The Royal Swedish Academy of Sciences announced on October 14, 2013 that Eugene Fama, Professor of Economics at the University of Chicago will share in this year’s Nobel Prize for Economics.* We congratulate Gene Fama on the well earned recognition he has achieved.
Fama’s research with long-term collaborator Professor Kenneth French from Dartmouth has been focused on the efficiency of markets and the higher expected return from small company and cheaper [value] stocks. This provided insight and inspiration to David Booth, a former student, who went on to establish Dimensional Funds Advisors (DFA) in 1981. DFA now manages over $300 billion and is the eighth-largest mutual fund company in the US. Professor Fama has served on DFA’s board of directors since inception and has helped shape DFA’s investment philosophy through his ongoing consultation.
As you may know, we utilize DFA funds and research to support much of the investing work we do at Marin Financial Advisors. Over the past ten years we have had the privilege of participating in numerous meetings with Professors Fama and French, David Booth [for whom the University of Chicago Business School is named] and other noted academics and have learned much from this association.
Professor Fama describes the stock market as a continuous pricing machine, incorporating investors’ judgments of the future prospects of the companies in which they invest. His work continues to inform our management of client funds. Please click on the link here to view an interview with Fama furnished by DFA. In the video Professor Fama provides, in his trademark humble and jovial manner, a basic description of his research.
