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A Deeper Dive into the Value Factor

4,347
by Mark Hebner
Thursday, August 29, 2013

The third risk factor in the Fama/French model is the amount of exposure to low priced stocks, which is measured by a book-to-market (BtM) value ...Read More

Archive

  • Historical Databases and Studies

    4,323
    by Mark Hebner — Tuesday, August 27, 2013

    The premier source of historical data used by the academic and corporate community comes from the Center for Research in Security Prices ...Read More

  • The New and Improved IFA Index Portfolios [VIDEO]

    15,735
    by Mark Hebner — Monday, August 26, 2013

    IFA established the original IFA Index Portfolios back in 2000, based on the DFA Matrix book and several peer-reviewed academic papers describing what I deem to be "Modern Portfolio Theory." We recently ...Read More

  • The Broccoli and Pizza Portfolio

    5,120
    by Jim Parker — Wednesday, August 21, 2013

    For some of us, it’s hard to give up on the idea that investing should be exciting. Picking stocks can be fun, after all, and there’s nothing like getting your timing right and bragging about it ...Read More

  • Kudos to Time Magazine

    5,594
    by Mark Hebner and IFA Contributors — Tuesday, August 20, 2013

    The major Wall Street firms provide a large source of revenue for the few companies that dominate the news media. This is why we found it so refreshing to read this article (“America Can’t Afford ...Read More

  • Discipline is Difficult [VIDEO]

    7,238
    by Weston Wellington — Thursday, August 15, 2013

    We're going to talk about discipline in the investment arena. I want to make the case that discipline is a challenge for almost all ...Read More

  • The Failure of Manager Pickers

    3,856
    by Mark Hebner — Wednesday, August 7, 2013

    Like stock and time picking, manager picking is usually a worthless endeavor; however, there are still investors out there who believe they can select an all-star manager or financial guru who can beat the ...Read More

  • Diversification is Your Friend [VIDEO]

    5,064
    by Weston Wellington — Tuesday, August 6, 2013

    In this session we're going to discuss the topic of ‘diversification.' One leading economist number of years ago said, "diversification is the investor's best ...Read More

  • Thoughts on Time Picking

    4,356
    by Mark Hebner — Tuesday, August 6, 2013

    There seems to be universal agreement among investment experts that time picking is futile. Even so, it is not unusual for these same experts to actively tout its ...Read More

  • Profitability and a Four-Factor Model

    16,369
    by Mark Hebner and IFA Contributors — Friday, August 2, 2013

    When constructing or evaluating a domestic equity portfolio, Index Fund Advisors has traditionally utilized the three-factor asset pricing model that Professors Eugene Fama and Ken French introduced1 in 1993. ...Read More

  • Missing the Best and Worst Days

    5,364
    by Mark Hebner — Friday, August 2, 2013

    Big down days and big up days frequently come right next to each other. This is volatility—and it is why you have to stay in the markets to get the markets’ superior ...Read More

  • When Two Hats Are Not Better than One

    4,026
    by Mark Hebner and IFA Contributors — Thursday, August 1, 2013

    As a registered investment adviser that is regulated under the Investment Advisers Act of 1940, one of the fiduciary duties that Index Fund Advisors owes to its clients is to seek out best execution for their ...Read More

  • IFA's Position Statement on Investing

    6,372
    by Mark Hebner — Wednesday, July 31, 2013

    1. Capitalism earns a profit for its shareholders on average. 2. Companies have a cost of equity capital of about 10% and that cost of capital is paid to the shareholders. 3. Nobody can see the future and ...Read More

  • The Wisdom of a Smart Crowd

    5,916
    by Mark Hebner and IFA Contributors — Tuesday, July 30, 2013

    Cogent Research LLC recently completed a survey of 1,700 financial advisers that asked how likely they are to increase or decrease assets with 24 different mutual fund companies, and once again, Dimensional ...Read More

  • The Separation Theorem

    9,628
    by Mark Hebner — Sunday, July 28, 2013

    Harry Markowitz was primarily concerned with the diversification of risky assets. James Tobin added the concept of combining risk-free assets, such as cash or bonds, with risky assets, such as ...Read More

  • Advocates of Capitalism

    7,244
    by Mark Hebner — Saturday, July 27, 2013

    Although not formally his professor, Ludwig von Mises may be considered a mentor of Friedrich von ...Read More

  • When Possessions Are Confused with Investments

    4,571
    by Mark Hebner — Friday, July 26, 2013

    All too often, we come across stories of broken nest eggs that make us feel truly awful. One such story can be found in this 8-minute documentary on YouTube regarding a former soap opera star who spent about ...Read More

  • Putting Active Management to the Test

    4,481
    by Mark Hebner — Friday, July 26, 2013

    from the University of Chicago, Eugene Fama's graduate student, Michael Jensen, published "The Performance of Mutual Funds in the Period 1945-1965," in the Journal of Finance, ...Read More

  • Prices are Fair [VIDEO]

    4,656
    by Weston Wellington — Friday, July 26, 2013

    Securities markets are very competitive all around the world. competition among market participants tends to drive prices toward fair ...Read More

