Quotes by Author: Eugene Fama

Eugene Fama, Ph.D., Nobel Laureate in Economics, 2013

Active management is a zero-sum game before cost, and the winners have to win at the expense of the losers.

Eugene Fama, Ph.D., Nobel Laureate in Economics, 2013

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. [response to a question about where alternative investments belong in a portfolio strategy]

- InvestmentNews

Step 1

Eugene Fama, Ph.D., Nobel Laureate in Economics, 2013

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.

- ChicagoBooth Magazine, Fall 2013.

Step 2

Eugene Fama, Ph.D., Nobel Laureate in Economics, 2013

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.

- ChicagoBooth Magazine

Step 2

Eugene Fama, Ph.D., Nobel Laureate in Economics, 2013

"I take the market-efficiency hypothesis to be the simple statement that security prices fully reflect all available information."

- “Efficient Capital Markets: II,” Journal of Finance Vol. 46, No. 5., 1575-1617.

Step 2

Eugene Fama, Jr.

"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." Mike Jensen in the Sixties and Mark Carhart in the Nineties both conducted exhaustive studies of professional investors. They each conclude that in general, a manager's fee, and not his skill, plays the biggest role in performance."

- The American Enterprise Institute

Step 3

Eugene Fama, Ph.D., Nobel Laureate in Economics, 2013

I don't think the Fed[eral 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?

- InvestmentNews

Step 4

Eugene Fama, Ph.D., Nobel Laureate in Economics, 2013

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.

- ChicagoBooth Magazine, Fall 2013.

Step 5

Eugene Fama, Jr.

"Ninety-seven percent of performance variation is due to asset class structure -- Study of 31 institutional pension funds during a range of six- to 12-year periods."

- Dimensional Fund Advisors' Conference, University of Chicago Graduate School of Business

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Quotes

Quotes by Eugene Fama (9)