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It's Now Official: Invest and Relax

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by Mark Hebner and IFA Contributors
Wednesday, January 21, 2015

As we say in Step 12 of IFA’s 12-Step Recovery Program for Active Investors, “Invest and Relax.” We just received confirmation of our advice from Assistant Professor Michaela Pagel of Columbia Business School who posted this working paper which is nicely ...Read More

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  • The Paper that Formalized the Size Premium

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    by Mark Hebner and IFA Contributors — Friday, January 16, 2015

    At Index Fund Advisors, we implement portfolios for our clients that are tilted towards the compensated risk and return factors of small cap, value, and profitability. In this article, we will review the ...Read More

  • 2014: Patience Pays Off

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    by Weston Wellington — Wednesday, January 14, 2015

    Forecasters often cite a figure of 8%–10% as a likely outcome for stock market performance in the year ahead, and 2014 was no exception. As sensible as this may sound, it is worth pointing out that over ...Read More

  • Let the Compounding Effect Work for You

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    by Venkat Yarlagadda — Wednesday, January 14, 2015

    “Compound interest is the eighth wonder of the world. He who understands it, earns it…he who doesn’t…pays it.”  – Albert Einstein “Someone is sitting in the ...Read More

  • When the Law Takes a Dim View of Cherry-Picking

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    by Mark Hebner and IFA Contributors — Tuesday, January 13, 2015

    As the Securities and Exchange Commission admonishes newly-registered investment advisers on its Website, “As an investment adviser, you are a ‘fiduciary’ to your advisory clients. This means ...Read More

  • IFA Index Portfolio 100 vs. the S&P 500 Index [VIDEO]

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    by Mark Hebner and IFA Contributors — Thursday, January 8, 2015

    There is no arguing the fact that compared to U.S. large company stocks, 2014 was a difficult year globally diversified portfolios tilted towards small cap and value stocks. The table below shows the 2014 ...Read More

  • What Should Investors Do Now? [VIDEO]

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    by Venkat Yarlagadda — Thursday, January 8, 2015

    Here is a classic video by Weston Wellington at DFA. During the 2008 market downturn some investors may have questioned the wisdom of their investment strategy. Weston address a number of questions and ...Read More

  • Book Review: Commanding Heights

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    by Thomas Brunson — Tuesday, January 6, 2015

    There’s little more frustrating than being stuck in a traffic jam, especially when you’re trying to get somewhere important. The same can be said for the way developing and third-world countries ...Read More

  • IFA FinPlan: A New, Free Technology for IFA Clients [VIDEO]

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    by Mark Hebner — Monday, January 5, 2015

    At Index Fund Advisors, we place an extremely high value on being able to see the whole picture of our client’s finances. This goes far beyond just managing their investable assets. Towards that end, ...Read More

  • The Fourth Quarter of 2014 in Review

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    by Mark Hebner and IFA Contributors — Friday, January 2, 2015

    In the fourth quarter of 2014, domestic equities had a strong showing, but foreign equities pulled back for both international developed and emerging markets. One major market-related story was the steep drop ...Read More

  • Do You Have a Trust and Will?

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    by Mark Hebner — Thursday, January 1, 2015

    We have often written about the woeful state of retirement readiness in the United States. According to Forbes, “Half of Americans don’t have any of the most basic estate planning documents, ...Read More

  • Is a Health Savings Account Right for You?

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    by Mark Hebner and IFA Contributors — Thursday, January 1, 2015

    A health savings account (HSA) is a tax-advantaged medical savings account for people who are enrolled in a high-deductible health plan (HDHP). For this purpose, an HDHP must have a minimum deductible of ...Read More

  • A Foundational Paper in Finance

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    by Mark Hebner and IFA Contributors — Wednesday, December 31, 2014

    At Index Fund Advisors, we often talk about the risk factors that explain the returns of diversified portfolios. In this article, we will explore the technique pioneered1 by Nobel Laureate Eugene Fama and ...Read More

  • Ponzi Schemes Continue to Proliferate

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    by Venkat Yarlagadda — Monday, December 29, 2014

