The Bloomberg podcast Odd Lots recently featured Dimensional Co-CEO and CIO Gerard O’Reilly as a guest. Hosts Joe Weisenthal and Tracy Alloway joined him at Dimensional’s Austin headquarters to discuss his views on market efficiency and where he sees the fund management industry going.

We especially like the segment from around minute 3:40 to minute 20. Enjoy!

Listen to the full episode here.

There are roughly 200,000 advisors in the US. How does an investor choose one?

David Booth, the founder of Dimensional Fund Advisors, says, “trust the advisor who trusts the market.”

See his memo here.

This year, I’m grateful for Diversification. Diversification is the only free lunch in investing. Let me repeat that. Diversification is the only free lunch in investing. As an investor, it allows you to dramatically reduce the range of possible outcomes in your investment portfolio, thereby making it easier to reach your financial goals. The range of performance of individual US companies this year was extremely wide and volatile. Think of it as a roller coaster with huge and frequent ups and downs. By diversifying, you were able to avoid some possible very negative outcomes. The video below provides a nice visual of the performance of the S&P500 year-to-date and gives an example of how increasing diversification, in this case by adding in small-cap companies, can help smooth the ride.

Video created by Jan Varsava.