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Will the Manager You Picked Deliver Alpha or Have You Been Fooled by Randomness?

10,540
by IFA Contributors
Thursday, May 26, 2011

Investors should not waste their time seeking managers who supposedly deliver alpha, or returns above what can be explained by the assumption of ...Read More

Article Library

  • Brad Steiman

    What's the Significance?

    49,983
    by Brad Steiman — Friday, May 6, 2011

    Caution: Technical Discussion to Follow—READ AT YOUR OWN RISK. As the old saying goes, there are three kinds of lies: lies, damned lies, and statistics. It is true data can be tortured with statistical tools that will make it confess to almost anything. On the other hand, ...Read More

  • Burton Malkiel on Tech | Ticker

    11,469
    by TechTicker — Monday, January 10, 2011

    Look at the performance of mutual funds over the last forty years: It’s clear that index funds like Vanguard’s have a huge advantage over other ...Read More

  • Index Funds Advisors

    Are You an Active Investor?

    7,549
    by Index Fund Advisors — Sunday, January 31, 2010

    The first step on the index funds journey is to recognize active investor behavior. If all investors were lined up in a row, could the active investors be identified? ...Read More

  • John Resurreccion

    Endowments Article Review

    5,409
    by John Resurreccion — Wednesday, January 13, 2010

    Stanford, Yale, Harvard, Princeton—we know these institutions as our top providers of secondary education and research in the world. In the investing world, their endowments along with foundations and pension funds like the California Public Employees’ ...Read More

  • John Resurreccion

    Galleon Insider Trading Review

    6,514
    by John Resurreccion — Wednesday, January 13, 2010

    The hedge-fund industry, $1.2 trillion strong, has been lobbying for years to avoid heavy regulation. That fight has stepped up recently in the wake of the financial crisis, but they have been dealt a serious blow by Galleon Group and their founder Raj ...Read More

  • John Resurreccion

    Hedge Fund Lies

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    by John Resurreccion — Wednesday, January 13, 2010

    Where is South Carolina Representative Joe Wilson when you need him? The shouting of “You Lie!”, although inappropriate during a joint session of congress, may just be warranted when pointed in the direction of Hedge Fund managers. In a new study entitled ...Read More

  • A Tribute to David Booth

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    by Sameer Desai — Monday, December 14, 2009

    Mr. David Booth’s $300 million gift to his alma-mater has to be a milestone in the annals of finance, economics and investments. University of Chicago’s announcement that its business school was being renamed Chicago-Booth. ...Read More

  • Sam Mamudi

    To beat index funds, luck is your only hope

    8,456
    by Sam Mamudi — Tuesday, December 1, 2009

    Investors who continue to send money to actively managed mutual funds in the hope that managers will be able to beat less-costly index funds are going to lose out almost all of the time, a new study ...Read More

  • Index Funds Advisors

    Harry M. Markowitz explains Portfolio Theory

    9,486
    by Index Fund Advisors — Wednesday, October 28, 2009

    what it is and how it's used from a top-down model from the asset classes to the investments. He covers Standard Deviation, Variance, Correlation, and Covariance. Markowitz also explains what happened in 2008 with Modern Portfolio ...Read More

  • Index Funds Advisors

    Mark T. Hebner - Big Losses, Big Government and Your Investments

    6,911
    by Index Fund Advisors — Saturday, October 3, 2009

    Mark T. Hebner covers historic recovery patterns and probability of future returns, the risks and returns that come with big government, the role of commodities in your investments, the pros and cons of inflation-hedging securities, and an investment ...Read More

  • Eugene Fama Jr - Vice President, Dimensional Fund Advisors

    Clarion Call

    7,725
    by Eugene Fama Jr. — Tuesday, April 7, 2009

    When returns are poor (and sometimes even when they're good), investors wonder if things have changed. Is this time different? Does a buy-and-hold strategy still make ...Read More

  • IFA's Quote of the Week - 52 (Fred Schwed Jr.)

    7,211
    by — Friday, April 3, 2009

    "Once in the dear dead days beyond recall, an out-of-town visitor was being shown the wonders of the New York financial district. When the party arrived at the Battery, one of his guides indicated some handsome ships riding at anchor. He said, ‘Look, ...Read More

  • An Interview with Eugene Fama Jr.

    8,669
    by Jennifer Nille — Friday, March 13, 2009

    Has the current financial crisis KO'd capital markets? Eugene Fama Jr. says no. The son of the author of the theory reminds us that in troubled times, believers in efficient markets need the courage of their convictions and to keep ...Read More

  • President Index Funds Advisors

    The Resilience of Capitalism: Part II

    8,412
    by Mark Hebner — Monday, March 9, 2009

    updated from December 2008 Now that February 2009 numbers are in, I wanted to update my discussion about this very challenging investment environment over the last 16 months and offer some much-needed perspectives. I am sympathetic to your concerns and want to help you through ...Read More

  • IFA's Quote of the Week - 48 (Mark Hulbert)

    8,104
    by Mark Hebner / Mary Brunson — Friday, February 27, 2009

    "It is very hard, if not impossible," he wrote in his study, "to justify active management for most individual, taxable investors, if their goal is to grow wealth." ...Read More

  • Mark T. Hebner

    The Hebner Model: Why Prices Change

    21,208
    by Mark Hebner — Saturday, February 21, 2009

    The Hebner model attempts to simplify free market forces into 3 simple variables: Price, Expected Return and Uncertainty. In short, prices move in the opposite direction of uncertainty so that expected returns can remain ...Read More

