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CROSSROADS SCHOOL FOR ARTS & SCIENCES
GRANDPARENT PROFILE
member since 1963. This is where Fama and Lars Hansen, Fama’s co-recipient of the 2013 Nobel Memorial Prize, developed the work that helped them to win this esteemed award. According to the Nobel Committee, the two men have contributed to the understanding of the movement of asset prices. Fama’s work, specifically, focused on the empirical analysis of asset prices, which helps explain how and why the price of stocks and bonds change over time.
Crossroads Grandparent Receives
Nobel Prize in Economics When Eugene Fama, 74, was named a
joint recipient of the 2013 Nobel Memorial Prize in Economic Sciences Oct. 14, two Crossroads students—second-grader Rocco and first-grader Francesca—and four Crossroads alumni—Lucie Fama ’11, Roxanne Röckenwagner ’08, Hans Röckenwagner ’10 and Gina Röckenwagner ’06—became the grandchildren of a Nobel laureate. All six traveled to Stockholm for the Dec. 10 ceremony, along with parents, Gene and Andrea Fama, and Mary Fama, to witness the ceremony in which the laureates receive their Nobel Prize from the chairman of the Swedish Nobel Committee in the presence of King Carl XVI Gustaf of Sweden. In the wee hours of the morning when the prize was announced, Gene Fama bumped into his son Rocco, who is an early riser, in the stairwell. Gene thought he would have to explain to his son what type of a prize his grandfather had won, but as it turns out, Rocco’s science class had just been studying about the Nobel Prize the week before. “He already knew all about it,” Gene says. Gene said his father may bring the Nobel
Prize, which he says is “about the size of a fried egg,” to Crossroads in the spring, so that it will bring the occasion to life for the students. Gene will have to persuade his father, who he says can be shy and “like a big kid himself.” While he may be a “big kid,” Eugene Fama is known as the “father of modern finance.” He is credited with coining the term “market efficiency.” Fama’s efficient-market hypothesis asserts that market prices quickly incorporate all known information about a stock or bond, making it difficult if not impossible to consistently achieve returns in excess of average market returns on a risk-adjusted basis. Fama also established that an economic hypothesis can’t be tested without setting a model of market equilibrium. Through these achievements, along with his extensive writing on virtually every topic in finance and economics, Fama changed modern investing and portfolio management. Fama is currently the Robert R. McCormick Distinguished Service Professor of Finance at the University of Chicago’s Booth School of Business, where he has been a faculty
Fama’s history in this field stems back to his time at Tufts University, where he first studied romance languages. According to an essay he wrote titled “My Life in Finance,” he became bored with romance languages and after two years shifted his focus to economics. He earned his bachelor’s degree from Tufts in 1960 and then went on to earn an MBA, as well. He earned his Ph.D. from the University of Chicago Booth School of Business. And while his academic credentials are lofty, Fama hails from modest roots. His grandparents were Sicilian immigrants who ran a grocery store in Boston’s West End. As a child, Fama excelled in everything and was even inducted into Malden Catholic High School’s athletic hall of fame for his participation in high school sports. Fama still holds his Boston roots close to his heart, especially those of Malden Catholic, where he has established a diversity scholarship fund to help students attend the high school. Fama urges Crossroads students to realize now the impact the School will have on them in the future, so that they can make the most of it. “It doesn’t seem so now, but what you learn at Crossroads will be important for the rest of your life,” he says. “Work hard, read a lot and make sure to learn your math and sciences, and you will have better choices for the rest of your life.” Eugene Fama’s family was in full force at the Nobel Prize ceremony in Stockholm. Photo and caption courtesy of Gene Fama: “Crossroadians: Girl on left in white is my daughter Lucie Fama ’11. Behind my Mom is Rocco and behind my Dad is Francesca. Behind Rocco is Mary Fama, mom of Roxy Röckenwagner ’08, in blue to her right, and Gina Röckenwagner ’06, in polka-dots to her right. I’m the bearded guy on the far right. My wife, Andrea, is in black between Mary and Roxanne.”