Investing

What sparks an investing revolution?


Ideas that emerged from the University of Chicago in the 1960s changed the world. But as a new film shows, they almost didn’t

WHAT prompts a revolution? When it comes to investing, no change has been as great as that which began with researchers at the University of Chicago in the 1960s. Their financial-theory revolution changed the way that almost everyone invests, and made speculators many trillions of dollars.

The transformation is the subject of Tune Out the Noise, a documentary by Errol Morris, an Academy Award winner, which held its premiere in New York on March 6. His film includes interviews with academics and investors, such as Eugene Fama, Myron Scholes and David Booth, who took ideas about market efficiency and diversification from the textbook and put them into practice in the markets. This led to a surge in the use of data and a disciplined focus on costs, in turn providing the foundation for modern passive investing.

Morris’ film may, in theory, be about brilliant individuals, but its most powerful message is about the role played by chance. History, like markets, is affected by randomness, and luck brought together the right people at the right time. Each had to be present for the financial revolution to emerge.

Share with us your feedback on BT’s products and services



Source link

Leave a Reply