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2012: Another Dismal Year for Active Managers and Market Predictors

5,442
by IFA Contributors
Friday, January 11, 2013

At Index Funds Advisors, we often counsel investors to avoid a “prediction addiction” and to especially avoid listening to the pundits who are hopelessly addicted. The past calendar year of 2012 proved us right once again, at least according to a recent ...Read More

Archive

  • IFA's Concerns with Laddered Bond Portfolios

    6,919
    by Mark Hebner — Thursday, January 10, 2013

    To borrow from Investopedia, a bond ladder is a portfolio of individual bonds with maturity dates evenly spaced across several years, so that the bonds are maturing and the proceeds are being reinvested or ...Read More

  • 2012: The Year It Didn’t Happen

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    by Weston Wellington — Monday, January 7, 2013

    Judging by the headlines in the financial press, investors spent much of the past year anxiously awaiting one calamity after another that failed to occur. The plunge off the so-called fiscal cliff was averted. ...Read More

  • 2012: The Year in Review

    6,482
    by IFA Contributors — Wednesday, January 2, 2013

    Unlike 2011, 2012 was a year in which risk was rewarded. It is important to bear in mind that if risk were rewarded every year, it wouldn't be risk and investors would have no right to expect a positive real ...Read More

  • New Website to Help Stop Investment Scams

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    by IFA Contributors — Friday, December 21, 2012

    Today, I found a basis for hope upon reading this press release describing how the Better Business Bureau (BBB) and the Financial Industry Regulatory Authority (FINRA) Investor Education Foundation have teamed ...Read More

  • Arthur Wiesenberger: The Morningstar of His Day

    7,756
    by Mark Hebner and IFA Contributors — Tuesday, December 18, 2012

    A recent addition to IFA's ever-expanding collection of antique finance books is the 1954 edition of Investment Companies by Arthur Wiesenberger. For those who are not familiar with this weighty tome, consider ...Read More

  • Ponzi Schemes After Madoff: A Sad Story Continues

    5,217
    by IFA Contributors — Tuesday, December 11, 2012

    It has been almost exactly four years since Bernie Madoff was revealed as the operator of the largest Ponzi scheme in history (estimated at $64.8 billion by prosecutors). One might think that with all the ...Read More

  • Forecasting Stock Market Returns: Why We Don't Do It

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    by Mark Hebner and IFA Contributors — Monday, December 10, 2012

    A recent whitepaper from Vanguard1 analyzed the impact of sixteen different variables on subsequent equity returns. They included everything from the ten-year smoothed price-to-earnings ratio to consensus GDP ...Read More

  • Tax Rates and Stock Returns

    5,695
    by IFA Contributors — Friday, November 30, 2012

    With all the chatter in the financial media about the impending fiscal cliff, investors cannot be blamed for their confusion. Some investors have expressed a concern that an increase in tax rates may result in ...Read More

  • What a License Plate Reveals

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    by IFA Contributors — Thursday, November 29, 2012

    While driving to work today, I was racking my brain for a good topic to write about when suddenly, a black Ferrari convertible zoomed past me. Normally, I would not give that a second thought, but I could not ...Read More

  • Deja Vu: Sandy and the Great Blizzard of 1888

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    by Mark Hebner — Tuesday, November 6, 2012

    While Sandy was well forecasted, folks back in 1888 had no benefit of foresight. As a result, Northeasterners were caught off-guard that early Sunday morning.  Snow pelted New Jersey, New York, ...Read More

  • The Impact of Bad Investor Behavior

    8,466
    by IFA Contributors — Wednesday, October 24, 2012

    About a year ago, Professors Brad Barber and Terrance Odean published a survey of studies from around the world (including several of their own) showing the deleterious impact of bad behavior on investors' ...Read More

  • When Two Minuses Do Not Make a Plus

    4,767
    by IFA Contributors — Tuesday, October 23, 2012

    As a registered investment advisor, Index Funds Advisors, Inc. is constantly solicited by mutual fund companies and ETF (exchange-traded fund) providers hoping to convince us to use their products for our ...Read More

