Category Archives for Financial Education & News

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Global Diversification Still Requires International Securities

Investors often ask if globally diversified stock portfolios are necessary when the US stock market has many multinational companies or those earning revenues from non-US countries. The data suggest these

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What Goes Up Might Not Come Down

US stock market indices hit all-time highs in recent weeks, leading some investors to wonder whether now is a good time to be in stocks—or do record levels portend an upcoming tumble? The historical

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Reality Meets Expectation for the Mag 7

It is unlikely any stock has an expected return of 100% per year. That seems too high to be the cost of equity capital for a company, and it’s doubtful anyone would sell a stock with an expected return

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Gold Hasn’t Been Effective at Tracking Inflation

Gold is sometimes touted as a tool for protecting wealth from rising prices. But history shows the challenges of using gold to offset the impact of inflation.Since 1970, gold has often experienced large

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Proceed with Caution Focusing on Yield

Investors selecting funds based on dividend yield should be aware that high yield is no assurance of higher expected return. Plotting 10-year annualized returns vs. average dividend yield for US large

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Investigating Patterns Objectively

Shifting my exercise routine to early mornings affords me more workouts on average each week. The tradeoff is nearly an hour’s less sleep each night.1 In effect, my fitness level is negatively correlated

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Draft Picks and Value Stocks

During the National Football League’s recent draft, teams selected from hundreds of prospects to build rosters for the future. It’s my favorite sporting event of the year, mainly because it provides

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Pensions & Investments: Dimensional Co-CIO Talks ETFs and Going Beyond Indexing

During a recent interview with Pensions & Investments (P&I), Dimensional Co-Chief Investment Officer and Global Head of Research Savina Rizova discussed a variety of investment topics, including

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Small Cap, Big Difference

Indices are samplings of the market and may differ substantially among index providers based on differences in construction methodology. Nowhere is that more evident than in US small cap stocks. The spread

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Financial Goals: Your Tickets To Ride

We’ve commented before on the mechanics of accumulating and preserving your wealth by building a low-cost, globally diversified investment portfolio aimed at your personal goals and risk tolerances.

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Looking for the Next Nvidia May Shrink Your Return

The Magnificent 7’s performance in 2023 may leave some investors wondering how to spot the next Nvidia or Apple.1 Specifically, which technology disruptor will see its stock soaring next. Emerging technology–themed

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What’s Baked into Your Credit Exposure?

Corporate bond funds have seen strong inflows to start the year. As investors select funds with credit exposure, they should be aware of what’s baked into a manager’s approach, or not.Baking is not

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Top 500 Stocks, Give or Take $2.1 Trillion

Investors who assume the “500” in an S&P 500 Index fund means the 500 largest US stocks are in for a surprise. As of February 29, 73 companies ranking in the top 500 on market capitalization were

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Japan in the News, But It’s Nothing New

Japan’s stock market has been in the news lately for setting “a new market high.”1 While its stock market did exceed the 1989 high-water mark, this strains the definition of “news.” Using a market-cap-weighted

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Curve Your Enthusiasm with Fed Activity

Judging by the CME FedWatch Tool, market participants expect the Fed to start cutting rates sometime in 2024. Some investors may be tempted to make duration decisions within their bond allocations because

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Bringing Order to Your Investment Universe Part 2: Transitions and Taxes

As we touched on in The Beauty of Being Organized, when you sell an investment for more than you paid for it, there can be burdensome capital gain taxes realized in the year of the sale. How do you manage

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Bringing Order to Your Investment Universe Part 1: The Beauty of Being Organized

When it comes to investing, our message has long been loud and clear: Build a well-structured portfolio to capture available market returns while managing the risks involved. Shape it to meet your individual

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Protecting Women’s Wealth

Today, let’s turn our attention to women and their wealth. Based on available evidence, what are women’s most likely superpowers as they acquire and manage personal wealth? What vulnerabilities might

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What I See When I Watch Basketball

It’s my favorite time of year again: March Madness, the NCAA competition held each spring to determine the national champions of college basketball.Many fans look forward to predicting who’s going

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Encouraging Data from Value’s Past and Present

The 20-year relative return of US small cap value stocks versus the S&P 500 Index dipped negative recently for the first time in US stock market history. Two decades is a long time for an expected

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Cost of Capital: A Gut Check on High-Flying Stock Returns

Nearly every year, a handful of securities generate headlines for delivering eye-popping returns. A challenge for investors is determining what portion of that return is a one-off windfall and not something

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David Booth on Pursuing a Better Investment Experience

In a recent episode of the Goldman Sachs Exchanges podcast, Dimensional Founder and Chairman David Booth reflected on his career in applying the finance theory he learned at the University of Chicago’s

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Common Investing Mistakes (Part 3)

Chasing Past PerformanceAs we continue to build from the last blog, discussing common investing mistakes around focusing on headlines. You might be inclined to select investments based on past returns,

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Common Investing Mistakes (Part 2)

Focusing on the HeadlinesAs we continue to build from the last blog, discussing common investing mistakes around trying to time the market. Investors may become enamored with popular stocks based on recent

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Common Investing Mistakes (Part 1)

Trying to Time the MarketInvestors may be tempted to cash out of the stock market to avoid a predicted downturn. But accurately forecasting the market’s direction to time when to buy and sell is a guessing

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The Next BlackBerry?

Some investors attribute the Magnificent 7 stocks’ dominance to a “winner-take-all” environment in which a handful of companies achieve sufficient market share to hinder competition.1 In businesses

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Exciting Returns May Not Be Expected Returns

It is natural for investors to want more exposure to last year’s top-performing market segment. The challenge is determining what portion of that return was a one-off windfall and not something to expect

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Uncertainty Is Underrated

“A wave of new scientific discoveries reveals that learning to lean into uncertainty in times of rapid change is a promising antidote to mental distress.” –Maggie Jackson, New York Times1For many

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Active ETFs vs Mutual Funds: Similarities and Differences

The exchange-traded fund (ETF) structure shares certain similarities with mutual funds, but also important differences that investors need to understand, especially if you’re used to investing through

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When Should You Take Your Social Security?

Ever since President Franklin D. Roosevelt signed off on the 1935 Social Security Act, most Americans have ended up pondering this critical question as they approach retirement: “When should I (or we)

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