From 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

4. Most investors, both institutional and individual, will find that the best way to own common stocks (shares¹) is through an index fund that charges minimal fees. Those following this path are sure to beat the net results (after fees and
expenses) of the great majority of investment professionals.² - Warren Buffett, 1996. Annual Report, Berkshire Hathaway.

Talk to Chuck: "Buy index funds. It might not seem like much action, but it's the smartest thing to do." - Charles Schwab, Money Magazine - p. 88, Jan 2007 Issue

"Most of my investments are in equity index funds." BusinessWeek & The Parable of Money Managers - William F. Sharpe, Nobel Laureate in Economics, 1990

Question: "When is the market likely to be inefficient or to misprice securities?" Fama: When it’s closed..." - Eugene Fama Interview 2006

"Most individual investors would be better off in an index mutual fund."
- Peter Lynch

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

"Wall Street's favorite scam is pretending luck is skill." - Ron Ross, Ph. D. Economist - The Unbeatable Market, 2002

"Empirical evidence provides no support for the claim that active management of small-cap portfolios is more fruitful than it is for large-cap portfolios."
- Richard M. Ennis, The Small-Cap-Alpha Myth Also see: The Big Lie, by William Bernstein & International

1. "Returns are the result of risk compensation, not price speculation."

2. "Most people are beat up by the market, instead of beating the market."

3. "The only time you should sell is when you need cash, or you have given up your faith in capitalism."

4. "Risk drives returns. Most investors get the cart before the horse, where the cart is return and the horse is risk."

5. "Markets were meant to be free, not managed"

- The 5 quotations above by Mark Hebner

"NONE OF US IS AS SMART AS ALL OF US" - A sign at Wells Fargo Bank during the creation of the Index Fund, circa 1971.

