Articles From Dimensional Fund Advisors (24)

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  • Dimensional Fund Advisors

    Singled Out: Historical Performance of Individual Stocks

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    by Dimensional Fund Advisors — Wednesday, May 18, 2022

    Many investors end up holding large concentrated positions in single stocks, whether as the result of employee compensation or a handsomely rewarded stock selection. Familiarity with these stocks or a successful track record while holding them may discourage investors from ...Read More

  • Dimensional Fund Advisors

    Navigating Geopolitical Events

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    by Dimensional Fund Advisors — Friday, February 25, 2022

    Russia's invasion of Ukraine is an important reminder that geopolitical risk is a part of investing in global markets. Dimensional's systematic active approach is designed to adjust to new information in real time, including information about geopolitical events and their ...Read More

  • Dimensional Fund Advisors

    Will Inflation Hurt Stock Returns? Not Necessarily.

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    by Dimensional Fund Advisors — Wednesday, February 2, 2022

    Investors may wonder whether stock returns will suffer if inflation keeps rising. Here’s some good news: Inflation isn’t necessarily bad news for stocks.A look at equity performance in the past three decades does not show any reliable connection between periods of ...Read More

  • Dimensional Fund Advisors

    Myth-Busting with Momentum: How to Pursue the Premium

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    by Dimensional Fund Advisors — Wednesday, November 10, 2021

    Nearly 30 years after its formal discovery, the appeal of stock price momentum remains in the eye of the beholder. Some see its outsize historical premium, 9.1% per year in the US, as validation for investing in momentum-focused ...Read More

  • Dimensional Fund Advisors

    CAPE Fear: Should Investors Be Concerned With Market Valuations?

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    by Dimensional Fund Advisors — Monday, November 8, 2021

    Investors often look for signals indicating whether it’s a good time to get into or out of the market. Market valuation measures, such as the cyclically adjusted price-to-earnings (CAPE) ratio1 of Campbell and Shiller (1998), are frequently portrayed as indicators to ...Read More

  • Dimensional Fund Advisors

    When It's Value vs. Growth, History Is on Value's Side

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    by Dimensional Fund Advisors — Updated: Tuesday, October 5, 2021

    There is pervasive historical evidence of value stocks outperforming growth stocks. Data covering nearly a century in the US, and nearly five decades of market data outside the US, support the notion that value stocks—those with lower relative prices—have higher ...Read More

  • Dimensional Fund Advisors

    Will Inflation Hurt Stock Returns? Not Necessarily.

    1,773
    by Dimensional Fund Advisors — Updated: Wednesday, September 22, 2021

    Investors may wonder whether stock returns will suffer if inflation keeps rising. Here’s some good news: Inflation isn’t necessarily bad news for stocks.A look at equity performance in the past three decades does not show any reliable connection between periods of ...Read More

  • Dimensional Fund Advisors

    Out of Bounds: Style Drift in the Russell 2000 Value Index

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    by Dimensional Fund Advisors — Tuesday, June 29, 2021

    AMC and GameStop are priced squarely in the large cap growth space, and yet represented nearly 1.5% of the Russell 2000 Value Index as of May 31. On the scale of size discrepancies, this is akin to 7-foot-6-inch former NBA star Yao Ming visiting a kindergarten class. However, ...Read More

  • jackson

    Inflation: An Exchange Between Eugene Fama and David Booth

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    by Dimensional Fund Advisors — Thursday, June 10, 2021

    With the economy starting to recover from the COVID-19 pandemic and investor concerns turning increasingly toward inflation, Dimensional Founder David Booth talked with Nobel laureate Eugene Fama about inflation and how investors should think about it in their portfolios. ...Read More

  • jackson

    To Bit or Not to Bit: What Should Investors Make of Bitcoin Mania?

