Joey Loss 00:00
We have, on average, an S, P dip of 14% per year, right? And somehow in the nine months between these dips, we just completely forget that this happens every single year, and each one has its own narrative that feels emotionally unique and devastating. Skylar Liang, welcome to the show.

Skylar Liang 00:27
Hey, Joey, how's it going?

Joey Loss 00:33
Good. I'm excited to have you on. You know, before we started recording, I was just saying I kind of thought it would be a long shot to get somebody from dimensional to come on and talk. So very excited that you guys carved out the time and seem open to talking about kind of whatever floats our boat as we navigate the kind of craziness that's going on in the markets in this transitional period.

Skylar Liang 00:54
We're always happy to do these sorts of things, and everything we do is really aimed at being very educational and advocating for clients to have the best experience. So excited to be here, and thanks for reaching out.

Joey Loss 01:06
Awesome. Well, for listeners who may not know who you are or who dimensional is, can you introduce both? Of course? Yeah, of

Skylar Liang 01:13
course. So I'll start with myself. My name is Skyler Leong. I'm a Senior Associate here at dimensional fund advisors. I actually am based in the Charlotte, North Carolina office, so I've been in the Carolinas for in total, almost a decade, which is pretty scary, but it's certainly home now. Before working at dimensional, I actually worked in consulting at Ernst and Young made a little bit of a pivot into the investment management space, and got really lucky that dimensional took their chance with hiring me, having very little investment management background, transitioning into who dimensional is. So we're a global investment firm. We have around 800 billion in global aum. We've been around since the 80s, so we've got four decades of track record to speak to, and really the art that unites us all here at the firm, and why we have, I think, such a strong presence in the advisor community is because we have one investment philosophy, and we really advocate for the best of best outcomes for your clients, or for for your our advisors clients. So I've had the privilege of working with financial advisors to communicate, understand and deliver really good investments. So really excited to be here, happy to be with dimensional, and glad we're included on this conversation.

Joey Loss 02:33
Yeah, well, thanks again for being here. Dimensional has really been ever since I got into this space as like an intern when I was 20, just diving into like Warren Buffett books and stuff like that. Dimensional has been a pillar in the investment space ever since dimensional was founded. And just to kind of point out the relevance of dimensional, if folks are familiar with the Booth School of Business that is named after the founder of dimensional, who David booth and yeah, dimensional has just grown tremendously over the years. And as I toot the horn of dimensional, I just want to be clear that I'm not in any way compensated by or affiliated with dimensional. I just think that they tell a particular investment story that is interesting for listeners to hear. And as we were talking about before we started recording, it's a different story than I think, is kind of naturally landing in the hearts and minds of young investors, especially right now, who may have only been investing for the last 10 years, a period during which growth stocks have just kind of held the headlines. We've had little pockets like in 2022 I believe there's a pocket where value kind of kicked butt for a while, but then its storylines are back to growth. And so one of the things I wanted to talk about is when people talk about value stocks versus growth stocks, I think people think you kind of jump between story lines across your life as an investor. And I don't really believe that that's a good way to approach things. I think there's a different way of looking at it. So can you tell us a little bit about how dimensional thinks about value investing? What is value investing? Maybe a good place to start for listeners? Yeah,

