• 12-Steps:
  • Chart Index
  • The 12-Step Introduction
  • The 12-Step Overview
  • About the Author
  • Preface
  • Short Book on Investing
  • IFA 12-Step Brochure [PDF]
  • Intro Print Version [PDF]
  • PowerPoint [PDF]
  • Art Gallery
  • FAQ
  • IFA Store
  • Buy the Book
  • Backtested Disclosures
• Step 1
  • Active Investors
  • Pages
    • Page 1
    • Page 2
    • Page 3
  • Quotes
  • 1.1 Introduction
  • 1.2 Definitions
    • 1.2.1 Active Investors
    • 1.2.2 Index Funds Investors
    • 1.2.3 Beating the Market
    • 1.2.4 Risk Measurements
  • 1.3 Problems
    • 1.3.1 Active Investors are Everywhere
    • 1.3.2 Active Investors are Gamblers
    • 1.3.3 Active Investors Lose
    • 1.3.4 The Poor Accounting of Active Investors
    • 1.3.5 Stock Market Prices are Random
    • 1.3.6 Stock Markets are Efficient
    • 1.3.7 When Risk Capacity is not Matched with Risk Exposure
    • 1.3.8 The High Cost of Turnover
    • 1.3.9 The Emotional Stress of Active Investing
    • 1.3.10 More than 1,500 Investors can be Wrong
  • 1.4 Solutions
    • 1.4 1.Active Investors Anonymous
    • 1.4.2 The History of 12-Step Recovery Programs
    • 1.4.3 The Big Book of Investing
    • 1.4.4 Top Investors Agree
    • 1.4.5 Index Funds Investors Win
  • 1.5 Summary
  • 1.6 Review Questions
  • Print Version [PDF]
  • Buy the Book
  • Backtested Disclosures
• Step 2
  • Nobel Laureates
  • Pages
    • Page 1
    • Page 2
    • Page 3
  • Quotes
  • 2.1 Introduction
  • 2.2 Definitions
    • 2.2.1 Nobel Prize in Economic Sciences
    • 2.2.2 The University of Chicago, Center for Research
      in Security Prices, and the Stock Market Database
  • 2.3 Problems
    • 2.3.1 Investors Rely on Lady Luck
    • 2.3.2 Active Investors are Unaware of Academic Studies
  • 2.4 Solutions
    • Nobel Laureates and Academics
    • Alfred Nobel
    • Blaise Pascal
    • Edmund Halley
    • Adam Smith
    • Louis Bachelier
    • Alfred Cowles
    • Harry Markowitz
    • James Tobin
    • Frank Modigliani
    • Merton Miller
    • William Sharpe
    • Paul Samuelson
    • Eugene Fama
    • Michael Jensen
    • Rex Sinquefield
    • Burton Malkiel
    • John Bogle
    • David Booth
    • Kenneth French
    • Who Should You Trust?
    • Market Forces
  • 2.5 Summary
  • 2.6 Review Questions
  • Print Version [PDF]
  • Buy the Book
  • Backtested Disclosures
• Step 3
  • Stock Pickers
  • Pages
    • Page 1
    • Page 2
    • Page 3
    • Page 4
  • Quotes
  • 3.1 Introduction
  • 3.2 Definitions
    • 3.2.1 Stock Pickers
    • 3.2.2 Adjusted Performance
  • 3.3 Problems
    • 3.3.1 Why Stock Pickers Fail
    • 3.3.2 The Stock Picker’s Graveyard
    • 3.3.3 Incubator Funds
    • 3.3.4 Studies and Observations that Show the Daunting Odds of Stock Picking
    • 3.3.5 Stock Pickers and Coin Flippers
    • 3.3.6 Stock Pickers are Focused on Short Term
    • 3.3.7 Stock Pickers are Style Drifters
    • 3.3.8 Stock Pickers are Looking for a Needle in a Haystack
    • 3.3.9 Stock Pickers Play a Zero Sum Game
    • 3.3.10 Stock Pickers in International Markets
    • 3.3.11 Stock Pickers in Small-Cap Markets
    • 3.3.12 Stock Pickers Pay More Taxes
    • 3.3.13 Stock Picking Gurus and Their Real Records
    • 3.3.14 Stock Pickers Don’t Want You to Know the Truth
  • 3.4 Solutions
  • 3.5 Summary
  • 3.6 Review Questions
  • Print Version [PDF]
  • Buy the Book
  • Backtested Disclosures
• Step 4
  • Time Pickers
  • Pages
    • Page 1
    • Page 2
    • Page 3
  • Quotes
  • 4.1 Introduction
  • 4.2 Definitions
    • 4.2.1 Random Walk Theory
    • 4.2.2 Efficient Market Hypothesis
  • 4.3 Problems
    • 4.3.1 Pickers are Fooled by Randomness
    • 4.3.2 Academic Studies Prove that Time Picking doesn’t Work
    • 4.3.3 Time Picking Gurus
    • 4.3.4 Gains and Losses are Impossible to Identify in Advance
    • 4.3.5 Time Pickers Pay More Taxes
  • 4.4 Solutions
  • 4.5 Summary
  • 4.6 Review Questions
