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Index Funds: The 12-Step Program for Active Investors (Hardcover)

by Mark T Hebner
ISBN: 0-9768023-0-9




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Harry M. Markowitz explains Portfolio Theory: 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 Theory. (39 Min.)

Harry M. Markowitz - Portfolio Theory and 2008

Mark 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 strategy that has been highly successful historically. (92 Min.)

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

Harry Markowitz gives an IFA Exclusive Presentation on Portfolio Theory Vs. Financial Engineering, and Their Roles in Financial Crises. Markowitz explains the difference between Portfolio Theory and Financial Engineering. Markowitz also covers Black Monday (October 19, 1987), Long Term Capital Management, and Now. (47 Min.)

Harry Markowitz - Portfolio Theory Vs. Financial Engineering, and Their Roles in Financial Crises

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? Active investors actively engage in stock picking, time picking (market timing), manager picking, and style picking.

Step 1: Active Investors - Podcast Interview with Mark Hebner

Mark Hebner explains the Nobel Laureates. Mark suggests a higher power of non-biased information from academics who carefully analyze data and have that data peer reviewed before it is published. Mark identifies the five basic concepts of the Modern Portfolio Theory.

Step 2: Nobel Laureates - Podcast Interview with Mark Hebner

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Jim Wiandt
Jim Wiandt

SEC Considers Changing Rules on Mutual Fund Disclosure

Jim Wiandt
Thursday, June 29, 2000

The Securities and Exchange Commission (SEC) is proposing to force mutual funds to disclose both pre-tax and after-tax returns.

The rule is being strongly resisted by mutual fund companies who are notorious for running tax-inefficient managed funds.

For some perspective on the issue, see our article on the bet that Vanguard founder Jack Bogle won from Robert Markman of Markman Capital Management. In the five-year period of the bet, the Vanguard 500 beat Markman's Moderate Fund, 226% to 156%. With taxes figured in though, the passive 500 fund triumphed by 214% to 114%.

Similar results hold across the field of large capitalization mutual funds, most of which are actively managed and tax inefficent.

 
Vanguard 500
Average Large Cap. Fund

1 Year
Pretax
27.84%
24.67%
1 Year
Aftertax
27.00%
23.07%
 
 
 
5 Year
Pretax
24.95%
20.37%
5 Year Aftertax
23.90%
17.90%
 
 
 
10 Year
Pretax
16.67%
14.07%
10 Year
Aftertax
15.46%
11.62%
Returns Through Sept. 1999 - Motley Fool

The proposed new rule reads as follows:
Mutual funds would be required to disclose after-tax returns based on standardized formulas comparable to the formula currently used to calculate before-tax average annual total returns. The proposals also would require funds that include after-tax returns in advertisments and other sales materials to include standardized after-tax returns.

The comment period on the proposed rule was scheduled to end June 30, 2000. For those who wish to comment to the SEC, email can be sent to rule-comments@sec.gov with File No. S7-09-00 in the Subject line. Rest assured, the active managers have their end covered.

 


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