

On Hedge Funds: “Hedge funds may have changed something serious about the usual rhythms of the markets. This is $1.2 trillion, leveraged three-to-one. So it’s actually $3 trillion that’s unregulated, that can move on a dime — and does. They’re also taking very good people, so we always have to fight it out with them.”

On Bubbles: “Bubbles will always happen, as people follow the rising asset class. From time to time, things get horribly overpriced. The only thing that’s uncertain is the timing of when a bubble will end.”

On Bear Markets: “Most money managers got into the business after 1982 and have experienced a long wave of happiness. But the laws of nature have not been repealed. There are always risks that the economy could unravel. But I stay optimistic because we have a history of muddling through. So stay alive, duck, and wait for better opportunities.”