The Long Term Investor The Science of Investing and Tuning Out the Noise With David Booth (EP.194)
Mar 5, 2025
David Booth, co-founder of Dimensional Fund Advisors, shares insights from his journey in transforming finance with evidence-based strategies. He discusses how academic research has challenged traditional stock-picking, emphasizing markets as efficient information processors. Booth highlights the importance of human ingenuity in driving long-term returns and how investors can distinguish valuable data from distractions. He also addresses common barriers to adopting scientific investing methods and offers advice to those starting their financial journeys.
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Honesty in Sales
- David Booth's experience selling shoes taught him the value of honesty.
- Prioritizing customer needs led to repeat business and personal satisfaction.
Shift to Science
- Investing shifted from storytelling to a science, driven by academic research at the University of Chicago.
- This challenged the idea that insider knowledge is essential for investment success.
Traditional vs. Academic Investing
- Traditional investing relied on market outguessing, lacking empirical evidence.
- Academic research revealed that insiders didn't outperform random selection, shocking many.