  • Print Version [PDF]
  • Buy the Book
  • Backtested Disclosures
• Step 5
  • Manager Pickers
  • Pages
    • Page 1
    • Page 2
    • Page 3
  • Quotes
  • 5.1 Introduction
  • 5.2 Definitions
  • 5.3 Problems
    • 5.3.1 Past Performance is No Guarantee of Future Results
    • 5.3.2 Persistence in Track Records
    • 5.3.3 Sources of Information Used by Manager Pickers
    • Are Highly Rated Funds Good Thing?
    • The Forbes Mutual Fund Honor Roll
    • Mutual Fund Advertisements
    • 5.3.4 Markets Make Managers
    • 5.3.5 Irrelevant Benchmarks
  • 5.4 Solutions
  • 5.5 Summary
  • 5.6 Review Questions
  • Print Version [PDF]
  • Buy the Book
  • Backtested Disclosures
• Step 6
  • Style Drifters
  • Pages
    • Page 1
    • Page 2
  • Quotes
  • 6.1 Introduction
  • 6.2 Definitions
    • 6.2.1 Investment Style
    • 6.2.2 Style Drift
  • 6.3 Problems
    • 6.3.1 Style Drift Alters Risk Exposure
    • 6.3.2 Style Drifters
    • 6.3.3 Style Drift and the Fama/French Risk Factors
      Style Picking
  • 6.4 Solution
  • 6.5 Summary
  • 6.6 Review Questions
  • Print Version [PDF]
  • Buy the Book
  • Backtested Disclosures
• Step 7
  • Silent Partners
  • Pages
    • Page 1
    • Page 2
    • Page 3
  • Quotes
  • 7.1 Introduction
  • 7.2 Definitions
  • 7.3 Problems
    • 7.3.1 Active Investors are Unaware of All the Costs
    • 7.3.2 Taxes
    • 7.3.3 Inflation
  • 7.4 Solutions
    • 7.4.1 Index Funds and Tax-Managed Index Funds
    • 7.4.2 Reduce Taxes and Turnover Costs with Index Funds
  • 7.5 Summary
  • 7.6 Review Questions
  • Print Version [PDF]
  • Buy the Book
  • Backtested Disclosures
• Step 8
  • Riskese
  • Pages
    • Page 1
    • Page 2
    • Page 3
    • Page 4
    • Page 5
  • Quotes
  • 8.1 Introduction
  • 8.2 Definitions
    • 8.2.1 Standard Deviation
    • 8.2.2 Probability Distributions and Histograms
    • 8.2.3 Mean Reversion
    • 8.2.4 Expected Return
    • 8.2.5 Rolling Period Returns
    • 8.2.6 Risk
    • 8.2.7 The Dimensions of Stock Return
    • 8.2.8 Implications of the Fama/French Three-Factor Model
    • 8.2.9 Time Diversification of Risk
  • 8.3 Problems
    • 8.3.1 Active Investors don’t Understand Risk and Return
    • 8.3.2 Investors Like Comfort and Dislike Uncertainty
    • 8.3.3 Stock Pickers Dilute the Two Important Risk Factors
    • 8.3.4 The Myth of the Ideal Investment
  • 8.4 Solutions
  • 8.5 Summary
  • 8.6 Review Questions
  • Print Version [PDF]
  • Buy the Book
  • Backtested Disclosures
• Step 9
  • History
  • Pages
    • Page 1
    • Page 2
    • Page 3
  • Quotes
  • 9.1 Introduction
  • 9.2 Definitions
    • 9.2.1 Historical Databases and Studies
    • 9.2.2 Time Series Construction
  • 9.3 Problems
  • 9.4 Solutions
    • 9.4.1 Long-term History Characterizes Risk and Return
    • 9.4.1a Probability of Portfolio Recovery
    • 9.4.2 Cross Correlation among Indexes
    • A Comparative History of Several Indexes
      using Rolling Periods
    • A Comparative History of Market Cap Deciles
    • The Returns Matrix
  • 9.5 Summary
  • 9.6 Review Questions
  • Print Version [PDF]
  • Buy the Book
  • Backtested Disclosures
• Step 10
  • Risk Capacity
  • Pages
    • Page 1
    • Page 2
    • Page 3
  • Quotes
  • 10.1 Introduction
  • 10.2 Definitions
    • Dimension One: Time Horizon and Liquidity Needs
    • Dimension Two: Attitude Toward Risk
    • Dimension Three: Net Worth
    • Dimension Four: Income and Savings Rate
    • Dimension Five: Investment Knowledge
  • 10.3 Problems
    • 10.3.1 Investors do not Properly Assess Risk Capacity
    • 10.3.2 Risk Capacity Changes over Time
  • 10.4 Solutions
    • 10.4.1 The Risk Capacity Survey
    • 10.4.2 The Ten Dimensions of Risk
    • 10.4.3 The Color of Risk Spectrum
    • 10.4.4 Twenty Risk Capacities
    • 10.4.5 Capacity Adjusted Risk
  • 10.5 Summary
  • 10.6 Review Questions
  • Print Version [PDF]
  • Risk Capacity Survey
  • Buy the Book
