The Informed Investor

Episode 27: Do small capitalization stocks typically outperform in January? If so, can investors capitalize on that pattern? This trend is known as the January Effect. It's a popular idea because historical data show a sizable small cap premium versus large caps in January. Still, that's not a reason to avoid small cap stocks in other months, assuming you want to own them. Why not? Two reasons: (1) Nobody really knows why this "January Effect" exists—or whether it will continue, and (2) small caps, in general, have higher expected returns. Welcome to the wild world of odd stock market indicators, few of which seem to offer sensible investing signals. Another popular one is the Super Bowl Indicator: The winner of the Super Bowl supposedly determines how the stock market will perform that year. Silly idea, obviously, because this widely followed signal suggests that the market will deliver a positive return only in years when the NFC champion wins. There isn't any academic or logical explanation for this indicator. But since the correlation between the Super Bowl winner/loser and market returns appeared to be perfectly accurate when the indicator was first identified in the late 1970s, people started believing it. They probably should stop believing. In the 21st century, the indicator's success rate is 38%. Technical analysts also look for signals in data like moving averages, often referencing something called a "Golden Cross" or a "Death Cross" in a stock index. The former is when the 50-day moving average crosses above the 200-day moving average; the latter is the opposite. (A moving average is a constantly updated average price or level.) The S&P 500 experienced both a golden cross and a death cross in 2025. Which signal, if any, was right? The same question applies to all of these strange indicators … and others like men's underwear purchases, hemline lengths, and even sunspots.  In Episode 27 of The Informed Investor, Dimensional's Mark Gochnour, Head of Global Client Services, Wes Crill, PhD, Senior Client Solutions Director, and Jake DeKinder, Head of Client Communications, scrutinize the data and try to determine whether investors can benefit from any of these so-called signals. LINKS FROM TODAY'S EPISODE: The Informed Investor: Feedback Survey https://www.dimensional.com/us-en/informed-investor-survey The Informed Investor, Episode 3 "Debts, Deficits, and Investing" https://youtu.be/AK66PrRFBTU?si=W5gJ-thCErETX7kV The Informed Investor on YouTube https://www.youtube.com/playlist?list=PLCyJr6FFig-h1mA7rVP7Mbk0irFw2wA90 Dimensional Fund Advisors Shorts on YouTube https://www.youtube.com/@dimensionalfundadvisors/shorts Mark Gochnour on LinkedIn https://www.linkedin.com/in/mark-gochnour-9a23598a/ Wes Crill on LinkedIn https://www.linkedin.com/in/wes-crill-77a49417/ Jake DeKinder on LinkedIn https://www.linkedin.com/in/jake-dekinder-cfa-4105b98/ Learn more at https://www.dimensional.com/  

Episode 26: Can anyone accurately predict when the stock market will hit a rough patch? Not likely. Although the market's long-term annualized return sits just above 10% and good years are more common than bad years, unexpected outcomes are not unusual. Which means holding a portfolio suitable for all market environments probably makes sense for most investors—as does conducting an investing "fire drill" to determine whether your portfolio is prepared for the unexpected. The 2000–2009 period, often termed the "lost decade," offers a helpful reminder. The annualized return for the S&P 500 was –0.9%. But in 2000 did anyone expect they would lose money over the next 10 years, especially after the index gained an annualized +18.2% in the previous 10 years? Again, not likely. Non-US stocks see similarly unexpected outcomes. During that lost decade in the US, the MSCI All-Country World ex USA index, a widely followed international stock index, gained an annualized +2.7%. Then there's Japan, where the stock market peaked in 1989 and proceeded to go nowhere for the next 28+ years. More recent evidence confirms that investors should expect the unexpected. In 2021, 2023, and 2024, the S&P 500 Index  gained more than +25% each year. Through late December of 2025, its year-to-date return was north of +18%. But in 2022 the index lost –18.1%. Note that none of those returns is close to the long-term average. The fact is that stocks often deliver surprising results. Bonds do too. Another example: From 2000 to 2020, the annualized return for the S&P 500 was +6.6%, far below its long-term average. Meanwhile,  the Bloomberg U.S. Government Bond Index Long gained +7.8%, higher than its long-term average. In Episode 26 of The Informed Investor, Dimensional's Mark Gochnour, Head of Global Client Services, Wes Crill, PhD, Senior Client Solutions Director, and Jake DeKinder, Head of Client Communications, examine the high volume of surprises that come with investing and explain why investors should set their expectations accordingly.   LINKS FROM TODAY'S EPISODE: The Informed Investor: Feedback Survey https://www.dimensional.com/us-en/informed-investor-survey "The Informed Investor" on YouTube https://www.youtube.com/playlist?list=PLCyJr6FFig-h1mA7rVP7Mbk0irFw2wA90 Dimensional Fund Advisors Shorts on YouTube https://www.youtube.com/@dimensionalfundadvisors/shorts Mark Gochnour on LinkedIn https://www.linkedin.com/in/mark-gochnour-9a23598a/ Wes Crill on LinkedIn https://www.linkedin.com/in/wes-crill-77a49417/ Jake DeKinder on LinkedIn https://www.linkedin.com/in/jake-dekinder-cfa-4105b98/ Learn more at https://www.dimensional.com/ Sources: S&P data © 2025 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved; MSCI data © MSCI 2025, all rights reserved; Bloomberg data from Bloomberg. Past performance is not a guarantee of future results. Indices are not available for direct investment; therefore, their performance does not reflect the expenses associated with the management of an actual portfolio.

