The work that earned Eugene Fama the Nobel Prize in economics provided the intellectual foundation for index-tracking funds, which have upended stock picking as investors abandon active money managers.
Clifford Asness , who runs AQR Capital Management LLC, one of the world’s biggest hedge funds, says fellow fund managers gouge their clients by charging exorbitant fees for just tracking the markets. He also takes a dim view of the administration of President Barack Obama , calling his economic team “Cossacks on a shtetl,” a reference to the Russian cavalrymen who sacked Jewish villages in Eastern Europe in the 19th century.
As Robert Arnott was deciding whether to start his own investment firm, he met with his hero John Bogle for dinner. At a steakhouse in downtown Philadelphia in 2001, the founder of indexing powerhouse Vanguard Group Inc. spoke with enthusiasm about running his own firm. Bogle, who’s now 82, told Arnott that starting a company could be rewarding once your investing ideas catch fire.
The Flat Earth Society has all but disappeared, but the efficient-market hypothesis is alive and well. This week, the Nobel Memorial Prize in Economic Sciences was awarded to its most tenacious advocate, Eugene F. Fama of the University of Chicago.
Robert J. Shiller, who shares the 2013 Nobel Prize in Economic Sciences, said he doesn’t expect the U.S. government to default on its debt and doesn’t foresee any long-term market consequences from the current impact over raising the nation’s borrowing limit.