In the 70s, you did some work with Tim Wilson about judgments about ourselves. Can you tell me a little bit about that? Well, the judgments that we were concerned with was people's ability to say why they had done something or why they thought something. I got into it because I was doing an experiment where I thought if you could persuade people who were about to take, to go through some intense emotional experience, which we achieved by giving them electric shock, which is always accompanied not only just with the painful sensations, but arousal. And the more aroused you are, the more aversive this whole thing is. But we said if we could give people a pill and tell them that that pill was going to make them their heart rate would increase, their breathing would become irregular, their palms might become a little sweaty. In other words, the symptoms of arousal, physiological arousal that you get under strong emotion. Here's the pill, it's going to cause those things. That those people would find the shock less aversive because the arousal, instead of multiplying the sensations, is attributed to something else. It turns out that's true. It's actually dramatically true. But in those days, you had to be able to ask your subjects what was going on in their heads to have support for your theory. So I would say, gee, I noticed you took an awful lot of shock. Why is that? And the guy might say, well, I used to put work with radios when I got a shock from time to time and say, well, I'm sure that could have played a role. Tell me, did you make any connection between what was going on and the pill you took on that night? Did you think about the pill or that the fact it was going to cause? No, I didn't think about it at all. So then we tell them the theory about why they might have taken so much shock. They say, well, it's very interesting. Could well be true for so many. But see, I used to work with radios and get shocks and so on. So it was clear they had absolutely no clue about the cognitive process that was going on for them. So I began to think, well, there's a lot of things like that, where I think there are things going on when we gotta later find out. That's not what I was thinking at all, or that's not why I did that. So Tim Wilson and I just started a series of studies to see how well people could identify what was going on in their heads. So very simple kinds of things like we would have people look at nightgowns or nylon stockings, four of them in a row, and evaluate them. We found out something that should be interesting to merchandisers, which is the later you view something, the higher your evaluation of it. I have no idea when it is. Introspection tells me nothing. Nobody's introspection, but it's just a fact. So you ask people to do this, and then you say, well, why did you like this one the best? And they give you, well, the color is better, they're all identical, by the way. And except that they look slightly different. And say, okay, well, that's very interesting. Thank you very much. Just one question, do you think that the order in which you looked at those things had an effect on you? And people, they're a little frightened. I mean, either I didn't understand the question or I'm dealing with a madman. So our simple study where we study number one, we're going to ask you to learn word pairs like dog rabbit, ocean moon, people memorize 20 pairs like that. Thank you. Now we're going to do another experiment. We're just going to ask you to free associate when I ask you a question. I'm going to ask you, and then we give some examples of the questions we'll ask. And they say the first thing that comes into their mind. So one of the things we might say is name a detergent. And the guy says, probably, tide, fine. So after it's all over, we say, I wonder why did that come into your mind? Well, I like the box, it's a colorful box, or that's what my mom uses at home. And then you say, well, I don't know if you remember, you rememberized the word pair ocean moon. Do you think that could, well, no, I just. And we know, because we got control subjects, experimental subjects, we know that we've doubled or tripled the likelihood that they'll give this association. So this is the kind of thing we did, and we did, but basically everything we tried worked in the sense that people didn't give us a correct explanation. And sort of consistent with our subject's behavior, we were wrong half the time about what would be going on in their heads or what effect we would get. So our introspection were nearly useless, which puts us together with our subjects in terms of having problems, figuring out what's going on in our heads. What sort of research has been done since then? Well, some of the most wonderful, Wilson has continued to do this research. And he's done fabulous things. He asks people to evaluate art objects or records. And then say how much they like each of them. Or he asks how much you liked it. And then why did you like it? So it could be jams, preserves. Say, well, it's got this fruity kind of tangy taste, and I like the color and so on.  