#301 In Praise of Passive Investing


Last week it was a listener turned finance coach as a guest...this week it's a former professional basketball player turned passive investing evangelizer, as our guest.

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Before becoming a big shot in the investment world, Dave Butler was draining big shots on the basketball court at Cal and was even drafted by the Boston Celtics.  Despite being drafted by an NBA team, Dave decided to take him game overseas, playing for a few years in Turkey and Japan.

After his playing days were over, Dave went back to California, earned an MBA from Cal at the Haas School of Business and ultimately joined Dimensional Fund Advisors (DFA). To the average person, Dimensional may sound like just another investment firm.  But it's not.  It's different.  DFA's goal from day one has been to redefine investment advice, by adhering to the passive approach.  Instead of relying on forecasting or falling prey to the vast amount of "investment pornography", Dimensional draws information about expected returns from the market itself, letting the collective knowledge of its millions of buyers and sellers set security prices. Dave advises us to focus on low costs, diversification, tax efficiency, transaction efficiency, rather than trying to beat the market.

During Dave's time at Dimensional, assets under management for financial advisors have grown from $2 billion to approximately $250 billion, so it's probably worth listening to this one time Rhodes Scholar candidate.

Thanks to everyone who participated this week, especially Mark, the Best Producer/Music Curator in the World. Here's how to contact us:

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