Don’t Get Creamed by Inflation Risk

The Impact of Inflation Over the long run, stock markets are expected to deliver returns well beyond the rate of inflation. That is, the $1 you invest in today’s stock markets should still provide $1 or more worth of purchasing power decades into the future. In exchange, you must tolerate volatility risk, which can cause your account balances to bounce around wildly, often uncomfortably, along the way. In contrast, “safe” Treasury bonds...

Let’s Tell a Story: Why Go Global When You Invest?

Doing Better With Global Diversification In two previous posts, here and here, we shared a pair of Dimensional Fund Advisor videos based on historical U.S. market returns data. If we really want to share this tale of evidence-based investing in living color, we’ve got to go global. While global returns data doesn’t go back as far – 1973 vs. 1926 for U.S. returns – it still has its own important story...

Let’s Tell a Story: Why Invest in Stocks and Bonds?

The Ups and Downs of Stocks and Bonds In our recent post, “What’s Up with Inflation?” we introduced a trio of videos Dimensional Fund Advisors has shared. They help bring its Matrix Book numbers to life for those who might not want to pore through pages and pages of data by themselves. Once you know what to make of all that data, it has quite a story to tell, especially when it...

Let’s Tell a Story: What’s Up with Inflation?

What’s Up with Inflation? Once upon a time (in 1982), Dimensional Fund Advisors began publishing its annual “Matrix Book,” now its longest-running publication. It's jam-packed pages of market returns data stretching back to 1926 may seem daunting at first. But, oh, the stories these numbers can tell … which they do in a trio of quick-take videos Dimensional released along with this year’s edition. Take, for example, the story of inflation. While...

Intro to “Tuning Out the Noise” Video

An Exercise in Confusion: “Tuning Out the Noise” First, take a moment to view this powerful video, just released by Dimensional Fund Advisors.  The new millennium’s biggest financial headlines Now, before you consider the substance, how did the onslaught make you feel? Nervous? Anxious? Annoyed? Confused? Maybe all of the above! This exercise captures exactly how most investors felt as the new millennium’s biggest financial headlines were playing out in real time. As...

Dimensional’s Quarterly Market Review (Q1 2018)

A Quarterly Tale of Risks and Returns in Real Time For the first time in a long time, U.S. and international developed stock markets alike bled off some steam this quarter. You’ll see that expressed by the bright red arrows in Dimensional Fund Advisors’ first quarter Quarterly Market Review Market Summary (page 3). While we fully expect markets will continue delivering positive long-term returns, who knows what the rest of the year...

Dimensional Fund Advisors: Sailing with the Tides

March 2018 Sailing with the Tides Embarking on a financial plan is like sailing around the world. The voyage won’t always go to plan, and there’ll be rough seas. But the odds of reaching your destination increase greatly if you are prepared, flexible, patient, and well-advised. Here is this week’s article from Dimensional's Jim Parker: Sailing with the Tides. SAGE Serendipity: You want to watch TV but deciding what to watch is taking more time...

Dimensional Fund Advisors: Recent Market Volatility

Recent Market Volatility February 2018 "While it may be difficult to remain calm during a substantial market decline, it is important to remember that volatility is a normal part of investing" After a period of relative calm in the markets, in recent days the increase in volatility in the stock market has resulted in renewed anxiety for many investors. From February 1–5, the US market (as measured by the Russell 3000 Index) fell...

Dimensional Fund Advisors: New Year, New Market Highs

February 2018 New Year, New Market Highs Every day stocks have a positive expected return regardless of whether markets are at an all‑time high or not. Throughout 2017, the S&P 500 Index recorded 62 new closing highs in 251 days of trading. In the first three weeks of January 2018 alone, the index crossed 10 new record closing highs in 13 days of trading. With stock indices continuing to set new highs, does...

Dimensional Fund Advisors: Nine Experts, Four Surprises, and One Million Dollar Bet

January 2018 Nine Experts, Four Surprises, and One Million Dollar Bet In 2017, we were again reminded of the importance of following an investment approach based on discipline and diversification vs. prediction and timing. As we gear up for the new year, we can look at several examples during 2017 that provide perspective on what guidance investors may want to follow, or not follow, in order to achieve the long-term return the...