So then people who just evaluate it. So the reason that he says this is going on is that if you ask to, if you're asked to explain why you like something, you're gonna focus on just those things that are verbalizable by definition. So you're gonna miss all the rest of it. That doesn't get, so you save why you like it based on the things you can articulate. All of the other reasons you might like or dislike go by the wayside. So later when you look at how much they like the art object or the jams or whatever, their correlation between how much they liked it initially and how much they liked it later goes to heck when you have asked them to explain why they did that. So it seems then that we might not be much better at predicting or interpreting our own behavior than anybody else's. Is that true? I mean, don't we have some sort of privileged access to our own beliefs? Well, I know what I was thinking and you may not know what I was thinking. So I've got an advantage there. But it's amazing how ignorant we are of things that are really important to us. And how much we insist that we know why these things happened or would happen. My favorite study in this whole line of work was done with Harvard women. They were asked for a period of a month, maybe more. At the end of each day, say, how good was your day? I mean, how happy were you? How satisfied were you? And then they answered a number of other questions to evaluate what went on during the day or just report, what day of the week was it?  How did the work go? How much sleep did you get? Et cetera, and now at the end of all of this, you can see how much these things actually affected their mood. And you ask people, oh, by the way, we'd just be interested in knowing how much you think each of these things influenced your mood in general. There was no correlation whatsoever between the actual impact of these things on people's mood and people's reports about the mood. And if instead of saying, how much did these things affect you, you would say, let's take a hypothetical person, Jane. Tell me how you think each of these things would affect you. Well, she gives the same answer that she would have given for herself. She's no more right about Jane than she is about herself. So, but we have a conviction that we know things like, I mean, you're telling me, I don't know what makes me happy or unhappy. I mean, give me a break. Sorry, can't give you a break. Does happiness fall into the same category? Do we know what makes us happy? Well, I think the study with these Harvard women say that a lot of the time we don't. Now, of course, I know that if my kid gets a great report on his report card, I know that makes me happy. It does make me happy. On the other hand, these are not trivial things. Everybody thinks they've got a blue Monday. Actually, it's not really true. Everybody thinks that a variety of things that have a big impact on them don't really. And Wilson has also shown that people are terrible about predicting what kinds of effects on things in life. So you've got people who are college students who are dating and you ask them, what do you think, what would it do to you if this were to break up? Miserable, I wouldn't be able to hold my head up. I couldn't sleep and so on. Actually, that's not true. Are they the unpleasantness only lasts for a small amount of time? Or you ask people who are just coming into a university freshman, what if you got dorm X? What do you think it would mean to you? So my God, that's terrible. It's dark, it's gloomy. The people that are boring, it would wreck my life. It actually, they're no less happy. Even, everybody assumes they'd be thrilled and delighted forever if they won the lottery. That only lasts for a few weeks. And actually, lottery winners end up being less happy than they were before. Neighbors are begging them for money, et cetera. The flip is true as well. I think it happens for death. One's own. That would be interesting. But death doesn't, bereavement doesn't last as long. Or it's not as bad as we think it predict would be. Breavement doesn't. If you ask people, what do you think it would do to you to become paraplegic, couldn't move you like? People take it for granted that would wreck their lives. And of course, it's terrible for a while. But eventually, I mean, they're never as happy as they were before or as the average person, but the misery does not last. And they find pleasure in things that we don't. They say, I enjoyed brushing my teeth today. So, I mean, there's Wilson and Dan Gilbert, his colleague, have a notion that we don't understand how good our psychological immune system is. That is ways we have of lifting ourselves up and we don't know what the hell is going on. Dissonance reduction is one. Somebody moves from the Midwest to California. But it's a different job, and he has to go to a small house and so on. How do I, he's gonna lose some things. But he reduces dissonance by saying, who wants to take care of a big house like I had in the Midwest? And the weather here just covers a multitude of sins and so on. So we're very good at rationalizing, explaining away, making things better than we think we could. And they have a concept of immune neglect. We don't understand that about ourselves. We don't understand that we will adapt. This course is about the science of everyday thinking. What advice do you have for people who really want to