David Booth’s University of Chicago Lessons

Last month’s Bloomberg View’s Masters in Business radio podcast with David Booth, founder, Chairman and co-Chief Executive Officer of Dimensional Funds Advisors (DFA) is well worth a listen. Especially relevant in this season of graduations and new beginnings, this podcast delivers terrific insight into Booth’s academic background and his career path.

A native of Kansas, Booth earned a B.A. in economics and a M.S. in business from the University of Kansas. He went on to receive a M.B.A. from the University of Chicago’s business school, where he became the teaching assistant for future Nobel laureate Eugene Fama.

DFA has been called the applied think tank from the University of Chicago because Booth has drawn so much on the work of his former professors there. DFA now manages more than $400 billion.

Booth never intended to enter the investment world. He wanted to return to Kansas to teach. As he first told Professor Fama, “I know what you do and I don’t want to do it.” However, he calls his later work with Fama as “life changing.” Booth recalls starting the first practical index fund in 1971, for institutions, and later founding DFA, a firm built around the idea of market efficiency and grounded in academic research.

In the podcast, Booth takes deep dives into DFA’s investment philosophy, corporate governance and shareholder rights, DFA’s positive inflows in 2007-2009, behavioral finance, the economic recovery, risk management, the importance of diversification and rebalancing, and working with Senator Bradley on retirement income.

Asked what a day in the life of David Booth is like, he responds, “It’s a lot of fun. Every day is different and we have spirit that we can change things.” That’s inspiring!

I encourage you to listen in.

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David Booth

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