We recently heard from former Foundation Chapter Board Member, Herb Morgan (Theta Iota/UC-Santa Cruz 1988). Brother Morgan wrote, "Nine years ago I named my company after an economic theory. Yesterday that theory's chief spokesperson received a Nobel Prize in economics for his work on the theory. Today, the U-T San Diego found the connection and wrote an excellent article highlighting both Mr. Fama's work and that of my firm, Efficient Market Advisors."
A portion of the following article has been posted with permission from Dan McSwain,U-T San Diego. To view the article in its entirety, click the link below.
Nobel nod to markets, efficient and crazy
By: Dan McSwain/U-T San Diego
On the surface, the Nobel Prize for economics that went Monday to three Americans highlighted the confusion that goes along with investing.
The winners were Eugene Fama, who says that financial markets are efficient and usually produce the best possible price; Robert Shiller, who says markets are often irrational; and Lars Hansen, who developed some cool math to test such theories.
Confused? So is everybody else.
Thankfully, there’s a bit less mystery about how investors can manage such uncertainty.
The work of all three economists argues strongly that you can’t reliably beat the market. So instead of trying, Wall Street has made it easy to join the markets by investing in index funds — and minimizing costs from transactions and taxes.
It’s impractical for a small investor to buy every security in the S&P 500 stock index or the Barclays U.S. Aggregate Bond Index. Pooling investments in a fund solves this problem.
As it happens, last week I talked about investing with Herb Morgan, chief executive of Efficient Market Advisors in Del Mar Heights. He recently completed a four-year term on the board (including a stint as president) that runs the city of San Diego’s $4.3 billion pension fund, presiding over a period of improved financial health and investment performance.
Morgan is an expert on building portfolios using exchange-traded funds, or ETFs, a relatively new vehicle that works like a mutual fund but trades like a low-cost stock.
He spent 25 years in the mutual fund industry. In 2004, Morgan started his company as a wholesale operation that manages portfolios for the clients of retail investment advisers.
To view the rest of this article in its entirety, click here. http://www.utsandiego.com/news/2013/Oct/15/nobel-shiller-fama-efficient-markets/?#article-copy