In 1981 David Booth, MBA’71, cofounded Dimensional Fund Advisors. The investment firm sought to apply the economic lessons he had learned at what is now named, in his honor, the University of Chicago Booth School of Business. He still works at Dimensional today, serving as its chairman—“half days,” says Booth, who turns 80 in December. “I’ve cut back.”

Motivated by ideas such as the efficient market hypothesis, which argues that asset prices reflect all available information, the firm became a pioneer of passive and factor investing. (The hypothesis was proposed by Booth’s mentor Eugene F. Fama, MBA’63, PhD’64, a 2013 Nobel laureate and the Robert R. McCormick Distinguished Service Professor of Finance at Chicago Booth. Fama also serves on Dimensional’s board of directors.) Rather than trying to pick winning stocks, this approach harnesses long-term thinking—as well as the stock and bond markets’ tendency to grow over time—to generate returns. By tilting toward stocks with higher expected returns, such as smaller companies, you can outperform an index over time.

In his new book Stay Calm: Learn to Embrace Uncertainty in Investing and Life (Authors Equity, 2026), Booth looks back on his career and the research that shaped it. This interview has been edited and condensed.

Why did you want to write this book now?

Well, a lot of people are experiencing a lot of anxiety now. My view is that if people better understood how markets work, they would be able to make better investment choices and feel better about them and be more likely to stay calm. It’s part education and part trying to help people feel more confident about their investment approach.

Passive investing has gone from a niche to a mainstream approach. How does that feel for you?

I find it incredibly rewarding and satisfying. When you get to be my age, you want to look back and think that somehow you helped a little bit along the way. That’s why I still come into work every day.

The overriding feeling is, “How lucky was I to come along at a time when such a paradigm shift in the money management industry was occurring?” I was at one of the epicenters of this shift, with the people who really made it happen. Nearly all the relevant people who really changed the industry, I got to know—a lot of them at Chicago. That’s about as cool as it gets.

What were your hopes for Dimensional Fund Advisors when it started, and what are your hopes for it today?

Basically, we’re here to help people have better lives. That’s why we want to apply the best thinking about markets and how they work, so we can be of the most help.

When we started, our clients were really large, sophisticated institutional investors—pension funds, sovereign wealth funds, and so forth. Because of the way they invested money, they weren’t able to invest any meaningful amount in the stocks of smaller companies. So that’s what we did. In fact, we were the first to use the term small cap in money management and treat it as a separate asset category. We’d say, “Look, it makes sense to have stocks of both large and small companies, not just large.” In 45 years, everybody’s come to agree with that.

These big, sophisticated institutions are great clients, and we help them. But today the people we can really help the most are individual investors, particularly people who haven’t started investing at all. My parents never invested in public markets because they thought of themselves as outsiders who would just get taken advantage of.

Now, with all this evidence from the academic world showing that professional investors don’t beat the market, and that you can buy the market very cheaply—that’s a profound shift in thinking, and it’s made investing realistic for everyone. So that’s who we want to reach.

How can people learn to identify good investment advice?

As a general rule, if the advice is getting you to trade, be a little suspicious. Good advice is about thinking through your particular situation and coming up with an investment approach that makes sense for you. Having somebody who approaches you and says, “I think the market is a little frothy here, and I think we should get out”—that’s not the kind of advice you want.

In the book, you write that “optimism is the only long-term realism.” Are you naturally optimistic, or is that something you’ve cultivated over time?

I probably was born with a healthy dose of optimism. But when I started looking at the data, it just reinforced that. Before 1960 there wasn’t research-quality data on stock and bond returns. That all changed in the ’60s. When I came to school and got all the research and the data, what did it tell you? Stocks have higher returns than bonds. Bonds do better than money market funds. All of those keep pace with inflation. And the insiders don’t seem to be able to do better than the market. That’s nothing but good news.

We’ve had a long enough history now about stock and bond returns that people ought to feel comfortable about investing. And most people are going to have to have some fraction of their money in the stock market if they’re going to achieve their long-term goals.

Many people today feel economically anxious to the point of feeling economically fatalistic. What would you say to them?

I understand people have anxiety today. I have anxiety about what’s going on—the world is not being managed the way I’d hope it would be.

But let’s go back over the last 100 years. Do you think people are more anxious now than they were during the Great Depression, during World War II when at first it looked like we were losing, during the late ’70s and ’80s with double-digit inflation, during the Great Recession, or when COVID hit in early 2020? Those are serious periods of anxiety. And through all of that, stocks have done roughly 10 percent a year. That’s why I say the stock and bond markets are miracles. You end up with a fair return even though you go through all kinds of anxiety.

It comes down to human ingenuity. When bad things happen, you don’t sit there and take it. You figure out how to get back on track, and that’s what happens with firms. Take COVID: The US stock market dropped 34 percent in just five weeks, and people were frightened. But firms reacted very quickly. My guess was we’d get back on track faster than people might think, which is what happened. The recession was one quarter—the shortest on record.

Just because you have anxiety doesn’t mean the stock market returns are going to be bad.

Have you ever struggled to follow your own advice or felt pressure to chase financial trends?

Every time I have that urge—I’m human—I go back to basics. Public stock and bond markets are one of the wonders of the world. The way the stock market works, you’ve got buyers and sellers coming together, and they don’t trade unless each side thinks they’ve got a good deal. As a result, you can accept that prices are being fairly set. If you buy the stock market, you’re getting a fair deal. There aren’t too many industries where you have that assurance.

So when I start thinking about where the market is going, I immediately go back to first principles. Unless I think I know more than the market, I’m better off not doing anything. And I know I don’t know as much as the market.

When you were at what is now Chicago Booth, was it obvious how impactful the ideas you were studying would become?

It was pretty clear. This was a total paradigm shift in how to think about investing. It’s not about staying up late at night pulling your hair out trying to read financial statements. It’s about managing portfolios, controlling risk.

The ideas were changing academia, but they weren’t changing the real world. That was really the opportunity—the real world was going to eventually catch up with what was going on in academia. And it has.

What was your life like outside the classroom?

One of the things I really remember is the football team. I went to the University of Kansas for undergrad, where football is a big deal. I enjoyed that. Then I came to Chicago, and it was not a very big deal at all, but I enjoyed that too.

In 1969 football came back for the first time in something like 30 years. Many of the people on the team hadn’t even played high school football. They didn’t have a marching band, so what we did at halftime was we’d all run out on the field with our kazoos and just start humming. Very much a University of Chicago experience.

What are the best and worst financial decisions you’ve ever made?

My best financial decision was going to the University of Chicago. That’s what made all the rest of it happen. The worst ones are always investing in my friends’ businesses. I’m still waiting for the first one to pay off.