Archive for Videos

Dimensional Stories: The 200th Draft

Dimensional Fund Advisors, Financial Planning, Videoson May 21st, 2015No Comments

Written By: Lauren Mireles, FPQPTM

As Dimensional Fund Advisors embarks on its 25th year of working with financial advisors, they shared with us a series of Dimensional Stories, two minute videos featuring Nobel Laureate Eugene Fama and/or David Booth speaking on the themes and insights that influence Dimensional’s way of investing. We introduced the first video of this series Dimensional Stories: Empirical Work last month, which featured Professor Fama describing the intellectual satisfaction of conducting empirical research and how ground-breaking concepts usually do not begin as “big ideas”.

Today, we share the second video of the five-part series, Dimensional Stories: The 200th Draft. We found this video to be particularly resonant because the collaborative approach described by Eugene Fama in regard to his work with Professor Kenneth French mimics, in many ways, the close working relationship of the Yeske Buie team. In the video, Dr. Fama notes that he tells Professor French (and his students), “Don’t give me something until it’s as good as you think it can be, and then I will try to improve it—that’s the way we work together.” At Yeske Buie, our team strives to deliver excellence to each other, to our Clients, to the profession and to our community and thus may produce 10, 50, or 200 drafts in order to ensure we are providing the best service possible. The fact that this collaboration style is a shared value of Dimensional and Yeske Buie strengthens our belief that DFA is an important strategic partner and adds enormously to our Clients’ investment success.

Dimensional Stories: Empirical Work

Dimensional Fund Advisors, Economy and Investing, Videoson April 23rd, 2015No Comments

Idea concept words in tag cloudWritten By: Lauren Mireles, FPQPTM

DFA founder David Booth likes to say, “it’s about ideas,” and we certainly don’t know of another fund company that has been more about ideas than Dimensional Fund Advisors. And not just any ideas, but the best thinking coming out of academic research in the science of economics.  As a consequence of that focus, the company has, from the beginning, filled its board of directors and advisory committees with top thinkers in the field.  We don’t know of another fund company that has recruited so many Nobel Laureates, including such luminaries as Eugene Fama, Myron Scholes, Merton Miller, and Robert Merton.

As Dimensional embarks on its 25th year of working with financial advisors, they shared with us a series of Dimensional Stories, two minute videos featuring Nobel Laureate Eugene Fama and/or David Booth speaking on the themes and insights that influence Dimensional’s way of investing. Over the next few months, we will be sharing these Dimensional Stories videos as we feel they give insights into the thinking of an important strategic partner, one which adds enormously to our clients’ investment success.

The first of this series, Empirical Work, features Professor Fama describing the intellectual satisfaction of conducting empirical research and how ground-breaking concepts usually do not begin as “big ideas”. He says:

“The way it works is, you start with a little idea, and it just keeps growing. If you’re pretty good at it, you just keep expanding it around the edges, and it evolves into a—maybe a big idea eventually.”

 

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Fiduciary Focus: Putting Clients First

Economy and Investing, Financial Planning, Videos, Yeske Buie in the Mediaon March 10th, 20152 Comments

Capitol DomePresident Obama has instructed the Department of Labor, which oversees company-sponsored retirement plans, to develop a new set of rules requiring those who advise plan participants to act as fiduciaries. Anyone acting as a fiduciary is required to put clients’ interests first.  The brokerage world normally operates under a different standard known as “suitability,” which merely requires advice to be broadly suitable to clients based on their overall circumstances, but not necessarily be in their best interest.  As President Obama later put it while speaking at an AARP sponsored event, “It’s a very simple principle: You want to give financial advice, you’ve got to put your client’s interests first. You can’t have a conflict of interest.”

