Archive | Dimensional DFA

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The Cost of a Perfect Market Timing Strategy

I recently read a Dimensional study* by the same name. “What if we could construct a strategy with a correlation close to 1 with a perfect market timing strategy? Can we estimate what its returns would have been? Can we use these estimates to understand what the market would have “charged” for a perfect market […]

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Dimensional

Behavior: Evidence-Based Investing Insights Part 4 of 4

Evidence-Based investing comes from a compilation over more than a half century of many independent peer reviewed research results of how markets work. There are 12 key insights in this 4 part video series. Here are the last two insights in this 5:47 video on behavior: 11. The human factor is the most important of all the factors. […]

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Dimensional

Return Factors: Evidence-Based Investing Insights Part 3 of 4

Evidence-Based investing comes from a compilation over more than a half century of many independent peer reviewed research results of how markets work. There are 12 key insights in this 4 part video series. Here are the third increment in this 4:48 video about return factor insights: 7. Where to returns come from? With a bond? With a stock? 8. No […]

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Dimensional

Diversity: Evidence-Based Investing Insights Part 2 of 4

Evidence-Based investing comes from a compilation over more than a half century of many independent peer reviewed research results of how markets work. There are 12 key insights in this 4 part video series. Here are the second 3 in this 4:50 video about diversity insights: 4. Diversification is important. It reduces exposure to different kinds of risk and […]

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Dimensional

Market Pricing: Evidence-Based Investing Insights Part 1 of 4

Evidence-Based investing comes from a compilation over more than a half century of many independent peer reviewed research results of how markets work. There are 12 key insights in this 4 part video series. Here are the first 3 in this 4:28 video about market pricing insights: Group intelligence – the market does a better job than […]

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The Rise of Short Term Rates

“While many market participants wait for the “inevitable” rise in short-term interest rates expected when the Federal Reserve tightens its monetary policy, some investors may have missed the increase in short-term rates already underway as a result of market forces. ” The rise of_short-term_rates from Better Financial Education Note: Your RSS feed or email may […]

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Research in Focus: Can You Predict a Good Time to Buy and Sell Stocks?

Can investors predict when to buy and sell securities? Jim Davis, PhD,* runs more than 780 tests on data from 15 stock markets to test this theory. Can you consistently buy low and sell high? Is there real world evidence of knowing when the best times are and being profitable in the process? They looked […]

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Reconstitution effects on inflexible indexes

The following phenomenon results from “reconstitution” has been well known for years. However, with the increasing popularity of indexing, I’m glad some light has been shined on the topic because this shows the difference between a retail structured index, that all mutual funds following an index are subject to, and a proprietary structured index such as Dimensional. […]

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Investment Philosophy

Index Funds Anchor Your Portfolio

Index funds often earn higher returns than the average actively managed mutual fund. What’s their secret? The differences between retail index funds and actively managed funds are discussed below. The article does not discuss a more broadly defined index that Dimensional (DFA) has developed. Retail indexes, as the article discusses, are defined by an investment […]

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Why Do Many Reasonable People Doubt Science?

This question posed in the National Geographic magazine (June 2015),… titled “Why Do Many Reasonable People Doubt Science?” …  got me thinking about why reasonable people think it is possible to time the markets, even though there’s plenty of academic evidence to the contrary. Some points from the NG article that are also in many ways relevant […]

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