Happy 60th Anniversary CAPM! Why the Capital Asset Pricing Model Still Matters
Bill Sharpe’s classic 1964 paper has stood the test of time
When someone hears I’m currently writing the authorized biography of William (Bill) Sharpe, the most frequent question I get is, “Is he still alive?” Sharpe is the 1990 recipient of the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, commonly known as the Nobel Prize in Economics. And, yes, in September 2024, he’s still alive and well. He lives in Carmel-by-the-Sea in California. Every Thursday morning, he meets with his coffee klatch. He can often be seen walking his bichon-poodle near Carmel Bay. In June 2024, he celebrated his 90th birthday. And September 2024 is another Sharpe milestone birthday: his seminal 1964 capital asset pricing model paper turns 60. It’s extremely rare for research to remain relevant after a decade let alone six. I’ll explain what the paper is about, how it impacted the investment industry, most likely including your own portfolio, and why it still matters.
The C-A-P-M
Let’s talk about the model’s name, common acronym, and what it’s really about. First, Sharpe never…