think better and do better? Well, we know a fair amount about that now. A little background about this, I started working, you've spoken and noted Danny Kahneman, and I was doing work very much like his, showing that people make all kinds of errors because they can't think statistically. They make all kinds of errors because they don't understand the need for control group and something. I mean, 28 people took a weight loss program and nearly all of them lost weight. So, well, what was the control group for that? Didn't have to understand that kind of concept. And they're really pretty dramatic errors that people make in everyday life. And at the time, pedagogical theory said, you can't teach people rules of inference. I mean, it's something as broad as that. I mean, you just have to teach them some facts and some procedures that you can't give the broad principles that will affect their lives in a very substantial way. And I accepted that view. And also, it was clear to me that I was making the same kinds of mistakes that my subjects were.   So, I decided I was gonna show that nothing can be done. You can teach people these principles and nothing happens. Fortunately, I couldn't have been more wrong. You can teach people principles. I mean, tremendously important principles like the law of large numbers in such a way that, I mean, you can do it in a matter of minutes and you can affect how they'll reason about absolutely all kinds of things. My favorite example is some economic principles, personal microeconomics, that concepts that people don't have, and they should have, and they'll live different lives if they understand that. They understand these concepts. My favorite is the concept of sunk cost. People don't understand that if they've paid for something, they should consume it only if it's still pleasurable because, actually, they can't get that money back. Well, sometimes you can't, but if you buy a ticket to a game and you don't go, you can't get that money back. So, they feel like the economical thing to do is to, darn it, go ahead and watch this thing. But you can give them, just a couple of anecdotes will change people's behavior, make them understand this concept. So, you suppose you had tickets for the basketball game in Detroit, which you bought a month ago, but it turns out the star's not playing, it's not gonna be that interesting a game, it started to snow, and it's an hour drive.  And an economist would say, well, wait a minute, let's try the following thought experiment. Suppose you hadn't bought tickets to the game, and a friend called you up and said, I have tickets to the basketball game in Detroit, tonight, would you like to have them?  But if your answer is, you gotta be kidding, it's snowing, the star isn't playing, you should not go to that game. In other words, just a few anecdotes like that, and people will apply that, we know they'll apply it, we call them up weeks later, they know where they were in a psychology study, weeks later we call them up in the guise of a survey being done by a national company and ask them to think about problems, and now they will apply the sum cost principle to those problems. Same thing is true for opportunity costs, where the basic idea is that anything you do, you're paying an opportunity cost for, that is to say, you could have been doing this or that or the other thing, so you need to assess, do I want to pay that cost or do I want to go do this other thing? And that changes people's understanding of things, changes their thinking. So statistical concepts, methodological concepts find that some undergraduate courses really change people dramatically. They really do understand some social phenomena better if they've had social science courses. And two years of graduate school and psychology teaches you to use the scientific method for all kinds of everyday life problems and statistical inference and all kinds of problems that come up in everyday life. And it turns out the people who are learning most among the psychologists, in fact, the only ones who are learning are those who are in the so-called soft areas of psychology, personality psychology, social developmental, the rat people, the brain people gain very little. They're taking the same statistics courses, but they're not learning how to apply it outside. And if you're doing research on people, you have to think about how to apply these concepts to people's behavior. So you learn how to code behavior in such a way that you can make contact with these principles. People think statistically already pretty well about lots of kinds of things. I mean, abilities they're pretty good at because especially if there's something countable there and they understand, for example, the law of large numbers for abilities. I mean, and there's an expression in this country that on any given Sunday, any team in the National Football League can beat any other team in the National Football League. That shows a comprehension of the law of large numbers. I said, so, but they know perfectly well that over the long haul, the class will tell. And we understand that for all kinds of abilities. People don't understand it for personality traits. I mean, how can I compare the friendliness of Joe with the