Eugene Fama
Eugene Fama
Eugene Francis "Gene" Famais an American economist and Nobel laureate in Economics, often referred to as "The Father of Finance", best known for his empirical work on portfolio theory, asset pricing and stock market behaviour...
NationalityAmerican
ProfessionEconomist
Date of Birth14 February 1939
CountryUnited States of America
caused debates economics explaining good great swings
Debates go on to this day about what caused the Great Depression. Economics is not very good at explaining swings in economic activity.
prayer alphas managers
An investor doesn’t have a prayer of picking a manager that can deliver true alpha.
thinking attention investing
I don't think the Federal Reserve has any role in how high rates are right now. I don't understand why everyone is paying attention to this tapering. The Fed is using one kind of bond to buy another kind of bond. What's the big deal, and why is anyone taking the Fed seriously?
matter return normal
The distribution of the market is fat-tailed relative to the normal distribution... For passive investors, none of this matters, beyond being aware that outlier returns are more common than would be expected if return distributions were normal.
persistence risk answers
After taking risk into account, do more managers than you’d see by chance outperform with persistence? Virtually every economist who studied this question answers with a resounding 'no.'
mean thinking people
I don't even know what that means. People who get credit have to get it from somewhere. Does a credit bubble mean that people save too much during that period? I don't know what a credit bubble means. I don't even know what a bubble means. These words have become popular. I don't think they have any meaning.
taken thinking investing
The efficient market theory is one of the better models in the sense that it can be taken as true for every purpose I can think of. For investment purposes, there are very few investors that shouldn't behave as if markets are totally efficient.
people portfolios would-be
People would be a lot more skeptical if they understood that there is an incredible amount of chance in the results that you observe for active managers. The distribution of outcomes is enormously wide-but that's exactly what you'd expect by chance with lots of active managers who hold imperfectly diversified portfolios. The really good portfolios contain a lot of really lucky picks, and the really bad portfolios contain a lot of really unlucky picks as well as some really bad ones.
zero winning games
Active management is a zero-sum game before cost, and the winners have to win at the expense of the losers.
thinking advice asking
I can't figure out why anyone invests in active management, so asking me about hedge funds is just an extreme version of the same question. Since I think everything is appropriately priced, my advice would be to avoid high fees. So you can forget about hedge funds.
intrinsic-value security efficient-markets
In an efficient market at any point in time the actual price of a security will be a good estimate of its intrinsic value.
people decision risk
Markets are efficient, but there are different dimensions of risk and those lead to different dimensions of expected returns. That's what people should be concerned with in their investment decisions and not with whether they can pick stocks, pick winners and losers among the various managers delivering basically the same product.
simple investing information
I take the market-efficiency hypothesis to be the simple statement that security prices fully reflect all available information.
want mouths compare
I’d compare stock pickers to astrologers but I don’t want to bad mouth astrologers.