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Firms that have a high BE/ME (a low stock price relative to book value) tend to have low earnings on assets. Conversely, low BE/ME (a high stock price relative to book value) is associated with persistently high earnings.

— Eugene Fama

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More quotes by Eugene Fama

The question is when is active management good? The answer is never.

Although size and book to market equity seem like ad hoc variables for explaining average stock returns, we have reason to expect that they proxy for common risk factors in returns.

If active managers win, it has to be at the expense of other active managers. And when you add them all up, the returns of active managers have to be literally zero, before costs. Then after costs, it's a big negative sign

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Quote text and notes from Wikiquote: Eugene Fama (page history), available under CC BY-SA 4.0. Source quality and labels are our own summary of what Wikiquote records.