In my early years with Hill Investment Group, here’s a question I would see in people’s puzzled faces almost every time I mentioned fund manager Dimensional Fund Advisors:

“Dimensional who?”

With the continued shift to evidence-based investing, the question has become something more like this:

“Who’s this ‘Dimensional Fund Advisors’ I keep hearing about?”

The name may be more familiar these days, but with their nerdy academic underpinnings and publicity-shy approach, it’s still a challenge to explain exactly what makes the firm tick. As the firm’s Investment Research Committee Chair Ken French says, “People at Dimensional care much more about getting the right answer than defending their answer.”

Fortunately, Dimensional has created a great new piece entitled “Inside Dimensional 2017.” Equal parts science, philosophy, and intellectual horsepower, it offers a fascinating tour through the firm’s inner workings – including an entire section dedicated to its “Data Dogs” and their use of computers to revolutionize the implementation of finance for investors.

Let us know if you would enjoy a behind-the-scenes peek at Dimensional’s people and culture, and we’ll gladly send you a copy of “Inside Dimensional.”

When I’m not busy helping people build long-term wealth via evidence-based investing, in my daydreams, I’m a starting pitcher in the major leagues.

Admittedly, if my dreams ever come true, I’ll probably throw out my shoulder on the third pitch, after giving up a couple of home runs. But besides that technicality, there actually are a number of similarities between my real day job and my fantasy career. I know this, because the Astros general manager Jeff Luhnow happens to be a fan of Matt Hall’s Odds On book. He even wrote an endorsement for the book, and he has stayed in touch with us ever since.

As we’ve covered before, author Michael Lewis published his now-iconic book Moneyball in 2003. Both the book and the award-winning motion picture showcase how Oakland A’s general manager Billy Beane employed empirical evidence over expert opinion, studied patience over rapid reaction, and cost control over splashy spending to take his underdog team in a dramatically new direction on a shoestring budget.

Sounds a lot like what we aim to do for investors, doesn’t it? But a happy Hollywood ending is one thing. Can the strategy really work over time in baseball, or was it a sensational flash in the pan?

That’s where additional data points from Luhnow come in, when he chose to take Beane’s analytical approach one step further with “extreme Moneyball,” as described in this 2014 Bloomberg piece. Similar to the A’s, the Astros were underperforming at the time – big time. They literally had the worst record in baseball EVER during the first two years of Luhnow’s tenure.

Then came his fresh, evidence-based approach. The Astros made the American League playoffs in 2015 and, as I draft this piece, this recent Wall Street Journal piece describes Luhnow’s data-driven shift to maintain the team’s home run averages while reducing its strike-outs. The results so far? The WSJ reports: “More than 40% of the way through the season, the Astros own the best record in the majors, blitzing the competition with a lineup that defies all logic.”

Well, not all logic.  The article also describes Luhnow as the “architect of perhaps the sport’s most data-driven organization.”

If you ask me, that probably explains it. Will the Astros take their first World Series in their 55-year history? Either way, come what may, I look forward to seeing what they have in store for 2017!

In the horse-and-buggy days, it was common to put blinders on your trusty steeds. It helped them narrow their frame of reference to the job at hand … or at hoof.

Even today, blinders remain a great strategy for those Budweiser Clydesdales. But for us humans, a similar behavioral bias known as narrow framing is more likely to knock us off-course than keep us sensibly invested.

What am I talking about? UCLA’s behavioral economist Shlomo Benartzi recently published an insightful Wall Street Journal piece on the subject. In it, he describes narrow framing as “a tendency to see investments without considering the context of the overall portfolio.”

Benartzi explains:

“The first [narrow framing] mistake involves people taking too little risk, which often leads to lower investment returns. When we engage in narrow framing, we tend to focus on short-term losses. … The second mistake involves people taking on too much risk without realizing it. When we don’t think about our entire portfolio, it’s easy to overlook the fact that many of our different investments might fall or fail for similar reasons.”

In other words, overly narrow framing can result in ignoring instead of accurately assessing your own and the market’s landscape of inherent risks and potential rewards. You end up investing like a horse with blinders on – but nobody is steering the cart.

Fortunately, Benartzi offers a few practical solutions, which just happen to coincide with our way of doing business here at Hill Investment Group.

“Rely on information that reflects the biggest possible picture,” he advises, but “remember not to look at it too often.” Sounds a lot like our motto: Take the Long View®, don’t you think? Helping families view their big picture is core to our approach.

Benartzi also notes that today’s aggregation software – like our recently released HIG’s Client Portal – makes it easier than ever to see the grand scheme of things at a glance.

If you’ve never had the chance to catch the Budweiser Clydesdales in action, I recommend it highly. (No, a Super Bowl commercial doesn’t count.) But when it comes to your investments, let your advisor and today’s technological tools help you eliminate your narrow-framing blinders. Being blinded will only lead you astray.