🔧 Explaining Stock Returns with the Fama-French 5 Factor Model

In 2023, the Fama-French 5-factor model could explain only 35% of NVIDIA's weekly return variation. In 2024, it explained 82%. That gap tells you something important: NVIDIA's 2023 surge was driven primarily by a narrative that no systematic factor had yet priced in - the sudden recognition that GPU scarcity would define AI infrastructure for...