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One Man's Trash—Another Man's Treasure

5,055
by Mary Brunson and IFA Contributors
Tuesday, December 3, 2013

Lost: An $8 Million Thumb Drive Just how easy is it to lose $8 Million? Easier than you might think if your war chest consists of virtual currency stored on a thumb drive. Just ask James Howells of the UK. You see, Mr. Howells was one of the tech ...Read More

Archives

  • Calculations for t-Statistics

    24,091
    by Mark Hebner — Monday, December 2, 2013

    In calculating the t-stat, the first step is to determine the excess returns the manager earned above an appropriate ...Read More

  • A New Way of Thinking about Your 401(k)

    7,598
    by Mark Hebner and IFA Contributors — Monday, December 2, 2013

    Matt Schifrin of Forbes was absolutely correct when he described the retirement crisis as a gigantic socioeconomic problem that should be weighing heavily on policymakers. Schifrin cites Federal Reserve data ...Read More

  • Cash Withdrawal Considerations

    13,265
    by Mark Hebner — Monday, December 2, 2013

    IFA is often in the position of accommodating regular cash withdrawal by its clients. The question is how to best generate cash for ...Read More

  • A Banner Month for CRSP

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    by Mark Hebner and IFA Contributors — Wednesday, November 27, 2013

    As we have discussed in many articles such as this one, the Center for Research in Security Prices (CRSP) is the gold standard of historical financial data and is the foundation upon which modern finance is ...Read More

  • Quantitative Easing and Interest Rates

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    by Mark Hebner and IFA Contributors — Monday, November 25, 2013

    Question: Should I be concerned about the recent news about the Fed reducing bond buys soon and its effects on my portfolio? Answer: Lately, it seems that a day does not go by without a story like this one ...Read More

  • The Persistent Myth of Active Funds in Bear Markets

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    by Mark Hebner and IFA Contributors — Friday, November 22, 2013

    All too often, we hear the refrain that yes, index funds are great for bull markets, but when the next bear market rears its ugly head, you will want to be in active funds because the manager can anticipate ...Read More

  • Vanguard Debunks a Widespread Myth about the Market

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    by Mark Hebner and IFA Contributors — Tuesday, November 19, 2013

    For at least the past two decades, we have been hearing about an approaching day of reckoning for the stock market prompted by retiring baby boomers selling their equities to fund their retirement needs. ...Read More

  • A Second Look at the Mutual Fund Landscape

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    by Mark Hebner and IFA Contributors — Tuesday, November 19, 2013

    A few months ago, we published “The Mutual Fund Landscape—Not a Pretty Picture” in which we presented the results of research by Dimensional Fund Advisors (DFA). To summarize, they found that ...Read More

  • A New Type of Treasury

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    by Mark Hebner and IFA Contributors — Friday, November 15, 2013

    The upcoming Treasury auction in January of 2014 will be different from past auctions in that it will mark the debut of a new category of Treasury security, Floating Rate Notes (FRNs). The last time that ...Read More

  • Differing Types of Retirement Annuity Payouts

    5,872
    by Mark Hebner and IFA Contributors — Friday, November 15, 2013

    At Index Fund Advisors, we have assisted many clients in making the crucial decision of how to take a payout at retirement—as an annuity or a lump sum. Of course, every client is different, and there is ...Read More

  • A Summary of the Risks Facing Retirees

    5,152
    by Mark Hebner and IFA Contributors — Thursday, November 14, 2013

    1)      Inflation Risk—the loss of purchasing power over time. As Moshe Milevsky points out, every person has his or her own unique inflation rate that is determined by the ...Read More

  • Chuck Talks to Us about Retirement Planning

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    by Mark Hebner and IFA Contributors — Tuesday, November 12, 2013

    OK, so maybe it wasn’t Charles Schwab himself, but Walter Bettinger is the President and CEO of Charles Schwab, and he certainly has the authority to speak to us on Chuck’s behalf. On November ...Read More

  • The Tax Man Cometh

    7,611
    by Mark Hebner and IFA Contributors — Monday, November 11, 2013

    As fiduciaries for wealth, we at Index Fund Advisors are obligated to do everything we can to maximize our client’s after-tax returns. Please note that this is not always the same thing as minimizing ...Read More

  • The Value of a Second Opinion

    4,987
    by Mark Hebner and IFA Contributors — Friday, November 8, 2013

    When it comes to our physical health, most of us believe that is our right (and perhaps duty) to get a second opinion when diagnosed with a catastrophic illness, as discussed in this article on WebMD.com. Of ...Read More

