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The Investment Meter

10,484
by Mark Hebner
Thursday, September 12, 2013

The investment meter is a device that shows the scores of the five dimensions as percentages of the maximum possible for each ...Read More

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  • Mark Hebner

    Risk Capacity

    12,696
    by Mark Hebner — Wednesday, September 11, 2013

    Each person has a unique Risk Capacity™.  The question is, how do we measure this capacity and find the right "bull" for you to ...Read More

  • Private Equity and Venture Capital

    6,318
    by Mark Hebner — Wednesday, September 11, 2013

    Some investors may wonder if they would be better off in private equity or venture capital, two asset classes that have nowhere near the amount of quality data that we have with public ...Read More

  • An Analysis of the Returns of XYZ Capital Management

    10,567
    by Mark Hebner — Wednesday, September 11, 2013

    XYZ Capital Management (XYZ) has chosen the S&P 500 Index as its benchmark. We argue that this is incorrect given that XYZ describes itself as a “value-oriented” manager, and several examples of companies that XYZ has invested in could be categorized as ...Read More

  • How IFA Keeps You Up to Date on Your Portfolio [VIDEO]

    10,531
    by Mark Hebner — Tuesday, September 3, 2013

    As an investment fiduciary, Index Fund Advisors has an obligation to always act in the best interests of our clients. This would include regular monitoring of their portfolios for rebalancing and tax loss harvesting opportunities, while regularly adjusting the risk level of the ...Read More

  • Mark Hebner

    Homemade Dividends [VIDEO]

    12,246
    by Mark Hebner — Tuesday, September 3, 2013

    At Index Fund Advisors, we often encounter investors who religiously adhere to the commandment, “Thou shalt not invade thy principal.” Whether the investor is a retiree who is living out of his portfolio or a foundation that is spending its endowment, the notion that ...Read More

  • Long-Term History Characterizes Risk and Return

    6,549
    by Mark Hebner — Friday, August 30, 2013

    Looking over the long term, David Booth, one of the two co-founders of Dimensional Fund Advisors, reviews the history of the stock market and highlights the importance of time, not timing, in the achieving long term investment ...Read More

  • Taking Stock in Pot? Beware!

    6,179
    by IFA Contributors — Thursday, August 29, 2013

    With medical marijuana now legal in twenty states and recreational marijuana approved in two states, some people may sniff an investment opportunity. Not so fast says the Financial Industry Regulatory Authority (FINRA), which issued this press release warning investors of ...Read More

  • A Deeper Dive into the Value Factor

    5,411
    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

  • Historical Databases and Studies

    5,359
    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]

    24,945
    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 collected several such papers and summarized them with one paragraph and ...Read More

  • The Broccoli and Pizza Portfolio

    6,946
    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 later with friends. For all the accumulated wisdom about asset ...Read More

  • Kudos to Time Magazine

    8,105
    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 Wall Street’s Terrible Investment Advice”) by Christopher ...Read More

  • Discipline is Difficult [VIDEO]

    15,014
    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

    4,824
    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]

    6,290
    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

  • Mark Hebner and IFA Contributors

    Casinos, Insurance Companies, and Indexers: What Do They Have in Common?

    10,406
    by Mark Hebner and IFA Contributors — Tuesday, August 6, 2013

    To many people, the financial markets are nothing more than a giant casino where the odds are stacked against them. Certainly, one can hardly blame them when they repeatedly hear about the computers that now dominate trading or the hedge-fund related insider trading scandals. ...Read More

  • Thoughts on Time Picking

    5,308
    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

    19,747
    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. This model states that the expected return of a broadly diversified ...Read More

  • Missing the Best and Worst Days

    6,493
    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

    5,060
    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 trades. We fulfill this requirement by placing client assets with ...Read More

  • IFA's Position Statement on Investing

    8,695
    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 future prices are randomly moved by unpredictable news. Bad news results ...Read More

  • The Wisdom of a Smart Crowd

    8,583
    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 Fund Advisors (DFA) scored the highest. DFA also scored the highest on ...Read More

  • The Separation Theorem

    12,577
    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

    10,431
    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

    5,590
    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 $100,000 on Beanie Babies with the expectation of making sufficient ...Read More

  • Putting Active Management to the Test

    5,650
    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]

    5,765
    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

    11,093
    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 indictment of SAC Capital Advisors for insider trading puts us in a bit ...Read More

  • The Mutual Fund Landscape—Not a Pretty Picture

    6,206
    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 how stacked the deck is against them, perhaps they would avoid this ...Read More

  • The Random Walk of Stock Prices

    5,850
    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

    5,285
    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 to the next level, according to this article from RIABiz. After ...Read More

  • Second-Guessing

    6,285
    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 unsettled financial markets by flagging that it may start to scale ...Read More

  • Active Investors Anonymous

    5,037
    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

    5,167
    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 were ...Read More

  • An Inside View of Dimensional: Upfront and Personal with David Booth

    7,776
    by Melissa Johnson and Mark Hebner — Friday, July 12, 2013

    Mark Hebner recently sat down in Napa, California for a rare interview with David Booth, Chairman and Co-Chief Executive Officer of Dimensional Fund Advisors, to discuss the beginnings, evolution and impact of the renowned Dimensional Matrix Books. Not only did Booth talk about ...Read More