Step	Quotations	Author		Source or Publication	Year
1 Active Investors	"The investor's chief problem - and even his worst enemy - is likely to be himself"	Graham, Benjamin(1894-1976) Legendary American investor, scholar, teacher and co-author of the 1934 classic, Security Analysis		Graham, Benjamin. "Security Analysis". New York: McGraw-Hill Companies, 1934.	1934
1 Active Investors	"Most investors are pretty smart. Yet most investors also remain heavily invested in actively managed stock funds. This is puzzling. The temptation, of course, is to dismiss these folks as ignorant fools. But I suspect these folks know the odds are stacked against them, and yet they are more than happy to take their chances."	Clements, Jonathan, Journalist		Clements, Jonathan. Wall Street Journal (New York), February 27, 2001.	2001
1 Active Investors	"Properly measured, the average actively managed dollar must underperform the average passively managed dollar, net of costs. Empirical analyses that appear to refute this principle are guilty of improper measurement."	William F. Sharpe, Nobel Laureate in Economics, 1990		The Arithmetic of Active Management, The Financial Analysts' Journal Vol. 47, No. 1, January/February 1991. pp. 7-9	1991
1 Active Investors	"The results of this study are not good news for investors who purchase actively managed mutual funds. No investment style generates positive abnormal returns over the 1965-1998 sample period. The sample includes 4,686 funds covering 26,564 fund-years."	Davis, James L.		Mutual Fund Performance and Manger Style, Financial Analysts Journal 57 (2001): 19-27	2001
1 Active Investors	"The deeper one delves, the worse things look for actively managed funds."	Bernstein, William		The Intelligent Asset Allocator	2001
1 Active Investors	"The sheer magnitude of the difference we discovered between the total returns earned by funds and the results captured by the average shareholder is shocking and tragic." [Funds = 5.7%, Investors = 1%]	Charles Trzcinka, Professor of Finance, Indiana University & Jason Zwieg, Columnist		What Fund Investors Really Need to Know, by Jazon Zweig Money Magazine, June 2002. (see 1.3.3)	2002
1 Active Investors	"[Most investors would] be better off in an index fund."	Peter Lynch, famous stock picker		Barron's, p. 15, April 2, 1990	1990
1 Active Investors	"Most investors, both institutional and individual, will find that the best way to own common stocks (shares’) is through an index fund that charges minimal fees. Those following this path are sure to beat the net results (after fees and expenses) of the great majority of investment professionals."	Warren Buffet		Berkshire Hathaway Inc. 1996 Shareholder Letter	1996
1 Active Investors	"Most of the mutual fund investments I have are index funds, approximately 75%."	Charles R. Schwab, author		Guide to Financial Independence, p. 90	2000
1 Active Investors	"Rather than making money, 240 pension funds lost about 0.5% per year on average, over the last five years through their active management activities."	The Ambachtsheer Letter		The Ambachtsheer Letter	1998, Sept. 28,
1 Active Investors	"The road to financial perdition begins with a call to your broker who claims to be able to 'beat the markets.'"	Daniel R. Solin		Author of Does Your Broker Owe You Money? (Perigee Books, 2006) and The Smartest Investment Book You'll Ever Read. (Perigee Books, 2006)
1 Active Investors	"If the data do not prove that indexing wins, well, the data are wrong."	John C. Bogle		The Little Book of Common Sense Investing, p. 28	2007
1 Active Investors	"Hint: money flows into most funds after good performance, and goes out when bad performance follows."	John C. Bogle		The Little Book of Common Sense Investing, p. 50	2007
1 Active Investors	"The investor with a portfolio of sound stocks should expect their prices to fluctuate and should neither be concerned by sizable declines nor become excited by sizable advances. He should always remember that market quotations are there for his convenience, either to be taken advantage of or to be ignored.	Benjamin Graham, The Intelligent Investor, 1949		John C. Bogle, The Little Book on Common Sense Investing	2007
1 Active Investors	"the neural activity of someone whose investments are making money is indistinguishable from that of someone who is high on cocaine or morphine"	Jason Zweig		Your Money & Your Brain	2007
1 Active Investors	"Wall Street, with its army of brokers, analysts, and advisers funneling trillions of dollars into mutual funds, hedge funds, and private equity funds, is an elaborate fraud."	Michael Lewis		Conde Nast Portfolio, The Evolution of an Investor, December 2007, page 184	2007
1 Active Investors	"It's not that stock prices are capricious. It's that the news is capricious."	Burton Malkiel, Princeton Professor of Economics and author of A Random Walk Down Wall Street		A Random Walk Down Wall Street
1 Active Investors	"The American economy is going to do fine. But it won't do fine every year and every week and every month. I mean, if you don't believe that, forget about buying stocks anyway... It's a positive-sum game, long term. And the only way an investor can get killed is by high fees or by trying to outsmart the market."	Warren Buffett		Fortune Magazine, "What Warren Thinks..." April 14, 2008	2008
1 Active Investors	"the active investors will have their returns diminished by a far greater percentage than will their inactive brethren. That means that the passive group – the "know-nothings" – must win."	Warren Buffett		2007 Berkshire Hathaway Shareholder Letter	2007
1 Active Investors	"When a shareholder asked for the single best specific investment idea Buffett could recommend to an individual in his 30s, Buffett said: "I would just have it all in a very low-cost index fund from a reputable firm, maybe Vanguard.	Jason Zweig, quoting Warren Buffett		CNNMoney.com, May 5, 2008 -About the Berkshire Hathaway 2008 Shareholder Meeting	2008
1 Active Investors	"Index funds have regularly produced rates of return exceeding those of active managers by close to 2 percentage points. Active management as a whole cannot achieve gross returns exceeding the market as a while and therefore they must, on average, underperform the indexes by the amount of these expense and transaction costs disadvantages."	Burton G. Malkiel		The Little Book of Common Sense Investing	2007
1 Active Investors	"The S&P is up 343.8 percent for 10 years. That is a four-bagger. The general equity funds are up 283 percent. So it's getting worse, the deterioration by professionals is getting worse. The public would be better off in an index fund."	Peter Lynch		The Little Book of Common Sense Investing	2007
1 Active Investors	"People ought to recognize that the average fund can never outperform the market in total."	Jon Fossel		The Little Book of Common Sense Investing	2007
1 Active Investors	"It's fun to play around...it's human nature to try to select the right horse...(But) for the average person, I'm more of an indexer...The predictability is so high...For 10, 15, 20 years you'll be in the 85th percentile of performance. Why would you screw it up?"	Charles Schwab		The Little Book of Common Sense Investing by John C. Bogle	2007
1 Active Investors	"Even fans of actively managed funds often concede that most other investors would be better off in index funds. But buoyed by abundant self-confidence, these folks aren't about to give up on actively managed funds themselves. A tad delusional? I think so. Picking the best-performing funds is 'like trying to predict the dice before you roll them down the craps table,' says an investment adviser in Boca Raton, FL. 'I can't do it. The public can't do it.'	Paul Samuelson		The Little Book of Common Sense Investing by John C. Bogle	2007
1 Active Investors	"Still, I figure we shouldn't' discourage fans of actively managed funds. With all their buying and selling, active investors ensure the market is reasonably efficient. That makes it possible for the rest of us to do the sensible thing, which is to index. Want to join me in this parasitic behavior? To build a well-diversified portfolio, you might stash 70 percent of your stock portfolio into a (Dow Jones) Wilshire 5000-index fund and the remaining 30 percent in an international-index fund."	Paul Samuelson		The Little Book of Common Sense Investing by John C. Bogle	2007
1 Active Investors	It seemed like we needed a 12-step program to cure us of our addiction to buying beaten-up stocks...	Bill Miller		chairman and chief investment officer of Legg Mason Capital Management, second-quarter update letter to shareholders
1 Active Investors	There are three kinds of investment risk. Two can be virtually eliminated. The third, market risk, must be managed.	Charles Ellis		Winning the Loser's Game
1 Active Investors	What Wall Street does is package luck and sell it as skill.	Dan Solin		CNBC's Power Lunch, Sept 8, 2009
1 Active Investors	The distribution [of the market] is fat-tailed relative to the normal distribution…For passive investors, none of this matters, beyond being aware that outlier returns are more common than would be expected if return distributions were normal.	Eugene Fama		Professor of Finance, University of Chicago Booth School of Business, “Q&A: Confidence in the Bell Curve,” March 2009
1 Active Investors	Surprise! The returns reported by mutual funds aren't actually earned by mutual fund investors.	John C. Bogle		The Little Book of Common Sense Investing	2007
1 Active Investors	"We need a mutual fund industry with both vision and values; a vision of fiduciary duty and shareholder service, and values rooted in the proven principles of long-term investing and of trusteeship that demands integrity in serving our clients."	John C. Bogle		The Book Enough
1 Active Investors	"Most people are beaten up by the market, instead of beating the market."	Mark T. Hebner		President and Founder of Index Funds Advisors and author of Index Funds: The 12-Step Program for Active Investing
1 Active Investors	“Just as they did with subprime mortgage-backed securities, Wall Street banks are transferring wealth from their clients to their trading desks.”	Peter Robison, Asjylyn Loder, and Alan Bjerga		“Amber Waves of Pain”, Bloomberg Businessweek	July 22, 2010
1 Active Investors	"So who still believes markets don't work? Apparently it is only the North Koreans, the Cubans and the active managers."	Rex Sinquefield		co-founder and board member Dimensional Fund Advisors
1 Active Investors	In investing, what is comfortable is rarely profitable.”	Robert Arnott		Investment Manager
1 Active Investors	”Wall Street is littered with the bones of those who knew just what to do, but could not bring themselves to do it.”	William Bernstein		The Investor's Manifesto, Preparing for Prosperity, Armageddon, and Everything in Between