  • A Hedge Fund Gets Indicted

    8,115
    by Mark Hebner and IFA Contributors — Thursday, July 25, 2013

    To help us keep track of all the hedge fund scandals of recent years, we created IFA’s Hedge Fund Manager Hall of Shame. Note that we limited it to hedge fund managers, so today’s grand jury ...Read More

  • The Mutual Fund Landscape—Not a Pretty Picture

    5,069
    by Mark Hebner and IFA Contributors — Wednesday, July 24, 2013

    As we have discussed in previous articles such as this one, investors have a strong tendency to pour cash into funds that have had high returns only to be met with disappointment. If investors truly understood ...Read More

  • The Random Walk of Stock Prices

    4,246
    by Mark Hebner — Wednesday, July 24, 2013

    The Random Walk Theory essentially states that there are no discernible patterns in stock market prices. The logic and reasoning goes like ...Read More

  • A New Gadfly Buzzes the 401(k) Industry

    4,285
    by Mark Hebner and IFA Contributors — Monday, July 22, 2013

    While we have often written about the sorry state of affairs that constitutes today’s 401(k) industry, as documented in this PBS Frontline documentary, Professor Ian Ayres of Yale Law School has taken it ...Read More

  • Second-Guessing

    5,166
    by Jim Parker — Monday, July 22, 2013

    Markets recently have had a rocky time as investors in aggregate reassess prospects for monetary policy stimulus in the US. Is this something to worry about? The world’s most closely watched central bank ...Read More

  • Active Investors Anonymous

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    by Mark Hebner — Friday, July 19, 2013

    I am Mark Hebner, president of Index Fund Advisors (IFA), a registered investment advisory firm. Years ago I learned some painful lessons when I sold my previous business and turned the profits over to active ...Read More

  • June Provides an Example of Differing Investor Behavior

    4,093
    by Mark Hebner and IFA Contributors — Friday, July 12, 2013

    June was a difficult month for fixed income (bond) investments, as interest rates increased in the face of the Federal Reserve's announcement that its program of bond buying known as Quantitative Easing would ...Read More

  • Some Recent Data on Inflation

    7,014
    by Mark Hebner and IFA Contributors — Thursday, July 11, 2013

    Anyone who is the least bit familiar with Index Fund Advisors knows that we take a “no forecasting” approach to economic data and its impact on returns. However, when the market itself provides a ...Read More

  • When Two Seconds Is an Eternity

    5,223
    by Mark Hebner and IFA Contributors — Tuesday, July 9, 2013

    In a previous article, we discussed the non-level playing field (to put it as charitably as possible) on which individuals who actively place their own trades compete. This message was driven home by Thomson ...Read More

  • Bond Funds: Doing Their Job

    4,769
    by Mark Hebner and IFA Contributors — Tuesday, July 9, 2013

    In the second quarter of 2013, bonds turned in a loss, and they remained negative on a year-to-date basis as of the market close on 7/5/2013. For the four bond funds used in the IFA Index Portfolios, the ...Read More

  • 2Q/2013: The Quarter in Review

    5,435
    by Mark Hebner and IFA Contributors — Friday, July 5, 2013

    In the second quarter of 2013, risk continued to be rewarded for US equities but not for foreign equities, REITs, or fixed income. Perhaps the most noteworthy event during the quarter was the negative reaction ...Read More

  • Pension-Gate: More Smart Advice from Maryland

    4,110
    by Mark Hebner and IFA Contributors — Friday, July 5, 2013

    About a year ago, we called attention to a report by the Maryland Public Policy Institute and the Maryland Tax Education Foundation titled, “Wall Street Fees and the Maryland Public Pension Fund” ...Read More

  • Climate vs. Weather: Understanding the Difference

    6,539
    by Mark Hebner and IFA Contributors — Thursday, June 27, 2013

    The recent heat wave in Alaska where the temperatures exceeded 90 degrees prompted us to ask what is the probability that on a given summer day, the temperature in Fairbanks, Alaska will exceed 90 degrees? ...Read More

  • Pension-Gate - Good News from Pennsylvania

    4,821
    by Mark Hebner and IFA Contributors — Wednesday, June 26, 2013

    A few months ago, we reported on how CalPERS (the $260 billion California Public Employees Retirement System pension plan) was considering dropping its current active approach to embrace a more passive ...Read More

  • The 401(k) Lawsuits Continue

    6,364
    by Mark Hebner and IFA Contributors — Wednesday, June 26, 2013

    About two months ago, PBS aired “The Retirement Gamble” which delved into the problems facing American workers who have had their defined benefit pension plans replaced with sub-par 401(k) plans. ...Read More

  • So Just How Much Should You Be Saving for Retirement?

    4,806
    by Mark Hebner and IFA Contributors — Tuesday, June 25, 2013

    This, of course, is a crucial question to both your current and future financial security. Certainly, there are no easy “one-size-fits-all” answers, but thanks to some recent research from Massi De ...Read More

  • How and Why Investors Lose

    5,364
    by Mark Hebner — Tuesday, June 25, 2013

    The Trzcinka study cited by Jason Zweig, showed a large gap between funds' and shareholders' returns and was a shock to even the ...Read More

  • Active Investors are Gamblers

    10,651
    by Mark Hebner — Monday, June 24, 2013

    New studies in the field of neuroeconomics confirm the release of dopamine when presented with the opportunity of a surging ...Read More