Everyone knows that the person I admire the most is Elon Musk–for his genius and his ambitious goal of bringing mankind to Mars–but he’s not my modern day hero. The fact of the matter is, that I attribute the latter to Eugene Fama. Now if you have no clue of who he is, I’d ask this question: “Do you remember CAPM?” If you don’t, then you’re already lost. If you do, then you’re in luck. What he came up with (along with Kenneth French) is way better.
A lot of people had been asking me on my decision to hop from one industry to another and ever since I never came up with a really good answer to the question. So now I’m writing this blog post to uncover what’s running inside my head when I decided to take the plunge to this rich (literally) new world of Finance.
One of the major foundations of modern finance is the Market Efficiency Theory. Simply put, it says that the current market prices are reflective of all the information available to the market.
In this video, Eugene Fama gives us a brief history of the theory, which I believe is pretty much the same journey in understanding the history of modern finance.