The film Tune Out the Noise is a documentary by Academy Award–winning director Errol Morris about the rise of academic finance, the computer analysis of market data, index funds, and the founding of Dimensional Fund Advisors (DFA). It appears that DFA commissioned this film, so it obviously will support their specific type of investing, but it should also explain the reasoning behind low-cost index funds and why high-expense active funds have been steadily losing market share over time.
Until 1/31, you can watch the film for free at film.dimensional.com/podcast with access code RATIONAL. They ask for name and e-mail, but don’t verify. This is offered through the Rational Reminder podcast, and you may also find interesting their interview with Errol Morris.
I learned about this through Paul Merriman’s newsletter:
Trust in the future of an investment may be the most important reason for most investors to stay the course for the long term. I formed a lasting trust in the academic work of Drs. Fama and French when I attended a 3 day workshop at Dimensional Fund Advisors in 1994.
That trust led our firm to use the DFA funds since the mid 90s. While I believe there are a lot of people who find our long term studies helpful, I’m not sure that all of those people understand that almost all of our studies, that go back to 1928, are based on the data from the academics who are associated with DFA. If you don’t already have a sense of trust about the source of our data, I think you will feel better if you watch the new documentary, “Turn Off the Noise.”
Here is a summary blurb about the film:
Tune Out the Noise is a documentary film about a group of unlikely upstarts who crossed paths at the University of Chicago in the middle of the 20th century, just as computers were first being used to analyze data. That serendipitous, monumental shift enabled them to develop, and then apply, research that turned Wall Street upside down, from its ineffectual investing methods to how those were sold to the public.
It’s a story about how finance became a science and challenged the traditional methods of investing. That, in turn, led to the invention of index funds, the founding of Dimensional Fund Advisors—an investment firm dedicated to implementing the science—and the evolution of client-focused financial advice. These advances have benefited generations of investors.
I am currently in the middle of watching the film (trying to finish before the free access ends), and it does have a very nice production quality while showing the backstory of many famous financial academics. It’s kind of nice to put a face with the names. I personally only invest a small portion of my portfolio into DFA and DFA-style funds (Avantis was started by former DFA executives), but I will watch the rest with an open mind and hope to learn some useful history.