  • IFA's Quote of the Week - 47 (Charles Ellis)

    7,354
    by Mark Hebner / Mary Brunson — Monday, February 9, 2009

    In his book Index Funds: The 12-Step Program for Active Investors, Mark Hebner identifies that 85% of investors are active investors. This means that a majority of investors handle their investments in one or more of the following ...Read More

  • Active vs. Passive Investing

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    by Index Funds Staff — Thursday, January 22, 2009

    The debate between active vs. passive investing has dragged on for more than 40 years; certainly far longer than necessary as reams of academic research continue to reveal the failure of active management to outperform a passively managed and properly ...Read More

  • IFA's Quote of the Week - 46 (John C. Bogle)

    7,423
    by Mark Hebner / Mary Brunson — Monday, January 12, 2009

    "We need a mutual fund industry with both vision and values; a vision of fiduciary duty and shareholder service, and values rooted in the proven principles of long-term investing and of trusteeship that demands integrity in serving our ...Read More

  • Mark Hebner's Response to Madoff's Mayhem

    8,581
    by Mark Hebner / Mary Brunson — Wednesday, December 17, 2008

    Like so many of you, I have watched in great dismay as the horrific details unfold regarding the Bernard Madoff investment scam—one that has quickly shaped up to be the biggest such scam in ...Read More

  • IFA's Quote of the Week - 40 (William Bernstein)

    7,483
    by Mark Hebner / Mary Brunson — Tuesday, November 18, 2008

    "No one in his right mind would walk into the cockpit of an airplane and try to fly it, or into an operating theater and open a belly. And yet they think nothing of managing their retirement assets. I've done all three, and I'm here to tell you that ...Read More

  • Harry M. Markowitz

    What to do about the Financial Transparency Crisis

    8,424
    by Harry M. Markowitz — Wednesday, October 22, 2008

    The current financial crisis is a combination of three ill winds that combined to make the “perfect” storm. One ill wind is the bursting of the real estate bubble; the second is the ongoing consequences of the ...Read More

  • IFA's Quote of the Week - 38 (Mark T. Hebner)

    7,242
    by Mark Hebner / Mary Brunson — Monday, October 20, 2008

    "Investing in the absence of an investment policy statement reduces decision making to an individual event-driven process of chasing short-term results, eliminating the expectation of achieving the long-term returns of ...Read More

  • Ben Brinkerhoff

    To Optimize or Not Optimize

    7,049
    by Ben Brinkerhoff — Thursday, October 9, 2008

    One question that clients sometimes ask is, "Are IFA's portfolios optimized?" It's a fair question. That word "optimization" is thrown around somewhat loosely, and it certainly sounds like a good thing. ...Read More

  • IFA's Quote of the Week - 37 (Harry Markowitz)

    9,465
    by Mark Hebner / Mary Brunson — Monday, October 6, 2008

    "To reduce risk it is necessary to avoid a portfolio whose securities are all highly correlated with each other. One hundred securities whose returns rise and fall in near unison afford little protection than the uncertain return of a single ...Read More

  • IFA's Quote of the Week - 35 (Jeremy J. Siegel)

    6,469
    by Mark Hebner / Mary Brunson — Wednesday, September 17, 2008

    "The current financial crisis calls out for new products and services as well as more, not less, information about what is safe and profitable in the future environment." ...Read More

  • IFA's Quote of the Week - 34 (Michael C. Keenan)

    6,869
    by Mark Hebner / Mary Brunson — Friday, September 12, 2008

    "Fiduciaries should strongly consider index funds as an alternative to actively managed funds. Index funds incur about 80% less in transaction costs than actively managed funds…long-term returns for actively managed funds trail their respective ...Read More

  • IFA's Quote of the Week - 33 (Matt Krantz)

    6,635
    by Mark Hebner / Mary Brunson — Friday, September 5, 2008

    "Remember when you buy a commodity, you're not buying something that generates earnings and profit. You're buying a hard asset and hoping another buyer will be willing to pay more for that asset in the ...Read More

  • IFA's Quote of the Week - 32 (Benjamin Graham)

    6,837
    by Mark Hebner / Mary Brunson — Friday, August 29, 2008

    "The investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic ...Read More

  • IFA's Quote of the Week - 29 (Benjamin Graham)

    7,366
    by Mark Hebner / Mary Brunson — Friday, August 1, 2008

    "The investor with a portfolio of sound stocks should expect their prices to fluctuate and should neither be concerned by sizable declines nor become excited by sizable advances. He should always remember that market quotations are there for his ...Read More

  • IFA's Quote of the Week - 24 (Truman A. Clark)

    6,621
    by Mark Hebner / Mary Brunson — Friday, June 20, 2008

    "Investors acquiring commodity futures in expectations of higher returns, lower risk, and improved inflation protection are making bets. Current evidence indicates that the odds are against ...Read More

  • IFA's Quote of the Week - 23 (Richard C. Green)

    6,615
    by Mark Hebner / Mary Brunson — Thursday, June 12, 2008

    "For a long career full of breakthroughs that have advanced our understanding of financial markets, and his early fundamental work on efficient markets, we are proud to have Professor Fama as the first recipient of this prestigious award." ...Read More

  • IFA's Quote of the Week - 22 (Harry Markowitz)

    7,547
    by Mark Hebner / Mary Brunson — Wednesday, June 4, 2008

    "A good portfolio is more than a long list of good stocks and bonds. It is a balanced whole, providing the investor with protections and opportunities with respect to a wide range of ...Read More