  • A Guilty Plea and a Record Fine for SAC Capital

    5,046
    by Mark Hebner and IFA Contributors — Tuesday, November 5, 2013

    Three months ago, we wrote about the unprecedented indictment of SAC Capital, and a few months before that, we wrote about SAC’s record-setting $616 million settlement for insider trading. Today’s ...Read More

  • The Active Voice is Alive and Well

    6,685
    by Mark Hebner and IFA Contributors — Tuesday, November 5, 2013

    Recently, we have seen many articles such as this one stating that the passive vs. active debate is over not because passive won but because the indexing advocates have drowned out the proponents of active ...Read More

  • If You Can't Beat 'Em, Join 'Em

    14,574
    by Mary Brunson and Mark Hebner — Monday, November 4, 2013

    "The current understanding of asset prices relies in part on rational investors and their concerns about risk and in part on psychology and behavioral finance." 2013 Nobel Prize Committee Announcement, October ...Read More

  • When As Good As It Gets Isn't Good Enough

    4,936
    by Mark Hebner and IFA Contributors — Friday, November 1, 2013

    One of the accusations constantly levied against 2013 Nobel Laureate Eugene Fama is that he uses his Efficient Market Hypothesis as a justification to denigrate all forms of financial regulation, including ...Read More

  • Understanding Your IFA Index Portfolio Return

    4,710
    by Mark Hebner and IFA Contributors — Friday, November 1, 2013

    If you are a client of Index Fund Advisors, you may have recently received a quarterly performance report. The intent of this article is to help you better understand the numbers on that report. The first ...Read More

  • No Logical Reason for Active Management

    4,480
    by Mark Hebner and IFA Contributors — Monday, October 28, 2013

    “The conclusion is inescapable: Active managers as a group, simply don’t add value…In short, there is truly no reason for a self-directed investor to own actively managed funds over index ...Read More

  • There Are Indexes, and There Are Indexes

    6,269
    by Mark Hebner and IFA Contributors — Tuesday, October 22, 2013

    Last Thursday (10/17/2013), we saw something that we don’t see very often—The S&P 500 Index gained 0.7% while the Dow Jones Industrial Average (the Dow) remained essentially flat. As its name ...Read More

  • Fama’s Win: Made Sweeter Through Time

    5,359
    by Mark Hebner — Tuesday, October 22, 2013

    Eugene F. Fama was interviewed on CNBC's "Squawk Box" this past Friday about the recent financial crisis and financial regulatory reform.   Q. Are u ever surprised that certain things in the past we ...Read More

  • What Do Brokerage Clients and Mushrooms Have in Common?

    4,907
    by Mark Hebner and IFA Contributors — Tuesday, October 22, 2013

    In the interest of decorum, we will only mention the first part of the punch line of this old joke—that they are both kept in the dark, although we certainly think that the second part (what they are ...Read More

  • Active vs. Passive—The View from Up North

    4,895
    by Mark Hebner and IFA Contributors — Thursday, October 17, 2013

    A few weeks ago, we published our semi-annual summary of the Standard and Poor’s Index Versus Active (SPIVA®) Scorecard. There were no surprises. Over the last five years, passive beat active in the ...Read More

  • Much Ado about Nothing

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    by Mark Hebner and IFA Contributors — Wednesday, October 16, 2013

    As we noted in our review of the third quarter, the market essentially shrugged off the government shutdown that began on midnight of September 30th. The far bigger issue appeared to be the looming October ...Read More

  • SBBI: The Almanac of Returns Data

    9,022
    by Ian Liew — Wednesday, October 16, 2013

    Stocks, Bonds, Bills, and Inflation (SBBI) is often characterized as the Almanac of returns data. This magisterial work originally produced by Roger Ibbotson and Rex Sinquefield is considered the go to place ...Read More

  • Interesting Times in the Mutual Fund World

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    by Mark Hebner and IFA Contributors — Monday, October 14, 2013

    Morningstar, Inc. just released its reported estimated U.S. mutual fund asset flows for September 2013. The results are summarized in this press release. Below, we will explain why we found it more interesting ...Read More

  • Eugene Fama Wins the 2013 Nobel Prize in Economics

    7,235
    by Mark Hebner and IFA Contributors — Monday, October 14, 2013

    At Index Fund Advisors, we were absolutely thrilled to hear the announcement by the Royal Swedish Academy of Sciences that the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel for 2013 is ...Read More

  • Time Diversification: A Bizarre Discovery? Not to Us!

