I heard an inspiring interview on the radio the other day with sports journalist Matthew Syed. He’s just written a book called Black Box Thinking: The Surprising Truth About Success, about the theory of marginal gains. Briefly, the theory is that small incremental improvements in any process produce a substantial improvement in outcomes when they are all added together. Dimensional.
The theory helped Sir Dave Brailsford to transform the fortunes of the British cycling team. It’s also enabled a hospital in Seattle become one of the safest in the world and to reduce its liability insurance premiums by 74%.
Dimensional Fund Advisors is another organisation that believes in the value of marginal gains. It’s always searching for new ways to produce the highest expected returns for the required level of risk.
Just as a few extra basis points in costs can add up to a large sum when compounded over time, minor tweaks to a portfolio can make a very significant difference over the long term, as Dimensional co-founder David Booth explains:
That video brings to an end this special week-long series. I hope you’ve found it interesting.
All the videos we’ve featured, and more, can be found on Dimensional’s YouTube channel.
Robin is a journalist and campaigner for positive change in global investing. He runs Regis Media, a niche provider of content marketing for financial advice firms with an evidence-based investment philosophy. He also works as a consultant to other disruptive firms in the investing sector.
