Mayweather V. McGregor

      No, this article isn't about a physical fight, but does contrast theories between living legends of finance, Josef Lakonishok and Eugene Fama. Josef Lakonishok is a professor of finance at University of Illinois, and is a market behaviorist. Market behaviorist believe the market isn't rational. Behaviorist argue that if people were rational the dot-com bubble wouldn't of occurred, as astronomical price to a variety of measures were being paid. Fama believes in the Efficient Market Hypothesis which relies on the assumption investors are rational. Both finance professors have put there money where there mouth is so to say by creating and managing funds. Lakonishok fund is LSV Asset Management with 8 billion under management while Fama has DFA with 34 billion under management. Both sides outdo the market but LSV outperforms DFA in small and large cap funds over both 3 and 5 year periods. Both though believe in value stocks as good long term investments. LSV picks stocks by old fashioned value ratios and ruling out stocks that have been public for less than two years or lack momentum and headed towards bankruptcy.  DFA builds its portfolios by categories such as international and micro-cap, along with ruling out stocks that could be in line for a takeover. They often own similar stocks albeit for different reasons. 

      The LSV Value Equity Fund trades under the ticker LSVEX. Its investment approach is deep value orientated, risk controlled, and qualitative. The majority of the portfolio is constructed of large and mid cap stocks in the United States. The fund typically has low price to earnings ratio compared to that of the market. The fund has a minimum holdings of 75 and an expense ratio of 0.66%. The five year average annual return is 11.91% compared to 10.34% of the Russell 1000 Value index. When comparing LSVEX to SPY the average return from March 2009 to September 2018 is 22.14% and 21.66% respectively.LSVEX beat the market, although slightly, an accomplishment for almost 10 year period. LSVEX has a higher monthly standard deviation of 4.27 compared to SPY's 3.62. SPY also outpaces LSVEX in Sharpe ratio due to having a lower standard deviation. SPY Sharpe ratio which is excess return for risk taken is .003988 compared to LSVEX of .00345498.  LSVEX is able to create a positive alpha of 0.374, signifying an excess return. LSVEX has a beta of .88 since 2009. 

      I would advise investing in LSVEX it has outperformed the market, and provides stable returns through seeking out value stocks similar to what made Warren Buffet famous. I am a believer in the market behaviorists theories. LSVEX also provides alpha over an extended period. Fama and Effiecent Market Hypothesis is sound if the assumptions are true, and still provide good returns when investing in index funds. The Efficient Market Hypothesis relies on the assumption that people are rational, and I've met people and know that there are many exceptions. I'm sure you would agree.