Episode 25: At the end of every calendar year, stock market pundits publish predictions for the coming 12 months. Should you pay attention to these forecasts? A look back at predictions for 2025 may help you decide. Some market pros argued that international stocks would struggle due to tensions around global trade and tariff policies. But that's not what happened. From January through the end of November, non-US stocks were performing far better than US stocks based on index returns. Similarly, many countries pegged as potential victims in a trade war—like Canada and Mexico—were outgaining the US market through the end of November. What about specific predictions for the US market—did they prove prescient in 2025? Not exactly. Ditto for the four years leading up to 2025. Many predictions weren't close, as realized gains mostly ran far ahead of the forecasts. At least one category did see accurate predictions: gold. Soothsayers in late 2024 went all in on a gold rally—and the coveted metal soared past $4,000 through November after starting the year just above $2,600. But similar predictions for a bitcoin boom didn't work out; the widely followed cryptocurrency was hit with big losses late in the year. In Episode 25 of the "The Informed Investor" podcast, Dimensional's Mark Gochnour, Head of Global Client Services, Wes Crill, PhD, Senior Client Solutions Director, and Jake DeKinder, Head of Client Communications, conduct an investment autopsy on 2025 predictions and offer some insights on why accurate forecasts were hard to come by. LINKS FROM TODAY'S EPISODE: "The Informed Investor" on YouTube https://www.youtube.com/playlist?list=PLCyJr6FFig-h1mA7rVP7Mbk0irFw2wA90 Dimensional Fund Advisors Shorts on YouTube https://www.youtube.com/@dimensionalfundadvisors/shorts Mark Gochnour on LinkedIn https://www.linkedin.com/in/mark-gochnour-9a23598a/ Wes Crill on LinkedIn https://www.linkedin.com/in/wes-crill-77a49417/ Jake DeKinder on LinkedIn https://www.linkedin.com/in/jake-dekinder-cfa-4105b98/ Learn more at https://www.dimensional.com/

Episode 24: Why do the majority of ETF and mutual fund managers fail to outperform their benchmarks? The reasons are numerous but not always clear. As a result, many investors might believe they own winning funds that will continue to beat their benchmarks or the market at large. But they might be wrong, on both counts. Other investors might be painfully aware that their funds are underperforming but unsure what to do about it. Every year Dimensional analyzes returns (https://www.dimensional.com/us-en/insights/the-fund-landscape) from a large sample of US-domiciled exchange-traded funds and mutual funds. Our objective is to assess the performance of fund managers relative to benchmarks. Based on data through 2024, the evidence shows that a majority of fund managers in the sample failed to deliver benchmark-beating returns after costs. Published costs include fund expense ratios, and the data show that funds with lower expense ratios tend to perform better than those with higher expense ratios. The same is true for funds with lower vs. higher turnover, a measure of how often holdings are bought and sold. But this data doesn't mean investors should just own the funds with the lowest expense ratios and lowest turnover. This approach might steer you toward index funds, which attempt to track the performance of their underlying indices in a rigid way. But one consequence is that such funds aren't necessarily focused on stocks with higher expected returns. On the other end of the spectrum, some investors might think that paying up for a supersmart fund manager will ensure outsize returns. But the data don't support that approach either; fund managers who outperform over periods of five years tend to underperform in the next five years. In Episode 24 of the "The Informed Investor" podcast, Dimensional's Mark Gochnour, Head of Global Client Services, Wes Crill, PhD, Senior Client Solutions Director, and Jake DeKinder, Head of Client Communications, analyze the complexities of the fund landscape to help investors assess their fund managers and determine whether their funds are getting the job done right. LINKS FROM TODAY'S EPISODE: The Fund Landscape https://www.dimensional.com/us-en/insights/the-fund-landscape "The Informed Investor" on YouTube https://www.youtube.com/playlist?list=PLCyJr6FFig-h1mA7rVP7Mbk0irFw2wA90 Dimensional Fund Advisors Shorts on YouTube https://www.youtube.com/@dimensionalfundadvisors/shorts Mark Gochnour on LinkedIn https://www.linkedin.com/in/mark-gochnour-9a23598a/ Wes Crill on LinkedIn https://www.linkedin.com/in/wes-crill-77a49417/ Jake DeKinder on LinkedIn https://www.linkedin.com/in/jake-dekinder-cfa-4105b98/ Learn more at https://www.dimensional.com/

Episode 23: Are there any connections between betting on sports and investing in stocks? Obviously, investing is not the same as placing a bet on your favorite team. For most people, after all, investing is usually a long-term endeavor. But you might be surprised to learn how the betting lines that drive wagering in sports are not unlike prices set by buyers and sellers in securities markets. Point spreads set by sportsbooks are largely based on all available information about the teams competing in upcoming games and the athletes who are expected to play. Similarly, research shows that stock prices in public markets are largely based on all available information about publicly traded companies as well as economic metrics and geopolitical trends. The outcome of any upcoming game is always in doubt because the game hasn't been played. Likewise, the future price of a stock is never known in advance. However, betting lines and market prices typically offer reasonable estimates of fair value. What does that mean, exactly? It means lines and prices are set at levels that will attract bettors and investors, respectively, regardless of their beliefs about the future. Then, when new information becomes available, those lines and prices frequently change so that bettors and investors will keep coming back. In this sense, markets are always working, whether it's a betting market or a securities market. In Episode 23 of the "The Informed Investor" podcast, Dimensional's Mark Gochnour, Head of Global Client Services, Wes Crill, PhD, Senior Client Solutions Director, and Jake DeKinder, Head of Client Communications, suit up and "show out" for a revealing discussion on sports betting and markets. LINKS FROM TODAY'S EPISODE: The "Grumpy Economist" on Growth, Tariffs, and the Fed WITH JOHN COCHRANE https://www.youtube.com/watch?v=KrOnqG0t-z4 "The Informed Investor" on YouTube https://www.youtube.com/playlist?list=PLCyJr6FFig-h1mA7rVP7Mbk0irFw2wA90 Dimensional Fund Advisors Shorts on YouTube https://www.youtube.com/@dimensionalfundadvisors/shorts Mark Gochnour on LinkedIn https://www.linkedin.com/in/mark-gochnour-9a23598a/ Wes Crill on LinkedIn https://www.linkedin.com/in/wes-crill-77a49417/ Jake DeKinder on LinkedIn https://www.linkedin.com/in/jake-dekinder-cfa-4105b98/ Learn more at https://www.dimensional.com/