friendliness of Jane? I mean, what's the units here? Is it smiles per minute? Is it pleasantries, a number of pleasantries all together? There's no way to make the comparison. So, but if you understand some aspects of coding and you can appreciate the fact that any sample you get of someone is a small, any kind of it has a wonderful idea about, you meet someone and our conception of what's going on is that you're sort of getting a hologram, a small hologram, a little fuzzy and a little, but basically I'm getting a read on you. Instead of I'm getting what's there. And in fact, it should be thought of as a sample of a huge population. I don't realize meeting you. I have really no conception of the fact you can behave in totally different ways in a huge range of situations. I just don't see that. Which is kind of odd because I see it for myself.  Lots of people think I'm a really swell guy. Lots of people think I'm very smart.  I mean, they're all right. It's just, you see them in one small size of behavior and you don't recognize that. One thing that psychologists have discovered and Tim Wilson and I were some of the first to work on this kind of question is how much that goes on in our heads is unconscious. I mean, we think we know what's going on. I mean, it's just, I mean, Freud didn't know the half of it. I mean, most of what goes on in our heads, we have very little inkling of. Some of the work that's come out recently about these priming effects, trivial little things, embarrassing that were affected by them.  I'm not as persuaded by it. Something's fishy here. Literally, interesting. Literally. And we know that that's what's going on. It's the fishy thing, the metaphor. Because there are some countries that don't have the metaphor that I'm something, there's something fishy about this. That's your control group, is it? So they don't have experience. That's right, there are some cultures that just don't have that. In Denmark, I think it's I smell a rat. Oh, I got you.  I don't know if there's rat essence that you can spray into the air. So then what's the upshot? So you're saying, so, yep, so a lot of it's unconscious. Yeah, a lot of it. I mean, process, in terms of my definition, is always unconscious. There's no such thing as awareness of cognitive process. We claim it, but we don't claim that we have awareness of the perceptual processes that we have. We have absolutely no idea how these various sensations are getting treated. And when you teach it in psychology, what percept is like, virtually everything you tell people. They had no idea. I mean, a lot of, I mean, there are a million visual illusions, for example, which depend on the fact that we have certain perceptual processes that operate in a particular way. And if you give us something that's slightly off base from that, we make an error in it, because the unconscious procedures that we have for perceiving the world will lead us astray in those situations. So, anyway, that's. So, so, are we on now? Oh yeah, well. I don't know whether to stop and let you take us in another direction. This is one that we probably won't make the interview, but it is, yeah, it's a selfish question. So precisely then, I mean, there are so many things we can do. One of them is we're trying to make ridiculously high production values for these things and maintain attention. Another thing we're trying to do is make a check on fluency. So it might look good and feel good, but here's some assessment to see whether you actually know this to try and boost self-assessment and awareness. But those are the things from the literature we're trying to do, but are there any specific things you think that we could do to help us teach? In my whole book, the thing I most want people to understand is that we solve problems, everything from the most common everyday problem like how do I make up to Joe after my unpleasantness to him to how do I solve this professional problem that I'm dealing with. Most of that goes on, first of all, there's no access to process at all. We know what's in our heads, some of it. Huge amounts, we don't know what's in our head. And the procedures that we use to solve problems are often completely opaque to us. We just, we don't know how we did it. My favorite study like this that was ever done was in the 1930s. A psychologist whose name was N.R.F. Meyer had people do a problem, solve a problem. He had cords hanging from the ceiling in different places. And he said, I want you to bring these cords together. And there were lots of things that were, there were things lying all around the room. And so maybe it was something that they could use, an extension cord. So they tied the extension cord to one and pulled it over the other, easy solution. And after they had five or six of these, then there was one other way to do it that they hadn't yet discovered, which was much more difficult. And after this, the subject had been stumped for five or 10 minutes. Meyer, who's been wandering around the room the whole time, flips one of the cords, sets it into motion. Within 45 seconds, the typical subject tied something to the bottom of it, swung it like a pendulum, grabbed the other and tied them together. And Meyer says, that's great, that's a solution. How'd