Dimensional Week: The appliance of science

Posted by Robin Powell on September 29, 2015

 

Welcome to Day Two of Dimensional Week on The Evidence-Based Investor — a five part series on Dimensional Fund Advisors, a company few investors have even heard of and yet one that’s helping to transform the world of money management. 

I’ll admit I wasn’t comfortable with it at first but I’m starting to feel more used to the idea of the science of investing, or at least the science of the capital markets.

Granted, it’s not a science in a conventional sense and there are those who’ll say, for instance, that the random and complex nature of the markets makes it hard, if not impossible, to test for repeatability. It’s also a multi-disciplinary subject, involving elements of psychology, genetics, economics, mathematics and history. But the academics whom Dimensional rely on for their research — Eugene Fama, Myron Scholes, Robert Merton and so on — all take a distinctly scientific approach.

Tomorrow, we’ll start looking at some of that research. In the meantime, this DFA video provides some useful background:

Tomorrow: The Godfather of Modern Finance

(Featured image: ‘Palisades West, Dimensional Fund Advisors, Austin, TX’ by Roy Niswanger)

 

ROBIN POWELL is a freelance journalist and the founding editor of The Evidence-Based Investor. Based in Birmingham, England, he founded Ember Television and Regis Media, and he specialties in helping disruptive financial firms to grow. He also campaigns for a fair, transparent and sustainable investing industry. You can follow him on Twitter at @RobinJPowell.

 

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Robin Powell

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.

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