Episode 22: Regardless of which way the market is moving, do you feel thankful as an investor? That's easy when the market is rising, but it may be challenging if stock prices are falling. Worrying about your portfolio can be unnerving. At Dimensional, we hope everyone can have a rewarding investment experience. But our view is that great returns aren't the only thing worth celebrating. We're thankful for the power of markets, for example. In 2025, most i­­nvestors can easily build a globally diversified, low-cost, transparent portfolio and then potentially benefit from what the capital markets deliver. They can also obtain reliable, fairly priced financial advice from investment professionals all around the country. And they can count on numerous investor protections built into the system at all levels. In Episode 22 of the "The Informed Investor" podcast, Dimensional's Mark Gochnour, Head of Global Client Services, and Jake DeKinder, Head of Client Communications, offer nine reasons why all investors can be thankful during the holiday season. LINKS FROM TODAY'S EPISODE: "The Informed Investor" on YouTube https://www.youtube.com/playlist?list=PLCyJr6FFig-h1mA7rVP7Mbk0irFw2wA90 Dimensional Fund Advisors Shorts on YouTube https://www.youtube.com/@dimensionalfundadvisors/shorts Mark Gochnour on LinkedIn https://www.linkedin.com/in/mark-gochnour-9a23598a/ Jake DeKinder on LinkedIn https://www.linkedin.com/in/jake-dekinder-cfa-4105b98/ Learn more at https://www.dimensional.com/  

Episode 21: What are the essential money moves for people over 50? By this point, many are beginning to prepare for retirement. Some may have built up significant wealth and gotten used to spending it after hitting their peak earning years. Others may be focused on preserving their wealth but feel unsure about whether they'll have enough for the decades ahead. "Lifestyle creep"—getting accustomed to spending on second homes, boats, vacations, entertainment, and more—may be a source of concern as you get closer to retirement. Planning for the future also means thinking about an estate plan, wills, trusts, and health care. Estimating how much money you'll spend in retirement, after you stop working and earning a paycheck, is an important task. If you've purchased a second home, maintenance costs can be significant. If aging parents are in the picture, now may be the time to address their financial circumstances and health-care needs. Once people hit retirement, how they spend their time becomes a puzzling question for many. Continuing to work but at a slower pace may be an option that ensures a comfortable transition. Carefully preparing for this stage of your career can be beneficial. Tax planning also rises in importance as you go from the accumulation to the decumulation phase with your savings. Thinking about your legacy—gifting to children or focusing on philanthropy—is another topic to consider carefully. In Episode 21 of the "The Informed Investor" podcast, Dimensional's Mark Gochnour, Head of Global Client Services, welcomes Tim Slattery, PhD, Chief Investment Officer of Heritage Investment Group, and Mike Mers, Founder of Aspen Capital Management, to talk wealth, health, and financial planning for people 50 and up. Next week, tune in for a special episode of "The Informed Investor" podcast as Dimensional's Mark Gochnour and Jake DeKinder, Head of Client Communications, discuss the many reasons why investors can be thankful during the holiday season.   LINKS FROM TODAY'S EPISODE: "The Informed Investor" on YouTube https://www.youtube.com/playlist?list=PLCyJr6FFig-h1mA7rVP7Mbk0irFw2wA90 Dimensional Fund Advisors Shorts on YouTube https://www.youtube.com/@dimensionalfundadvisors/shorts Tim Slattery https://heritageinvestment.com/our-professionals/timothy-g-slattery/ Mike Mers https://www.aspencapitalmgmt.com/mike-mers Mark Gochnour on LinkedIn https://www.linkedin.com/in/mark-gochnour-9a23598a/ Jake DeKinder on LinkedIn https://www.linkedin.com/in/jake-dekinder-cfa-4105b98/   UPCOMING WEBCAST Fast Takes on a Fast Market: Your 2025 Market Q&A The 2025 market has been anything but quiet. From shifting rate expectations and tariff talk to the latest moves in gold and digital assets, investors have had plenty to process and even more to ask about. Join Dimensional's Courtney Scott, Jake DeKinder, and Apollo Lupescu for a fast-paced webcast that cuts through the noise and examines what's currently driving investor questions and market sentiment. Tuesday, December 9, 2025, at 1 pm CT REGISTER NOW: https://event.webcasts.com/starthere.jsp?ei=1742855&tp_key=0ddcbb9c03&sti=apple    Learn more at https://www.dimensional.com/  

