Dimensional Origins

How is Dimensional different from other money management firms? I think the critical difference is the way we look at markets. We trust the markets, and over the long haul, that approach has served us well. Dimensional is a firm that's dedicated to implementing the great ideas in finance. That's what we're about. The idea was a small company fund and we went out and tested the idea, and we were able to get a few clients. Obviously, we had no track record. Our first office was my apartment in Brooklyn Heights. It was a two bedroom apartment. My brother had been living with me, and he moved out, and used that second bedroom as the trading room. It was run on the thinnest of margins, and we didn't exactly have success written all over us. When you start a business, one of the first things you worry about is, and people say, aw, man, everybody knows that, so I was particularly concerned about, was there research out there that we didn't know about, that could be used against us? So my first phone call was to Gene Fama. I had worked for Gene as a research assistant and teaching assistant, and I called on him, and said, look, here's what we wanna do. And we invited him to be a founding shareholder of the firm, and on the board of directors. We're blessed with working closely with Fama, and French, who were largely the people that developed the data. One of the first things we discovered in running a mutual fund was that a mutual fund has to have its own separate board of directors and so we thought, who better to monitor what we're doing, than other leading academics? So we went over to the Business School of Chicago, and first person we talked to was Merton Miller, who eventually would get the Nobel Prize for his work in cost of capital, and we asked Merton to be on the board, and he agreed. And next door was Myron Scholes, and we went into his office, invited him to be an independent director of the mutual fund, as well, and he also agreed. I think of it more as an investment philosophy that draws on the academic community. We think that distinguishes us from the other managers. In this process, we have, you know, the best minds, the people that have developed the research that leads to these conclusions about Dimensions, so we're very comfortable with our process, and very pleased with the results that have been achieved with it. I mean, basically, and I don't know anybody else that would ever have this attitude, they feel that they should just let us do our research, and if something comes out of that that they can use, then they will do it, but basically, they think we're working, and it can be profitable to them, even though it's primarily academic work. Dimensional, unlike any of the big banks, or others that you would think of, or even other fund complexes, was founded on finance science so the culture, from the beginning, matched my culture. I consider myself to be an incredibly lucky guy. Have had the exposure to these great people, with great ideas, be able to implement them. There are many other companies that have used our research without us getting involved. Dimensional, they're different. It's been fabulous working closely with such talented people, and I think what's great, as well, is that the biggest beneficiaries of all of this, hopefully, are the clients. At the end of it all, it's about the implementation of the great ideas, and these ideas are much bigger than the firm.