1 Active Investors	"No one in his right mind would walk into the cockpit of an airplane and try to fly it, or into an operating theater and open a belly. And yet they think nothing of managing their retirement assets. I’ve done all three, and I’m here to tell you that managing money is, in its most critical elements (the quota of emotional discipline and quantitative ability required) even more demanding than the first two."	William Bernstein		July/August Journal of Indexes
1 Active Investors	"The thing that I have been emphasizing in my own work for the last few years has been the group approach. To try to buy groups of stocks that meet some simple criterion for being undervalued-regardless of the industry and with very little attention to the individual company."	Benjamin Graham		"An Hour With Mr. Graham", Transcript of an interview with Benjamin Graham	1976
1 Active Investors	"The best way in my view is to just buy a low-cost index fund and keep buying it regularly over time, because you'll be buying into a wonderful industry, which in effect is all of American industry...People ought to sit back and relax and keep accumulating over time."	Warren Buffett		MarketWatch	May 7, 2007
1 Active Investors	"Unless an investor has access to 'incredibly high-qualified professionals,' they should be 100 percent passive -- that includes almost all individual investors and most institutional investors."	David Swensen		John C. Bogle Legacy Forum, Bloomberg	January 31, 2012
2 Nobel Laureates	"Efficient markets have no trends, so any speculation using trading systems or active investment strategies, such as stock, time, manager, or style selection, will only detract from future market returns."	Mark T. Hebner		President of Index Funds Advisors
2 Nobel Laureates	"Prediction is very difficult, especially if it's about the future."	Nils Bohr, Nobel laureate in Physics
2 Nobel Laureates	"This message (that attempting to beat the market is futile) can never be sold on Wall Street because it is in effect telling stock analysts to drop dead."	Paul Samuelson, Ph.D., Nobel Prize laureate
2 Nobel Laureates	"A Copernican Revolution . . .the most fundamental thing that has happened to the investment process - the development of Modern Portfolio Theory, the Theory of Efficient Markets, the scientific understanding of risk/return relationships and the importance of diversification in portfolios"	Langbein, John H. , Chancellor Kent Professor of Law and Legal History at Yale University Law School Reporter,		The Uniform Prudent Investor Act	-
2 Nobel Laureates	"It is not easy to get rich in Las Vegas, at Churchill Downs or at the local Merrill Lynch office."	Samuelson, Paul A. , Massachusetts Institute of Technology, Economist, Nobel Laureate in Economics		-	1970
2 Nobel Laureates	Q. So investors shouldn't delude themselves about beating the market? A. "They're just not going to do it. It's just not going to happen."	Daniel Kahneman, Nobel Laureate in Economics, 2002		Investors Can't Beat Market, Jan 2, 2002	2002
2 Nobel Laureates	"One can resist the invasion of armies, but not the invasion of ideas."	Victor Hugo, French Poet (1802-1885)		-	1880
2 Nobel Laureates	"It is remarkable that a science which began with the consideration of games of chance should have become the most important object of human knowledge."	Marquis de Laplace, Theorie Analytique des Probabilites		Lady Luck, the theory of probability by Warren Weaver	1812
3 Stock Pickers	"I have been a stockbroker for 5 yrs and have made people money, but I always lose it in the end. I have taken huge risks with my clients, I have lost millions, but I am tired of looking for new clients."	Anonymous Stock Broker		Online Chat, ifa.com	2001, Sept.
3 Stock Pickers	"If there's 10,000 people looking at the stocks and trying to pick winners, one in 10,000 is going to score, by chance alone, a great coup, and that's all that's going on. It's a game, it's a chance operation, and people think they are doing something purposeful... but they're really not."	Miller, Merton Nobel Laureate and Professor of Economics, Univ. of Chicago		Transcript of the PBS Nova Special, The Trillion Dollar Bet	2000
3 Stock Pickers	"The economists arrived at a devastating conclusion: it seemed just as plausible to attribute the success of top traders to sheer luck, rather than skill."	Announcer		Transcript of the PBS Nova Special, The Trillion Dollar Bet	2000
3 Stock Pickers	"It's human nature to find patterns where there are none and to find skill where luck is a more likely explanation (particularly if you're the lucky [mutual fund] manager)." Mutual fund manager performance does not persist and the return of stock picking is zero."	Bernstein, William		The Intelligent Asset Allocator	2001
3 Stock Pickers	"It's just not true that you can't beat the market. Every year about one-third of the fund managers do it. Of course, each year it is a different group."	Stovall, Robert , Investment Manager		ABC 20/20 Interview "Who Needs the Experts"	1992
3 Stock Pickers	"The difference between luck and skill is seldom apparent at first glance"	Bernstein, Peter L.		Capital Ideas, The Improbable Origins of Modern Wall Street	1996
3 Stock Pickers	11. [There is] "no support for the claim that active management of small-cap portfolios is more fruitful than it is for large-cap portfolios." ,	Richard M. Ennis		The Small-Cap-Alpha Myth	2001, Sept
3 Stock Pickers	"The implication [of the Efficient Market Hypothesis] for the investor is that it is almost impossible to "beat the market."			12th Grade Economics Text Book, Economics, (even our kids are learning this)	2000
3 Stock Pickers	The house [casino] takes a cut on each spin of the wheel, paying out less in winnings than it collects in bets. So roulette is a negative-sum game, and so is your non-index mutual fund [actively managed fund].	Meir Statman		Odds say you can't beat index funds, MoneyCentral Investing	May 29, 2001
3 Stock Pickers	"Investment managers sell for the price of a Picasso [what] routinely turns out to be paint-by-number sofa art."	Dunn, Patricia C., CEO, Barclays Global Advisors		CEO of world's largest money management firm, approx $1 trillion of assets under management, approx 80% indexed)	2001
3 Stock Pickers	"After taking risk into account, do more managers than you'd see by chance outperform with persistence? Virtually every economist who studied this question answers with a resounding "no." Mike Jensen in the Sixties and Mark Carhart in the Nineties both conducted exhaustive studies of professional investors. They each conclude that in general, a manager's fee, and not his skill, plays the biggest role in performance."	Fama, Jr, Eugene, DFA		Markets Don't Have to Be Right to Be Efficient	2001
3 Stock Pickers	"Speculation is an effort, probably unsuccessful, to turn a little money into a lot. Investment is an effort, which should be successful, to prevent a lot of money from becoming a little."	Schwed, Fred Jr.		Where Are The Customer’s Yachts?	1940
3 Stock Pickers	"99% of fund managers demonstrate no evidence of skill whatsoever."	Bernstein, William		The Intelligent Asset Allocator	2001
3 Stock Pickers	"It's hard to find ideas that aren't picked over and harder to get real returns and differentiate yourself. We are entering a new environment. The days of big returns are gone."	Steven Cohen, Founder of Hedge Fund SAC Capital Advisors		The Hedge Fund King is Getting Nervous, The Wall Street Journal	September 16, 2006
3 Stock Pickers	"It's amazing how difficult it is for a man to understand something if he's paid a small fortune not to understand it."	John C. Bogle		The Little Book of Common Sense Investing	2007
3 Stock Pickers	" If your fund doesn't last for the long term, how can you invest for the long term?" Note: over 36 years, 80% of the original 355 funds went out of existence.	John C. Bogle		The Little Book of Common Sense Investing p. 79-80	2007
3 Stock Pickers	"Having been an idealistic young sales-oriented fellow I became a licensed stockbroker for one of Wall Street's most prestigious firms in the late 60s. I learned very quickly that to succeed I had to "sell my soul", and to be more than moderately successful I had to follow the boss' program and to sell exactly what the boss wants sold - - it was "the hell with the client". ... kudos for having the intestinal fortitude at PORTFOLIO [magazine] to speak out about the 'sacred cows' that graze along Wall Street!"	Peter Magurean III		The Evolution of an Investor, Conde Nast Portfolio.com - Reader Comments	Nov. 20, 2007
3 Stock Pickers	Nobody knows which company will prove a good long-term investment. Even Buffett's genius lies more in running businesses than in picking stocks. But in the investing world, that is ignored. Wall Street, with its army of brokers, analysts, and advisers funneling trillions of dollars into mutual funds, hedge funds and private equity funds, is an elaborate fraud."	Michael Lewis		"The Evolution of an Investor", Conde Naste Portfolio, December 2007
3 Stock Pickers	"Will customers keep supporting the enormous overhead required to sustain ineffectual, unproductive stock picking across an array of thousands of individual funds devoted to every investing 'style' and economic sector or regional subgroup that some marketing idiot can dream up? Not likely. A brutal shakeout is coming and one of its revelations will be that stock picking is a grossly overrated piece of the puzzle, that cost control is what distinguishes a competitive firm form an uncompetitive one."	Holman Jenkins, Jr.		The Little Book of Common Sense Investing by John C. Bogle	2007
3 Stock Pickers	&quotA minuscule 4 percent of funds produce market-beating after-tax results with a scant 0.6 percent (annual) margin of gain. The 96 percent of funds that fail to meet or beat the Vanguard 500 Index Fund lose by a wealth-destroying margin of 4.8 percent per annum."	David Swensen		The Little Book of Common Sense Investing	2007
3 Stock Pickers	"After a lifetime of picking stocks, I have to admit that Bogle's arguments in favor of the index fund have me thinking of joining him rather than trying to beat him. Bogle's wisdom and common sense [are] indispensable...for anyone trying to figure out how to invest in this crazy stock market."	James J. Cramer		The Little Book of Common Sense Investing	2007
3 Stock Pickers	"Buy a cross section of American industry, and if a cross section of American industry doesn't work, certainly trying to pick the little beauties here and there isn't going to work either."	Warren Buffett		Fortune Magazine, "What Warren Thinks..." April 14, 2008	2008
