Broker Check

2013 Client Letter: Who is Gene Fama?

April 05, 2014

Who is Gene Fama?

You may have seen the news last week that Eugene “Gene” Fama was awarded the Nobel Prize in Economic Sciences. You might be asking yourself, “Who is Eugene Fama?”

The 74 year-old Fama, considered the “father of modern finance”, is a professor at the University of Chicago’s Booth School of Business. Unlike other Nobel Prizes, the Economic Sciences prize tends to highlight the work of those who aren’t often seen in the headlines – until they win a Nobel Prize that is.

Many in the financial community know Fama’s work, and it is the foundation for much of the work we do at Wiseman and Associates. For Fama, it is all about research and empirical evidence, not the headlines. Years ago, Fama demonstrated in layman’s terms that capitalism works, the capital markets are efficient, and that no one person knows any more about a stock than the next person. As Fama would say, “It’s priced in!” It’s quite difficult, if not impossible, to know which is a good stock or a bad stock. We just know that we want to own them all!

Fama’s research led to the development of stock index funds, which eventually lead to ETF’s. He has proven that it is highly unlikely that anyone can pick fund managers who will beat the market this year, let alone year in and year out. This research, and the passively managed, globally diversified, low cost portfolios that it led to has made a world of difference to the average investor. To our firm it is the foundation of our wealth management philosophy.

After 25 years in the investment management business, I have learned that whatever the headlines, Fama would tell you “it’s priced in” and you should own not just the US market, but the whole global market. If that is the foundation of your investment philosophy, as it is ours, you will find that you are no longer challenged by the latest “financial news” and you wont let it distract you from making smart financial decisions.

I hope you and your family are getting ready for the upcoming holiday season. As always, if we may be of service in any way in helping you reach your financial goals, please reach out to me or one of our team members!

For more on “Who is Gene Fama” See the video below!

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Our best to you and your family!


Wiseman & Associates Wealth Management

Thomas R. Wiseman, II