you come up with that? No one ever gave him the answer and the correct answer. And he ran some psychologists through this and they were hilarious. I mean, in their rich accounts of what? I thought of monkeys swinging through trees. The idea of a pendulum entered my head at the precise moment. So, but that's just for ordinary everyday problems of the most mundane kind. If you read, there was a couple years ago, there, the main journal in mathematics received a paper from an obscure mathematician at some small university somewhere whose previous job, he couldn't get a job, even was working at a subway. They get a paper from him, which is a partial solution to the question, can you prove that there are an infinite number of twin primes? Three in five are twins, seven in five again. I run out, this is not my strong suit. But anyway, mathematicians for centuries have worked on this problem. So here's this, he gives this solution to them. The math journals got papers on mathematics from quacks and all the time. But this seemed a little plausible, so they sent it out to a bunch of prominent reviewers. And with, the reviewers came all over, it came from my God, this is right, this is the correct solution. They published the thing by warp speed, by academic standards. And then somebody asked him, tell me how did you solve this problem? Someone had been working on it for years and I was sitting in somebody's backyard in Colorado in a barbecue and suddenly the idea about how it popped into my head had been making about what I was about to eat. There was a million stories like this by mathematicians. I wasn't even thinking about it, the thing popped into my head.  And we don't take nearly as much use of it as we could. You have to, there's a writer for the New Yorker who has a wonderful account of how you write, how to do it. So you have to sit down and think a bit about what you're gonna do. If you don't, nothing's gonna happen.  It's been handed over to the unconscious and the unconscious is working on it 24 hours a day, no matter what you're doing. I mean, I find that with my own work all the time. When I'm teaching seminar, I give thought questions. If I wait until, just before I have to do those thought questions, it's an effort. They're not very good. If three or four days in advance, I said, what are the best things that I want, make sure come out of the discussion here and just spend five or 10 minutes on it. Three days later when I start to do it, it's like I'm taking it by dictation and they're much better than I would otherwise have come up with. I don't know that I've ever convinced any student for that term paper, first day of class, tomorrow start working on that term paper. And I don't think they believe me. I don't know if I've ever gotten across, but I have a lot of examples now of this kind of thing that I think if you spend 20 or 30 minutes with people, they might really come to believe you and might be able to make much more use of their brain than they are. My name is Richard. I think about inference.


Hello and welcome to the session. This is Professor Farhad in which we would look at the Fama French three-factor model. This topic is covered on the CFA exam, briefly on the CPA exam in form of multiple regression, as well as essentials of investment course. As always, I would like to remind you to connect with me on LinkedIn. If you haven't done so, YouTube is where you would need to subscribe. I have 1800 plus accounting, auditing, tax, finance, as well as Excel tutorials. If you like my lectures, please like them, share them, put them in playlists. If they benefit you, it means they might benefit other people. On my website, farhadlectures.com, you will find additional resources to supplement and complement your accounting, your finance, as well as this course and your professional certification CPA, CIA, CFA, or CMA. Please check out my website. Let's take a look at what we learned already. We learned about CAPM and basically CAPM is a way to predict your expected return on a certain stock based on the beta. The beta, it means how does your stock correlate with the market? So how do we compute your expected return for a specific stock return on stock D? It's the risk-free rate, beta times the risk premium. And this is what we say is the CAPM model. And basically what we are using here is one factor to predict your expected return. And that's basically the beta times the expected return. Now we can use multiple factor. In the prior session, we also saw that we can expand this rather than just using the beta. For one factor, we could use the beta for the market, the beta for the treasury bond. So what we're doing is we're using two-factor model. Here comes Fama in French, which are the two authors, Eugene Fama and Kenneth French. And what they did is they expanded on that CAPM and they said there might be other factors that affect the expected return. And what they find out is there are two main factors that we can add. So we can take the CAPM and add two more factors.  