Episode 20: How should you manage your money from ages 18 to 50? When to start saving—and how much—are questions many adults begin to consider when they start their first job. Employer retirement programs, such as 401(k) plans, typically offer easy ways to save that come with tax advantages. Many employers will match a significant portion of contributions by employees to help them build their nest eggs. Exactly how to invest your savings is another important issue. That means identifying an appropriate asset allocation for your age. People under 30 may also confront questions about establishing an emergency fund, building credit, and managing their spending habits. Later, from ages 30-50, common concerns include purchasing a home, starting a college savings plan for children, and determining needs for life insurance. In Episode 20 of the "The Informed Investor" podcast, Dimensional's Mark Gochnour, Head of Global Client Services, does a deep dive with Tim Slattery, PhD, Chief Investment Officer of Heritage Investment Group, and Mike Mers, Founder of Aspen Capital Management, on the must-dos and don'ts that can help anyone ages 18–50 lead a healthy financial life. Next week, Episode 21 of "The Informed Investor" podcast will explore financial must-dos and don'ts for people ages 50 and up.   LINKS FROM TODAY'S EPISODE: "The Informed Investor" on YouTube https://www.youtube.com/playlist?list=PLCyJr6FFig-h1mA7rVP7Mbk0irFw2wA90 Dimensional Fund Advisors Shorts on YouTube https://www.youtube.com/@dimensionalfundadvisors/shorts Mark Gochnour on LinkedIn https://www.linkedin.com/in/mark-gochnour-9a23598a/ Tim Slattery https://heritageinvestment.com/our-professionals/timothy-g-slattery/ Mike Mers https://www.aspencapitalmgmt.com/mike-mers Learn more at https://www.dimensional.com/

Episode 19: Is gold worth owning? Many investors are probably asking themselves that question after marveling at gold's recent returns. From January 1, 2024, through September 30, 2025, the metal's spot price soared more than 87%, doubling the performance of the S&P 500. Still, strong returns in the past don't tell us what's going to happen in the months and years ahead. So a decision to invest in gold generally comes with additional questions beyond asking about potential rewards. Is gold an inflation hedge? In other words, does it help track unexpected inflation? Alternatively, does it offer the opportunity for gains that exceed inflation? And what about investing in gold as a safe haven—is it a useful way to help protect your portfolio against geopolitical turmoil? Throughout history, gold has fascinated human beings. Its look and feel continue to wow just about anyone. As an investment, gold is frequently touted as a tool with multiple uses. But regardless of the wow factor, the data on gold, especially its volatility, do not necessarily support the metal's alleged ability to protect against inflation, market volatility, or economic downturns. That doesn't mean gold should be ignored as an investment option. It may be appropriate for some investors. But it's essential to understand the risks. In Episode 19 of the "The Informed Investor" podcast with Dimensional's Mark Gochnour, Head of Global Client Services, Wes Crill, PhD, Senior Client Solutions Director, and Jake DeKinder, Head of Client Communications, we go digging for the nuggets about gold that often escape curious investors and discuss what the metal can and can't do for your portfolio. LINKS FROM TODAY'S EPISODE: The "Grumpy Economist" on Growth, Tariffs, and the Fed WITH JOHN COCHRANE Tuesday, November 11, 1 pm CT REGISTER: https://event.webcasts.com/starthere.... The Informed Investor on YouTube https://www.youtube.com/playlist?list=PLCyJr6FFig-h1mA7rVP7Mbk0irFw2wA90 Mark Gochnour on LinkedIn https://www.linkedin.com/in/mark-gochnour-9a23598a/ Wes Crill on LinkedIn https://www.linkedin.com/in/wes-crill-77a49417/ Jake DeKinder on LinkedIn https://www.linkedin.com/in/jake-dekinder-cfa-4105b98/ Learn more at https://www.dimensional.com/ Dimensional does not trade in physical gold assets and therefore may have a conflict of interest in suggesting that it is wise or unwise to do so. Past performance is no guarantee of future results.

Episode 18: Are you spooked by stock market headlines? When investors look back at market history, they'll find a grotesquely gory list of horrible headlines. "The Death of Equities" (1982), "Apocalypse Soon" (1993), and "The End Is Near" (2018) are just three examples. Several other hair-raising headlines probably had many investors hunting for monsters under the bed. But here's the thing: More often than not, these headlines turned out to be horrendously off-base. For the record, a long bull market began in 1982. The 1990s delivered huge gains. And during the five years from 2018 to 2023, a period that included the pandemic, the S&P 500 climbed more than 50%.  No investor can be faulted for reacting emotionally to scare stories about the market or the economy. But it's important to separate your fears from your approach to money management. In honor of Halloween, Episode 18 of the "The Informed Investor" podcast with Dimensional's Mark Gochnour, Head of Global Client Services, Wes Crill, PhD, Senior Client Solutions Director, and Jake DeKinder, Head of Client Communications, digs up some ghastly stock market stories from history's graveyard and offers some perspective on how to cope with nerve-racking news. Source: S&P data © 2025 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved. Indices are not available for direct investment. LINKS FROM TODAY'S EPISODE: "The Grumpy Economist" on Growth, Tariffs, and the Fed WITH JOHN COCHRANE Tuesday, November 11, 1 pm CT REGISTER: https://event.webcasts.com/starthere.jsp?ei=1736505&tp_key=1cdc223812 The Informed Investor on YouTube https://www.youtube.com/playlist?list=PLCyJr6FFig-h1mA7rVP7Mbk0irFw2wA90 Mark Gochnour on LinkedIn https://www.linkedin.com/in/mark-gochnour-9a23598a/ Wes Crill on LinkedIn https://www.linkedin.com/in/wes-crill-77a49417/ Jake DeKinder on LinkedIn https://www.linkedin.com/in/jake-dekinder-cfa-4105b98/ Learn more at https://www.dimensional.com/