Skylar Liang 04:07
of course. Well, just starting off with what value investing is, and this might be familiar for some of you listening, but it's really the notion that you as an investor will seek out stocks of companies that you think are trading under value, right? So under their intrinsic value or what their true worth should be. So the whole goal here is you're finding something that is cheaper than what you think it should be. I think Warren Buffett is one of the most commonly thrown around value investor names, right? But there's more to it than that. I think that's the traditional understanding of value investing that you can find undervalued securities kind of transitioning to a little bit more of what dimensional believes and how we think through value investing. So we've had a value tilt in our portfolio. IOS for over three decades, actually. But where we differ is we wouldn't necessarily coin the securities as being undervalued, per se, it's more so that they have a lower relative price. And so what we mean by that is, you could kind of think of it as cheaper, but not necessarily that we're saying it's priced wrong, just that relative to other peers or characteristics, they're cheaper, so you can expect that you have more, a higher likelihood of doing better. So again, I think that's kind of the notion you find a cheap stock or undervalued stock, you invest in it, and you theoretically have a higher chance of outperforming the growth counterpart. Sometimes we like to use a little analogy here about if you have two houses on the same block, the same, everything about them is the same. Square footage, the kitchen cabinets are the same, but one of them is cheaper than the other. Which one are you going to want to buy? Probably the cheaper one. So that's really all it is, kind of from a high level. When it comes to implementing it, we implement what we call the value premium, or the relative price premium, in addition to two other premiums, so the small cap premium and the high profitability premium. A lot of people will call these factors or factor Based Investing, but we call them premiums here at dimensional particularly because they have those expected out performance relative to their counterparts. So it's kind of, as Joey said, not been Vogue recently to be in value stocks, but the theory is there, and it's really been a core tenet of our investment philosophy since the early days of our firm's founding.

Joey Loss 06:43
Yeah. And for listeners, the counter to that would be a growth stock. And you know, now there's kind of a budding class of momentum, which is kind of its own thing, but yeah, kind of in my opinion, overlapping with growth. But to define growth, a growth stock is one where you're not really holding it for its relative price value today, or the dividend that it offers relative to the cost of owning the stock. You're owning it because of its potential to simply grow. And that's quite different than the Warren Buffett approach or the value approach, relative price approach that we just talked about, because instead of buying something where you know you think you have an idea of the relative value of that particular stock in the market, or the value of the dividend in the market relative to its price, you're owning something simply because, in a way, you believe in the narrative that it can grow. And maybe there's some qualitative factors that you can look at that help with that, and help you determine, as an investor, which one of those might be the right one to pick. But it's not as much about the fundamentals as value stock investing is, and

Skylar Liang 07:43
look, part of our investment philosophy. While we advocate for an overweight or leaning into value, we still don't say that you shouldn't be invested in growth, right? We really do say you need to be broadly diversified and you should still own those growth securities. But if you really want to put more of the odds in your favor of beating the market, you should have at least a little bit of an overweight, or you should consider having a bit of an overweight to value stock,

Joey Loss 08:13
right? And that comment's based on historical performance. Of course, we never know. Got to throw in the disclaimer. We never know what's going to happen going forward, yeah, but it has been a fairly consistent across long time span record that the relative price approach cannot perform. Now, looking specifically at the last 10 years, it has been a different story, and I think there's a lot of reasons why that might be it'll be easier in 10 years from now to look back at the last 10 years and say with a little bit more certainty what was happening and what might the causes have been. But I think first of all, we had this huge generation of retail investors enter the market. We had moments of stimulus through COVID. A lot of new money coming into the market. Was kind of following what was already hot, is my opinion. And just listening to what my friends who are getting into investing for the first time, seven, eight years ago, what they were talking about, why they were liking different stocks. It just had a bias towards, you know, they weren't breaking down looking at value aligned surveys at home. You know, it's just not they're looking at what stocks were really interesting from a just a social perspective, and as an investor, that's enough. If you make a make money on that, that's great. The question is, can you do it consistently over long periods of time? And so that may be where we've reached the end of an era. Potentially, it might not be. But what is dimensionals outlook at this point? If they have one, you can comment on about like, where we are in the grand scheme,