3 Stock Pickers	"Investors...can't pick stocks that are better than average. Stocks are a good thing to own over time. There's only two things you can do wrong: You can buy the wrong ones, and you can buy or sell them at the wrong time. And the truth is you never need to sell them".	Warren Buffett		Fortune Magazine, "What Warren Thinks..." April 14, 2008	2008
3 Stock Pickers	"If investors learned how to invest intelligently, according to the teachings of John Bogle and many, many others, they would be far better off."	Dan Solin		CNBC interview
3 Stock Pickers	"If there's 10,000 people looking at the stocks and trying to pick winners, one in 10,000 is going to score, by chance alone, a great coup, and that's all that's going on. It's a game, it's a chance operation, and people think they are doing something purposeful...but they're really not."	Merton Miller		Nobel Laureate and Professor of Economics, University of Chicago, Transcript of the PBS Nova Special, "The Trillion Dollar Bet"
3 Stock Pickers	"When it comes to fund managers and market strategists, this year's hero usually turns into next year's zero."	William Bernstein		The Investor’s Manifesto: Preparing for Prosperity, Armageddon and Everything In Between
3 Stock Pickers	"When you’re underperforming the index, you go home at night and cry in your beer,” he said, adding: “It’s not fun, but who said this business should be fun. We’re too well paid to hang our heads and say boo hoo."	Bill Gross		Dan McCrum, Pimco’s Gross rues US debt 'mistake', Financial Times	August 29, 2011
3 Stock Pickers	"Practically speaking, individual investors should treat the market as unbeatable and realize that when they try to beat it because it is inefficient, they are likely to injure themselves, rather than gain at the expense of another."	Meir Statman Professor of Finance, Santa Clara University and author of What Investors Really Want		SF Gate.com article titled, "Meir Statman: Amateur investors expect impossible" 11/16/2010	2010
3 Stock Pickers	"The simple index fund solution has been adopted as a cornerstone of investment strategy for many of the nation's pension plans operated by our giant corporations and state and local governments. Indexing is also the predominant strategy for the largest of them all, the retirement plan for federal government employees, the Federal Thrift Savings Plan (TSP). The plan has been a remarkable success, and now holds some $173 billion of assets for the benefit of our public servants and members of armed services."	David Swensen		The Little Book of Common Sense Investing by John C. Bogle	2007
3 Stock Pickers	"Mutual funds have failed to manage their realized capital gains in such a way as to permit a substantial deferral of taxes (raising) investors' tax bills considerably ....If the Vanguard 500 Index fund could have deferred all of its realized capital gains, it would have ended up in the 91.8 percentile for the high tax investor" [i.e., it outpaced 92 percent of all managed equity funds]	Joel M. Dickson		The Little Book of Common Sense Investing by John C. Bogle	2007
3 Stock Pickers	"Forsake search for needles that are so very small in haystacks that are so very large."	Paul Samuelson		Samuelson, Paul. "The Judgment of Economic Science on Rational Portfolio Management Indexing, Timing, and Long–Horizon Effects ." The Journal of Portfolio Management 16, no. 1 (Fall 1989): 4-12.	1989
4 Time Pickers	"The investor with a portfolio of sound stocks should expect their prices to fluctuate and should neither be concerned by sizable declines nor become excited by sizable advances. He should always remember that market quotations are there for his convenience, either to be taken advantage of or to be ignored."	Benjamin Graham		The Intelligent Investor, 1949 John C. Bogle, as quoted in The Little Book on Common Sense Investing
4 Time Pickers	"The illusions of hope are apt to close one's eyes to the painful truth."	Harry F. Banks
4 Time Pickers	These results add up to perhaps the most important investment lesson of all that can be drawn from this week's market anniversaries: Predicting turns in the market is incredibly difficult to do consistently well. That means that, if your investment strategy going forward is dependent on your anticipating major market turning points, your chances of success are extremely low.	Mark Hulbert		"Fools R Us," MarketWatch, March 10, 2010
4 Time Pickers	"Our system works. Over time, people will live better and better. We have a system that unleashes human potential, and now China has a system that unleashes human potential. We will have interruptions. We overshoot and undershoot sometimes, but your kids and grandkids will live better than you. Over time, we move ahead at a pretty damn rapid rate."	Warren Buffett		2009 Berkshire Hathaway shareholders meeting
4 Time Pickers	"Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy when others are fearful."	Warren Buffett		2004 Annual Report of Berkshire Hathaway	2004
4 Time Pickers	"Inactivity strikes us as intelligent behavior."	Warren Buffett		1996 Annual Report of Berkshire Hathaway	1996
4 Time Pickers	"Our favorite holding period is forever."	Warren Buffett		1988 Annual Report of Berkshire Hathaway	1988
4 Time Pickers	"The only value of stock forecasters is to make fortune-tellers look good."	Warren Buffett		1992 Annual Report of Berkshire Hathaway	1992
4 Time Pickers	"We continue to make more money when snoring than when active."	Warren Buffett		1996 Annual Report of Berkshire Hathaway	1996
4 Time Pickers	"Our stay-put behavior reflects our view that the stock market serves as a relocation center at which money is moved from the active to the patient."	Warren Buffett		1991 Annual Report of Berkshire Hathaway	1991
4 Time Pickers	"If you knew what was going to happen in the economy, you still wouldn't necessarily know what was going to happen in the stock market."	Warren Buffett		Fortune Magazine, "What Warren Thinks..." April 14, 2008	2008
4 Time Pickers	"The time is always right to do the right thing."	Martin Luther King, Jr.		Money Magazine	2007 Sept.
4 Time Pickers	"There is no other proposition in economics that has more solid empirical evidence supporting it than the Efficient Market Hypothesis...In the literature of finance, accounting, and the economics of uncertainty, the EMH is accepted as a fact of life."	Michael C. Jensen		“Some Anomalous Evidence Regarding Market Efficiency,” Journal of Financial Economics	1978
4 Time Pickers	"He who lives by the crystal ball soon learns to eat ground glass."	Edgar R. Fiedler		The Three Rs of Economic Forecasting-Irrational, Irrelevant and Irreverent	June 1977
4 Time Pickers	"Those who have knowledge, don't predict. Those who predict, don't have knowledge. "	Lao Tzu, 6th Century BC Chinese Poet
4 Time Pickers	"If I have noticed anything over these 60 years on Wall Street, it is that people do not succeed in forecasting what`s going to happen to the stock market."	Benjamin Graham, Legendary investor and author		Security Analysis	1934 classic
4 Time Pickers	"The market is like watching a drunk walk a tight rope. You never know what's going to happen next."	Arthur Cashin, CNBC Commentary		CNBC Television	21-Nov-03
4 Time Pickers	"Market Timing is a wicked idea. Don't try it --- ever."	Ellis,Charles D.		Winning the Loser's Game	1985, 1999
4 Time Pickers	"Hulbert's conclusion: None of the newsletter timers beat the market [over a ten year period]. The average return was 11.06%. During the same period, Standard & Poor's 500-stock index earned 18.06% annually..."	Jeffrey M. Laderman		"Market Timing: A Perilous Ploy", Business Week	1998, March 9
4 Time Pickers	"There are two kinds of investors, be they large or small: those who don't know where the market is headed, and those who don't know that they don't know. Then again, there is a third type of investor - the investment professional, who indeed knows that he or she doesn't know, but whose livelihood depends upon appearing to know."	Bernstein, William		The Intelligent Asset Allocator	2001
4 Time Pickers	"...most [stock pickers and market timers] should go out of business - take up plumbing, teach Greek..."	Paul A. Samuelson, Nobel Laureate		"Challenge to Judgement" The Journal of Portfolio Management, Fall 1974, p. 17-19	1974
4 Time Pickers	"By day we write about "Six Funds to Buy NOW!"... By night, we invest in sensible index funds. Unfortunately, pro-index fund stories don't sell magazines."	Anonymous Fortune Magazine Writer		Fortune, April 26, 1999	1999
4 Time Pickers	"Why does indexing outmaneuver the best minds on Wall Street? Paradoxically, it is because the best and brightest in the financial community have made the stock market very efficient. When information arises about individual stocks or the market as a whole, it gets reflected in stock prices without delay, making one stock as reasonably priced as another. Active managers who frequently shift from security to security actually detract from performance [compared to an index fund] by incurring transaction costs."	Burton G. Malkiel, author of A Random Walk Down Wall Street		The Wall Street Journal	-
4 Time Pickers	"IN THE STOCK MARKET (as in much of life), the beginning of wisdom is admitting your ignorance. One of the many things you cannot know about stocks is exactly when they will up or go down. Over the long term, stocks generally rise at a nice pace. History shows they double in value every seven years or so. But in the short term, stocks are just plain wild. Over periods of days, weeks and months, no one has any idea what they will do. Still, nearly all investors think they are smart enough to divine such short-term movements. This hubris frequently gets them into trouble."	James K. Glassman, Co-Author of Dow 36,000		Attempts to Time the Market Always Leave the Investor Out of Sync	11/12/2001
5 Manager Pickers	"All the time and effort people devote to picking the right fund, the hot hand, the great manager have, in most cases, led to no advantage." and "Most individual investors would be better off in an index mutual fund."	Peter Lynch, former fund manager of Fidelity Magellan fund		Barron's, p. 15	April 2, 1990
5 Manager Pickers	"Most fund managers don't beat the S&P 500. Or if they do, very few can keep doing it for long spells. When bear markets wreak their periodic havoc, even fewer funds remain moneymakers."	2002 Mutual Funds Guide		Forbes Magazine	Feb. 4, 2002
5 Manager Pickers	"Contrary to their oft articulated goal of outperforming the market averages, investment managers are not beating the market; the market is beating them."	Charles D. Ellis		"The Loser's Game," as quoted in the Financial Analysts Journal	July-Aug 1975
5 Manager Pickers	Gee Beav, those stock pickers and market timers really do add value to your portfolio.	Eddie Haskel. Leave it to Beaver		"Tall Tales"	circa 1965
