Lifelong Learning

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One of the things I love about my work is the wide range of opportunities I have for continuing education.  This is one of two auditoriums at Dimensional Fund Advisors’ headquarters in Austin, Texas where I recently attended Dimensional’s Annual Investment Symposium for Financial Advisors.  Dimensional is an Institutional mutual fund company which means they only work with institutional investors like large pension funds, corporations and insurance companies that are investing for the very long term – 30 to 40 years or longer.  Dimensional Fund Advisors was started in 1981.  In the early 90’s, Dimensional began allowing a small group of financial advisors to use their funds for clients.  These advisors had to undergo rigorous training about Dimensional’s science of investing and long-term (institutional) approach.  This approach has evolved over the years but the science (academic research) remains at the core of everything Dimensional does.  Today, this group of advisors numbers about 1,900 worldwide and the training (continuing education & lifelong learning) is even more rigorous.

At last week’s two-day training in Austin, we were fortunate to have several contributors to the science of investing behind Dimensional.  Myron Scholes, a Nobel Laureate (1997) for his work with Fischer Black on a 1973 paper entitled, “The Pricing of Options and Corporate Liabilities” in which they presented the “Black-Scholes Model.”  Another Nobel Laureate, Robert Merton was the first to publish a paper about option pricing and coined the term Black-Scholes Model.  Scholes and Merton received Nobel Prizes in 1997 for their work.  Fisher Black passed away before then and so was not able to be awarded the Nobel Prize.  Both Myron Scholes and Robert Merton are advisors to Dimensional.

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Seated on the left in this picture you can see David Booth, who started Dimensional Fund Advisors in 1981 with his partner, Rex Sinquefield (now retired).  David is interviewing Gene Fama (middle) and Ken French (on the right) who developed the “Three Factor Model” which discussed the returns of different kinds of stocks.  I wrote about this in my blog, Diversification.  Gene Fama won the Nobel Prize last year.  To say that Dimensional focuses on the Science of Investing is an understatement.  A tremendous amount of thought goes into any decision Dimensional makes about its mutual fund line-up.  We have worked with Dimensional since the inception of our Wealth Management business in 1999.  My partners and I have had 15 years of continuing education – much of which has been centered on Dimensional.  I was inspired by the entire conference but it was sitting there learning from some of the top financial minds in the world that the notion of life-long learning hit me.  Gene Fama and Ken French started their work 40 years ago.  They did their calculations by hand in the beginning.  Ken French talked about the data they have now – decades later – from which they continue to learn and grow.  I look forward to many more years of life-long learning about Investing, Planning and Wealth Management so I can apply that knowledge to the work I do for my clients.

 

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