Dimensional is rarely in the news, but they are becoming harder for the national media to avoid, as passive portfolios continue to beat the competition. Click here to read the Forbes top story “The Index Insurgents.”
Yale University recently announced a 23 percent return on its investments, swelling its endowment to a whopping $18 billion. The man behind that investment success is David Swensen. He’s made an average 16 percent annual return over 21 years — better than any portfolio manager at any other university.
Mr. Swensen has become passionate about trying to teach individual investors how best to save for retirement. When Mr. Swensen set out to write a book (Unconventional Success) explaining how the average investor could replicate his success at Yale, the research showed him that the odds of beating the market in an actively managed fund are less than one in 100.
We invite you to listen to or read this recent interview to learn more about Mr. Swensen’s experience and his advice. Many of the lessons should sound familiar. Click here for the article and audio.
We were recently discussing the cable television show “Mad Money” because it takes a lively and entertaining perspective on the typical format of a show that dispenses financial advice/information. However, as with all such hot news, by the time the information has been disseminated, it is already incorporated into stock pricing within our highly efficient markets, and thus no longer useful information on which to base decisions about trading. Instead, we would suggest that, rather than following recommendations that may or may not match an individual’s ability, need and willingness to take risk, prudent investors continue to adhere to their well-developed plan based on their long-term financial objectives.