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13 May, 2015

Gravel Road Investing

A good analogy can be used to help understand difficult concepts.  Everyone seems to love a good car analogy, and there are few better car analogies than this one, presented by Dimensional fund Adviser's Vice President, Jim Parker.  Here Jim illustrates how having a good all round vehicle may be less exciting than driving the perfect vehicle for the terrain, but how less exciting can be far more financially rewarding.  We believe that keeping investment dull is at the heart of good investment management - eliminating the cost and effort of trying to 'win' also eliminates the risks of 'losing'.  Of course funds and markets go down as well as up, but over the long term the science of efficient investment is more likely to deliver an acceptable result than taking an aggressive stance and trying to 'outhink' the market.

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by John Stirling


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