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June Provides an Example of Differing Investor Behavior

4,255
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 eventually taper down. Investors holding longer-maturity bonds ...Read More

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  • Some Recent Data on Inflation

    7,612
    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

    5,376
    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

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    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

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    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

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    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

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    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

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    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

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    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?

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    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

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    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

    11,891
    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

  • Types of Active Investing

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    by Mark Hebner — Sunday, June 23, 2013

    About 75% of investors are active investors. The most popular strategies in attempting to beat a market include stock, time, manager, and style ...Read More

  • What is Risk?

    6,320
    by Mark Hebner — Saturday, June 22, 2013

    There are many terms used by investment professionals and academics in their quest to define ...Read More

  • The Downsides of Indexing?

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    by Mark Hebner and IFA Contributors — Friday, June 21, 2013

    A recent article on MarketWatch by J.J. Zhang offers up several criticisms of indexing that we will answer here. Zhang starts with the usual positive attributes of indexing, such as simplicity and ...Read More

  • Active vs. Passive: Is the Tipping Point Here?

    5,446
    by Mark Hebner and IFA Contributors — Tuesday, June 18, 2013

    Back in 2007, John Bogle, the founder of The Vanguard Group and the author of The Little Book of Common Sense Investing, The Only Way to Guarantee Your Fair Share of Stock Market Returns", wrote the following ...Read More

  • Buy What, Bernie?

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    by Tom Allen and Mark Hebner — Friday, June 7, 2013

    The name Bernie Madoff has become the icon for everything that is wrong with the financial services industry. Although many scammers have preceded Bernie in deceiving investors and bilking them out of their ...Read More

  • Sex, Lies and Ticker Tape

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    by Mary Brunson — Wednesday, June 5, 2013

    "I don't wait in lines...I snort them." Those simple, yet searing words should have served as a warning siren for Turney Duff. They should have signaled the impending and total crash of his own personal ...Read More

  • The Art of Letting Go

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    by Jim Parker — Wednesday, May 29, 2013

    In many areas of life, intense activity and constant monitoring of results represent the path to success. In investment, that approach gets turned on its head. The Chinese philosophy of Taoism has a word for ...Read More

  • Book Review - Modern Principles: Macroeconomics

    5,435
    by Mark Hebner and IFA Contributors — Wednesday, May 29, 2013

    A College Level Textbook by Tyler Cowen and Alex Tabarrok   All too often, we hear horror stories of what students are being taught in college these days. When President Obama reminisced about his ...Read More

  • A Stock Picker's Market?

    7,432
    by Mark Hebner and IFA Contributors — Wednesday, May 29, 2013

    Of all the nonsensical terms that pervade the financial media, there are few that reach the stupidity level of "a stock-picker's market." It is a refrain often heard at the beginning of the year, particularly ...Read More

  • Investors Continue to Be Their Own Worst Enemy

    6,217
    by Mark Hebner and IFA Contributors — Thursday, May 23, 2013

    "We have met the enemy and he is us" – Pogo "The investor's chief problem—and even his worst enemy—is likely to be himself." – Benjamin Graham     A topic we have addressed on ...Read More

  • Recent Enhancements to Small Cap Investment Strategies

    4,758
    by Mark Hebner and IFA Contributors — Tuesday, May 21, 2013

    One of the reasons we at Index Funds Advisors advise using funds from Dimensional Fund Advisors is that Dimensional never stops seeking ways to add value for their investors. Drawing from a deep bench of ...Read More

  • Stupid Is As Stupid Says

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    by Mary Brunson — Monday, May 20, 2013

    You know those days when a long list of to-do’s instantly gives way to the necessity to respond to something that strikes you so viscerally you just have to drop everything and address it? Today is just ...Read More

  • When Is the Right Time to Take Social Security Benefits?

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    by Mark Hebner and IFA Contributors — Wednesday, May 15, 2013

    Americans who are near or in retirement are faced with the vexing question of when to take Social Security benefits. For a married couple, the complexity is multiplied by consideration of spousal benefits and ...Read More

  • IFA Contributors

    The Capitalism, Inc. Stock Certificate

    10,838
    by IFA Contributors — Tuesday, May 14, 2013

    At Index Funds Advisors, we are sometimes asked if there is any company whose stock we would recommend buying. Our tongue-in-cheek answer is shown below: The brainchild of IFA’s founder and president, ...Read More

  • To Roth or Not to Roth in Your 401(k)?

    4,859
    by Mark Hebner and IFA Contributors — Tuesday, May 14, 2013

    A question we are commonly asked at Index Funds Advisors is whether contributions to a 401(k) plan should be to a traditional or a Roth account. Recall that the former defers taxes until withdrawals begin ...Read More

  • Man vs. Machine: A Battle Best Avoided

    4,860
    by Mark Hebner and IFA Contributors — Monday, May 13, 2013

    A question we are often asked at Index Funds Advisors is whether the individual investor stands a chance against the high-frequency traders that now dominate the financial markets. Our answer, of course, is ...Read More

  • The Evolution of Dimensional

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    by David Booth — Monday, May 13, 2013

    We believe that the best way to add value over benchmark returns is by structuring portfolios around the dimensions of expected returns. Portfolio structure, rather than the tactical shifts associated with ...Read More

  • Style Drift on Steroids

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    by IFA Contributors — Tuesday, May 7, 2013

    In Step 6 of IFA’s 12-Step Recovery Program for Active Investors, we analyze the problem of style drift, the tendency of active managers to buy securities outside of their mandate. Normally, style drift ...Read More

  • Roger J. Trinwith, CFA

    IFA's Approach to Minimizing Cash Drag

    6,797
    by Roger Trinwith — Thursday, May 2, 2013

    One of the least advertised benefits of being an Index Funds Advisors, Inc (IFA) client is the continuous effort that our portfolio management team makes to give our clients the best investment experience ...Read More

  • Sell in May? Forget about It!