Skylar Liang 09:40
yeah, well, I do think the first important thing to level set on is that dimensional has a very high degree of conviction that you cannot predict what the markets are going to do. And we really advocate for having an investment. Experience that's based off of expected outcome. So and being formed around things that you can control. So whether or not growth or value comes back into favor is not necessarily a question of when, for us, it will. And so in our minds, we're still optimistic that the value premium exists. In fact, even year to date, we are what? Three months into 2025 value has been ripping. I mean, it's been doing really well, and that's in light of recent years of underperformance value versus growth. So what's our Hudson value? The same as always. Joey, I'm sure you've heard the dimensional story a lot, but we feel confident that the value premium exists, and we advocate for really maintaining a targeted but intentional exposure to value stocks again, while still being broadly diversified, so that when the premium comes back or really shines, You capture all of that upside. So this is a great example. A lot of people were out of favor of value in 2023 and 2022 and even prior years. And who would have necessarily guessed that in the first three months, value would have really outperformed growth of 2025 so we don't have a really strong Outlook or prediction and exactly how or when it will come back, we just feel that we have a high degree of confidence that it will. And probably one other thing to mention is there's a lot of talk around the US market, but there are global markets where value actually has done recently well as well. So kind of a circuitous answer for you there, Joey, but there's no prediction that we're going to make on the magnitude or when it will come back. We're consistent that it always benefits investors to have at least a little bit of an overweight to value stocks for the intuitive and empirical reasons that that we kind of mentioned earlier.

Joey Loss 12:00
Yeah, that makes sense, and I understand that that line, it seems to me like value in concept sort of capitalizes on the gap between fundamental truth about stocks relative to wherever they occupy in the market and the behavioral gap of investors themselves. Does that resonate as kind of the through line of how value ends up outperforming?

Skylar Liang 12:27
You know, I think that's an interesting point. I would say the reasons that we see, or we believe in value comes from the historical performance, but really what we call the valuation equation, and it's kind of a framework to think through the market value and your expected return from securities. And what that looks like is your market value equals your expected future cash flows over a discount rate. And so you can kind of back into why a security with a lower price relative to its book would have that higher discount rate using that equation. But what we have kind of refrained from, Joey is, is attributing it to anything specific, more so, not questioning where did it come from, or why is it here, and really just saying it's statistically significant. We see it pervasively across markets, persistently across time, and intuitively it makes sense using that framework for understanding market value and expected cash flows. So I'm not sure if that's helpful, but yeah, we don't prescribe exactly where it could be risk and return could be supply and demand could be behavior. There's a lot of things at play, and we refrain from attributing it to anything specific more, so just taking confidence and knowing empirically it does.

Joey Loss 13:47
I actually love that answer, because it just kind of exposed my desire to like, apply a narrative to like, why something that's just like, I do this for a living. And even then, that answer was so good because it is the institutional answer to a statistical question, right? It's not like, I don't know. I think. I just love when there is a story. And I think everybody is similar to that. And if you look, I mean, there's so many investor stories right now. What is going on in the market? 60 days ago, everybody was bullish on the US, right? It was the story that. And for the last two years, we had two back to back years of 20 push that plus S p5, 100 returns. Didn't matter if you were in value or growth, you were getting great returns. You're doing well, yeah, right. And if you just own the S P, which, which, again, like dimensional funds, most of these fund companies, they they own multiple they don't just own one or the other, right? They own a bit of everything. So investors had a really good time the last two years, and then within 60 days of new policy, just and the plates moving, the tectonic plates of the economy moving. Now we're saying the US is not the place to be. International is where it's at. The German index is up 20% When's the last time you could say that for most of us, maybe never to a client? It's been 15 or 20 years since that was true? Yeah,

Skylar Liang 15:07
yeah. Well, I think again. And this is why it is so important to have that really disciplined, high level overview, because it is so hard to know exactly what's going to happen, when it's going to happen. We don't know at the end of the day, right? I mean, even in most of 2024 most capital market assumptions were saying there was going to be a recession in 2024 and the markets had to drop. I mean, it was coming, and yet the S, p5, 100 index actually beat its historical average by almost double in 2024 so again, I sound like a little bit like a broken record here, but we don't necessarily try to attribute it to anything. We don't try to explain it. We try to build a plan around what's expected. What do we expect to happen over time? Markets reward investors. They march forward and up, even in light of global political crises, pandemics, market crashes. In the long run, if you believe in capitalism, if you believe in human innovation, right, it continues to go up. Now that's not to say it's not going to be bumpy or volatile or hard to stay in your seat. But over time, the markets have rewarded investors, and we think that that's a narrative you can craft an investment experience around, not one that's based off of political policy or market behavior. And as of late, yeah,