5 Manager Pickers	People exaggerate their own skills. They are overoptimistic about their prospects and overconfident about their guesses, including which [investment] managers to pick.	Professor Richard Thaler, University of Chicago		Investment Titans, by Jonathan Burton, McGraw-Hill	2001
5 Manager Pickers	"... skepticism about past returns is crucial. The truth is, much as you may wish you could know which funds will be hot, you can't -- and neither can the legions of advisers and publications that claim they can. That's why building a portfolio around index funds isn't really settling for average. It's just refusing to believe in magic."	McLean,Bethany		"The Skeptic's Guide to Mutual Funds," Fortune Magazine,March 15, 1999.	1999
5 Manager Pickers	"Santa Claus and the Easter Bunny should take a few pointers from the mutual-fund industry [and it's fund managers]. All three are trying to pull off elaborate hoaxes. But while Santa and the bunny suffer the derision of eight year olds everywhere, actively-managed stock funds still have an ardent following among otherwise clear-thinking adults. This continued loyalty amazes me. Reams of statistics prove that most of the fund industry's stock pickers fail to beat the market. For instance, over the 10 years through 2001, U.S. stock funds returned 12.4% a year, vs. 12.9% for the Standard & Poor's 500 stock index."	Jonathan Clements		"Only Fools Fall in ... Managed Funds?" Wall Street Journal (New York)	September 15, 2002.
5 Manager Pickers	"Fund investors are confident that they can easily select superior fund managers. They are wrong."	John C. Bogle		The Little Book of Common Sense Investing	2007
5 Manager Pickers	"It is often said there are two types of forecasts ... lucky or wrong!!!!"	"Control" magazine		published by Institute of Operations Management
5 Manager Pickers	"If the data do not prove that indexing wins, well, the data are wrong."	John C. Bogle		The Little Book on Common Sense Investing	2007
5 Manager Pickers	"A miniscule 4 percent of funds produce market-beating after-tax results with a scant 0.6 percent (annual) margin of gain. The 96 percent of funds that fail to meet or beat the Vanguard 500 Index Fund lose by a wealth-destroying margin of 4.8% per annum."	David Swensen, chief investment officer, Yale University Endowment Fund		John C. Bogle, The Little Book on Common Sense Investing	2007
5 Manager Pickers	"Nothing highlights better the continuing gap between rhetoric and substance in British financial services than the failure of providers here to emulate Jack Bogle's index fund success in the United States. Every professional in the City knows that index funds should be core building blocks in any long-term investor's portfolio. Since 1976, the Vanguard index funds has produced a compound annual return of 12 percent, better than three-quarters of its peer group. Yet, even 30 years on, ignorance and professional omerta still stand in the way of more investors enjoying the fruits of this unsung hero of the investment world."	Jonathon Davis, columnist for London's "The Spectator"		John C. Bogle, The Little Book on Common Sense Investing	2007
5 Manager Pickers	"A vast industry of stockbrokers, financial planners, and investment advisers skims a fortune for themselves off the top in exchange for passing their clients' money on to people who, as a whole, cannot possibly outperform the market."	Michael Lewis		"The Evolution of an Investor", Conde Naste Portfolio, December 2007
5 Manager Pickers	"You will almost never find a fund manager who can repeatedly beat the market. It is better to invest in an indexed fund that promises a market return but with significantly lower fees."	The Economist, July 3, 2003, "The Blame Game"		John C. Bogle, The Little Book on Common Sense Investing	2007
5 Manager Pickers	"I don't try to be clever at all. The idea that I could see what no one else can is an illusion."	Daniel Kahneman		The Little Book of Common Sense Investing by John C. Bogle	2007
5 Manager Pickers	"In every mutual fund prospectus, in every sales promotional folder, and in every mutual fund advertisement (albeit in print almost too small to read), the following warning appears: "Past performance is no guarantee of future results." Believe it!"	Paul Samuelson		The Little Book of Common Sense Investing by John C. Bogle	2007
5 Manager Pickers	"The number of managers with great track records in a given market depends far more on the number of people who started in the investment business (in place of going to dental school), rather than on their ability to produce profits."	Nassim Nicholas Taleb		The Little Book of Common Sense Investing by John C. Bogle	2007
5 Manager Pickers	"Buying funds based purely on their past performance is one of the stupidest things an investor can do."	Jason Zweig		The Little Book of Common Sense Investing by John C. Bogle	2007
5 Manager Pickers	"The investment business is a giant scam. Most people think they can find managers who can outperform, but most people are wrong. I will say that 85 to 90 percent of managers fail to match their benchmarks. Because managers have fees and incur transaction costs, you know that in the aggregate they are deleting value."	Jack R. Meyer		The Little Book of Common Sense Investing	2007
5 Manager Pickers	"Experience conclusively shows that index-fund buyers are likely to obtain results exceeding those of the typical fund manager, whose large advisory fees and substantial portfolio turnover tend to reduce investment yields. Many people will find the guarantee of playing the stock-market game at par every round a very attractive one. The index fund is a sensible, serviceable method for obtaining the market's rate of return with absolutely no effort and minimal expense."	Burton G. Malkiel		The Little Book of Common Sense Investing	2007
5 Manager Pickers	"We conclude that hedge funds are far riskier and provide much lower returns than is commonly supposed."	Burton G. Malkiel		"Hedge Funds: Risk and Return"Financial Analysts Journal November / Dec
5 Manager Pickers	"It's like giving up a belief in Santa Claus."	Burton Malkiel		20-20 Interview with John Stossel
5 Manager Pickers	“ The real purpose of investment management is not to 'beat the market,' but to do what is really right for a particular client. And making sure the manager concentrates on achieving that objective is, by default, the responsibility of the client.”	Charles D. Ellis		Winning the Loser's Game
5 Manager Pickers	Millions of mutual-fund investors sleep well at night, serene in the belief that superior outcomes result from pooling funds with like-minded investors and engaging high-quality investment managers to provide professional insight. The conventional wisdom ends up hopelessly unwise, as evidence shows an overwhelming rate of failure by mutual funds to deliver on promises.	David F. Swensen		Unconventional Success, A Fundamental Approach to Personal Investment
5 Manager Pickers	"Once in the dear dead days beyond recall, an out-of-town visitor was being shown the wonders of the New York financial district. When the party arrived at the Battery, one of his guides indicated some handsome ships riding at anchor. He said, ‘Look, those are the bankers’ and brokers’ yachts.’ ‘Where are the customers’ yachts?’ asked the naive visitor."	Fred Schwed Jr.		Where Are the Customers’ Yachts?
5 Manager Pickers	"Why didn't I just throw my money out of the window - and light it on fire?"	Peter Cohan		"The Stock Picker's Defeat", The Wall Street Journal
5 Manager Pickers	"Wall Street is a place where whatever can be sold will be sold. You are the consumer of their dreck. What they can sell to you, they will sell to you."	Robert Soros		quoted by Jeffrey Goldberg, "Why I Fired My Broker," The Atlantic	May 2009
5 Manager Pickers	"Some fiduciary boards, particularly those composed largely of non professionals, do not adequately understand the true returns, risk and cost associated with investment in hedge funds."	Stanford Graduate School of Business		“Statement of the Financial Economists Roundtable on Hedge Funds,” Stanford Graduate School of Business	2005
5 Manager Pickers	"The $50 billion allegedly lost to investors would make Madoff's fund one of the biggest frauds in history."	The Financial Press		"Madoff arrested over $50 billion fraud"
5 Manager Pickers	"Toss a coin; heads and the manager will make $10,000 over the year, tails and he will lose $10,000. We run [the contest] for the first year [for 10,000 managers]. At the end of the year, we expect 5,000 managers to be up $10,000 each, and 5,000 to be down $10,000. Now we run the game a second year. Again, we can expect 2,500 managers to be up two years in a row; another year, 1,250; a fourth one, 625; a fifth, 313. We have now, simply in a fair game, 313 managers who made money for five years in a row. [And in 10 years, just 10 of the original 10,000 managers.] Out of pure luck... A population entirely composed of bad managers will produce a small amount of great track records.... The number of managers with great track records in a given market depends far more on the number of people	Nassim Nicholas Taleb		The Little Book of Common Sense Investing	2007
6 Style Drifters	"The avoidance of taxes is the only intellectual pursuit that carries any reward."	John Maynard Keynes		Money Magazine	2007 Sept.
6 Style Drifters	"Style drift is a serious problem for [investors] because it distorts asset allocation and undermines performance when styles rotate. Value managers who have drifted over the past three years [1998-2000] toward more favored growth stocks are regretting those moves, but not as much as their [investors]."	Ron Surz, President, PPCA Inc.		Get the Drift	2001
6 Style Drifters	"If a fund is drifting to a style that is dramatically different, your potential returns, volatility, and risk are going to change."	Rosanne Pane		Spotting 'Style Creep' When a fund starts to wander, returns can suffer, BusinessWeek Online	1999, Nov.
6 Style Drifters	"One thing is clear: Style drift happens to a sizable percentage of mutual funds...For [investors or] planners seeking to create portfolios tapping into consistently different equity styles, style drift presents a significant concern."	Craig L. Israelsen, Ph.D		Drift Happens, Financial Planning Interactive	Nov. 1999
6 Style Drifters	"How do you beat the S&P 500? You beat it by overweighting some groups, underweighting others, and by owning stocks that aren't in the S&P. [i.e. style drift]... Sometimes I think if people knew how risky I was acting in the portfolio [Fidelity Magellan] they'd really be surprised. Just go back a bit -- I made AOL very big; I made Yahoo very big. I'm not afraid to make any bet." [that's scary]	Bob Stansky, Manager Fidelity Magellan Fund		Inside the world's largest fund, by Jason Zweig, CNN/Money	April 2002
