Eugene Fama

Eugene Fama is an American economist whose research shaped modern asset pricing, portfolio theory, and the efficient-market hypothesis.

Kenneth French: Kenneth French is an American economist known for research on asset pricing and his collaboration with Eugene Fama. Their joint work produced influential models linking stock returns to systematic risk factors.
Efficient-market hypothesis: The hypothesis that asset prices reflect available information to varying degrees. Fama’s 1970 review organized the hypothesis into weak, semi-strong, and strong forms.
Modern portfolio theory: A framework for choosing portfolios by balancing expected return against risk. Its account of diversification and risk provided a foundation for Fama’s asset-pricing research.
Index fund: An investment fund designed to track the performance of a market index. Belief that prices are difficult to beat consistently supports low-cost passive investing.
Merton Miller: Merton Miller was an American economist who shared the 1990 Nobel Prize in Economic Sciences for work on corporate finance. Miller supervised Fama’s doctoral research at the University of Chicago.
Fama–French three-factor model: An asset-pricing model that adds market, size, and value factors to explain stock returns. Fama and French proposed it to capture return patterns the capital asset pricing model missed.
Capital asset pricing model: A model relating an asset’s expected return to its sensitivity to market risk. Fama tested and developed implications of this central benchmark for expected returns.
Passive management: An investment strategy that tracks a benchmark rather than selecting securities to outperform it. Fama’s evidence on competition and prices became a major intellectual basis for passive strategies.
Robert Shiller: Robert Shiller is an American economist whose research highlights predictability and excess volatility in asset prices. His evidence challenged strong interpretations of market efficiency and helped frame Fama’s Nobel-era debates.
Fama–French five-factor model: An asset-pricing model using market, size, value, profitability, and investment factors. It extends Fama and French’s earlier model with profitability and investment dimensions.

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