Joey Loss 16:36
I will completely sign off on that. Like, if you had 60 days ago, like we were saying, just ridden the emotional wave of two years of success in the US market, right? And you applied the narrative of that time, which we know I love a narrative, then you could have easily made the case I should be 99% in US stocks, right? I mean, statistically, not a great approach, but if you just love the story, and you're diversifying within the US market? Yeah, I'm sure a lot of investors do that. In fact, I follow somebody who has helped a lot of people with basic investment advice. He just poses himself as like a dad, giving basic investment coaching to people you know, how to buy index funds, stuff like that. And he's on the NASDAQ and like BT sack forever, right? And you could ascribe to a philosophy like that, based on the narrative that was existing for the last two years of just great success in the US market, and with how dramatically that story has changed in 60 days, it's worth stepping back and realizing, okay, the only thing that's been true for the last 30 years is the statistics themselves, right? And that is things like every we have, on average, an S, P dip of 14% per year, right? And somehow, in the nine months between these dips, we just completely forget that this happens every single year, and each one has its own narrative that feels emotionally unique and devastating.

Skylar Liang 17:59
Yeah. I mean, I think it's natural right as humans to want to have a narrative to explain things, right? We want to feel good about what we're doing, and we want to be able to attribute behaviors or outcomes. We like to be in control as people. And I think that's why you see so many narratives. You see so many financial professionals trying to time the markets, or trying to explain what's going to happen, or when it's going to happen, because it gives us a sense of control when, at the end of the day, so little of the market's behavior is within our control, the only thing we really can control is our behavior towards it, and so is having a strategic asset allocation being globally diversified, so that, hey, if the US is down, you still capitalize on international emerging markets going up. I mean, that's a great thing. Diversification is the only free lunch, really. So yeah, I hear you, and that's things that we hear from advisors all the time with their clients struggling with, what's the next best thing? What's going to put me in the best position? What's going to put you in the best position is having a financial planner who can understand staying disciplined, being broadly diversified and advocating for your better investment experience. Yeah,

Joey Loss 19:14
and diversification, you know, the last two years probably annoyed people a little bit, right? If you're absolutely yeah, 80% in equities, and you've got 25% in international, so let's say, I don't know us, total market index is doing 18% 19% let's say last year, then your international might drag that down to like 15, right? Yeah, that doesn't feel good. But this year, if you own 25% international instead of being down 10% you might be kind of close to even, especially if you own some small caps, if you have a tilt towards value things that have done better relative to other places, right,

Skylar Liang 19:55
right? Well. And going back to the conversations we have with advice. Users, right? Ones who aren't, who are still kind of trying to understand dimensionals investment approach. We did get the question a lot in 2024 and 2023 Why would I own anything but the US? Or even, second to that, why would I own anything but the S, p5, 100? Well, you need to consider what happens if things change. I mean, from January of 2000 to December of 2009 the S p5 100 had a negative 95 basis point return. Now what had positive returns International and emerging markets. They absolutely crushed it for 10 years. The S p5 100 did materially worse than global securities. But then again, you flip the script, January of 2010, to December of 2019, and the S, p5 100 crushed International. So we're not saying it's cyclical. We're not saying we know when or if it will happen again, but maintaining that exposure to all of those areas of the market will help out your case, because we don't know what's going to outperform when, and we're not trying to predict what's going to happen, and we think doing so is somewhat of a futile exercise.

