Eugene Fama and Kenneth French’s seminal 1992 paper, “The Cross-Section of Expected Stock Returns,” resulted in the development of the Fama-French three-factor model. This model added the size and value factors to the market beta factor.
One of the benefits of adding the value factor (the tendency for relatively cheap assets to outperform relatively expensive ones) to asset pricing models was that its inclusion went a long way toward explaining the superior performance of “superstar” investors from the value school of Benjamin Graham and David Dodd.
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