  • The Google Earnings Debacle: The Piranhas Attack

    5,186
    by IFA Contributors — Friday, October 19, 2012

    At Index Funds Advisors, Inc, we often talk about the Efficient Markets Hypothesis which states that current prices incorporate all publicly available information. When new information appears, traders act on ...Read More

  • VP Dimensional Fund Advisors

    The Top Ten Money Excuses

    7,854
    by Jim Parker — Thursday, October 18, 2012

    Human beings have an astounding facility for self-deception when it comes to our own money. We tend to rationalize our own fears. So instead of just recognizing how we feel and reflecting on the thoughts that ...Read More

  • Hedge Fund Warnings from the SEC

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    by IFA Contributors — Monday, October 15, 2012

    Anyone who is contemplating investing in a hedge fund would do well to read the SEC's Investor Bulletin: Hedge Funds. This document instructs potential investors to not only read the fund's offering memorandum ...Read More

  • Beating a Dead Horse

    7,392
    by IFA Contributors — Friday, October 12, 2012

    Once again, the S&P Indices versus Active Funds (SPIVA®) Scorecard shows the dismal story for active management getting worse and worse. For domestic equity funds in the last 12 months, 86.0% failed to ...Read More

  • Weston Wellington

    Another Wall of Worry

    6,713
    by Weston Wellington — Thursday, October 4, 2012

    Investors have been confronted with a steady drumbeat of discouraging news over the past year. It's not difficult to explain why mutual fund investors have generally favored fixed income strategies rather than ...Read More

  • A Problem with Jack Bogle? I Don't Think So!

    6,573
    by IFA Contributors — Tuesday, September 11, 2012

    For anyone who works in the investment advisory business, particularly on the passive side, John (Jack) Bogle is a name held in the highest esteem. A pioneer in the realm of indexing, the founder and longtime ...Read More

  • The Economic Consequences of the New Deal

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    by Tyler L. Collins — Friday, September 7, 2012

    Benjamin Stolberg and Warren Jay Vinton wrote The Economic Consequences of the New Deal in 1935. Benjamin Stolberg was a journalist and writer, who mainly focused on the issues of American ...Read More

  • Vice President Dimensional Fund Advisors

    In Other News

    3,996
    by Jim Parker — Monday, September 3, 2012

    Bad news sells. It sells because fear is a more powerful emotion than greed. Newspaper editors know that, which is why the front pages are often so depressing. But sometimes you need to dig inside the paper ...Read More

  • Amsterdam: Where It All Began

    7,765
    by IFA Contributors — Monday, August 13, 2012

    In his magnificent work, The Birth of Plenty—How the Prosperity of the Modern World Was Created, William Bernstein outlines the four necessary conditions for the massive growth of wealth experienced over ...Read More

  • Caught Short! A Saga of Wailing Wall Street

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    by IFA Contributors — Thursday, August 2, 2012

    Continuing with our series of blogs on books in the financial humor genre, we will take a quick look at Caught Short—A Saga of Wailing Wall Street by the iconic singer, dancer, actor, comedian, and ...Read More

  • Brad Steiman

    The Greatest Hits of Investing

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    by Brad Steiman — Friday, July 27, 2012

      For more than a decade, I have had the privilege of hearing many colleagues discuss the fundamentals of investing in simple and effective ways. Everyone puts their own words and music to this set of ...Read More

  • Jim Parker

    The Cost of Safety

    4,127
    by Jim Parker — Sunday, July 15, 2012

    Investors are now so risk averse they are willing to pay the German government to look after their money; not a risk-free return, but a return-free risk. Yields on two-year German notes sank to an all-time low ...Read More

  • Pop Quiz

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    by Weston Wellington — Sunday, July 15, 2012

    Question: The twenty-two prominent firms listed below share a common characteristic. What is it? Answer: If you guessed each firm is a constituent of the S&P 500 Index, you would have been close—but ...Read More

  • Brendan Connelly

    Retirement Plan Shadows

    5,535
    by Brendan Connelly — Thursday, July 12, 2012

    How to Win Your Battle against the Money Management Machine     "It is difficult to get a man to understand something when his salary depends on his not understanding it." —Upton Sinclair, The ...Read More

