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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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The Power of the Market, the Ultimate AI
There’s plenty of attention on AI, but there’s another, even smarter information-processing machine: the market. Dimensional uses information in prices to put the power of the market to work for investors
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The Cost of Trying to Time the Market
The effect of being out of the market for even a short time can be profound—missing a period of strong returns can drastically impact overall performance.
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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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Trying to Predict Interest Rates? Good Luck.
As 2023 began, inflation was elevated, US policy makers were in a rate-hiking cycle, and talk of recession was in the news. Investors could be forgiven for expecting big changes in US Treasury yields before
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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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Market Behavior and the Weather
Investors can focus on the daily rain clouds and sunshine the markets bring. Or they can think about the long term.
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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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What 2023 Teaches Us About Expectations vs. Reality
Realized market returns are driven by the difference between investor expectations and the events that actually transpire. If reality pans out better than expected, markets may deliver strong returns along
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Pursuing ETF Share Classes: The Right Thing to Do for Investors
In July, Dimensional applied for exemptive relief from the US Securities and Exchange Commission (SEC) to be able to offer ETF share classes of our mutual funds. We believe that the ability to offer both
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A Slice of Dividend Accounting
As many of us observed firsthand during the holiday season, eating a slice of pie means less pie remains. While not as tangibly apparent, the same concept applies to stock dividends: A company’s share
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Going Global for Value
Global diversification can increase the reliability of outperformance for strategies pursuing higher than market returns because premiums, like the value premium, do not always move in lockstep across
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