So I'm just going to, I'm going to add here, they added the, they added the size effect to the formula and they added the high minus low, which is the value, which is I'm just going to, why don't I put here SMB plus high minus low. And what is high minus low? What they find out also is that high book to market ratio, which are considered value stock, outperform low book to market ratio, which are growth stocks. So what they said is this. They said, okay, let's add those two factors to the CAPM and see what happened to the expected return. Because what the argument is beta for the market, the way the stock react to the market, it's not the only factor, there are other factors. What are those two other factors, the size and the value of the stock? And why did we choose the size? Basically, here's the argument shares of large firms, maybe less risk in a, what do we mean by large versus small in the first place? Because what we're saying here, small, small minus big, it's a small capitalization. And you're going to find out what they would do mean by M minus. So basically, they looked at small cap stocks versus large cap stock. What do we mean by small, small cap versus large cap? For example, Apple computer has a large capitalization. How do you, how do you compute cap stock? It's basically the number of shares times the market, the stock market price versus immediate small company would have a small cap stock. Now what would be an example of a small cap? Small will be something like Papa Jones pizza. So Apple will be a large cap stock. So Apple versus Papa Jones pizza. So this is a small cap. It means if we take the number of shares times the stock price, it may, it may add up to like 50 billion dollar versus Apple. Apple right now is one plus trillion dollar. So one more than it's more than a trillion dollar. So this is what we mean by large versus small. So other things being equal, large cap stocks, they are followed more by analysts. So for example, stock market analysts on Wall Street, they would follow a company like Apple more than they, more than they follow Papa Jones. So with better informed investors with the media coverage, the prices of these two different stocks maybe accurately reflected the true value of the stock. And as a result of they are reflecting the true value, they are less susceptible to systematic risk, the systematic market. So everything is known because they are followed as well as firm specific fluctuation because everyone is evaluating them. Therefore, we should have more information about large cap and because we have more information, there is less risk. Also shares of large firms like Apple, they have deeper pockets and greater that capacity. So in an economic downturn, these, these firms, they can withstand downturns. So they, they react differently than small caps because of AMB because of those two reasons, small firms will commend higher risk premium. You don't know much about them. Well, because they're not followed. Well, less information mirrors more risk, more risk mirrors, more return. And since they don't have deep pockets, they don't have a lot of money, they may not with, they may not withstand downturn economic risk. Therefore, more risk, more return. Therefore, the beta alone does not give them enough justice when it comes to, when it comes to computing their expected return. Therefore, the size does matter comparing small versus large. And usually what we say, small cap outperform large cap. The second factor is the high book to market ratio stocks, which are considered value stocks outperform low book to market ratio. Now what does it mean high book to market versus low book to market ratio? We can compute the book, the book ratio to market ratio. So if the, let's market is in the denominator, market is in the denominator. If we have more book, it means accounting record, their assets, they have more assets than what's reflecting in the market. It means they are a mature company that's considered value stock. If they have less amount in the denominator, less books, less on the books, less assets relative to their market value, it means they, they are based on their performance is based on future expectation. They are, therefore they are considered growth stocks. So value stocks, they have a lot of assets in relationship to their market versus the low book asset ratio. So high book to market ratio, they are considered in generally speaking, they are mature firms. They already have a lot of assets relative to their, relative to their market. So what happened is with many assets on the books, when they have a downturn, you are not using your assets at full capacity. Well, if you're not using your asset at full capacity, it imply a higher systematic risk. When there is a market risk, you're not using all of your assets, you are less efficient, therefore you should perform lower from a logical perspective. Low book to market ratio, those assets, they value their growth from future cash flow because they don't have enough assets right now, but the expectation is they're going to have a future cash flow. That's why they have a high book to market. Now, what do you mean book to market? It means low book to market. It means M is high. YM is high. So let's assume we have a company with 100 books, 100 market. The answer is one. So here's what's going to happen. If I keep the books 100 and I make the market 200 as value, the ratio is 0.5. So I have a low, low