Episode 17: Are taxes hurting your investment returns? Investors holding mutual funds and exchange-traded funds (ETFs) in taxable accounts seek to capture high after-tax returns, not just rewarding pre-tax returns. But achieving that goal depends on how the funds are managed. Using efficient portfolio design and tax-smart implementation, some funds are able to limit capital gains and income distributed to shareholders. That approach limits the taxes they have to pay. One tool funds can employ is low turnover (the portion of securities bought and sold). Limiting how often and in what fashion securities are sold can lower capital gain distributions for investors. Capital gain distributions may be either short-term or long-term in nature. Long-term gains are typically taxed at lower rates. Short-term gains are generally taxed at higher rates. Another tool used by tax-efficient funds is what's known as in-kind redemptions. In the case of ETFs, shares of the fund are created and redeemed in the primary market through a process between the ETF provider and authorized participants (APs), which are large institutional investors. When securities are exchanged for ETF shares (creation units), this is known as an in-kind transaction. An AP may place an order directly with the ETF provider to purchase creation units of ETF shares in exchange for securities and/or cash that constitute a creation basket defined by the ETF provider. In the case of a redemption, this process works in reverse. When an ETF uses in-kind redemptions, appreciated securities transferred out are not recognized as capital gains for tax purposes and, therefore, do not impact end-of-year fund distributions for shareholders. While commonly associated with ETFs, in-kind redemptions may also be used by mutual funds. Dividend income distributions are another important component of overall tax costs. They are classified as either qualified, which are taxed at a lower rate, or nonqualified, which are taxed at higher taxes. Funds that distribute higher proportions of qualified dividend income (QDI) can reduce investors' overall tax costs. In Episode 17 of "The Informed Investor," Dimensional's Mark Gochnour, Head of Global Client Services, Rob Harvey, Co-Head of Product Specialists and a former Dimensional portfolio manager, and Jake DeKinder, Head of Client Communications, go in depth on how investments are taxed, why some funds hit investors with large taxable distributions, and which tools funds may use for maximizing after-tax returns. LINKS FROM TODAY'S EPISODE: The Informed Investor on YouTube https://www.youtube.com/playlist?list=PLCyJr6FFig-h1mA7rVP7Mbk0irFw2wA90 Mark Gochnour on LinkedIn https://www.linkedin.com/in/mark-gochnour-9a23598a/ Rob Harvey on LinkedIn https://www.linkedin.com/in/robkharvey/ Jake DeKinder on LinkedIn https://www.linkedin.com/in/jake-dekinder-cfa-4105b98/ Learn more at https://www.dimensional.com/

Episode 16: Can you imagine another "Black Monday" in the stock market? On October 19, 1987, the S&P 500 plunged 20.5%, the biggest single-day drop in history. Panic selling occurred in markets around the world.   A new product from US investment firms, known as "portfolio insurance," had become popular and it accelerated the crash's pace as initial losses led to further rounds of selling, according to the US Federal Reserve. https://www.federalreservehistory.org/essays/stock-market-crash-of-1987 Today, such a massive market decline may seem impossible to many investors. That's probably because the event itself led to significant reform in how the stock market operates. After Black Monday, regulators developed new rules, known as circuit breakers, allowing exchanges to halt trading temporarily in instances of exceptionally large price declines. The goal was to help restore a well-functioning in the midst of a crisis. Among the many lessons learned from Black Monday is the importance of investor resilience. From January through August of 1987, the S&P 500 climbed more than 40%. After Black Monday, it was suddenly under water. But by the end the year, the S&P 500 finished with a 5.2% gain—which hardly seemed possible on October 19. The lesson is that markets usually overcome what at the time seem like unprecedented challenges. Black Monday in 1987, the Asian Financial Crisis of 1997–1998, the dotcom bust of 2000, the Global Financial Crisis of 2008, COVID-19 in 2020—markets weathered them all. Each crisis can feel like the end of the world when it happens, yet the stock market has recovered after each crisis. Remember what happened in 2020: The S&P 500 finished the year with a gain of 18.4% even after plummeting at the start of the pandemic. Research shows it's virtually impossible to predict where the market will go today, tomorrow, or anytime in the future. So nobody really knows when or whether there will be another Black Monday.   The takeaway for long-term investors is to stick with your plan if the market drops, knowing stocks can rebound sooner than you might think. In Episode 16 of "The Informed Investor," Dimensional's Mark Gochnour, Head of Global Client Services, Wes Crill, PhD, Senior Client Solutions Director, and Jake DeKinder, Head of Client Communications, crank up their time machine to look back at Black Monday and look ahead to how investors should handle a massive drop if one happens again. LINKS FROM TODAY'S EPISODE: The Informed Investor on YouTube https://www.youtube.com/playlist?list=PLCyJr6FFig-h1mA7rVP7Mbk0irFw2wA90 Mark Gochnour on LinkedIn https://www.linkedin.com/in/mark-gochnour-9a23598a/ Wes Crill on LinkedIn https://www.linkedin.com/in/wes-crill-77a49417/ Jake DeKinder on LinkedIn https://www.linkedin.com/in/jake-dekinder-cfa-4105b98/ Learn more at https://www.dimensional.com/

