I’ve attached a brief video from the founder of Dimensional Funds, David Booth. The video gives a great perspective on investing since the end of WWII. The lesson of the past 65 years is that bull and bear markets can run for lengthy periods. Their durations are impossible to predict, and popular sentiment at any time offers little insight about the future. The keys to success are investing for the long-term and keeping a cool head.Several months back I began offering Dimensional’s funds to clients. Dimensional is a 30-year-old investment company which manages $225 billion for institutions and individual clients of financial advisers like me. Dimensional is a unique investment firm that brings science to investing. Their funds have performed quite well in the past. While that is no guarantee of the future, I believe there is no better alternative for the serious, long-term investor.Dimensional’s strategies are based on deep research of long-term investment performance. They believe that markets are efficient, which means if you try to “beat” the market by stock-picking or market-timing, you will, on average, generate higher costs but lower returns. By contrast, Dimensional’s research and performance demonstrate the keys to success are:
- A broadly diversified portfolio that includes US and international stocks, bonds and other investments
- Low fees
- Over-weighting to small and “value” stocks, which over time have out-performed large and “growth” stocks
- Minimizing trading costs and taxes
- A long-term horizon with regular “rebalancing” to maintain your portfolio weightings
If you want more info on Dimensional, please go to www.dimensional.com, or call me.