A Brief History of Finance and My Life at Chicago

An interesting essay by finance luminary Eugene F. Fama, which touches on some of the important events in the evolution of the finance field.

Disagreement, Tastes, and Asset Prices

Confused about the differing assumptions of pricing models? More than likely you know that the assumptions don’t hold very well and you probably know much research has looked at how the assumptions matter. Fama and French now provide a framework to hopefully make sense of some of this confusion. In a working paper they show that investor tastes and expectations matter. For … [ Read more ]

The Capital Asset Pricing Model: Theory and Evidence

I love summary articles. They help make sense of the world and let us see the forest through the trees. Some of my favorites include the Harris and Raviv summary article on capital structure, Fama’s paper that responds to Behavioral Finance Theories, and Cliff Smith’s introduction to his book of readings in Corporate Finance. And now I have a favorite on the … [ Read more ]

Rethinking Stock Returns: New Evidence on Value Versus Growth

Investors generally subscribe to the conventional wisdom that growth stocks outperform value stocks. But a study of international portfolios by professors at the University of Chicago Graduate School of Business and the Yale School of Management has shown that in reality the reverse is true: Value stocks reap higher returns than growth stocks in markets around the world.

Editor’s Note: this is an old article … [ Read more ]