Joey Loss 21:09
Yeah, and that that really holds weight coming from a an institution with $800 billion under management, right? Obviously, you've earned it, and to be willing to say we don't know what's going to happen, and here's why we're using math to give us good guidance. Yeah,

Skylar Liang 21:24
one of my favorite times of the year is in the beginning of every new year, we publish papers on how other firms, capital market assumptions panned out and what actually happened. And I highlighted this a little bit earlier when it came to the S, p5, 100, but it's all over the board. I mean, some of these largest institutional asset managers, biggest firms, they always have market outlooks. They're always going to have opinions. And our job at dimensional, we don't have opinions on what's going to happen, other than over time the market's going to go up. And we like to kind of fact check what everyone said at the beginning of the year, and then when they then when they had to walk back. So don't need to name names on here, but it is really interesting to see people screaming, there's going to be a recession, or this asset class is going to outperform, or this country's on the rise. And oftentimes they're mistaken in some sense, yeah,

Joey Loss 22:18
I bet that's a fun project for everybody. Yeah,

Skylar Liang 22:22
we have a good time with maybe the other other managers

Joey Loss 22:26
are, yeah, we've got a live radio show we do on Saturdays here in town, and that's one of the things we love to pull up is like these absolute predictions that people make right and talk about how foolish they are in hindsight. And it's not because we we're doing any better on that front. We just consistently pound it. We have no idea exactly. And you know, what people pay us for, from a financial planning perspective, is to get extremely clear on how do we deploy the statistical understanding of good investing across time to figure out how to apply the money that you have, yeah, into that mop. And

Skylar Liang 23:01
I think sometimes people feel like, well, if we're not doing anything and we're just buying and holding we're giving up returns, or we're sacrificing an investment experience, and we reject that. I mean, at the end of the day, you'd rather capitalize on good returns over the long run than not have any good returns at all, and you let the market work for you again, we know there's parts that you can't control, and we always say, focus on what you can control, and make a plan around what's expected. There's always going to be unspected unexpected outcomes. That's part of investing. Our founder, David booth has a article on uncertainty, and it's about why uncertainty is a good thing. A lot of people hate uncertainty. I know I'm a control freak, and I hate that too, but when it comes to investing, he's right. You need to have uncertainty, because if there was no uncertainty, you might as well just own cash or bonds. There'd be no premium for being in stocks. So at the end of the day, that uncertainty is a good thing. And having a financial planner, having a plan that's strategic and makes asset allocation decisions based off of your investment goals, your needs, not what's happening in the market, is what we see. Makes clients really happy and have a successful experience.

Joey Loss 24:18
Yeah, I completely agree, and I want to comment for a minute on just kind of the infrastructure that leads to a client meeting in a small conference room in a boutique financial planning firm. There's the amount of institutional backing that there is, right? So we use funds from dimensional and funds not from dimensional. We use a broad array of funds, and each of these institutions dimensional, included, of course, builds does all that they can to build these systems that use the math, right? If that's their philosophy, which we lean towards those and they they use the math to create these funds that remove the human emotion error that takes place in investing, right? And maybe those. Funds represent a pocket of the market, or they represent the entire market, but the job of us as the financial planner meeting with the client is to stack all of these institutional products together to create a portfolio that reflects the best of what's possible for them based on their financial capacity for risk, right? So people that have more money, can handle more risk relative to their spending. People that don't have as much money cannot handle as much risk. And so everything that goes into a client meeting, where it's just an advisor and a client couple or client individuals sitting in a room is there's just a tremendous amount of intentional backing that goes into that conversation. And so yeah, I know people can get sticky about the different ways people get charged in the financial planning field, but I think across a lifetime, what is really being accomplished is the minimization of the likelihood of being stupid. As Charlie Munger would say, I think I just posted about this today, like my favorite quote of his is overwhelming success in investing is more about not being stupid than it is about being smarter than anyone else. In fact, you try to be smarter than anyone else, right, which we never try to do. And I don't think dimensional tries to do it at all. If you try to do that, you're almost certainly going to step in poop and end up in trouble. Yeah, well,