7 Silent Partners	"None of my clients are taxable... Once you introduce taxes, active management probably has an insurmountable hurdle. We've been asked to manage taxable money -- and declined"	Aronson, Theodore of Aronson+Partners		Institutional Money Manager
7 Silent Partners	"If you can eliminate the government as a 39.6% partner, then you will be much better off."	Buffett, Warren E., Chairman, Berkshire Hathaway		-	-
7 Silent Partners	"It's amazing how difficult it is for a man to understand something if he's paid a small fortune not to understand it."	John C. Bogle		John C. Bogle, The Little Book on Common Sense Investing	2007
7 Silent Partners	"Managed funds are astonishingly tax-inefficient."	John C. Bogle		The Little Book of Common Sense Investing, p. 61	2007
7 Silent Partners	"The miracle of compounding returns is overwhelmed by the tyranny of compounding costs"	John C. Bogle		The Little Book of Common Sense Investing	2007
7 Silent Partners	"The general systems of money management [today] require people to pretend to do something they can't do and like something they don't. [It's] a funny business because on a net basis, the whole investment management business together gives no value added to all buyers combined. That's the way it has to work. Mutual funds charge two percent per year and then brokers switch people between funds, costing another three to four percentage points. The poor guy in the general public is getting a terrible product from the professionals. I think it's disgusting. It's much better to be part of a system that delivers value to the people who buy the product."	John C. Bogle		The Little Book of Common Sense Investing	2007
7 Silent Partners	"Index funds are...tax friendly, allowing investors to defer the realization of capital gains or avoid them completely if the shares are later bequeathed. To the extent that the long-run uptrend in stock prices continues, switching from security to security involves realizing capital gains that are subject to tax. Taxes are a crucially important financial consideration because the earlier realization of capital gains will substantially reduce net returns. Index funds do not trade from security to security and, thus, they tend to avoid capital gains taxes."	Burton G. Malkiel		The Little Book of Common Sense Investing by John C. Bogle	2007
7 Silent Partners	"For the markets in total, the amount of value added, or alpha, must sum to zero. One person's positive alpha s someone else's negative alpha. Collectively, for the institutional, mutual fund, and private banking arenas, the aggregate alpha return will be zero or negative after transaction costs. Aggregate fees for the active managers should thus be, at most, the fees associated with passive management. Yet, these fees are several times larger than fees that would be associated with passive management. This illogical conundrum will ultimately have to end."	Gary P. Brinson		The Little Book of Common Sense Investing by John C. Bogle	2007
7 Silent Partners	"Market-cap based indexing will never be driven from its deserved perch as core and deserved king of the investment world. It is what we should all own in theory and it has delivered low-cost equity returns to a great mass of investors...the now and forever king-of-the-hill."	Clifford A. Asness		The Little Book of Common Sense Investing	2007
7 Silent Partners	"The greatest Enemies of the Equity investor are Expenses and Emotions."	Warren Buffett		The Little Book of Common Sense Investing by John C. Bogle	2007
7 Silent Partners	&quotInvest in low-turnover, passively managed index funds...and stay away from profit-driven investment management organizations... The mutual fund industry is a colossal failure... resulting from its systematic exploitation of individual investors...as funds extract enormous sums from investors in exchange for providing a shocking disservice..... Excessive management fees take their toll, and (manager) profits dominate fiduciary responsibility."	David Swensen		The Little Book of Common Sense Investing by John C. Bogle	2007
7 Silent Partners	"While it is probably a poor idea to own actively managed funds in general, it is truly a terrible idea to own them in taxable accounts...(taxes are) a drag on performance of up to 4 percentage points each year...many index funds allow your capital gains to grow largely undisturbed until you sell....For the taxable investor, indexing means never having to say you're sorry."	William Bernstein		The Little Book of Common Sense Investing	2007
7 Silent Partners	"Suppose it was demonstrated that one out of twenty alcoholics could learn to become a moderate social drinker. The experienced clinician would answer, 'Even if true, act as if it were false, for you will never identify that one in twenty, and in the attempt five in twenty will be ruined.' Investors should forsake the search for such tiny needles in huge haystacks."	Paul Samuelson		The Little Book of Common Sense Investing	2007
7 Silent Partners	"Most active mutual funds are more interested in collecting fees than in boosting returns for investors."	David Swensen		John C. Bogle Legacy Forum, Bloomberg	January 31, 2012
7 Silent Partners	"I¹ve always viewed high-frequency trading as a tax on the rest of us."	David Swensen		John C. Bogle Legacy Forum, Bloomberg	January 31, 2012
7 Silent Partners	“In these topsy-turvy days of volatile markets, who knows what's up or down? The Dow could be up 250 today, and down 300 tomorrow. It's a fool's game playing market direction, and every diehard index fund investor knows it."	Jim Wiandt			Mar 2001
7 Silent Partners	"The miracle of compounding returns is overwhelmed by the tyranny of compounding costs"	John Bogle		The Little Book of Common Sense Investing
7 Silent Partners	"The multiple failings of our flawed financial sector are jeopardizing, not only the retirement security of our nation’s savers but the economy in which our entire society participates."	John C. Bogle		founder and former chief executive of The Vanguard Group, before the Committee on Education and Labor, U.S. House of Representatives, Washington, DC, “Strengthening Worker Retirement Security,”	February 24, 2009
7 Silent Partners	"It is very hard, if not impossible," he wrote in his study, "to justify active management for most individual, taxable investors, if their goal is to grow wealth." And he said that those who still insist on an actively managed fund are almost certainly "deluding themselves."	Mark Hulbert		“The Index Funds Wins Again”, Mark Hulbert, New York Times	February 21, 2009
7 Silent Partners	"For most investors, tax loss harvesting is one of the most important ways to reduce tax liability now and in the future."	Mark T. Hebner		President of Index Funds Advisors & author of Index Funds: The 12-Step Program for Active Investors
7 Silent Partners	"Fiduciaries should strongly consider index funds as an alternative to actively managed funds. Index funds incur about 80% less in transaction costs than actively managed funds…long-term returns for actively managed funds trail their respective indexes."	Michael C. Keenan		"The Elephant in the Living Room", Financial Advisor Magazine	May 2008
7 Silent Partners	"Fiduciaries should strongly consider index funds as an alternative to actively managed funds. Index funds incur about 80% less in transaction costs than actively managed funds…long-term returns for actively managed funds trail their respective indexes."	Michael C. Keenan		strong>“The Elephant in the Living Room”
7 Silent Partners	"e;None of my clients are taxable... Once you introduce taxes, active management probably has an insurmountable hurdle. We've been asked to manage taxable money -- and declined."e;	Theodore Aronson		Aronson+Partners, Institutional Money Managers
7 Silent Partners	It is difficult to get a man to understand something when his salary depends upon his not understanding it.	Upton Sinclair		Candidate for Governor: And How I Got Licked (1935), ISBN 0-520-08198-6; repr. University of California Press, 1994, p.109.	1994
7 Silent Partners	“The typical fund company services [401k plan] participants in the same way that Baby Face Nelson serviced banks.”	William Bernstein		Riding for a Fall, The 401(k) is likely to turn out to be a defined-chaos retirement plan.
8 Riskese™	"You’ve already paid for the risk, so it might be good to stick around for the expected return."	Burton Malkiel		Dimensional Fund Advisors
8 Riskese™	The average long-term experience in investing is never surprising, but the short-term experience is always surprising. We now know to focus not on rate of return, but on the informed management of risk.	Charles Ellis		author "Investment Policy" (1985), as well as ten other books on investing
8 Riskese™	"When you look at the results on an after-fee, after-tax basis over reasonably long periods of time, there's almost no chance that you end up beating the index fund."	David F. Swensen		Chief Investment Officer, Yale University Endowment, Economics Professor and author of Unconventional Success: A Fundamental Approach to Personal Investment, "NPR, Yale Money Whiz Shares Tips on Growing a Nest Egg"
8 Riskese™	"Nobody Told Me There'd Be Days Like These"	John Lennon		"Nobody Told Me"
8 Riskese™	"Return generation is the responsibility of the market, which sets prices to compensate investors for the risks they bear. "	Marlena I. Lee		Author of Rebalancing and Returns
8 Riskese™	"For a long career full of breakthroughs that have advanced our understanding of financial markets, and his early fundamental work on efficient markets, we are proud to have Professor Fama as the first recipient of this prestigious award."	Richard C. Green		Former AFA President and selection committee chair speech in which he bestowed the Morgan Stanley-AFA Award for Excellence in Finance to Eugene Fama
8 Riskese™	"The probable is what usually happens."	Warren Weaver		Lady Luck, The Theory of Probability	1963
8 Riskese™	"Some investments do have higher expected returns than others. Which ones? Well, by and large they're the ones that will do the worst in bad times."	William F. Sharpe		Nobel Laureate in Economics, 1990, Stanford Professor of Economics, as quoted in Money Magazine's July, 2007 issue	2007
8 Riskese™	"Some investments do have higher expected returns than others. Which ones? Well, by and large they're the ones that will do the worst in bad times."	William F. Sharpe		Nobel Laureate in Economics, 1990, Stanford Professor of Economics, as quoted in Money Magazine’s July, 2007 issue	2007
8 Riskese™	"In the short run the stock market is a voting machine... (but) in the long run it is a weighing machine."	Benjamin Graham		The Little Book of Common Sense Investing	2007
