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Earlier this month, I traveled to Washington D.C. with my husband and dog, Otis.  The Dimensional Fund Advisors conference was held Thursday and Friday and we stayed for the following few days to celebrate my birthday and see the city.  (See my Facebook page for the full “Otis goes to Washington” photo album.)

During the conference, I spent the day taking in Dimensional’s philosophy, the research behind it and various ways to incorporate different strategies on behalf of our clients.  As I’m sure most of you have heard over the years, you can boil down years of complex, Nobel-prize winning research and portfolio design into one over-arching belief: if you trust the markets and work with them rather than against them, you won’t make a killing but you won’t get killed either.

At night after the conference, I’d come back to the hotel and turn on my current TV addiction: The Sopranos.  I’m sure most of you know that The Sopranos is a story of a New Jersey crime family (read: the mob) led by Tony Soprano, a seemingly normal suburban man with a wife (Carmela) and two teenage children.  In an episode we happened to be watching, Carmela was trying to convince Tony to think about their long-term financial future.  She wanted him to get estate planning documents and start an investment portfolio.

Tony’s reply was “Stocks? You gotta be high up in the corporate structure to make that work for you.” I can understand why Tony would think that you have to have some kind of an edge to ‘win’ at the market.  Every business activity he engaged in involved some element of deception.  His guys made their living by getting tipped-off about a joint they could rob, a sporting event that was rigged or a person they could blackmail.  The entire enterprise required his people to get insider knowledge that they could leverage for a profit.  He knew that to make a killing, you have to have some kind of advantage over the other guy – otherwise you might get killed.

So, if you imagine, as I did, Tony coming to me for investment advice you can imagine that he’s going to expect me to produce the magic.  The secret sauce, the edge over the other guy.  Of course, I would tell him what I, and many reams of statistical data show to be true: that in today’s world of professional money management and trading dominated by institutional investors, it’s next to impossible to acquire and act on superior knowledge that no other investor knows.  There was a time when investors had the potential to do that.  Back when there weren’t book authors and TV hosts and newspaper and internet journalists, not to mention professional investment analysts, plodding through company data on a daily basis, the average investor could potentially research their way to knowing more about a company’s earnings and outlook than the other mom and pop investors they were up against.   But now, unless you want to break someone’s knee caps, it’s a lot harder to find an unturned stone of objective data that would enable you to know that much more than the next guy.

Without the advantage of better information, conventional investing is based on the manager’s perceived ability to speculate.  It requires a belief that someone, ourselves or others, have a superior ability to interpret the data.  There are lots and lots of people who believe they can glean something smarter, better, faster from the exact same information to which we all have access.  They know when the bull market will end, when interest rates will rise, when to get out and back in, which stock is the hidden treasure and how all of this will make you a killing.  They know it in their gut.  I guarantee you there’s a woman sitting at a slot machine right now, convinced in her gut that she knows that’s the machine that’s going to hit the jackpot.  She might even be right, but I’d rather not pin my financial future on it.

To know the fair price at which to buy or sell a stock, we don’t need to rely on knee-cap busting or gut instincts.  The market will tell you at any given moment what millions of investors have determined to be the fair price.  If you trust that, rather than try to outsmart it, then you can focus on a whole range of other things that actually can make a difference like reducing expenses, managing risk and being disciplined.

A guy like Tony Soprano doesn’t want discipline in exchange for reduced risk.  He wants high risk with no discipline.  He wants an immediate score, not a long-term return.  He wants a shortcut, an edge, a secret not a strategy.  That’s why I wouldn’t want him for a client.  That and I don’t want to get whacked.