    I recently discovered a fascinating Website tracks Ponzi Schemes all over the world. It is appropriately named ponzitracker.com, and here is what it says for the first half of 2014: “In the first six ...Read More

  • Q&A with IFA: Bond Funds vs. Individual Bonds

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    by Mark Hebner and IFA Contributors — Friday, December 26, 2014

    Question: Should the bond portion of my portfolio be in bond funds or in a ladder of individual bonds? Answer: Like many things with respect to investing, a case can be made for either side. Any proposed bond ...Read More

  • No Virginia, There Is No Stock Picking Santa Claus

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    by Mark Hebner and IFA Contributors — Wednesday, December 24, 2014

    There is no denying it; we Americans love an underdog, and what better underdog than a 17-year-old high school kid who beats Wall Street at its own game? Or so it seemed according to this fluff piece carried ...Read More

  • When a Chinese Wall Is Not Something to Toy With

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    by Mark Hebner and IFA Contributors — Monday, December 22, 2014

    In the wake of the dot-com bust of the early 2000s, you may recall how we were promised that going forward there would be a “Chinese wall” or a “firewall” between the research and ...Read More

  • Some Interesting New Data on 401(k) Plans

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    by Mark Hebner and IFA Contributors — Thursday, December 18, 2014

    BrightScope and the Investment Company Institute recently collaborated to produce this report on the current state of 401(k) plans based on BrightScope’s database of over 35,500 plans. As of 6/30/2014, ...Read More

  • A Golden Age for Active Investing? We Think Not!

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    by Mark Hebner and IFA Contributors — Wednesday, December 17, 2014

    Alexander Friedman of GAM Holding AG recently opined on CNBC.com that (to paraphrase Mark Twain) the recent reports of the demise of active managers are greatly exaggerated. Friedman acknowledges the mass ...Read More

  • A Respectful Disagreement with St. Jack

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    by Mark Hebner and IFA Contributors — Tuesday, December 16, 2014

    Anyone who has spent a significant amount of time on our Website will know that we have nothing but the highest respect for Jack Bogle, the Father of Indexing for Retail Investors. Recently, however, we saw ...Read More

  • What Can We Read into the Increase in the VIX Index?

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    by Mark Hebner and IFA Contributors — Friday, December 12, 2014

    As noted in this CNBC article, The CBOE Volatility Index (VIX) which is widely interpreted to be an indicator of fear has risen by 40% (actually 57% based on the 12/10/2014 close) over the three trading days ...Read More

  • Living with Volatility, Again

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    by Jim Parker — Thursday, December 11, 2014

    Volatility is back. Just as many people were starting to think markets only ever move in one direction, the pendulum has swung the other way. Anxiety is a completely natural response to these events. Acting on ...Read More

  • Two Nobel Laureates—Two Views of Smart Beta

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    by Mark Hebner and IFA Contributors — Thursday, December 11, 2014

    Smart beta appears to be all the rage in the investment world right now. According to this Financial Times article citing Morningstar data, there were 673 smart beta exchange-traded products representing just ...Read More

  • Even More Bad News for Active Managers

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    by Mark Hebner and IFA Contributors — Wednesday, December 10, 2014

    On the heels of this story that we just published regarding the difficult times faced by active managers of large cap funds comes this piece from Reuters which states, “Stock-picking fund managers are ...Read More

  • Fallen Oil Prices: A Nice Tailwind for the Market

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    by Mark Hebner and IFA Contributors — Thursday, December 4, 2014

    One of the leading market-related stories of 2014 is the drop in oil prices. From the beginning of the year through the end of November, the price per barrel has dropped by about 33%, closing at just under ...Read More

  • An Enormous Waste of Money

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    by Mark Hebner and IFA Contributors — Friday, November 28, 2014

    Just how much do investors spend every year on active management fees in pursuit of the ever-elusive alpha? How does $600 billion (or roughly the GDP of Switzerland) grab you? This unfathomably large number ...Read More

  • Ebola Stocks: Avoid them like the Plague!

