Thursday, April 12, 2007
I read an interesting article in the current Bloomberg at the airport about Dimensional Fund Advisers, aka DFA. The basics, I think, of DFA is that the foundation is built on Fama and French.
The way the article reads, all the DFA believers think stock picking is a scam and that no one can predict what the stock market will do.
I met with a DFA guy a while back and he seemed to take pride in the notion that he would not take any defensive action ever.
The article was a weird read WRT to the various rules that DFA imposes on the advisers that use their funds.
I don't know a lot about DFA. It seems like their funds are structured to simply be the market yet any of their funds I have ever looked trounce their benchmark--if its even right to compare their small cap fund against the Russell 2000 and so on.
Their approach is not something I am ever going to buy into but it will appeal to a lot of folks. If you feel like you don't fully buy into what you are doing now, DFA may be something that works.
To be crystal clear this is not what I do nor will I but for some folks... Also important to remember that DFA, like every other strategy out there, will have strengths and weaknesses.
The picture is looking out the front door of where we are staying.