Episode 15: Does technology help—or hurt—the workforce? Will AI take your job? Millions of Americans are no doubt wondering how artificial intelligence will alter their career trajectories. Some may fear they'll need to drastically shift gears because the job opportunities they thought would be plentiful may suddenly disappear. But the funny thing about technology, according to labor market expert Kevin Murphy, PhD, George J. Stigler Distinguished Service Professor of Economics Emeritus at the University of Chicago, is that we don't know exactly how it will affect the workforce. AI, for instance, might decrease the need for millions of jobs that are important in today's economy. But tomorrow's economy, driven by innovations like AI, may also generate millions of new jobs that we can't even imagine today. Throughout his career, Murphy has studied inequality, unemployment, and relative wages as well as the economics of growth and development and the economic value of improvements in health and longevity. Murphy entered the business world at 14 when he took an after-school job sorting soda bottles in a small Los Angeles grocery store, working his way up to bagging groceries, according to a profile in University of Chicago Magazine. https://magazine.uchicago.edu/0612/features/murphy.shtml He stayed in the grocery business through college—and he credits that work for helping him to understand the intricacies of the labor market. Among the many areas Murphy has probed is the value of education in improving the fortunes of the workforce. In the battle between people and technology, Murphy insists that the adaptability of human beings prepares them for the unknown. "People can do all kinds of things and switch from one thing to the other," he says. "Machines historically have been more specialized. … You want people to be able to adapt because predicting where technology is going to go isn't as easy as you think." In Episode 15 of "The Informed Investor," Dimensional's Mark Gochnour, Head of Global Client Services, welcomes Kevin Murphy to Dimensional's Charlotte office for an in-depth discussion on the history and future of technological innovation and its surprising impact on the dynamics of the labor market and the economy at large. LINKS FROM TODAY'S EPISODE: The Informed Investor on YouTube https://www.youtube.com/playlist?list=PLCyJr6FFig-h1mA7rVP7Mbk0irFw2wA90 Mark Gochnour on LinkedIn https://www.linkedin.com/in/mark-gochnour-9a23598a/ The University of Chicago Booth School of Business https://www.chicagobooth.edu/ Learn more at https://www.dimensional.com/  

Episode 14: Does cryptocurrency like bitcoin have a positive expected return—and, if so, why? Cryptocurrency is a digital or virtual currency that uses cryptography for security. Transactions are recorded on a decentralized network called a blockchain. Since 2010, when bitcoin started trading at a price of just pennies, the value of one coin has climbed past $100,000. Some investors may think the value of bitcoin (or any of the numerous cryptocurrencies) will keep rising after they buy. But while that's possible, it's difficult to make a case for why. When you invest in stocks, you expect the value of those stocks to rise in the long run. A company's growth prospects, its financial health, and its overall earnings influence its expected future cash flows, which is one key element driving the expected return of the company's stock. When you invest in bonds, you are entitled to interest payments and the return of your capital upon maturity. These can be sound reasons to expect a positive return. But cryptocurrencies don't have the same characteristics or qualities as stocks or bonds. An investor can speculate that crypto will increase in value, maybe because of the hype around it or possibly due to new developments in the industry or the underlying technology. But we believe speculation isn't the same thing as investing and often comes with additional risk. To wit: Over the past decade, the price of bitcoin has fluctuated wildly. Since its first recorded market price in August 2010, bitcoin has experienced 10 declines exceeding 30% and five declines exceeding 70%. The broad stock market hasn't seen anything close. Another reason some investors might want cryptocurrencies is for hedging inflation. But inflation hedges are supposed to track unexpected inflation, and the data does not support bitcoin or any cryptocurrency as an effective hedge. That said, none of these concerns means investors should ignore crypto. The industry is evolving fast, and keeping a close watch on what's happening makes sense. In Episode 14 of "The Informed Investor," Dimensional's Mark Gochnour, Head of Global Client Services, Kevin Green, PhD, Head of Investment Solutions Analytics, and Jake DeKinder, Head of Client Communications, go deep on the past, present, and future of cryptocurrencies. LINKS FROM TODAY'S EPISODE: The Informed Investor on YouTube https://www.youtube.com/playlist?list=PLCyJr6FFig-h1mA7rVP7Mbk0irFw2wA90 Mark Gochnour on LinkedIn https://www.linkedin.com/in/mark-gochnour-9a23598a/ Kevin Green on LinkedIn https://www.linkedin.com/in/kevin-green-505b15355/ Jake DeKinder on LinkedIn https://www.linkedin.com/in/jake-dekinder-cfa-4105b98/ Learn more at https://www.dimensional.com/ Dimensional does not trade in cryptocurrencies or their derivatives and therefore may have a conflict of interest in suggesting that it is unwise to do so.  Any such statements are statements of opinion.  This discussion is not intended, and should not be construed as, commodity trading advice.

Episode 13: Can you take advantage of artificial intelligence (AI) in your portfolio? It's one of the most common investor questions regarding the rise of AI, a game-changing technology that seems to be affecting life in new ways almost every day. By now, most people are probably familiar with common AI tools like ChatGPT that rely on large language models, which are advanced systems that understand and generate human-like text using data they've been trained on through machine learning. Breakthroughs in generative artificial intelligence seem poised to benefit a wide gamut of businesses. Nvidia has been an early winner in the movement, and its stock has reflected this success. But the cascade effect of AI has already spread beyond just the household tech names. Many companies are adopting gen AI tools as implementation assistants to increase the efficiency and scalability of their businesses. Eventually, we may reach a point where, like the internet, it's hard to fathom a time before broad AI usage. The good news for investors is that they don't have to focus on technology companies to get exposure to AI. Diversified equity portfolios already have exposure—because AI tools touch nearly every type of business. Some investors may want to go further by using AI to help invest. But there's a big difference between getting help from AI for everyday tasks at home or work and investing for retirement. Dimensional Chairman and Founder David Booth is fond of saying that large language models are intended to understand and generate text that seems as if it was made by humans, not predict future outcomes. https://www.dimensional.com/us-en/insights/david-booth-in-the-financial-times-why-the-wisdom-of-the-market-crowd-beats-ai Instead of relying on AI for picking stocks, Booth suggests relying on the power of market prices to help you invest for the future. In Episode 13 of "The Informed Investor," Dimensional's Mark Gochnour, Head of Global Client Services, Wes Crill, PhD, Senior Client Solutions Director, and Jake DeKinder, Head of Client Communications, talk through the numerous ways AI is impacting the financial industry and offer incisive thoughts on the investment implications. LINKS FROM TODAY'S EPISODE: The Informed Investor on YouTube https://www.youtube.com/playlist?list=PLCyJr6FFig-h1mA7rVP7Mbk0irFw2wA90 Mark Gochnour on LinkedIn https://www.linkedin.com/in/mark-gochnour-9a23598a/ Wes Crill on LinkedIn https://www.linkedin.com/in/wes-crill-77a49417/ Jake DeKinder on LinkedIn https://www.linkedin.com/in/jake-dekinder-cfa-4105b98/ Learn more at https://www.dimensional.com/

