More Sellers than Buyers?
KRF:Â What does it mean to say there is a flight to quality? For every seller there must be a buyer. After exploring this simple point, I explain how expectations about future cashflows and future...
View ArticleIs This a Good Time for Active Investing?
KRF:Â I explain why active investing is always a negative sum game. We often hear that now is a good time (or a bad time) for active investing. That does not make sense. In aggregate, active investors...
View ArticleIdentifying Superior Managers
Although it would be great if we could all hire above average active managers, that only happens in Lake Wobegon. Superior managers may exist, but most investors might as well be picking their managers...
View ArticleDollar Cost Averaging
Does it make sense to dollar cost average? It depends. Standard financial analysis says dollar cost averaging is suboptimal. If you focus on only your investment outcome, investing a lump sum...
View ArticleDid Diversification Fail When We Needed It Most?
Investors may doubt the usefulness of diversification after the recent market decline. In this video, Kenneth French explains that diversification cannot reduce the volatility of the overall market,...
View ArticleShould Stockholders Sit This One Out?
The answer depends on why stockholders want to leave the market. During the financial crisis, some investors discovered that their tolerance for risk is lower than they thought, so it might make sense...
View ArticleFama on Market Efficiency in a Volatile Market
Widely cited as the father of the efficient market hypothesis and one of its strongest advocates, Professor Eugene Fama examines his groundbreaking idea in the context of the 2008 and 2009 markets. He...
View ArticleEugene F. Fama: Economist
In an interview conducted by Professor Richard Roll, famed University of Chicago economist Eugene F. Fama discusses his life, research, and contributions to the field of finance. Produced by...
View ArticleFama Lecture: Masters of Finance
From the American Finance Association's "Masters in Finance" video series, Eugene F. Fama presents a brief history of the efficient market theory. The lecture was recorded at the University of Chicago...
View ArticleFather of Modern Finance Weighs In
EFF:Â I was interviewed on CNBC's "Squawk Box" this past Friday about the recent financial crisis and financial regulatory reform. View the video here.
View ArticleFuture of Money Management
This video, recorded at the Chicago Booth 2010 Management Conference, features Eugene Fama and David Booth providing insights into what lies ahead for active and passive money management. (View the video)
View ArticleShould Investors Fear the "New Normal"?
In this video, Kenneth French explains why lower economic growth may not hinder future stock returns. In fact, history shows that average returns tend to be higher during periods of economic...
View ArticleQ&A: Three-Factor Model and Recent Returns
How well has the three-factor model explained the recent behavior of stock returns? Â EFF/KRF: For diversified portfolios, quite well. For example, the model's market, size, and value-growth factor...
View ArticleQ&A: Recent Deleveraging
Do you think that the current investor deleveraging is playing a significant role in asset pricing? If so, has it been consistent with your views on asset pricing? Is this something we should be really...
View ArticleQ&A: Gold as a Haven?
Should I consider gold as a possible safe haven for some portion of my portfolio? EFF/KRF: The volatility of gold prices (and of commodity prices in general) is much like that of stock returns. Gold is...
View ArticleQ&A: Timing Volatility
Stock market volatility is currently quite high. Does it make sense for investors to get out of the market until volatility settles down? EFF: If the current high volatility makes you permanently...
View ArticleQ&A: T-bills Shift
What would happen if many investors decided to sell their stocks and invest in Treasury bills instead? EFF/KRF: Stock prices would go down and T-bill prices would go up - the usual response of prices...
View ArticleQ&A: The Value of Historical Data
How useful is an approach based on historical data when the current situation appears to be unprecedented? EFF/KRF: Any current situation is always somewhat unprecedented and somewhat old stuff. Large...
View ArticleQ&A: Market Turmoil
Is the market turmoil a sign that markets are not efficient? EFF/KRF: The market turmoil is caused by some combination of (i) quickly fluctuating changes in expected cashflows (future profitability),...
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