8 Riskese™	"The investor with a portfolio of sound stocks should expect their prices to fluctuate and should neither be concerned by sizable declines nor become excited by sizable advances. He should always remember that market quotations are there for his convenience, either to be taken advantage of or to be ignored."	Benjamin Graham		The Little Book of Common Sense Investing	2007
8 Riskese™	"Index funds eliminate the risks of individual stocks, market sectors, and manager selection. Only stock market risk remains."	John C. Bogle		The Little Book of Common Sense Investing	2007
8 Riskese™	"Some investments do have higher expected returns than others. Which ones? Well, by and large they're the ones that will do the worst in bad times."	William F. Sharpe		Money Magazine	2007, June
8 Riskese™	"It's bad enough that you have to take market risk. Only a fool takes on the additional risk of doing yet more damage by failing to diversify properly with his or her nest egg. Avoid the problem--buy a well-run index fund and own the whole market."	William Bernstein		The Four Pillars of Investing	2002
8 Riskese™	"The average long-term experience in investing is never surprising, but the short term experience is always surprising. We now know to focus not on rate of return, but on the informed management of risk."	Charles Ellis		Investment Policy	1985
8 Riskese™	"Since the dawn of capitalism, there has been one golden rule: "If you want to make money, you have to take risks."	Announcer		Opening line of the Nova Special, "The Trillion Dollar Bet"	2000
8 Riskese™	When asked what he considered man's greatest discovery, Albert Einstein replied without hesitation: "Compound interest!"	Charles Ellis		Investment Policy	1985
8 Riskese™	"If your broker [or investment advisor] is not familiar with the concept of standard deviation of returns, get a new one."	William Bernstein		The Intelligent Asset Allocator	2001
8 Riskese™	"Odds are you don't know what the odds are."	Gary Belsky and Thomas Gilovich		Why Smart People Make Big Money Mistakes	2000
8 Riskese™	Probably the question heard most frequently is: "How high can stocks go?" To the unsophisticated observer there appears to be no maximum price.	financial journalist		New York Times, August 21, 1929	1929
8 Riskese™	"In investing, what is comfortable is rarely profitable."	Robert Arnott		Chariman, Research Affiliates
8 Riskese™	Investors must keep in mind that there's a difference between a good company and a good stock. After all, you can buy a good car but pay too much for it.	Richard Thaler		Upside, July 6, 1999	1999
8 Riskese™	"Probability is the very guide of life."	Cicero		Lady Luck, The Theory of Probability by Warren Weaver
8 Riskese™	"The probable is what usually happens."	Aristotle		Lady Luck, the theory of probability by Warren Weaver
8 Riskese™	"The record of a month's roulette playing at Monte Carlo can afford us material for discussing the foundations of knowledge."	Karl Pearson		Lady Luck, the theory of probability by Warren Weaver
8 Riskese™	"The most important questions of life are, for the most part, really only problems of probability."	Marquis de Laplace, Theorie Analytique des Probabilites		Lady Luck, the theory of probability by Warren Weaver
8 Riskese™	"Statistical thinking will one day be as necessary for efficient citizenship as the ability to read and write."	H.G. Wells		Lady Luck, the theory of probability by Warren Weaver	Pre-1963
8 Riskese™	"Chance favors the prepared mind."	Louis Pasteur (1822 - 1895)
8 Riskese™	"Modern physics uses the normal distribution to describe the movements of molecules. The motion of each individual molecule is quite disordered, and yet their overall behavior is very predictable. This disordered movement is known as random walk. The idea of random walk was actually used by Laplace and others to analyze a gambler's chances of wandering into bankruptcy. Today, the random walk is applied to many phenomena, including the stock market."	Gary Smith		Statistical Reasoning	1985
8 Riskese™	"One of the most striking and fundamental things about probability theory is that it leads to an understanding of the otherwise strange fact that events which are individually capricious and unpredictable can, when treated en masse, lead to very stable average performances."	Warren Weaver		Lady Luck, the theory of probability	1963
9 History	"It takes between 20 and 800 years of monitoring performance to statistically prove that a money manager is skillful rather than lucky - which is a lot more than most people have in mind when they say 'long-term' [track record]."	Ted Aronson		"Confessions of a Fund Pro", Money, Feb 1999, pp. 73-75.	1999
9 History	"The only new thing in the world is the history you don't know."	Harry S. Truman
9 History	"If a man dwells on the past, then he robs the present; but if a man ignores the past, he may rob the future. The seeds of our destiny are nurtured by the roots of our past."	Master Po		Kung Fu Television Series	1970s
9 History	"Those who are ignorant of investment history are bound to repeat it. Historical investment returns and risks of various asset classes should be studied. Investment results for an asset over a long enough period (greater than 20 years) are a good guide to the future returns and risks of that asset. Further, it should be possible to approximate the future long-term return and risk of a portfolio consisting of such assets."	William Bernstein		The Intelligent Asset Allocator	2001
9 History	"The four most dangerous words in investing are, It's different this time."	Sir John Templeton, legendary investor.		Money Magazine, Fall 2002, p. 25	2002
9 History	"I know of no way of judging the future but by the past."	Patrick Henry		March 23, 1775, Virginia Convention Speech	1775
9 History	"Investing is a strange business. It's the only one we know of where the more expensive the products get, the more customers want to buy them."	Anthony M. Gallea, William Patalon III		Contrarian Investing
9 History	"History doesn't repeat itself, but it rhymes."	Mark Twain
9 History	"Assuming that the future is like the past, you can outperform 80 percent of your fellow investors over the next several decades by investing in an index fund—and doing nothing else. [But] acquire the discipline to do something even better: become a long-term index fund investor."	Mark Hulbert		The Little Book of Common Sense Investing by John C. Bogle	2007
9 History	"The investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage."	Benjamin Graham		*The Intelligent Investor*
9 History	"Historically, the stock market is like a gambling casino with the odds in your favor. Over the long pull, stocks are given something like nine and a half to ten percent compounded per year. The banks have probably given you something in the order of four to five."	Burton G. Malkiel		20/20 Interview with John Stossel, November 27, 1992	1992
9 History	"The only thing new in this world is the history you don't know."	Harry S. Truman		33rd President of the United States
9 History	"Let other people overreact to the market...if you can stay cool while those around you are panicking, you can surely prevail."	James Pardoe		author *How Buffett Does It*, 2005	2005
9 History	"The current financial crisis calls out for new products and services as well as more, not less, information about what is safe and profitable in the future environment."	Jeremy J. Siegel		The Wall Street Journal
9 History	"The bets laid down by predictin’ that news will surely bring on the Speculation Blues."	Mark Hebner		President of Index Funds Advisors,  The Speculation Blues (see youtube)
9 History	"Let’s Change Our Verb Tenses When Speaking of Investment Markets."	Michael Edesess		*The Big Investment Lie*
9 History	"Data! Data! Data!" he cried impatiently, "I cannot make bricks without clay!"	Sherlock Holmes		The Adventure of the Copper Beeches - Sir Arthur Conan Doyle, 1892	1892
9 History	I think the most important factor in getting out of the recession actually is just the regenerative capacity of American capitalism. And we had many recessions in the history of this country when nobody even heard of fiscal policy or monetary policy. The country always comes back.	Warren Buffett		CNBC's Squawk Box	9/23/2010
9 History	...it's important to have the right monetary policy. It's important for, to have the right fiscal policy. But it's nowhere near as important as just the normal regenerative capacity of American capitalism.	Warren Buffett		CNBC's Squawk Box	9/23/2010
10 Risk Capacity™	"An investment in knowledge pays the most interest."	Benjamin Franklin
10 Risk Capacity™	"To reduce risk it is necessary to avoid a portfolio whose securities are all highly correlated with each other. One hundred securities whose returns rise and fall in near unison afford little protection than the uncertain return of a single security."	Harry Markowitz		Efficient Diversification of Investment
10 Risk Capacity™	"Investing in the absence of an investment policy statement reduces decision making to an individual event-driven process of chasing short-term results, eliminating the expectation of achieving the long-term returns of capitalism."	Mark T. Hebner		The 12-Step Program for Active Investors
10 Risk Capacity™	"It is a certainty that equity markets will be full of uncertainty. This uncertainty is the reason investors should expect returns."	Mark T. Hebner		The 12-Step Program for Active Investors
10 Risk Capacity™	"Our favourite holding period is forever."	Warren Buffett		Letter to Berkshire Hathaway shareholders, 1988	1988
10 Risk Capacity™	"He that is overcautious will accomplish little."	Friedrich von Schiller		Money Magazine	2007 Sept.
10 Risk Capacity™	"Design a portfolio you are not likely to trade... akin to premarital counseling advice; try to build a portfolio that you can live with for a long, long time."	Robert D. Arnott, President, Research Affiliates		Is Your Alpha Big Enough to Cover Your Taxes? [answer is NO]	1999
10 Risk Capacity™	"Investment Policy [asset allocation] is the foundation upon which portfolios should be constructed and managed."	Charles D. Ellis		Investment Policy	1985
11 Risk Exposure	"Investment planning is about structuring exposure to risk factors."	Gene Fama, Jr.		The Error Term	Dec 2001
11 Risk Exposure	"'Tis the part of a wise man to keep himself today for tomorrow, and not venture all his eggs in one basket."	Miguel de Cervantes		Don Quixote de la Mancha	1605-1615
11 Risk Exposure	"Risk is good. Not properly managing your risk is a dangerous leap"	Evel Knievel, Motorcyclist
11 Risk Exposure	"History shows that in the long run a thoughtfully designed, diversified strategy of "passive" funds typically beats all but a few active managers. It's not easy to structure and maintain such a strategy. It requires some initial research and discipline to stay the course. But it's much easier than predicting which active managers will randomly beat this approach."	Eugene Fama, Jr.		DFA	2001
