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)