    4,541
    by Mark Hebner and IFA Contributors — Thursday, October 10, 2013

    Time diversification of risk refers to the idea of a risky portfolio becoming less risky when held over a long investment period. For example, for IFA's Index Portfolio 100 on glide path, the range of rolling ...Read More

  • The Endowment Model: Beating a Dead Horse

    5,461
    by Mark Hebner and IFA Contributors — Wednesday, October 9, 2013

    “Those institutions [state pension plans and endowments of state universities] are placing risky bets on private equity and similar funds, to some degree at the taxpayer’s expense. They are relying ...Read More

  • The Active vs. Passive Debate Plays Out in the L.A. Times

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    by Mark Hebner and IFA Contributors — Wednesday, October 9, 2013

    Over the weekend, this article by Tom Petruno caught our attention. Overall, we commend him for penning a good summary of the current status of the ongoing battle between active and passive for the minds (and ...Read More

  • 3Q/2013: The Quarter in Review

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    by Mark Hebner and IFA Contributors — Monday, October 7, 2013

    In the third quarter of 2013, risk was nicely rewarded for all classes of equities except REITs, and fixed income staged a small comeback from a difficult second quarter. Once again, there was a lot of ...Read More

  • All the Way from India Comes a Voice of Reason

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    by Mark Hebner and IFA Contributors — Friday, October 4, 2013

    At Index Fund Advisors, one of the things that we like to keep an eye on is the emergence of indexing in other countries. As the second most populous of the four “BRIC” countries (Brazil, Russia, ...Read More

  • Passive vs. Active — The Scorecard as of 6/30/2013

    6,474
    by Mark Hebner and IFA Contributors — Monday, September 30, 2013

    At Index Fund Advisors, one of our favorite pieces of research is the semi-annual Standard and Poor’s Index Versus Active Funds (SPIVA®) Scorecard put out by S&P Dow Jones Indices. The ...Read More

  • From Rags to Riches to Rags

    4,110
    by Mark Hebner and IFA Contributors — Thursday, September 26, 2013

    “What is a Financial Advisor? That is a term that means almost nothing. It is somebody who might be a financial planner, or it could be a broker who is really a salesperson. The vast majority of ...Read More

  • Thinking About a Private Placement? Think Again! [VIDEO]

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    by Mark Hebner and IFA Contributors — Wednesday, September 25, 2013

    So says the Financial Industry Regulatory Authority (FINRA) in a recent press release and investor alert. A private placement is an offering of a company’s securities that is not registered with the ...Read More

  • So Just How Much Should You Be Spending in Retirement?

    5,290
    by Mark Hebner and IFA Contributors — Tuesday, September 24, 2013

    A couple of months ago, we published an article addressing the question of how much you should be saving for retirement. Today, we will examine the other side of the coin, once again utilizing research ...Read More

  • American Funds: When Silence is Golden

    5,514
    by Mark Hebner and IFA Contributors — Tuesday, September 24, 2013

    The corporate parent of American Funds, the Capital Group Companies, recently broke its silence to defend its long-held practice of active management. As we noted in a prior article, they have been suffering ...Read More

  • Yet another 401(k) Lawsuit

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    by Mark Hebner and IFA Contributors — Thursday, September 19, 2013

    A few months ago, we published this article discussing lawsuits filed against financial services companies (Cigna and Ameriprise Financial) by their own employees for breaching their fiduciary duties by ...Read More

  • Mutual Fund Distributions

    5,462
    by Mark Hebner — Tuesday, September 17, 2013

    Once you are invested and relaxed, an understanding of distributions of dividends and capital gains is important for taxable ...Read More

  • The Value of a Passive Advisor [VIDEO]

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    by Mark Hebner and IFA Contributors — Tuesday, September 17, 2013

    By now, you realize the benefits of an indexing strategy, and more importantly, the expensive false promises of active management.  So the next logical question is, “Why should I seek the help of an ...Read More

  • Dimensional Fund Advisors

    9,301
    by Mark Hebner — Sunday, September 15, 2013

    Dimensional Fund Advisors (DFA) makes their low cost, institutional index funds available to individual investors through DFA approved registered financial ...Read More

  • A Practical Example of Direct Profitability

    9,458
    by Mark Hebner and IFA Contributors — Friday, September 13, 2013

    In recent weeks, we have published two articles (here and here) on direct profitability and its potential use as a dimension of expected returns. Since these articles were somewhat abstract in nature and ...Read More

  • Capacity Adjusted Risk

    6,187
    by Mark Hebner — Friday, September 13, 2013

    Capacity adjusted risk is an entirely new way for investors to look at the uncertainty of their ...Read More