Episode 404: The Finance Paper that Changed Everything
The Rational Reminder Podcast · 2026-04-09 · 1h 3m
Episode notes
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 empirical asset pricing research. They explore how factor investing evolved, why anomalies may not be anomalies at all, and what this means for evaluating portfolios and active managers today. The conversation also connects theory to practice - highlighting how modern fund providers implement factor strategies and what it means for investors trying to improve expected returns without abandoning diversification. Key Points From This Episode: (0:00:00) Introduction to the episode and why this is a long-awaited deep dive into factor investing.