IL52: Why Staying Calm Is the Ultimate Investing Edge ft. David Booth

**David Booth** (0:01)
That's a big part of it, for sure. And the evidence shows, that's where this research comes in, is that the pros don't seem to be able to beat the market. So they're not taking advantage of outsiders. It's really one of the wonders of the world, the public market.
These days, you can buy a market portfolio very inexpensively, very easily, everywhere. So there's no excuse not to invest.

**Niels Kaastrup-Larsen** (0:27)
Welcome to Top Traders Unplugged. In markets, success doesn't come from predicting what happens next. It comes from being prepared for what you can't predict.
In each episode, we go deep with some of the world's most thoughtful minds in investing, economics, and beyond, to understand how they think, how they prepare, and how they decide, and the experiences that shaped how they see the world. No noise, no short cuts, just real conversations to help you think better and invest with confidence.

**Kevin Coldiron** (1:01)
Welcome everyone to Top Traders Unplugged. My name is Kevin Coldiron, and I'm host of the Ideas Lab series where we talk with authors of new books that help us understand and navigate the global economy. Our guest today is one of the pioneers of the modern investment world, David Booth. He is the Founder and Chairman of Dimensional Fund Advisors, which manages $1 trillion in assets. And he was an early pioneer of index investing and one of the first people to bring the ideas of modern financial science out of academia and into real world portfolios. And I know all this because my own career in finance was in the same world and I was lucky enough to start after David and others had built the foundations. And if you own an ETF that tracks the market or attempts to do better than the market, say by identifying stocks that have attracted valuation or repeatable cash flows, then you too are directly benefiting from David's legacy and the work of those people close to him.
He joins us today to talk about his brand new book, Stay Calm, Learn to Embrace Uncertainty in Investing and Life. David, thanks so much for joining us and welcome to the show.

**David Booth** (2:16)
Oh, well, thanks for having me.

**Kevin Coldiron** (2:19)
So, maybe we could start with your motivation for writing the book. I mean, you say in the acknowledgments that Bob Merton, the Nobel Prize winner, had wanted you to write this for years. And I'm just curious, like, why did you decide to do it now?

**David Booth** (2:38)
Well, it's kind of the result of working for about the last dozen years or so on and trying to help make investing more intuitive. What I realized about a dozen years ago is that all this, the new science, the quantitative methods and so forth are very useful.
And most people have no chance of really understanding all those details. If you really want to help people, I felt it important that we figure out how to talk to people using English rather than Greek. And so, over the last dozen years, I've been working on it. And finally, I got to the point where I thought I had a message to deliver. You know, that, and in particular, this year, where a lot of people feel, have a lot of anxiety about what's going on for what, that we could write a book that would help people be more optimistic about investing and feel more confident that they can have a long-term investment performance that will enable them to meet their investment objectives. You know, so, and basically feel good. I guess it's time to have a book that has a little bit more about hope in it, you know?

**Kevin Coldiron** (3:51)
Yeah, and I appreciated that about the book. And what we're going to talk about that, particularly about your, you know, you say you're an optimist and you'll always be optimistic. And I want to talk about that a little bit later. I thought maybe we could, you know, start with a little bit about your personal background. I mean, you grew up in Kansas, you had an undergraduate degree and a master's degree from the University of Kansas. And then you went to the finance PhD program at the University of Chicago. And you were there at a time of, it seems like great excitement. Oh, wow.
You were working with some of the pioneers in academia. And what was interesting to me is, you talk about this, that you had worked really hard to get into that program. And you're there at this time where they're making new discoveries and it seems very exciting. You're working with household names or people who are now household names.