Skylar Liang 26:20
and again, I think when you look at the financial industry as a whole, there is, candidly, there are people who aren't keeping your best interests in mind. And particularly when you look at media outlets reporting on what's happening in the market, there's a difference between reporting on objectively. This is what the market has done versus saying. Here are the best five ETFs you need to buy right now. And part of the reason why financial advisors are so imperative to dimensionals viewpoint of investing is because we trust that y'all are able to really separate out the objective truth of what's happening versus something aimed at trying to sell you something or something trying to change something. I mean, Joe, even recently, we've talked a lot about volatility, and a lot this year, the S P is actually still up 9% in a one year time frame as of today, in March. I mean, you based off the headlines, you'd think we're in horrendous territory for the SP 500 and value is actually up over 8% relative to growth year to date right now as well. So again, the headlines are important to take into account when you're trying to figure out maybe just what's happening. But we say don't make asset allocations based off of an article you saw on the internet, and financial planners and professionals are really there to help you navigate that volatile landscape and keep you in your seat.

Joey Loss 27:53
Yeah, absolutely. And the right way to tether all this together changes across your lifetime as circumstances change, not as headlines change. Absolutely.

Skylar Liang 28:02
Yeah, absolutely. And I think that's what the whole strategic asset allocation is. I might have said this earlier, but your asset allocation is informed on your investment objectives, your time horizon, your goals. Those are all really important, not what's going on in the market, not what news article or shiny object comes up, and that's imperative to us at dimensional for a good investment experience. And that's again, why we rely on financial advisors and professionals who have their clients best interest in mind to execute that.

Joey Loss 28:33
The philosophy that you guys have is so hand in hand with financial advice, right? The actual end point of giving the advice and implementing the investment strategies. Was it from the beginning? Was it known that you guys wanted to focus on, kind of like the if we were parlayed into software terms, right? You guys are kind of like the back end developers, right? And then you have us up there, we're the front end development. So we might be the website interface, but if it works, it's because you guys, from the background, pulling the levers. Was that known to be the intention the whole time.

Skylar Liang 29:01
So when we started in the 80s, 1981 we actually started in the institutional space. Our very first strategy was a micro cap us fund, because David booth is one of our founders, recognized that a lot of institutional wealth is only really invested in large cap securities. So the very first fund was institutional and micro cap. We only got into the advisor space subsequent to really being institutional. And was it always the plan that this would be the main way? Who's to say? You'd have to ask David booth, but when it comes to our current client base and how we work in the InVEST management space. Now it's absolutely integral to what we do, and that's a large part of the reason why we frame from having our own financial advisors in house. We don't have that similar to some other firms. We say, You know what we're going to focus on, what we're good at. We're good at. Having really strong investment philosophy, delivering phenomenal investments. And financial advisors are the ones who are phenomenal at working with the clients and implementing a plan. So we're just a piece of your overall plan, as you know, but we've always wanted to stay kind of in this corner, at least right now, and let you guys Excel what you're good at, and let us excel at what we're good at as well. So was it always planned? Who's to say? But it's the way things have evolved now. And I think it's a privilege to be able to work with financial professionals who are have such strong conviction in the planning side of things. I know I'm a big planner. I love trying to control things, so we love that. That's kind of how our things have shaped out so far. That

Joey Loss 30:42
makes sense. And in the end, you know, for an advisor like me, it helps me believe in the integrity of a company like dimensional, if they're not do there's an arm of them doing the same thing I'm doing, you know, because I might be competing with you. Yeah, you guys feel, you feel that full support. And it's always really interesting when I go to an event to learn about what has been going on, what are you guys thinking about? It feels like there's always a lot of client nurturing help, right? You guys are really somehow connected with clients as well, which is interesting. There's a lot of information there that you guys provide to us about what clients really want, which back to the narrative, saying sometimes what I think clients want isn't exactly what I'm doing, yeah, and what they really want, it might be a different thing, yeah? Well, and

Skylar Liang 31:25
a lot of this is behavioral, right? There's a behavioral side to finance, and a lot of it is coaching. The value of your advice is immeasurable in a lot of ways, because so much of it is the psychology of staying invested or being disciplined, of what you're doing, and we create and develop articles, communications tools, frameworks for talking through these things, to equip y'all with with that information and how to best deliver that to your clients. But we don't pretend to be the experts necessarily at that as well. That's kind of why we're we're like, you guys are really good at your job. We're going to do our job with the investments and equipping you with everything you need to talk about investments. But at the end of the day, we're not the advisor here. We're just helping you get there