  • Credit Ratings vs. Market Pricing

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    by Dimensional Fund Advisors — Friday, June 29, 2012

    In the highly competitive financial markets, most "news" has already been incorporated into prices. Dimensional takes advantage of the information embedded in prices, rather than relying on third parties ...Read More

  • A Busy Week in the World of High Finance

    4,782
    by IFA Contributors — Thursday, June 28, 2012

    This is one of those weeks where we have so many juicy stories that I truly don’t know where to begin. How about another Madoff story? At last, we have the long-awaited and so richly deserved punishment ...Read More

  • Reaching for Yield: Junk and Other High-Risk Bonds

    5,299
    by IFA Contributors — Tuesday, June 26, 2012

    In this concluding article in the series exploring different ways investors might attempt to increase the income generated by their portfolios, we look at high-yield bonds. These securities offer a higher ...Read More

  • Investing Anomalies

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    by Roger Trinwith — Monday, June 25, 2012

    Investing is historically chock-full of strategies based on absurd anomalies. These include the January effect, the Super Bowl Indicator, the Harvard MBA Indicator, and “Sell in May and Go ...Read More

  • When Truth is Stranger than Fiction

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    by IFA Contributors — Monday, June 25, 2012

    Once in a while, when I need a topic to write about, I browse the latest press releases from the Securities and Exchange Commission (SEC). When looking today, however, even I had to do a double-take when I saw ...Read More

  • "Index Funds" by Mark Hebner - A Gem

    4,286
    by Taylor Larimore (guest author) — Tuesday, June 19, 2012

    "Index Funds" by Mark Hebner - A Gem by Taylor Larimore (guest author) Mark Hebner’s updated Index Funds is a beautiful little book full of colorful pictures, complex charts and ...Read More

  • Book Collector

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    by Guest Author: Farzam Khassian — Tuesday, May 29, 2012

    Book collector Farzam Khassian shares his thoughts on his hobby of collecting rare investment and financial books. He has collected more than 1,000 financial books over the years and has inspired Mark Hebner ...Read More

  • IFA’s Concerns with IPOs

    8,743
    by IFA Contributors — Thursday, May 24, 2012

    While some may accuse us of hindsight for writing this blog during the unfolding of the Facebook IPO debacle in which $12.8 billion of shareholder value has been wiped out as of 5/23/2012, Index Funds ...Read More

  • Jim Parker

    Sharing the Wealth: The Case for Equities

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    by Jim Parker — Thursday, May 24, 2012

    Quiz Question: What do these companies have in common: Whitbread of the United Kingdom, Molson Coors of North America, Qantas of Australia, Honda of Japan, and Adidas of Germany? Yes, they all deliver consumer ...Read More

  • A Big Bang for 401(k) Plans?

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    by IFA Contributors — Wednesday, May 23, 2012

    Source: NASA On rare occasions, a change so profound and significant occurs in the financial world that it is given the “big bang” designation. Examples include the 1975 abolition of the fixed rate ...Read More

  • Mal-location of Capital

    5,371
    by Roger Trinwith — Wednesday, May 2, 2012

    I used to play a lot of golf, probably far too much. When my friends would ask for advice, the number one question I would get is, “What kind of driver should I buy?” I suppose this was my ...Read More

  • Wall Street: the other Las Vegas

    7,089
    by IFA Contributors — Wednesday, May 2, 2012

    About a month ago, I wrote about Nicolas Darvas, a world famous dancer who claimed that he made $2 million in the stock market. This claim was vigorously disputed by the New York State Attorney General, Louis ...Read More

  • The Road to Serfdom

    5,447
    by Tyler L. Collins — Sunday, April 29, 2012

    The Road to Serfdom was written by Friedrich von Hayek in 1944. Friedrich von Hayek was a prominent Austrian economist during the twentieth century, and this book was one of his most important ...Read More

  • Weston Wellington

    Where's the Party?

    6,571
    by Weston Wellington — Friday, April 20, 2012

    The surge in stock prices around the world in the first quarter serves as a reminder that predicting market trends can be a frustrating business. Six months ago, the outlook for stock prices appeared to be ...Read More