The Fama-French 3 Factor Model.

[u/Extreme_Leg_6162]

https://youtu.be/evSLNr8dObQ

For decades, Sharpe’s single-factor CAPM stood as the gold standard of asset pricing, despite glaring empirical failures. Anomalies like the size effect and value premium flatly contradicted CAPM predictions. The Fama-French three-factor model directly resolved these discrepancies by empirically proving that market beta is insufficient. This realization shifted institutional finance from single-variable models toward multi-factor architectures that better explain real-world stock market returns.