This change has been a long time in coming and is anything but certain.  The financial services industry continues to spend heavily lobbying against a mandatory fiduciary standard and they have allies in Congress.  The most common rationale offered by opponents of the proposed rules is that requiring those who advise retirement plan participants to adopt a fiduciary standard will drive up costs and make it harder for participants to get advice.  This is, of course, absurd on its face.  When forced to act as fiduciaries, plan advisors would no longer be able to steer participants to investments with high hidden fees and expenses without disclosing them, as well as disclosing the availability of lower-cost alternatives.  It wouldn’t drive up costs, it would instead drive down the profits brokers have been earning from all those hidden fees and commissions.  There would still be plenty of advisors willing to work with retirement plan participants under the new rules, there would just be less raping and pillaging going on as part of the process.

This issue has been near and dear to us for many years. Elissa invoked the need for financial planners to adopt a fiduciary standard during her presidential speech to members of the Institute of Certified Financial Planners (ICFP) — a predecessor of the Financial Planning Association — at the group’s annual gathering in 1999.  Afterward, finance journalist Bob Clark jokingly shared his surprise and pleasure that Elissa had focused on the fiduciary standard, telling her, “I can’t believe you used the F-word!”  Four years later, when Dave was president of the Financial Planning Association (FPA) in 2003 he made it the centerpiece of his speech to 3,000 association members in Philadelphia.  W. Scott Simon subsequently quoted from Dave’s speech in his Fiduciary Focus column on the Morningstar Advisor website:

No one describes the vital importance of the work we do in the investment advisory profession and the solemn obligations we owe to our clients better than David Yeske, the 2003 president of the Financial Planning Association:

  • Financial planning has the power to transform people’s lives. 
  • We are dealing, after all, with some of the most potent forces in people’s lives.
  • [These] forces will determine whether a couple will be able educate their children, care for aging parents, retire in comfort, travel, and do all else that might mark lives well lived. 
  • We must also come to terms with the corresponding obligations. For the privilege of exercising our power over the money forces in people’s lives carries with it great responsibility.
  • Accepting this responsibility means accepting liability.
  • Many have gone so far as to say that financial planners must step up to the plate and accept the role of fiduciary. I certainly like the concept as I understand it: putting your clients’ interest above your own and being ever mindful of the responsibility engendered by their trust. 
  • I would like to set a higher challenge: to think and act like a fiduciary at all times, whether or not the law says you are. 
  • We must distinguish ourselves by conducting ourselves always as if we were fiduciaries.

Reporting on the same speech and a subsequent interview, Investment News noted more of Dave’s rationale for calling on all financial planners to act like fiduciaries, whatever the law might require:

David Yeske, president of the Financial Planning Association, urged attendees at the Denver- and Atlanta-based group’s annual FPA conference last week in Philadelphia to “think and act like a fiduciary at all times, whether or not the law says you are.”

The broad challenge laid out by Mr. Yeske was controversial because it was directed to everyone who holds themselves out as financial planners.

“People argue about fiduciary [status], whether or not you should be a fiduciary, whether or not you’re required to be a fiduciary at all times in dealing with your clients,” Mr. Yeske tells InvestmentNews.

“I wanted to cut through all that and say, `We should not even care about the legal status. We should not even be nitpicking the legal technicalities. We should just accept the fact that we need to put our clients’ interests first at all times.”‘

In response to the concern about added risks, Mr. Yeske says: “We work with powerful forces in people lives, and liability is going to go along with that. Live with it.”

During Dave’s years on the FPA board, the association also battled the SEC over the so-called “Merrill Lynch Rule,” under which broker-dealers were allowed to offer fee-based accounts without adopting a fiduciary standard, something clearly required by the Investment Advisor Act of 1940.  By not requiring broker-dealers to adopt a fiduciary standard, the SEC left them free to engage in undisclosed self-dealing that was not in their customer’s best interests. FPA ultimately sued the SEC and won.  On the eve of the SEC’s deadline to appeal that decision, Dave appeared on CNBC’s Closing Bell with Maria Bartiromo to discuss the matter.

In the end, the SEC decided not to appeal the DC Court’s ruling and the Merrill Lynch Rule ceased to exist.  As did Merrill Lynch itself in January of 2009 when it was taken over by Bank of America after suffering $52 billion of losses as a consequence of the sub-prime meltdown that Merrill had done so much to create.  Transparency and disclosure were the only thing that might have prevented the Great Recession and all the regulatory and legislative forces during the preceding decade had been moving in the opposite direction.