book to market. It means my market value is higher. If my market value is higher, it means my market value is higher. Not because I have a lot of assets on the books, I have better future prospects. And that's why I'm considered the growth stocks. And research shows that on average, these companies, they have higher average return. Again, because the expectation is they're going to have higher growth, higher growth. If you're interested in actual data about this model, you can go to Kenneth French website, which is he teaches at Dartmouth College. And this is just a snapshot of it. But below you could have, you can download Excel data about small minus big and high minus low. And the way they compute this, the way they compute the size factor and the growth factor, again, you can go and see the data. But I'm going to show you how they do it is the difference. How did they compute it? So what's considered small and what's considered big? What they do is they look at the difference, notice the difference in returns and firms with low market value, low capitalization versus high market value.  It means they take two portfolios, one with small cap, one with large cap, they compute the return and they find the difference. This is how we compute the size factor. Now, how do we compute the value versus growth factor? Again, it's the difference in return and stocks with two portfolios, one with high when one with low ratio of book to market. They look at those two portfolios, they follow them and they compute the difference. So once again, if you're interested in looking at actual data, you can go to Kenneth's website and you'll be able to Kenneth French and you'll be able to download actual data. This is just basically a summary as of June 30th. So just showing you the factors. Now, let's take a look at an example because as far as we're concerned, I'm going to keep this the least amount of statistics as possible. Let's just take a look at a sample. Suppose that the risk free rate is 1%, the beta for market risk premium 1.235, that's the beta and the market risk premium is 6%, then the beta for small minus big is 0.246. Again, you can compute this or it could be provided to you and the risk premium is 2% small minus big. So when we take the small minus big, the small portfolio return versus the big portfolio return, it's the risk premium is 2%. The beta for high minus low is 0.69, this is the beta and the risk premium is 3%. Now we are ready to find the expected return, let's assume this company is Ford using this benchmark and risk premium. Let's see. So we're going to take the risk free return. This is basically a multi regression analysis. So basically, if we stop right here, if we stop right here, this is basically CAPM. This is basically CAPM. Now what we do in addition to the CAPM, which is we take the beta afford, the beta afford, which is here is 1.235 of the risk times the risk premium, which is 6%. Then we add, now this is the addition that they added, small minus big, the beta for Ford small minus big times the expected return. The expected return is how much small minus big is 2% to the risk premium. So we'll take 2.246. This is the beta times 2% and we'll do the same thing for high minus low, the beta times the risk premium for that 3% and the expected return is 10.978. All what we did is we expanded the expanded CAPM to give us more information about Ford Motor Company and we can do this for any other company. We can do this for any other company. This is basically in a nutshell and the least amount of statistics provided, the explanation of the FAMA French model and its simplicity as much as I can simplify it. I hope I get the point through. Study hard, stay safe and good luck.


Well, hello there, my name is John Schumacher and I am a client of George Cow and I just want to give George a huge, huge thank you, a huge shout out. If you are considering hiring George, please do so and here's why. So my background is I was struggling in a job I was no longer passionate about. I was just rinding away, trying to figure out how to build something on the side in order to make that leap towards my own independence and my own freedom online. And I met George, I interviewed George on one of my podcasts or my webinar series and got to know George and George really helped me a ton to make that leap. You see, I was fearful.  And George was really the the epitous, the epitous, whatever the word is for helping me make the jump and getting over my own fears. So George has a perfect blend of marketing and business savvy with authentic lifestyle coaching. And that's really why I hired George and really why I got such an enormous benefit from George is he's just he's so open. He's friendly. He's he's very, but he's very direct. He has a clear framework and he has a clear message to help you both become better in your business and your authentic business, but also in your life and how you balance and manage your business so that you truly develop happiness and freedom and joy in your life and in your business. So if you're if you're at all considering working with George, Cal, highly recommend him, take a look, hire him. He's a wonderful man, a wonderful coach, and he'll serve you very well. So thank you.


