## What Is the Fama and French Three Factor Model?

Whenever I talk to people about the future, I'm struck by their belief that it is knowable. The impression I get is that most people imagine the future like a book ending: already written and readable if you can just steal a quick look at the last few pages. What they find difficult is accepting that the pages aren't written yet. The future hasn't happened, hasn't even been planned--and cannot be known because it doesn't exist.
Erle Spratt, who manages M&G’s Asia property fund, an open-ended investment vehicle, says it is risky to invest directly because assets are not easy to find and price. “It is a very difficult market to buy assets in for investors like us, because developers have very substantial holdings and they tend not to sell,” he says.
The film critics of The New York Times — Manohla Dargis and A. O. Scott — share their picks for the best movies of the year.

### Key Takeaways

• 所以我不知道2014会发生什么——谁也不知道。但在我的想象中，它会是这样的：
• One of the best things you can do to improve your entire life, not just school, is meditate. Fifteen minutes a day is all you need to feel calm, centered and confident.
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## The Formula for the Fama French Model Is:

﻿\begin{aligned} &R_{it} - R_{ft} = \alpha_{it} + \beta_1 ( R_{Mt} - R_{ft} ) + \beta_2SMB_t + \beta_3HML_t + \epsilon_{it} \\ &\textbf{where:} \\ &R_{it} = \text{total return of a stock or portfolio } i \text{ at time } t \\ &R_{ft} = \text{risk free rate of return at time } t \\ &R_{Mt} = \text{total market portfolio return at time } t \\ &R_{it} - R_{ft} = \text{expected excess return} \\ &R_{Mt} - R_{ft} = \text{excess return on the market portfolio (index)} \\ &SMB_t = \text{size premium (small minus big)} \\ &HML_t = \text{value premium (high minus low)} \\ &\beta_{1,2,3} = \text{factor coefficients} \\ \end{aligned}﻿

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## How the Fama French Model Works

Nobel Laureate Eugene Fama and researcher Kenneth French, former professors at the University of Chicago Booth School of Business, attempted to better measure market returns and, through research, found that value stocks outperform growth stocks. Similarly, small-cap stocks tend to outperform large-cap stocks. As an evaluation tool, the performance of portfolios with a large number of small-cap or value stocks would be lower than the CAPM result, as the Three-Factor Model adjusts downward for observed small-cap and value stock out-performance.

The Fama and French model has three factors: size of firms, book-to-market values and excess return on the market. In other words, the three factors used are SMB (small minus big), HML (high minus low) and the portfolio's return less the risk free rate of return. SMB accounts for publicly traded companies with small market caps that generate higher returns, while HML accounts for value stocks with high book-to-market ratios that generate higher returns in comparison to the market.

There is a lot of debate about whether the outperformance tendency is due to market efficiency or market inefficiency. In support of market efficiency, the outperformance is generally explained by the excess risk that value and small-cap stocks face as a result of their higher cost of capital and greater business risk. In support of market inefficiency, the outperformance is explained by market participants incorrectly pricing the value of these companies, which provides the excess return in the long run as the value adjusts. Investors who subscribe to the body of evidence provided by the 穗社科院：2019年广州二手房成交有望小幅回升 are more likely to agree with the efficiency side.

## What the Fama French Model Means for Investors

The ECB ended the year with a vote on December 3 to cut its deposit rate to minus 0.3 per cent and an expansion in asset purchases that leaves its quantitative easing programme at 1.46tn. The move came days before the US Federal Reserve increased interest rates for the first time since 2006, underlining the sharply divergent policies being pursued on either side of the Atlantic.
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The Nobel Prize in physiology or medicine was awarded to a cellular-level experiment.

Apple Inc.'s Chief Executive Officer Steve Jobs is shown in this combination photo of file photographs dating (top row L to R) July 2000, November 2003, September 2005, (bottom L to R) September 2006, January 2007 and September 2008. Jobs will take a medical leave of absence until the end of June because his health problems are "more complex" than he had thought, shocking investors and sending the company's shares down as much as 10 percent on January 14, 2009.
Enrollment: NA
11月，财新-Markit制造业采购经理人指数(PMI)从10月的51%降至50.8%，接近区分扩张和收缩的50%大关。此前，路透社(Reuters)对经济学家进行调查得出的预测中值曾预计，制造业PMI将降至50.9%。

《被撕破的芭蕾舞鞋和突变的生活》(Torn Ballet Shoes, and a Life Upended)
The inclusion of three turbodiesel engines this year could be considered controversial, especially as diesels remain far less popular in the U.S. than in Europe, where they tend to dominate the discussion. This is the first year in which more than two diesel-powered mills made the top 10 list and ironically two of them come from domestic automakers, including the only current full-size domestic half-ton pickup to offer one, the Ram 1500.

2.Artificial Eyes

## Fama and French’s Five Factor Model

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X-Men: Apocalypse is said to hit theatres on May 27, 2016.
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China’s handling of its state reserves of raw materials such as cotton and sugar will be a key factor shaping the direction of agricultural commodities in 2017, according to a major lender to agribusinesses.

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《新财富》预计，2025年左右，中国首富将追平美国首富的个人财富，并有实力问鼎全球首富。

There are many more 2016 movie releases that will do well at the box office, but there are only a few that we're all eagerly waiting to watch.