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    by Mark Hebner and IFA Contributors — Wednesday, May 1, 2013

    It never fails that at the beginning of May we receive a query about the “Sell in May and go away” market-timing strategy. We have always dismissed it out of hand for three primary reasons: ...Read More

  • "You Have to Be in Gold"

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    by Weston Wellington — Wednesday, May 1, 2013

    We are living in a world of money printing. … That is why I have to recommend gold again. ... Once gold surpasses $1,800 an ounce, it will run to the low-to-mid $2,000s.” Quotation attributed to ...Read More

  • The Rule of 72: A Mathematical Thing of Beauty

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    by IFA Contributors — Tuesday, April 30, 2013

    As an admitted math geek, I never tire of learning new tricks that simplify otherwise complex calculations. Far and away my favorite trick is known as “the rule of 72,” which states that if you are ...Read More

  • Gold: And Then There's The Downside!

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    by Tom Allen and Mark Hebner — Monday, April 29, 2013

    Gold has had quite the roller coaster ride over the last five years. The unprecedented monetary easing policy taken by the Federal Reserve has made some investors unnerved about the threat of hyperinflation ...Read More

  • F.A. Hayek: A Progenitor of Market Efficiency

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    by Mark Hebner and IFA Contributors — Friday, April 26, 2013

    “I am convinced that if it [the price system of a free market] were the result of deliberate human design, and if the people guided by the price changes understood that their decisions have significance ...Read More

  • The 12-Step Recovery Program for Retirement Gamblers

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    by Mark Hebner — Thursday, April 25, 2013

    For the last fourteen years, IFA has been educating investors on the sensible way to invest, based on decades of academic research. Amid all the clamor and din of Wall Street advertising and the talking heads ...Read More

  • Smart Sustainable Investing

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    by Mary Brunson and Mark Hebner — Friday, April 19, 2013

    There are a handful of funds that address sustainability, with just too many satisfying an emotional pull, packing the proverbial sizzle, but no steak. Many such funds incorporate a positive screening process, ...Read More

  • Taking Stock of the STOCK Act

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    by IFA Contributors — Wednesday, April 17, 2013

         In November of 2011, 60 Minutes did an eye-opening expose’ of members of Congress who profited from stock trading based on information.  The truly stunning aspect of this story ...Read More

  • Vanguard Makes the Case for Indexing

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    by IFA Contributors — Tuesday, April 16, 2013

         As someone who follows the world of passive investing quite closely, one publication that I eagerly await every year is The Case for Index-Fund Investing1 from Vanguard Research. As with ...Read More

  • Another Arithmetic Lesson from William Sharpe

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    by IFA Contributors — Friday, April 12, 2013

    Nobel Laureate William Sharpe is one of the academic linchpins of IFA’s investment philosophy. A year after winning the Nobel Prize in 1990, he penned a brief and elegant article1 showing that as whole, ...Read More

  • 1Q/2013: The Quarter in Review

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    by IFA Contributors — Thursday, April 4, 2013

    The first quarter of 2013 was a quarter in which risk was rewarded. Once again, the market climbed a wall of worry centered on government shutdowns and budget sequestrations. On the international front, we ...Read More

  • Jim Parker, DFA  Vice President

    Running to Stand Still

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    by Jim Parker — Thursday, April 4, 2013

    Trying to correctly time your entry point to the market is never easy. Just ask the experts. In early February, strategists at a global investment bank were becoming alarmed at political events in Europe, the ...Read More

  • What's a Mother to Do?

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    by IFA Contributors — Wednesday, April 3, 2013

    Yahoo!'s Daily Ticker is one of the few financial Websites that I make a point to visit on a daily basis. The three to six minute interviews and commentaries are always entertaining and sometimes very ...Read More

  • Active vs. Passive: 2012 Standard & Poor's Update

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    by Tom Allen — Monday, April 1, 2013

    Standard & Poor's recently published its year-end 2012 scorecards comparing the performance of active mutual funds versus their respective benchmarks, as well as the persistence of top performing active mutual ...Read More

  • Momentum: A Fourth Factor

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    by IFA Contributors — Monday, April 1, 2013

    Throughout IFA’s Website, you will find references to the three-factor model formulated by Professors Eugene Fama and Ken French, which says that the expected return of a broadly diversified stock ...Read More

  • Hedge Funds: A Deeper Look into their Returns

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    by IFA Contributors — Wednesday, March 27, 2013

    Despite the dismal results delivered to their investors since inception1, hedge funds have continued to grow, reaching a record $2.25 trillion by the end of 2012, according to Hedge Fund Research2.  At ...Read More