Eugene Fama

Eugene Fama received his PhD in economics and finance from the University of Chicago Booth School of Business, where he has spent his entire academic career. He is widely regarded as the father of modern empirical finance. His 1970 paper "Efficient Capital Markets: A Review of Empirical Work" in the Journal of Finance formalised the Efficient Markets Hypothesis (EMH) in its three forms: weak (prices reflect all historical price information), semi-strong (prices reflect all publicly available information), and strong (prices reflect all information including insider information). The EMH became the most debated concept in finance, inspiring both its proponents — who use it to justify passive index investing — and its critics, who document persistent anomalies. Fama's later empirical work directly challenged the CAPM through his collaboration with Kenneth French. Their 1992 and 1993 papers demonstrated that size (small-cap outperformance) and value (high book-to-market outperformance) factors capture significant cross-sectional variation in stock returns that the CAPM misses. This launched the modern factor investing revolution. Fama co-received the 2013 Nobel Prize in Economics with Lars Peter Hansen and Robert Shiller. He has been an academic advisor to Dimensional Fund Advisors since its founding, where his research has been implemented in factor-tilted index strategies managing hundreds of billions of dollars. His total academic output comprises hundreds of papers, making him one of the most cited economists of the 20th century.