Let’s hope that the big money being thrown around in Washington right now doesn’t sway Congress to oppose this latest blow for transparency and consumer protection.  And, believing that you sometimes have to fight fire with fire, Dave is again serving on the board of FPA’s Political Action Committee (PAC) and he urges any financial planning colleagues who are reading this and who are members of FPA (only members can contribute) to consider making a PAC contribution.  And if you’re not an FPA member but believe in its mission and the importance of having real financial planners represented in Washington, please consider joining!  The PAC is a critical piece of our advocacy efforts, helping us to gain access to key legislators and tell our version of the financial planning and consumer protection story.

 

Dimensional Origins

Dimensional Fund Advisors, Economy and Investing, Videoson October 9th, 2014No Comments

DFA founder David Booth likes to say, “it’s about ideas,” and we certainly don’t know of another fund company that has been more about ideas than Dimensional Fund Advisors. And not just any ideas, but the best thinking coming out of academic research in the science of economics.  As a consequence of that focus, the company has, from the beginning, filled its board of directors and advisory committees with top thinkers in the field.  We don’t know of another fund company that has recruited so many Nobel Laureates, including such luminaries as Gene Fama, Myron Scholes, Merton Miller, and Robert Merton.  In anticipation of the Royal Swedish Academy of Science’s announcement this coming Monday of the next Nobel Laureate in Economics, we thought we’d share a brief video devoted to the origins of this most idea-driven company.


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Eugene Fama – Building a Life

Dimensional Fund Advisors, Economy and Investing, Videoson August 14th, 2014No Comments

Few economists have had a greater influence on how we think about the markets and how we structure client portfolios than Gene Fama.  We’ve written about Fama and his work before, first to congratulate him on receiving the Nobel Prize in Economics in November of last year, and later to acknowledge the deep influence he’s had on the founders of Dimensional Fund Advisors and the subsequent development of that firm’s investment offerings.  While in graduate school in the early 1990s, Dave became an early fan of the work of Fama and his collaborator Ken French as they developed the “Three-Factor Model,” finding the insights compelling and incorporating them into client portfolios from the start.  This, even before discovering Dimensional Fund Advisors and their Fama-inspired fund portfolios. We bring this up now because we’ve come across a brief, seven minute video in which Gene Fama discusses his life, how he came to be an economist, and some of the sources of his greatest insights.  Along the way, he shares anecdotes from his personal life, growing up, going to school (he was originally planning to earn a PhD in French literature), meeting his wife (who also appears in the film), his mentors, and mentees (including David Booth, cofounder of DFA).  We hope you enjoy this brief video and believe you’ll decide it’s well worth seven minutes of your time. video platformvideo managementvideo solutionsvideo player

Video: The Wisdom of Crowds

Economy and Investing, Fun Stuff, Videos, Webinarson January 29th, 20142 Comments

We conducted an experiment testing the “wisdom of crowds”, the proposition that, in many situations, the collective wisdom of a group will surpass that of even its smartest individual members.

Video: How to Build an All-Weather Portfolio

Economy and Investing, Videos, Webinarson December 19th, 2013No Comments

Stormy SeaWhen it comes to investing your hard earned money for the long-run, the world can sometimes seem like a scary place. And not just because of the occasional category five storm that blows our way, like the dot-com meltdown of 2000-2002 or the bursting of the real estate bubble in 2008. It’s also all the squalls that can sweep through the markets, triggered by things like the Euro-zone debt crisis, government shutdown, or debt-limit standoff, that likewise threaten feel like they might capsize our portfolios. The one thing we know with a certainty is that the timing, magnitude, or impact of world events can never be predicted with the kind of precision required if we’re to nimbly trade in or out of the markets to avoid danger or capture gains. At the end of the day . . .

It’s better to be resilient than nimble.

This 13 minute video is a brief description of how we build a resilient, all-weather portfolio that can carry you through whatever storms may come our way.