Episode 12: IPOs are hot again in 2025. Should you try to get in on the action? Initial public offerings (IPOs), particularly those involving well-known companies, often draw considerable attention from investors. Historically, while the most common path to enter public markets was through an IPO, entryways such special purpose acquisition companies (SPACs) and direct listings are drawing fresh attention too. Yet, the performance of IPOs tends to be disappointing after a first-day splash. Indeed, as a group, IPOs largely have behaved like small growth, low profitability, high investment stocks, underperforming the broad US market in their first year. This kind of checkered performance record for newly traded public companies raises a number of questions. If investors have an opportunity to invest in IPOs before trading begins, should they jump? Second, do big-name IPOs offer a better investment opportunity than the majority of IPOs, which are typically small cap companies? And does the increasingly active IPO market tell us anything about the direction of the broader stock market? One potential performance headwind for IPOs is the expiration of lockup agreements. Generally, a large percentage of the IPO shares held by insiders are subject to lockup provisions that prevent such insiders from selling shares on the open market shortly after the IPO. When the lockup agreements expire, usually six to 12 months after the initial offering, these shares may be sold in the marketplace, creating a liquidation event that puts downward pressure on the stock price. In Episode 12 of "The Informed Investor," Dimensional's Jake DeKinder, Head of Client Communications, Wes Crill, PhD, Senior Client Solutions Director, and Kevin Green, PhD, Head of Investment Solutions Analytics, explore what investors really need to know before they get involved in initial public offerings. LINKS FROM TODAY'S EPISODE: The Informed Investor on YouTube https://www.youtube.com/playlist?list=PLCyJr6FFig-h1mA7rVP7Mbk0irFw2wA90 Jake DeKinder on LinkedIn https://www.linkedin.com/in/jake-dekinder-cfa-4105b98/ Wes Crill on LinkedIn https://www.linkedin.com/in/wes-crill-77a49417/ Kevin Green on LinkedIn https://www.linkedin.com/in/kevin-green-505b15355/ Learn more at https://www.dimensional.com/  

Episode 11: Do private investments deserve a place in your portfolio? Some investors may see private assets as a tool to boost returns and increase diversification. Research on these questions is ongoing. Private investments tend to comprise illiquid assets that trade infrequently. As a result, their valuations may be difficult to assess, and their returns may behave quite differently than those of public market equivalents. While recent headlines suggest retirement plans like 401(k)s may get access to private investment options in equities, debt, and real estate, and many players in the financial industry are talking about creating products for everyday investors that feature private investments, it's an open question whether these options are appropriate for the average investor as opposed to solely accredited investors who meet specific wealth and income criteria. In public markets, investors can choose widely diversified, low-cost portfolios. In private markets, especially for smaller allocations, that's not so easy. So due diligence in the manager selection process is key for any investor considering a private allocation. Assessing the costs is equally important. One cost is the stated fee. Another is the opportunity cost—the possibility of missing out on other options that might have more transparency around expected returns and risks. And taxes should be considered as they may be more complex with private investments. In Episode 11 of "The Informed Investor," Dimensional's Mark Gochnour, Head of Global Client Services, Wes Crill, Senior Client Solutions Director, and Jake DeKinder, Head of Client Communications, examine the allure of private markets as well as the return potential, risks, and costs. LINKS FROM TODAY'S EPISODE: The Informed Investor on YouTube https://www.youtube.com/playlist?list=PLCyJr6FFig-h1mA7rVP7Mbk0irFw2wA90 Mark Gochnour on LinkedIn https://www.linkedin.com/in/mark-gochnour-9a23598a/ Wes Crill on LinkedIn https://www.linkedin.com/in/wes-crill-77a49417/ Jake DeKinder on LinkedIn https://www.linkedin.com/in/jake-dekinder-cfa-4105b98/ Learn more at https://www.dimensional.com/