11 Risk Exposure	"The $4.8 billion Orange County Employees' Retirement System, Santa Ana, Calif., more than doubled its total indexed assets to $1.2 billion during the 12 months ended Sept. 30, 2001, from $593 million the year before." "We think that (indexed) exposure was a reasonable portfolio for the return characteristics and compared favorably with active (management)," he said.	Farouki Majeed, chief investment officer		ASSETS UP 30%: Where the action is: funds embrace enhanced indexing, by Fred Williams, www.pionline.com	2002, Jan
11 Risk Exposure	"We can extrapolate from the study that for the long term individual investor who maintains a consistent asset allocation and leans toward index funds, asset allocation determines about 100% of performance."	Roger Ibbotson, Ibbotson Associates		The True Impact of Asset Allocation on Returns	2001
11 Risk Exposure	"Ninety-seven percent of performance variation is due to asset class structure -- Study of 31 institutional pension funds during a range of six- to 12-year periods."	Eugene F. Fama Jr.		Dimensional Fund Advisors' Conference, University of Chicago Graduate School of Business	1997
11 Risk Exposure	"The essence of effective portfolio construction is the use of a large number of poorly correlated assets."	William Bernstein		The Intelligent Asset Allocator	2001
11 Risk Exposure	"Approximately 94 percent of variability of a fund's investment return is due to asset allocation -- Study of 91 large pension funds over a 10-year period."	Gary P. Brinson, L. Randolph Hood and Gilbert L. Beebower		Determinants of Portfolio Performance," Financial Analysts Journal, July-August 1986, Follow-up study, "Revisiting Determinants of Portfolio Performance: An Update," 1990 Working Paper	1986, 1990
11 Risk Exposure	"It is a truth very certain that when it is not in our power to determine what is true we ought to follow what is most probable."	Rene Descartes, Discourse on Method		Lady Luck, The Theory of Probability by Warren Weaver	1963
11 Risk Exposure	"There is safety in numbers."	Euripides		Lady Luck, The Theory of Probability by Warren Weaver	1963
11 Risk Exposure	"What if your advisor talks only about returns, not risk? ...It's his job to take risk into account by telling you the range of possible outcomes you face. If he won't, go to a new planner, someone who will get real."	William F. Sharpe		Money Magazine	2007, June
11 Risk Exposure	"It can be shown that maximum diversification is achieved by holding each stock in proportion to its value to the entire market (italics added).... Hindsight plays tricks on our minds....often distorts the past and encourages us to play hunches and outguess other investors, who in turn are playing the same game. For most of us, trying to beat the market leads to disastrous results...our actions lead to much lower returns than can be achieved by just staying in the market."	Jeremy J. Siegel		The Little Book of Common Sense Investing by John C. Bogle	2007
11 Risk Exposure	"It's bad enough that you have to take market risk. Only a fool takes on the additional risk of doing yet more damage by failing to diversify properly with his or her nest egg. Avoid the problem—buy a well-run index fund and own the whole market."	William Bernstein		The Little Book of Common Sense Investing	2007
11 Risk Exposure	"Participants who didn't seek help often made mistakes in risk with their portfolios — either too much or too little."	Christopher L. Jones		CIO Financial Engines, Pensions and Investments January 26, 2010	2010
11 Risk Exposure	"Work exclusively with fee-only advisors: It eliminates a huge conflict of interest."	Dan Solin		*The Smartest 401k Book You'll Ever Read: Maximize Your Retirement Savings...the Smart Way!*
11 Risk Exposure	"A good portfolio is more than a long list of good stocks and bonds. It is a balanced whole, providing the investor with protections and opportunities with respect to a wide range of contingencies."	Harry Markowitz		Portfolio Selection: Efficient Diversification of Investments, Nobel Laureate in Economics, Professor of Economics at University of California at San Diego
11 Risk Exposure	"It's Not Easy Bein' Green"	Kermit the Frog		As sung by Kermit the Frog, with lyrics by Joe Rapposo
11 Risk Exposure	"Remember when you buy a commodity, you're not buying something that generates earnings and profit. You're buying a hard asset and hoping another buyer will be willing to pay more for that asset in the future."	Matt Krantz		*USA Today, 6/23/2008, "Read this before you jump on the commodities bandwagon"*
11 Risk Exposure	"Investors acquiring commodity futures in expectations of higher returns, lower risk, and improved inflation protection are making bets. Current evidence indicates that the odds are against them."	Truman A. Clark		former professor of finance, University of Southern California, "Commodity Futures in Portfolios"
12 Invest & Relax	"Insanity: doing the same thing over and over again and expecting different results."	Albert Einstein		Definition of Insanity
12 Invest & Relax	"The case highlights the wide gap and opposing roles of a broker who is permitted in law to further his and his firm’s interests at the expense of customers, and a fiduciary who is required in law to put his clients’ interests first. This is at the core of why the fiduciary standard is important."	Knut A. Rostad		Committee for the Fiduciary Standard, as quoted in Wealth Manager “Goldman Sachs, Suitability and the
12 Invest & Relax	"Important services such as rebalancing, tax managed investments and tax loss harvesting help investors maximize returns at a given level of risk."	Mark Hebner		IFA President
12 Invest & Relax	"You only find out who is swimming naked when the tide goes out."	Warren Buffett		Letter to Shareholders, February 28, 2002	2002
12 Invest & Relax	"You will want to ensure that your adviser is choosing your investments purely on their investment merit and not on the basis of how the vehicles reward him. The warning signs here are recommendations of load funds, insurance products, limited partnerships, or separate accounts. ...Your adviser should use index/passive stock funds wherever possible. If he tells you that he is able to find managers who can beat the indexes, he is fooling both you and himself. I refer to a commitment to passive indexing as 'asset-class religion.' Don't hire anyone without it."	William Bernstein		The Little Book of Common Sense Investing	2007
12 Invest & Relax	"If you passed a law saying that [members of Congress and their staffs] can only invest in index funds, on the whole you would do them a great favor, for two reasons. First, they won't be reading news coverage about themselves that they and their constituents don't like. And two, they're more likely to make more money on index funds than by trying to outsmart the market."	Meir Statman	Finance Professor at Santa Clara University	Jason Zweig, “What Conflict of Interest? How Power Blinds Us to Our Flaws,” The Wall Street Journal, 16 October 2010, wsj.com
12 Invest & Relax	"Yes. First, get diversified. Come up with a portfolio that covers a lot of asset classes. Second, you want to keep your fees low. That means avoiding the most hyped but expensive funds, in favor of low-cost index funds. And finally, invest for the long term. [Investors] should simply have index funds to keep their fees low and their taxes down. No doubt about it."	Jack R. Meyer		The Little Book of Common Sense Investing	2007
12 Invest & Relax	"If you believe in indexing, then you know that there is no free money. Ultimately, the push toward enhanced indexing is about enhancing the bottom line for managers.... But it's important for us to keep our eyes on the ball and remember what makes indexing, well, indexing. Low fees, broad diversification, hold hold hold. Don't believe the hype. Try to beat the market—in any manner—and you're likely to get beat...by about the cost of doing it."	Jim Wiandt		The Little Book of Common Sense Investing by John C. Bogle	2007
12 Invest & Relax	"If you would be wealthy, think of Saving as well as Getting.....Remember that time is money....Beware of little Expenses; a small Leak will sink a great Ship..... There are no Gains, without Pains....He hat would catch Fish, must venture his Bait...Great Estates may venture more, but little Boasts should keep near the shore....Tis easy to see, hard to forsee....Industry, Perseverance, and Fruglity make Fortune yield."	Clifford S. Asness		The Little Book of Common Sense Investing by John C. Bogle	2007
12 Invest & Relax	"Many receive advice, few profit by it."	Publilius Syrus		quoted in Money Magazine, 2007 Sept.	42 B.C.
12 Invest & Relax	What is the best investment for the average investor? Thorley agreed with Odean: index funds. [Thorley and Odean are professors who study the market)	Mark Dempsey		Robbing You Blind	2000
12 Invest & Relax	"If we could choose only one family of funds for the ideal 401(k) plan, it would be Dimensional Fund Advisors. We believe DFA's institutional index funds are the best, and employees whose plans include them are fortunate...In 2001, a portfolio of DFA funds weighted equally among the asset classes we listed above would have appreciated by 1 percent. Doesn't seem like much but it's much better than the 12 percent loss in the Standard & Poor's 500 Index and the 23 percent decline by the average large-company growth fund."	Paul Merriman		A world-class menu of 401(k) choices,CBS Marketwatch.com	2002, Jan 16

Backtested Performance Info

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WARNING: Past performance does not guarantee future results. Investment returns and principal value will fluctuate, so that investors' shares, when sold, may be worth more or less than their original cost. Investing in any mutual fund, index or actively managed, does not guarantee that an investor will make money, avoid losing capital, or indicate that the investment is risk-free. Actively managed funds sometimes outperform index funds. You just don't know in advance which actively managed fund will outperform the appropriate index. Just because a mutual fund is an index mutual fund, it does not guarantee a performance superior to an actively managed mutual fund. There are no absolute guarantees in investing. When reviewing any backtested performance information on this internet site, please read the Disclosure for Backtested Performance Information (click here to read the Disclosure for Backtested Performance Information.) For a copy of the Index Funds Advisors, Inc. Privacy Policy, click here.

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