With 2017 in the rearview mirror, we’re pleased to reflect on – and share with you – a newly released Dimensional Fund Advisors 2017 Market Review. Overall, the view is quite pleasant for most global and domestic returns alike, even though few financial forecasters were predicting this sort of slam dunk at the outset of the year. If you think back to last January, there were plenty of reasons to wonder about the next 12 months – what with Brexit uncertainties, U.S. election upsets, … [Read more...]
2016 Year in Review: Oh what a difference a year can make!
When comparing Dimensional Fund Advisors’ recent 2016 Market Review with the 2015 edition I shared a year ago, I’m afraid you won’t need my mad professional skills to spot some of the differences between them. In fact, I think my 8-year-old daughter could point them out. To be blunt, most of 2015’s annual returns stunk – a lot – with small-company and value company stocks as the worst offenders. The first few weeks of 2016 didn’t look very promising, either. It turned out to be poor start to … [Read more...]
Why the S&P 500 is a Bad Benchmark for Your Investments
Imagine you are going to buy a house. How do you start the planning process? Do you look at everyone around you who is purchasing a home and do exactly what they do? Do you buy one at the same price point, the same size, in the same area, with the same mortgage company? Well, you could, but that would be pretty stupid. No. You would first determine how much you could afford to pay monthly, investigate how much equity you currently have, research what neighborhood you want to live … [Read more...]
How Will the Market and Your Money Behave in an Election Year?
“Let’s say it clearly: No one knows where the market is going — experts or novices, soothsayers or astrologers. That’s the simple truth."— Fortune “So Greg, where do you think the market is headed?” This is a question I get asked often. I get it from friends, family, people I know well, and new people I meet when I tell them what I do for a living. If only we knew the answer to this question. Wouldn’t life be so beautiful and comfortable if we could predict these kinds of things? … [Read more...]
2015 Year in Review: Stormy Seas for Wealth Building Investors
As the name implies (with the subtlety of a sledge hammer), evidence-based investing means viewing capital markets from the perspective of a professor of finance. We use the science of investing as our guide to building wealth. Instead of fixating on what seems to be working lately or is predicted to work well soon, we turn to decades of peer-reviewed, academic inquiry: Which factors have contributed to higher returns over time and across multiple markets? Which are supported by … [Read more...]
Can you predict a good time to buy and sell stocks?
Buying and selling stocks would be much easier if only there were an investment indicator that was dependable. One indicator in particular has lured many investors into its seemingly sound logic. Mean reversion. This is a fancy term for a historical observation that good market climates tend to follow bad … and vice-versa. Or, put simply, what goes up must come down. Looking back on market history, we see evidence of mean reversion. The "tech wreck" of 2000 to 2002: skyrocketing stock values … [Read more...]
Dimensional Fund Advisors Culture Gets an “A” Grade from Morningstar
Given our disciplined, tortoise vs. hare investment strategy, it’s not often I get the opportunity to say, “I told you so.” I’m not much better off at home, where my brilliant family seems to always be one step ahead of me. Well, today’s my lucky day, based on a recent Morningstar Stewardship report card that gave Dimensional Fund Advisors an “A” grade. In March 2014, we were bewildered when Morningstar lauded Dimensional’s “many positive traits” … but then gave it a B for corporate culture. … [Read more...]
Market Turmoil and the Importance of a Sound Investment Philosophy
Feeling distressed by the market tumult over the past week? On Monday, August 24th, 2015, the Dow Jones fell more than 1,000 points in early trading. A market meltdown of that magnitude can put your investment plan to the ultimate test. To put the current manic behavior of the market in perspective, it helps to look at history as a guide. What was the investment climate like at year-end 2011? If you don’t remember, you are in good company. In his January 2012 year-end review, Wes Wellington … [Read more...]
Lessons from the Greek Crisis About Building Wealth
As an investor, are you a dipper and a darter, or an efficient market collaborator? If you’re not sure, you can tell by how you have – or have not – reacted to this summer’s Greek economic crisis. As we have advised during any number of past economic crises, the best position for a long-term investor looking to build wealth is to let efficient markets do their work. The evidence supports this philosophy as the best way to capture market returns over the long run. Don't try to beat the … [Read more...]
9 Reasons Why Investors Are Loving Vanguard and DFA Funds
Wow. Vanguard had tremendous growth in 2014. An intake of $214.5 billion last year pushed this fund giant’s total assets to $3.1 trillion as of December 31, 2014. That growth represents a 56% increase for Vanguard compared to 2013. Early this year, they passed State Street Global Advisors as the second-largest exchange-traded fund provider as they close in on the top dog BlackRock. Dimensional Fund Advisors (Dimensional or DFA funds for short) is another fund company that has been … [Read more...]