The 'Father of Modern Finance' Talks Today's Economy

On this week's Stansberry Investor Hour, Dan and Corey welcome Eugene Fama to the show. Eugene is a Nobel Prize-winning economist and widely recognized as the "father of modern finance." Eugene kicks things off by talking a bit about his efficient-market hypothesis, whether he believes it's still relevant in today's economy, and how passive investing plays a role in all this. He also discusses what it's like winning a Nobel Prize, the impact of his five-factor model on investing and the rise of factor-based funds, rationality versus irrationality, and the importance of luck in markets. (0:34) Next, Eugene argues against a New York Times article claiming that a PhD in economics won't bring affluence or prestige anymore, laments the lack of new breakthroughs in financial theory/modeling, and comments on the modern competitive environment in economics that didn't exist 60 years ago. Things then take a more personal turn, and Eugene talks about his how he discovered his love of economics and what he wanted to focus his research on. (16:28) Finally, Eugene shares what it was like in Chicago back when the city was the epicenter of financial research, including his experience working with some other notable economists. After that, he gives his opinion on market bubbles. Speaking about the dot-com era, he says that the total value created from the industry is a big part of international wealth today, so it can't be considered a mistake. And he closes things out with a conversation about uncertainty in making predictions. (30:34)