Slate Money Money Talks: Can Math Really Crack the Stock Market? (Encore)
Dec 24, 2024
Mary Childs, co-host of Planet Money and author of "The Bond King," dives deep into the complexities of stock market predictions using the Fama-French model. She highlights the shifting nature of financial numbers and the clash between empirical finance and legal perspectives. Discussions also include the historical performance of value stocks versus growth stocks, challenges in creating reliable datasets, and philosophical questions about the reality behind financial numbers. Childs' sharp insights make this exploration of finance both thought-provoking and entertaining.
AI Snips
Chapters
Books
Transcript
Episode notes
Unexpected Conference Experience
- Mary Childs attended a business law conference, expecting a typical conference setting.
- She found herself in a small seminar room with professors, sparking her interest in a paper about Fama and French.
Data's Role in Litigation
- Fama-French data is crucial in securities litigation for calculating damages, as it provides a counterfactual.
- This precision matters greatly to business lawyers, unlike empirical finance academics who accept uncertainty.
Shifting Value Stock Returns
- The historical performance of value stocks, as calculated by Fama and French, has changed significantly over time.
- A $10,000 portfolio in 1926 would be worth $250,000 in 2005 based on 2005 data, but $400,000 based on 2022 data.