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    by Mark Hebner and IFA Contributors — Wednesday, November 26, 2014

    So says the U.S. Securities and Exchange Commission (SEC) which recently suspended trading for ten business days in the stocks of four companies that claim to be developing products or services in response to ...Read More

  • Some Interesting Facts about the Ultra Wealthy

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    by Mark Hebner and IFA Contributors — Tuesday, November 25, 2014

    A few days ago, a client directed our attention to this CNBC article about ultra-high net worth (UHNW) people around the world. According to a report issued by UBS and Wealth-X, individuals worth $30 million ...Read More

  • Vanguard Studies the Performance of College Endowments

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    by Mark Hebner and IFA Contributors — Monday, November 24, 2014

    Every Year, the National Association of College and University Business Officers (NACUBO) releases its study of the performance of college endowments. From the data in their press release, we created this ...Read More

  • Can You Rely on Mean Reversion to Outsmart the Market?

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    by Mark Hebner and IFA Contributors — Friday, November 21, 2014

    Mean reversion is the idea that following a period of above-average returns, there is more likely to be a period of below-average returns and vice versa. It can be applied not just to the overall stock market ...Read More

  • Smart Beta: Nothing New Under the Sun

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    by Mark Hebner and IFA Contributors — Tuesday, November 18, 2014

    In our daily perusal of investment-related articles, we came across this article1 from the Financial Times claiming that “smart beta is eating active managers’ lunch.” As we have previously ...Read More

  • When a "Happiness Letter" Is Not Cause for Celebration

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    by Mark Hebner and IFA Contributors — Tuesday, November 11, 2014

    One of our favorite financial columnists, Jason Zweig of the Wall Street Journal, wrote this piece warning clients of brokerage firms to beware of “happiness letters”. Even though we thought we ...Read More

  • Pimco Continues to Bleed Cash

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    by Mark Hebner and IFA Contributors — Monday, November 10, 2014

    Since the departure of Bill Gross from Pimco on September 26th, its flagship Total Return fund has suffered investor withdrawals of $51 billion, according to this excellent Wall Street Journal article by ...Read More

  • A Great New Video: How to Win the Loser's Game [VIDEO]

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    by Mark Hebner — Friday, November 7, 2014

    Here is a full-length landmark documentary by SensibleInvesting.tv, How to Win the Loser’s Game.  It is well worth your time to watch every minute of it.  It is about 80 minutes long ...Read More

  • The 40th Anniversary of a Classic Investment Article

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    by Mark Hebner and IFA Contributors — Friday, November 7, 2014

    We have recently marked the 40th anniversary of Nobel Laureate (and father of random walk theory) Paul Samuelson’s Challenge to Judgment which originally appeared in the Journal of Portfolio Management. ...Read More

  • Christopher Dennistoun

    Livermore and Cutten—Rarer than Lions in Tennessee

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    by Christopher Dennistoun — Wednesday, November 5, 2014

    Edwin Lefevre’s, Reminiscences of a Stock Operator, is possibly the greatest book on the stock market ever written. But while every trader knows it by repute, most of us fail to appreciate its lessons. ...Read More

  • The Wisdom of a Stock Operator

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    by Mark Hebner and IFA Contributors — Sunday, November 2, 2014

    “Stock operator” is a term that is now obsolete. It essentially describes someone who makes a living by trading or speculating in individual stocks. Given the computerization of trading with the ...Read More

  • Towers Watson Revisits the Gotrocks Family

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    by Mark Hebner and IFA Contributors — Friday, October 31, 2014

    In his 2005 shareholder letter, Warren Buffett envisioned a hypothetical family (the Gotrocks) who just happened to own all the companies in America. While each family member could have been content to simply ...Read More

  • Enhancing Returns in Passively Managed Bond Funds

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    by Mark Hebner — Wednesday, October 29, 2014

    While the title of this article may seem like an oxymoron, it definitely does not refer to the activity of seeking out mispriced bonds, for the bond market is efficient, with prices incorporating investor ...Read More