I want to see all of these, especially in that 10 building, if you're in that area, I want to post somebody on the rooftop. When you get passed on to serve there, one rifle, two personal. In the two-storey yellow building? Yeah. Roger. Rock Hamilton stayed back in. Dude's running around with rifles. You can land them somewhere. Okay.


Hello, I am Dr. Devananda, Head of the Department of Cardiac Surgery at Manipal Hospitals. I have been practicing cardiac surgery for the last 18 years. There are several diseases which can affect the mitral valve. Some are from the birth, some we acquire as we grow. Now, one of the important causes of mitral stenosis, which means narrowing of the mitral valve in our country still is rheumatic heart disease, which affects in the form of sore throat, produces antibodies which go and finally affects the heart valves. Somehow in the recent years with the widespread use of antibiotics, the incidence of rheumatic fever is coming down. So also the incident of mitral stenosis.


Sadhguru, scriptures tell us that everything happening in this world, including what happens in our life, is preordained. Which scripture said that? At least that's what I thought, that we are destined to do something irrespective of what happens. If that is the case, we are destined to die someday, then what's the role of people like us in this world? Oh! Oh! We are definitely destined to die. People come and tell me, «Sadhguru, this man, my enemy, I can't bear him, I want to do something.  You don't have to do anything, just wait. Just be patient, that's all. So, destined to die, yes. But I don't think ever any scripture has mentioned that your life is pre-determined, pre-ordained. This is an import from outside. You must understand the fundamental nature of what this culture is, it's rooted in this. This is a godless culture, you must understand this. There has never been an idea of God in this country. It's an imported value, let me put this into perspective, because it upsets lots of people. We have many divine entities, many. We count some thirty-three million, something like that. How did all these gods come up? So, the idea, the monotheistic idea is there's a god sitting out there and doing things to you, so they believe in dictatorship. That there is somebody who determines everything. Not so in this culture. Here, there is no idea of God, but there are many divine entities. What are these entities? Generally, if you look back, the language that was used for all the deities that you have is, you're a Devi, is a Yantra, always a Yantra. The word Yantra literally means a machine or a device or a tool. When I refer to our own yogic temples as tools, people get offended. Sadhguru, don't say that, it means more than our life. I said, if you are offended by this, you come to the ashram. I am going to give you a plumbing job to do in the ashram without tools. You must use your nails and your teeth and do plumbing in the ashram for three days. After three days, I'll give you a chain winch or a spanner. Will you worship or no? Will you worship the tool or no after having lost all your teeth? So the power of the tool, the power of the tool is something that we always understood. We as human beings, we are who we are on this planet only because of the tools that we have created. If we did not have any tools, a dog would dominate us, isn't it? Yes or no? It's only because of the tools human beings have become who they are. So there are… a screwdriver is a tool too, but there are subtler tools, energy tools, subjective tools which can open up different dimensions of life. So for this, for every dimension we create a different tool, a different possibility because we clearly know without this tool we would never access this possibility. We bow down to it and we worship it because without being worshipful it will not yield to you. This is… we clearly know, gods are our making. It is just that others have forgotten.  This means your life is your making. Where is the question of preordained? Such a thing never arises in this culture. Thank you, Sadhguru. But it's dangerous for a doctor to think it's preordained.


What's our greatest need?  We need reconciliation with God, a right relationship to the one who has created us in his image and to live for his glory alone. We need forgiveness, forgiveness of sins. We need our guilt removed. We need righteousness in order to stand before him, holiness without which no one will see the Lord. We need his wrath, the wrath that is justly directed against us. We need that wrath to be taken out of the way, to be propitiated. We need to be born again. We need to be made a new creation.  You have offended an eternal God.