Joey Loss 32:10
for so it used to be the case that dimensional funds were only accessible to end consumers through financial advisors who'd been vetted and approved by dimensional as understanding how to be a good advisor and how to work with the products that has recently changed and now you guys have an ETF lineup for listeners who are curious about reading about dimensional or just like what direct to consumer information, research, education products. There are, you know, feel free to comment a little bit about

Skylar Liang 32:42
that. Yeah, so we have a public site. I would encourage for people who listening, who are not financial professionals or advisors. You there's a lot of information about our ETF lineup on our public website. We still would advocate for working with a planner to use the dimensional lineup. But you're right, Joey, they are ETFs are not restricted in nature, so anyone is able to trade them. But what I can say is we can trace back most of the ETF assets to financial advisors that we work with anyway. So again, we haven't spent much time, if at all, marketing towards retail clients, trying to get them to buy. You know, we're not going to be well, I guess I can't promise in the future, but so far, we've never been the official ETF of X company or x group of people, or, yeah, putting ads aimed at retail clients out there. So we'd still always recommend working with a financial professional to gain access. But to your point, if you are not working with one, you're always welcome to go to the public website, where they have much more information on what our ETF lineup looks like and a little bit more about our history as well. I know we've talked a lot about being disciplined globally diversified, but there's really so much more that dimensional does when it comes to investing on fixed income as well. So lots of exciting things happening in that space. And yeah, we're always happy to have a conversation with other financial professionals about as well. We just refrained from really going direct to consumer.

Joey Loss 34:14
Yeah. And one last question that just popped to mind is, you know, dimensional has this as an approach, because they're not technically index funds. They have a little bit more flexibility and latitude to behave differently throughout the year than an index fund, in a way that, to me, feels proven to be advantageous to an investor. It's one of the things that may be interested in the first place, coming previously from index funds to that philosophy. Can you talk a little bit about that, of course.

Skylar Liang 34:42
So I guess we always like to start by setting the stage that indexing is a good solution, right? We think that there are merits to being in an index, some of those things being that they're broadly diversified, they're. Costs. They're transparent, and so we always level set, hey, indexing, that's a fine solution, but we think you can do better, and we know you can do better because that's what we've been able to accomplish. There's a couple of considerations around indexing that sometimes are maybe more reserved for the financial professional conversations, but basically, indices make some active decisions on behalf of investors, like how they define the market? What are they actually calling the emerging market space? What countries are involved? How small down in market cap are they going? That's a decision that they're making. I mean, even for the S and p5 100, most people would say it's the largest 500 stocks, it's actually not there. They have different thresholds to be added. You have to have certain amount of profitability. There's also a committee that selects kind of what, what stocks get in or out. And we would just encourage people to think a little bit about that. What is it that you're actually buying? Are there decisions being made on your behalf that aren't giving you the full investment experience. And then I think really the last part is coming towards implementation. A lot of people might not be familiar, but a lot of indices only rebalance a few times a year. In fact, some of them only rebalance once a year, and index funds, their whole goal is to make sure they have zero difference relative to that index, so they have to buy exactly what's in the index on exactly the reconstitution date that they're given. And because of that, there's they can be subject to higher trading costs, higher execution costs, lower liquidity, all these sorts of considerations dimensional, while we can give you a very similar next like experience, we are taking into account information and market prices. We're not beholden to a specific day and time of the year that you have to trade so we can get a better price. We have a better cost advantage. And there's also other considerations when it comes to tax treatment, again, might be a little over our heads for this conversation, but just know that we agree there are merits to indexing. We just know you can do better, and the dimensional lineup can give you a very similar index, like experience, but just better in a number of ways. So talk to if you're a financial professional, feel free to chat. Have a chat with us about it. If you're a retail consumer, talk to your financial professional about it on our path.

