The Finance Paper that Changed Everything
4/9/20261 hr 3 min
What if the way we think about investing—and expected returns—was fundamentally incomplete?
In this episode, Ben Felix and Dan Bortolotti take a deep dive into one of the most influential papers in financial economics: Fama and French (1993). With nearly 15,000 citations, this research reshaped how we understand asset pricing by showing that market beta alone isn't enough to explain returns. Instead, multiple factors—specifically size and value—play a critical role.
Ben and Dan unpack how this paper challenged the dominance of CAPM, introduced the now-famous Three-Factor Model, and laid the foundation for decades of empir...
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First 90 secondsBenjamin Felix· Host0:00
[upbeat music] This is The Rational Reminder Podcast, a weekly reality check on sensible investing and financial decision-making from two Canadians. We're hosted by me, Benjamin Felix, Chief Investment Officer, and Dan Bortolotti, Portfolio Manager at PWL Capital.
Dan Bortolotti· Host0:16
Good to be back for another one. This is a topic I think, Ben, that I feel like you've waited your whole life to finally give an overview of factor investing in this way.
Benjamin Felix· Host0:26
[chuckles] Yeah, we were kind of chatting about it before. It's a topic we've talked about lots, but I don't think we've ever... Well, we definitely have never done sort of a deep dive into the original paper that kicked off this whole way of thinking about expected returns and asset prices.
Dan Bortolotti· Host0:42
It was an interesting thing for me, too, because I remember learning all of this a decade ago when I first got into understanding index investing at a high level, and then this takes index investing to a different level. But I hadn't really dove into it at this depth until, you know, the last little while. So anyway, it'll be interesting to revisit it. It's come a long way in fifteen years, for sure.
Benjamin Felix· Host1:11
Definitely. [upbeat music] We're calling this discussion The Finance Paper That Changed Everything. We're really talking about Fama and French's 1993 paper in the Journal of Financial Economics, which is a paper that today has nearly fifteen