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    by Dimensional Fund Advisors — Tuesday, March 23, 2021

    Bitcoin and other cryptocurrencies are receiving intense media coverage, prompting many investors to wonder whether these new types of electronic money deserve a place in their portfolios. Cryptocurrencies such as bitcoin emerged only in the past decade. Unlike traditional ...Read More

  • DFA

    Tales from the Crypto: How to Think About Bitcoin

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    by Dimensional Fund Advisors — Wednesday, March 17, 2021

    Bitcoin and related cryptocurrencies (now numbering in the thousands) are the subject of much debate and fascination. Given bitcoin’s dramatic price changes, it is not surprising that many are speculating about its possible role in a ...Read More

  • Dimensional Fund Advisors

    The Performance of Late-Cycle Premiums

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    by Dimensional Fund Advisors — Thursday, February 25, 2021

    The media has been sharpening its focus on cycles lately, but not in anticipation of the Tour de France. Rather, the financial media’s spotlight is on business cycles. A common refrain from the industry is that the performance of certain groups of stocks is tied to the ...Read More

  • jackson

    FANMAG: Because FAANGs Are So Yesterday

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    by Dimensional Fund Advisors — Thursday, February 18, 2021

    A handful of large technology stocks have garnered attention for outsize returns in recent years. Collectively referred to by the FANMAG acronym, Facebook, Amazon, Netflix, Microsoft, Apple, and Google all substantially outperformed the US ...Read More

  • jackson

    Flexibility in Practice: How We Handled GameStop

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    by Dimensional Fund Advisors — Tuesday, February 16, 2021

    After peaking, GameStop’s subsequent fall in price put it in the low profitability growth space of the small cap market, which we exclude across our equity portfolios due to low expected returns. Our daily process allowed us to again respond quickly. By February 3, we had ...Read More

  • jackson

    Gauging Market Expectations?

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    by Dimensional Fund Advisors — Thursday, February 4, 2021

    A recent flurry of return spikes for a handful of US stocks has captivated investors and noninvestors alike. Wall Street news trending on social media even amid an NFL playoff season is indeed an unusual event.So, what should investors make of these dramatic price movements? A ...Read More

  • jackson

    Investing in FAANG Stocks: Should You Expect Unexpected Returns?

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    by Dimensional Fund Advisors — Thursday, January 28, 2021

    Investment returns have two parts: the expected return and the unexpected return. The expected return is the best guess of what will happen based on all the information currently available. The unexpected return is the surprise, the difference between what does happen and what ...Read More

  • jackson

    Market Review 2020: Looking Back on an Unprecedented Year

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    by Dimensional Fund Advisors — Monday, January 11, 2021

    The year 2020 proved to be one of the most tumultuous in modern history, marked by a number of developments that were historically unprecedented. But the year also demonstrated the resilience of people, institutions, and financial markets. The novel coronavirus was already in ...Read More

  • jackson

    The Right Thing, Not the Easy Thing

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    by Dimensional Fund Advisors — Wednesday, November 25, 2020

    New entrants into the field of systematic investing must look for ways to differentiate themselves. Impressive backtested performance is one way to stand out. But are these backtests robust? Are they likely to withstand the challenges of real-world implementation? Historical ...Read More

  • Dimensional Fund Advisors

    An Exceptional Value Premium

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    by Dimensional Fund Advisors — Friday, October 9, 2020

    It’s probably not news to most value investors that the value premium has struggled over the past decade. What might be news is just how extreme an outlier recent value stock underperformance represents. The periodic returns for value versus growth in Exhibit 1 convey a ...Read More

  • Dimensional Fund Advisors

    Large and In Charge? Giant Firms atop Market Is Nothing New.

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    by Dimensional Fund Advisors — Thursday, October 1, 2020

    A top-heavy stock market with the largest 10 stocks accounting for over 20% of market capitalization and a marquee technology firm perched at No. 1? This sounds like a description of the current US stock market, dominated by Apple and the other FAANG stocks,1 but it is actually ...Read More

  • Dimensional Fund Advisors

    Deja Vu All Over Again

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    by Dimensional Fund Advisors — Tuesday, February 12, 2019

    Investment fads come and go. Letting short-term trends influence your approach may be counterproductive to pursuing your financial ...Read More