Yeske Buie Celebrates Eugene Fama’s Nobel Prize in Economics

Economy and Investing, Videoson November 8th, 2013No Comments

Nobel_PrizeWe’ve spent the past two decades discussing with our clients the insights we’ve gained from studying the work of Eugene Fama, University of Chicago professor and one of the fathers of Modern Portfolio Theory. Over that time, we frequently found ourselves referring to him as a “future Nobel Laureate.” We’re tremendously pleased that we can now excise that word “future” from any and all citations going forward. On October 14, the Royal Swedish Academy of Sciences announced that it had awarded the Prize in Economic Sciences to Fama, along with Lars Peter Hansen, and Robert J. Shiller “for their empirical analysis of asset prices.”

Gene Fama was one of the developers of the notion of “efficient markets” – he was actually the one who first coined that phrase – which is simply the idea that markets rapidly incorporate new information into the prices of securities. The biggest implication of this is that stock prices are at all times reflective of everything that can be known about a company and will change only as new information emerges, rendering the research efforts of individual analysts redundant.  Put another way, one cannot consistently “beat the market” through individual stock picking.

Working with collaborator Ken French of Dartmouth University, Fama also developed the “three-factor” model for explaining the cross section of stock market returns in 1992. We studied this work with great interest when it was first published and it immediately influenced how we assembled client portfolios.  The three-factor model explains stock returns in terms of the stock market’s general propensity to produce higher returns than risk-free investments like Treasury Bills plus two additional “factors”: size and value.  The evidence with respect to these “size” and “value” factors suggests that small company stocks produce higher returns than large company stocks and that stocks trading at low prices relative to their assets produce higher returns than high-priced “growth” stocks.  Fama and French were not the only researches to have identified these factors but their model pulled it all together in a particularly compelling way.  This is one of the reasons that our portfolios have such large allocations to small company and value stocks.

Professor Fama has also been deeply involved with Dimensional Fund Advisors (DFA), with whom we have a long-standing relationship and which contributes a significant number of funds to our client portfolios.  DFA co-founder David Booth was a doctoral student under Gene Fama and Fama has served on the company’s board since its founding in 1981.  Most of DFA’s portfolios are in one way or another based on or influenced by the research of Professor Fama.

Here’s a short video of Professor Fama discussing his life in finance.

Webinar: Economic Vomitility and Financial Planning Dramamine

Videos, Webinarson September 23rd, 2011No Comments

If wild market gyrations have been leaving you feeling a little queasy, this presentaton is for you. In this webinar, we explore the underlying causes of the recent increase in financial market volatility (or vomitility, as a friend of ours recently named it) and what it may be telling us about the wider economy. We also review the ways in which financial planning, like Dramamine, can provide relief from the worst of the market-induced motion sickness.

This is a Windows Media file and should play when you click on the link below.

2011-09-21 15.03 Economic Vomitility and Financial Planning as Dramamine

And here’s an Adobe Acrobat version of the slides:

2011-09-21_Economic_Vomitility

Groundhog Day: webinar now available for viewing

Economy and Investing, TheLiveBigWay® Digest, Videos, Webinarson November 22nd, 2010No Comments

“History may not repeat, but it sure does rhyme.” Mark Twain

Our latest webinar was a review of some of the enduring characteristics of the economy and the markets and how, even amidst the seeming chaos, it’s still possible to craft investment strategies that can carry us to our goals.

Click here to stream the full audio/video presentation.

Here are the slides only (Acrobat format).


“Our deepest fear is not that we are inadequate. Our deepest fear is that we are powerful beyond measure. It is our light, not our darkness that most frightens us. We ask ourselves, Who am I to be brilliant, gorgeous, talented, fabulous? Actually, who are you not to be? Your playing small does not serve the world. There is nothing enlightened about shrinking so that others won't feel insecure around you. We are all meant to shine. And as we let our own light shine, we unconsciously give others permission to do the same. As we are liberated from our own fear, our presence automatically liberates others.” ~Marianne Williamson