The University of Chicago Booth School of Business

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Chicago Booth Magazine


The True Believer: David Booth, ’71, proves his Chicago smarts by refusing to out-think the market

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Back to School, Chicago-Style

Learning Dimensional’s fundamentals isn’t everyone’s cup of tea, Booth admits. The ideas don’t lend themselves to a 30-second sound bite, and “our challenge is to find people who are willing to invest enough time to learn the message.” Seeing that happen, he adds, has been one of the great rewards of his professional life. “You see the light go on,” he says. “It’s a transformative experience.”

Bloomberg News has wryly noted that many Dimensional advisors “travel in a parallel universe where the rest of the world seems to be completely out of its mind.” But one seminar attendee has a retort to such charges: “People say it’s like drinking Kool-Aid, that we’re in a trance,” he said. “That’s a bunch of BS. All we did was become educated, and everyone who is doing active management is not.”

As an added bonus, attendees are often schooled in Dimensional’s fundamental principles by the very people who invented them—most notably Fama. “I’ve known Gene Fama now for 39 years and he still uses the same types of transparencies,” Booth says laughing. “The whole world has gone to PowerPoint except Gene.”

Booth continues to believe that there’s also a lot to learn from Chicago that isn’t in theories or curricula. He credits the business school for showing him the value of encouraging intense, open debate. “It had a pronounced effect on the way we manage our firm,” he says. And he feels his own personal belief system has been shaped by the principles of uncertainty and randomness that underlie efficient markets. “Before the University of Chicago, I had a tendency to always connect, to always look for causality,” he says. “Chicago made it easier for me to accept uncertainty and the effects of random outcomes. Studying it in detail makes you much better prepared to go through life and be more accepting.”

Booth has never forsaken his beloved Jayhawks— KU’s Booth Family Hall of Athletics, a gift from all the Booth siblings in honor of their parents, is testimony to the family’s enduring bonds. But he also counts himself among Chicago’s biggest fans. “My adult life has been just one continuous exposure to the ideas at Chicago,” he says. “I was thinking this the other day: too often people outside of business think of businessmen as people who make some sort of Faustian pact in order to get ahead. I see my career as spreading the word about efficient markets and helping people have a much better investment experience. So my pact with Chicago is a kind of anti-Faustian pact.”

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