Joey Loss 37:26
Yeah. Well, I admire that you guys still advocate, you know, in general, for the index approach above most other approaches. And I would totally agree. I think a leap beyond that, like you said, is just some good education that can help you understand whether it's for you or not, but I think there's some really good merits to considering an approach that has a little bit more flexibility, because market anomalies happen and if reconstitution happens on a weird day, I mean, that can cost real return.

Skylar Liang 37:53
Yeah, an example of that, I mean, would be GameStop. Gamestop was included in the list to rebalance as part of one of the really common small cap indices, and then it had that meme extravaganza. But guess what? It already had to be held in the small cap fund, so you were holding a large cap security in a small cap index fund if you bought ones that were tracking that specific index. So the whole point is, a little bit of flexibility can go a long way here. There's a lot more considerations that we could walk through, but at the end of the day, just know that being flexible can help you out. Indexing is a good place to start, and we think it has its merits, but there's a lot of information you're leaving on the table by not being at least a little active in how the strategies are implemented and again, yeah, to be fair, we don't think that a traditional, active approach might be the best one, either. A lot of times they're really expensive, they're trying to outbeat or out perform the market in a way that's not sustainable or not based on science. And we don't think that's necessarily a good situation either. So middle ground is where we kind of sit, and that's where we're proud to sit, and we think that we have merits, or we take the best of both worlds in our opinion,

Joey Loss 39:06
yeah, I think that's fair. And you know, the line between being strategically not stupid and exactly smart is not always so clear, yeah. And the more you came out, I think the more obvious it becomes how to do where that line is, for sure,

Skylar Liang 39:22
it's blurry, but hey, we say that's what financial professionals are for. That's why, like you, Joey, exists, and that's why you do good by our clients.

Joey Loss 39:31
That's all right. Well, skylarion, thank you so much for your time. I really appreciate having you on if people want to keep up with you. And dimensional, we talked a little bit about the site, but can you, can you just rehash however? Just rehash however people could connect with you and dimensional,

Skylar Liang 39:44
of course, well, it's been a pleasure being on, like I said, if you're a retail consumer and not a financial advisor, professional, either talk with your financial planner about dimensional, or go to our public site. And if you are a financial planner, part of an raa. Or independent broker dealer or any sort of registered firm. You're welcome to contact us also through a public site, but it's through the financial professional public site, and we can get in contact with you though that way. Welcome. Well, I will

Joey Loss 40:13
include a link to dimensionals public site in the show notes, and thank you again for coming on. I appreciate your

Skylar Liang 40:19
time. Yeah, Joey, thanks so much for having us. We're always happy to do these, and at the end of the day, there's little that we can control when it comes to the market's behavior, but you can control your behavior, and that's what's going to help your investment experiences, is being disciplined and working with a good professional like Joey, I completely agree, biased. Yeah, I'm not. I'm also not paid to be here. This is so they're not paying me anything to say that. It's just true until next time. Awesome. Thanks, Joey, take care.

Joey Loss 40:53
Thanks for joining us. If you enjoyed the podcast, please consider sharing it with your friends or family. This is the best way to spread the word, and we want to keep churning out great content for you guys. Show Notes and episode transcripts are available on our website at strivous wealth.com/podcast Special thanks to Bo listens for the intro outro music and to the podcast man for producing the show. Until next time,

Disclaimer 41:19
The Wealth Unplugged Podcast is sponsored by Strivus Wealth Partners, Joey and Adam’s SEC-registered investment advisory offering Financial Planning and Investment Management services to clients across the United States. The opinions voiced in this episode are for general informational purposes only. Nothing any host or guest says on the podcast is meant to serve as advice or recommendations for any individual security to determine which investments may be appropriate for you. Consult your financial advisor prior to investing. This information is not intended to substitute for individualized tax insurance or estate planning advice. Please consult your tax advisor, insurance agent or estate advisor regarding your specific situation.