  • Backtested Disclosures
• Step 11
  • Risk Exposure
  • Pages
    • Page 1
    • Page 2
    • Page 3
    • Page 4
    • Page 5
    • Page 6
  • Quotes
  • 11.1 Introduction
  • 11.2 Definitions
    • 11.2.1 Modern Portfolio Theory
    • 11.2.2 Diversification
    • 11.2.3 Global Diversification
    • 11.2.4 Portfolio Rebalancing
    • 11.2.5 Whole Portfolios
    • 11.2.6 The Prudent Investor Act
    • Five Principles of Prudence
  • 11.3 Problems
    • 11.3.1 How Much Risk is There?
    • 11.3.2 Where is the Data?
    • 11.3.3 Investors Want to Avoid Risk
    • 11.3.4 Risk is Good in Proper Doses
    • 11.3.5 Portfolios Get Out of Balance
    • 11.3.6 Selecting Index Funds
  • 11.4 Solutions
    • 11.4.1 Twenty Index Portfolios
    • 11.4.2 Index Mutual Funds Earn more Return and Eliminate more Risk
    • 11.4.3 The Most Efficient Funds on the Market
    • Small Cap Strategy
    • U.S. Small-Cap Strategy
    • U.S. Micro-Cap Strategy
    • Value Strategies
    • U.S. Small-Cap Value Strategy
    • U.S. Large-Cap Value Strategy
    • Real Estate Securities Strategy
    • U.S. Large Company Strategy
    • Developed International Markets
    • Emerging Markets
    • Fixed Income
    • 11.4.4 Are Commodities Worth the Risk?
    • 11.4.5 Matching People with Portfolios
  • Index Portfolios
    • Portfolio 100 - Bright Red
    • Portfolio 95 - Yellow
    • Portfolio 90 - Gold
    • Portfolio 85 - Orange
    • Portfolio 80 - Purple
    • Portfolio 75 - Dark Blue
    • Portfolio 70 - Dark Teal
    • Portfolio 65 - Dark Green
    • Portfolio 60 - Green
    • Portfolio 55 - Olive
    • Portfolio 50 - Sea Green
    • Portfolio 45 - Teal
    • Portfolio 40 - Aqua
    • Portfolio 35 - Sky Blue
    • Portfolio 30 - Pale Blue
    • Portfolio 25 - Ice Blue
    • Portfolio 20 - Light Turquoise
    • Portfolio 15 - Light Green
    • Portfolio 10 - Light Yellow
    • Portfolio 5 - Ivory
    • Data Sources
    • Asset Class Time Series
  • 11.5 Summary
  • 11.6 Review Questions
  • Print Version [PDF]
  • Returns Calculator
  • Portfolio Simulator
  • Comparison Charts
  • Backtested Performance Data
  • IFA Indexes
  • Buy the Book
  • Backtested Disclosures
• Step 12
  • Invest and Relax
  • Pages
    • Page 1
    • Page 2
  • Quotes
  • 12.1 Introduction
  • 12.2 Definitions
    • 12.2.1 Registered Investment Advisers
    • 12.2.2 Dimensional Fund Advisors
    • 12.2.3 Rebalancing Portfolios
    • 12.2.4 Rebalancing Formula
    • 12.2.5 Tax Loss Harvesting
    • 12.2.5a Mutual Fund Distributions
    • 12.2.5b Cash Withdrawal Considerations
    • 12.2.6 Financial Advice
  • 12.3 Problems
    • 12.3.1 Active Investors Procrastinate
    • 12.3.2 Active Investors "Go It Alone"
    • 12.3.3 The Media Wants Investors to Worry
    • Invest in Index Mutual Funds
    • Asset Allocation
    • Minimization of Investment Costs
    • Minimization of Taxes
    • Reliable Investment Performance
    • A Simple and Understandable Investment Strategy
    • An Easier Way to Track Investment Performance
    • Increased Leverage and Compounding
      of Investment Wealth
    • Invest like Institutional Investors
  • 12.4 Solutions
  • 12.5 Summary
  • 12.6 Review Questions
  • Print Version [PDF]
  • Buy the Book
  • Chat with an Advisor
  • Open an Account
  • Fee Page
  • Your Schwab Account
  • Your Fidelity Account
  • IFA Client Login
  • Retirement Plans
  • About Us
  • Contact Us
  • Network Members
  • Backtested Disclosures

Step 11: Page:

Interactive and Dynamic Charts

 

The Interactive Charts require Adobe Flash to run. Please click here and visit Adobe's webpage to download the latest version.

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9 Nine Foot Galton Board

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11 Enlarge

12 Hebner Model

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Step 11: Page:

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