Episode 10: When you invest, where does the money go? While investors may be comfortable putting their money in vehicles like mutual funds and ETFs, they may be unclear or confused about what happens to their money once it's invested. A fund's structure is governed by law, and the regulatory and legal requirements applicable to mutual funds and exchange-traded funds (ETFs) encourage clearly defined governance, transparency, and accountability. All of that means your money follows a specified path when you invest it, and that path has built-in protections to limit the risk of conflicts of interest, malfeasance, or fraud. Those protections include transparency, access to information, regulatory oversight, and sufficient checks and balances. Major players in this system include independent boards of directors, fund custodians, transfer agents, and auditors, all of whom are separate from the fund and fund manager. The key law governing mutual funds and ETFs in the US is the Investment Company Act of 1940, often referred to as the 40 Act. Administered by the Securities and Exchange Commission (SEC), the law was passed in the wake of the stock market crash of 1929 and the Great Depression. Beyond being protected by a fund's structure and industry and government regulations, investors can help themselves by maintaining some healthy skepticism about any investment. So if it sounds too good to be true … In Episode 10 of "The Informed Investor," Dimensional's Mark Gochnour, Head of Global Client Services, Stephanie Hui, Head of Responsible Investment and Senior Public Policy Strategist, and Jake DeKinder, Head of Client Communications, take a close look at the formal rules that protect investors and their money. LINKS FROM TODAY'S EPISODE: The Informed Investor on YouTube https://www.youtube.com/playlist?list=PLCyJr6FFig-h1mA7rVP7Mbk0irFw2wA90 Mark Gochnour on LinkedIn https://www.linkedin.com/in/mark-gochnour-9a23598a/ Stephanie Hui on LinkedIn https://www.linkedin.com/in/stephaniedhui/ Jake DeKinder on LinkedIn https://www.linkedin.com/in/jake-dekinder-cfa-4105b98/ Learn more at https://www.dimensional.com/

Episode 9: Enticing pitches for "buffered" strategies promise protection against downside risks in stocks. Are they worth it? Should investors sacrifice some upside for lowering the risks of losing money?   So-called "defined outcome strategies" offer a way to hedge downside equity risk in exchange for lower participation during market upswings.   There is typically a downside protection amount (the "buffer"), ranging from 10% to 100%, and a capped potential upside over a set period, typically one year.   The income potential of these strategies may be attractive for some investors, and softening the blow during equity market downturns is appealing for most investors. But there is more than one way of targeting downside protection.   Historically, fixed income investments across a wide range of sectors have had a positive average return when equities have had a negative return. Since 1976, for example, the Bloomberg US Aggregate Bond Index had an average return of 4.53% in years when the S&P 500 Index had a negative return. Some may question the diversification benefit of fixed income based on recent episodes where stocks and bonds moved in the same direction, like 2022. But it's important to remember that volatility reduction in portfolios from an allocation to fixed income has been largely unconnected to whether the returns of stocks and bonds moved in the same or opposite directions. Buffered strategies and traditional equity/fixed income allocations both aim to provide downside protection at the cost of upside participation. The tradeoff between upside participation and downside exposure is comparable whether using defined outcome strategies or a simple mix of stocks and bonds. What's not similar between these two approaches is the overall performance—in the five-year period ending June 30, 2025, a 60% stocks/40% bonds strategy outgained several types of buffered strategies, which typically come with higher fees. In Episode 9 of "The Informed Investor," Dimensional's Mark Gochnour, Head of Global Client Services, Wes Crill, Senior Client Solutions Director, and Jake DeKinder, Head of Client Communications, analyze the allure of buffered strategies as well as the risks and costs of seeking downside protection. LINKS FROM TODAY'S EPISODE: The Informed Investor on YouTube https://www.youtube.com/playlist?list=PLCyJr6FFig- Wes Crill on LinkedIn https://www.linkedin.com/in/wes-crill-77a49417/ Jake DeKinder on LinkedIn https://www.linkedin.com/in/jake-dekinder-cfa-4105b98/ Learn more at https://www.dimensional.com/

Episode 8: Is the stock market expensive or a good value? Stock valuation ratios, which measure stock prices against a financial metric like a company's earnings or book value, offer investors some information about the expected returns of the market or individual stocks at any point in time. If a valuation ratio, literally the price divided by the financial metric, is considered elevated relative to a historical average or another comparative number, some investors may worry that stocks are too pricey. Alternatively, if valuation ratios are considered attractive, investors might see stocks as a good buy. However, investors may not realize that aggregate stock market valuation ratios have not been strong predictors of future returns in the broad market. Valuation measures such as the cyclically adjusted price-to-earnings (CAPE) ratio are frequently portrayed as indicators that assess whether the stock market's expected return has increased or decreased. Yet, there isn't much evidence showing that such indicators are useful for investors' asset allocation decisions. Equally noteworthy is that eye-popping returns for the market's most high-flying stocks, the companies that often carry high valuations, typically tend to occur before those companies reach the top of the market. Once there, subsequent returns tend to lag the market. This is a cautionary tale for investors expecting continued outperformance from big-name technology stocks or continued underperformance from so-called value stocks. That may or may not happen—nothing is guaranteed. While ample evidence suggests emphasizing stocks with low price-to-book ratios has been a reliable approach for investors seeking outperformance versus the market over the long haul, we don't know when (or if) that outperformance might occur. What we do know is that, in general, stocks are priced to have a positive expected return. In Episode 8 of The Informed Investor, Dimensional's Mark Gochnour, Head of Global Client Services, Wes Crill, Senior Client Solutions Director, and Jake DeKinder, Head of Client Communications, dive into current debates about market valuations in an attempt to separate the signals from the noise. LINKS FROM TODAY'S EPISODE: The Informed Investor on YouTube https://youtube.com/playlist?list=PLCyJr6FFig-h1mA7rVP7Mbk0irFw2wA90&si=Luthpbg9WwkhMVbi Mark Gochnour on LinkedIn https://www.linkedin.com/in/mark-gochnour-9a23598a/ Wes Crill on LinkedIn https://www.linkedin.com/in/wes-crill-77a49417/ Jake DeKinder on LinkedIn https://www.linkedin.com/in/jake-dekinder-cfa-4105b98/ Learn more at https://www.dimensional.com/