"Mark Hebner's magnificent book presents solid financial
theory and practice wrapped in an elegant package."
- Harry
Markowitz Ph.D., Nobel Laureate in Economics, “Father
of Modern Portfolio Theory," Professor of Economics at University
of California at San Diego, author
of Portfolio Selection: Efficient Diversification of Investments as
well as numerous other books, articles and papers.
"...an incredibly handsome and wise book. We must be near
a "tipping
point" of passive over active. Perhaps Hebner's book will
mark the moment. Congratulations!"
- John
C. Bogle, Founder and Past CEO of The Vanguard Group
Index Funds Advisors (IFA) is a fee-only
independent financial advisor that provides wealth management
by utilizing risk-appropriate, returns-optimized, and tax-managed
portfolios of index funds. IFA founder, Mark Hebner and the team
at IFA have done extensive research as shown on this web site
and the #1
ranked book on index funds. This research leads our
clients to the optimal money management strategy, net of our
advisory fees
and taxes. IFA completely avoids the futile, speculative, and unnecessary
cost-generating activities of stock,
time, manager,
and style picking.
Instead, our investment strategy employs a disciplined, quantitative
approach, emphasizing broad diversification and consistent exposure
to the structural trends of
publicly traded markets around the world, with an overweighting
of small and value priced companies. In short, we invest in capitalism.
The IFA advice is based on the highly respected research
indexes designed by Eugene Fama and Kenneth French and documented
in their empirical and peer-reviewed publications. The two
professors
rank
#1 and #2 on total downloads per paper among 10.5 million downloads
on the Social Sciences Research Network. Our current and independent
advice incorporates 80 years
of IFA Indexes and Indexfolio risk
and return data, third generation index fund designs and
25 years of refined passive trading techniques employed by
Dimensional Fund Advisors (DFA.)
IFA does not accept payments from DFA or from any other recommended
investments. IFA is exclusively paid by its 2,000+ clients
for its advice on the optimal wealth management of approximately
$1billion of assets under management, as of July 2007.
IFA adds value through matching people with portfolios
by carefully qualifying and quantifying 5 dimensions of an investor's
Risk Capacity
and matching it to 5 dimensions of a portfolio's Risk
Exposure. This process produces investor-specific optimal
returns by applying the IFA proprietary concept of 10dRisk™.
IFA obtains academically identified capital market rates of returns
for its clients from about 16,000 public companies in the U.S.
and about 40 other countries around the world. IFA then designs
highly tax-managed and low cost trading strategies, maintains
ongoing proper risk exposures through rebalancing, manages cash
inflows and outflows, and provides online monthly
and inception to date detailed measurements of client performance
relative to the IFA Indexes and other traditional benchmarks.
This ongoing reporting on performance, gains, income and tax reporting
is exclusively available at IFA and adds significant value since
measurement is essential to improvement.
Index Funds
Index
funds are funds (mutual or exchange traded) with clearly defined sets of rules
of ownership, that are adhered to regardless of
market conditions. There are about 1,000 index funds. We like many of them, but our current favorite is the index funds from Dimensional
Fund Advisors (DFA).
Charles Schwab & Co., Inc. and Fidelity Investments
have been selected as Index Funds Advisors' primary custodians. Custodians
hold, insure, and provide reports on our clients' assets.
IFA has advised clients to invest in DFA funds since March,
1999. IFA receives no compensation from any product or service
they advise their clients to use. IFA only receives fees from
their clients, other advisors who license their software and
book sales. The best strategy for investors is to invest in
a globally diversified portfolio of index funds and rebalance
as needed. As Louis Pasteur said, "Chance favors the prepared
mind."
Comprehensively, they provide overwhelming evidence and support for the investment strategy of Index Funds Advisors, Inc. to buy, hold, and rebalance index funds.
A Recovery Program for
Stockaholics
Rehab for All Types of Active Investors
The 12-Step
Program is a complete investor education program and
the treatment of choice for active investors. On average, about
100% of portfolio return level is explained by the index funds
allocation. (see 1, 2)
STOCK MARKETS ARE RANDOM AND EFFICIENT (please
read the links.)
How and Why Free Markets Work:
Stock
markets throughout the globe have a history of rewarding investors
for the capital they supply to those who engage in capitalism
(about 10% per year over 80 years, with a Std. Dev. of 20%).
Companies, inclusive of their shareholders, compete with
each other for liquidity and investment capital, and millions
of investors compete with each other to find
the most attractive returns. This competition quickly
drives prices to fair value, ensuring
that no investor can expect greater returns without bearing
greater risk. This means that returns are the result
of risk compensation and not the result of price
speculation. Market prices were meant to be free, not managed. Risk
is all you can manage. Returns from price changes are
random and therefore not predictable or manageable in the near
term. In diversified portfolios, over the long term (about
10 years), investors are appropriately rewarded for the risks
they take. This is due to the time diversification of short term
returns. Invest in risk-appropriate investments and relax. Capitalism
Incorporated is the ultimate investment for your capital.
(celebratecapitalism.org)
IFA is looking for help with Korean
and Chinese translations. IFA will pay $150 to translators of
the 12-Step Overview (see
English version) for any languages we have not completed. Please
email us if you would like to help us change the way the
world invests.
July 22, 2010 "It is difficult to get a man to understand something when his salary depends upon his not understanding it." - Upton Sinclair, (1935) - See Dan Solin's new post about this quote.
July 5, 2010 - An important message from DFA’s Weston Wellington is titled “Is It Different This Time?" Click here to view it. This insightful and informative presentation reveals that time after time, headlines have been poor predictors of future market movements. Also see this video.
July 5, 2010A
analysis of eight centuries of financial folly lead to the conclusion
that nothing is different. Capitalism is amazingly resilient.
Reinhart and Rogoff's book provides a quantitative history of
financial crises derived from over 600 years and 66 nations.
The basic message from all their data is that there are remarkable
similarities in today's financial crises with experience from
other countries and nations. John Templeton said the four
most dangerous words in investing are, "It's different this
time."
Buffett, Schwab, Lynch, Fama, Sharpe, Hebner, and more...
"It is difficult to get a man to understand something when his salary depends upon his not understanding it." - Upton Sinclair, (1935)
Three
Annual Reports from Warren Buffett mention Index Funds!
1. ..the best way to own common stocks is
through index funds...
- Warren Buffett, Berkshire
Hathaway Inc. 1996 Shareholder Letter
2. Additionally, those index funds that
are very low-cost (such as Vanguard’s)
are investor-friendly by definition and are
the best selection for most of those who
wish to own equities.
- see page 10 of Berkshire
Hathaway Inc. 2003 Annual Report
3. Over
the 35 years, American business has delivered
terrific results. It should therefore have
been easy for investors to earn juicy returns:
All they had to do was piggyback Corporate
America in a diversified, low-expense way.
An index fund that they
never touched would have done the job. Instead
many investors have had experiences ranging
from mediocre to disastrous. - page 5, 2004
Berkshire Hathaway Annual Report
So investors shouldn't delude themselves
about beating the market? "They're
just not going to do it. It's just not
going to happen."
- Investors
Can't Beat Market, Jan 2, 2002 - Daniel
Kahneman, Nobel Laureate in Economics, 2002;
"And
the world is a better place (prices are
more rational) when misinformed investors
admit their ignorance and switch to a
passive market portfolio strategy."
- New
Fama/French Paper
"Mark Hebner's magnificent book presents solid financial
theory and practice wrapped in an elegant package."
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