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Index Funds: The 12-Step Recovery Program for Active Investors Hardcover – March 15, 2012
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"Hebner gives us good advice presented in a very appealing manner. Index Funds remains one of the most valuable investment guides available."
- Burton G. Malkiel, Ph.D., Professor of Economics, Princeton University and author of A Random Walk Down Wall Street;
"It is really beautiful and really well done. I plan to use it as a reference guide."
- David G. Booth, Chairman and Co-Chief Executive Officer, Dimensional Fund Advisors, Inc., Benefactor of Chicago Booth School of Business;
"... .as this book documents so well, a foolish attempt to beat the market and get rich quickly will make one s broker rich and oneself much less so."
-- Harry Markowitz, Ph.D., Nobel Laureate in Economics;
"This Book is Wonderful!"
--Theodore R. Aronson, Founder of Aronson Johnson Ortiz, Institutional Money Manager
James Burt, Foreword Reviews
Smart, precise, and funny, Index Funds makes understanding the market sensible and even desirable.
Today it’s hard to know where to turn for investment advice. Fortunately, Mark T. Hebner’s Index Funds: The 12-Step Recovery Program for Active Investors offers educated insight—with lots of research and a touch of humor—into today’s investor arena.
Hebner’s 12-Step Program is meant as a way to assist people with problems. In this case it’s active investors or speculators that have tried to predict market activity to make killer returns and have lost out financially. By contrast, via his self-constructed program, Hebner shows how investing in index funds is a safer, more secure way to invest money to see realistic long-term returns.
The author does not act like a guru. His information is clearly researched, right from his definition of index funds and passive investing: a strategy of investing carefully in a diversified portfolio of longstanding stocks and bonds. It makes reference and pays respect to the great money market theorists, from Friedrich von Hayek and Benjamin Graham up to Warren Buffett, Merton Miller, and Eugene Fama. He compiles studies from these famous experts, noting that active stock picking is really a finding-a-needle-in-a-haystack venture. Investors need to subject their managers to the industry T-score to see if they are good at making investment choices.
Hebner also returns to a central thesis throughout the book: that no one, no matter how great his or her track record is, can truly predict market activity to pick stocks. His examination of “time picking” in step 4 shows that those that claim to pick stocks at the right time are usually riding on luck, and that truly great investing depends on, as step 9 says, analyzing “historical data over eighty years … to provide a more reliable estimate of risks and returns.”
While some books on business advice and understanding marketplaces are often dry and laden with industry jargon, Hebner infuses Index Funds with easy-to-understand explanations of how to invest with index funds. The prose breaks down all the terms of investing—“riskese,” “time picking,” etc.—with short descriptions complete with helpful charts and infographics.
Thanks to artist Lala Ragimov, whose renditions of Flemish Baroque and Venetian Renaissance style paintings include investor caricatures, Index Funds also has outright humor that, again, helps explain each concept chapter by chapter.
Smart, precise, and funny, Index Funds makes understanding the market sensible and even desirable.
About the Author
Mark T. Hebner is the founder and president of Index Fund Advisors, Inc., author of ifa.com, and the book Index Funds: The 12-Step Program for Active Investors. That original book received praise from the financial industry and academic legends, including John Bogle, David Booth, Harry Markowitz, Burton Malkiel, and Paul Samuelson. This is a condensed and updated version of that book. Mark is considered a leading author, speaker, and Internet provider of investing education. He is especially knowledgeable about the superiority of index mutual funds, as well as the research indexes designed by financial economists. He earned an MBA at the University of California, Irvine.
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I am a 20-year veteran Australian financial adviser living and working in Hong Kong looking after expatriates from every corner of the globe. Hong Kong has some very wealthy and sophisticated clientele who are pitched all sorts of structured products, derivatives and hedge funds by the big private banks. About a month before the GFC hit, I decided to venture out and set up my own business with some partners who along with me believed in the theories of Nobel Laureate’s Eugene Fama, Harry Markowitz and Gary Brinson on asset allocation and achieving portfolio returns through index funds and ETFs.
In my research, I came across Mark’s book “Index Funds.” I read it in one weekend and was hooked on his research and statistics that backed up every claim he made and did it with some theater and entertainment that I had never seen in a book before. The style and play of Mark’s writing was both enjoyable and educational. The paintings in each chapter are a brilliant way to illustrate Mark’s 12 steps.
This book, now with all the updated data, is excellent for the novice right through to the multimillionaire. I use it along with other materials in my business and I can tell you flat out it was instrumental in doing the right thing for my client. The virtue of simplicity in fund management breaks through all the market news, clutter and hubris of the ego driven Wall Street broker.
If you are looking to manage your own money or others, buy this book…you will learn just about everything you need to know and the best part is you can go to Mark’s website and watch his videos which go deeper into the 12 steps of his book.
- Love the new edition!
- Retouched and rewritten all over the place, not just a couple of charts, not just one new section as some other "updated" books do. Minor improvements and notes have been added in such places as the introduction, every chapter, many charts and diagrams, and almost any place where recent dates are involved right up through Jan 2015.
- More recent examples in the media are alluded to, such as the film "The Wolf of Wall Street" and Warren Buffett's 2014 letter to shareholders.
- A glance through the Index in the back shows references to many newer studies and articles dating well into 2014.
- Long term returns data through year-end 2013 are the norm, sometimes even more recent, and that really helps put the crash of '08 into better perspective, having a good number of years of "bounce-back" afterwards.
- As expected, all recent developments and updated studies serve to reinforce and prove accurate the principles and conclusions of previous book editions.
- And it's not just updated data, but very many segments have been rewritten or changed altogether for improved clarity and illustration.
- Interestingly, some of the improvements are in the form of historical documents, such as a new section highlighting an artistic Dutch copper engraving dating back to 1720 which portrays the fates of investors caught up in the heavy market speculation of the day.
- There are some new original paintings, including, for example, a depiction of true manager alpha being as hard to find as unicorns, Bigfoot, or the Loch Ness Monster.
ORIGINAL REVIEW MARCH 2014
- Heavily researched TRUTH (not just typical Wall Street pseudo-plausibility as a sales tactic)
- Tons of colorful and intuitive charts, graphs, diagrams, illustrations, and other graphics to really SHOW the facts
- Interesting (and beautiful in my opinion) original artworks throughout
- Lots and lots of academic research to back up claims - and those guys are in it for the facts, not for sales commissions
- A quick read, not too "heavy" or long as many financial texts can be (sorry "Random Walk", you're good, but, oh man...)
- Great tongue-in-cheek humor throughout
- It's a breath of fresh air for advisors interested in doing what's RIGHT instead of what most of dishonest Wall Street does
- Helps illustrate why using an advisor is really in your best interest - just like a personal trainer, you'll get better results
- Artwork is on the small almost pocket sized pages of this shrunken down book, I'd love to see it full-size
- No 2014 version available (yet!)
As a young new idealistic financial advisor in-training, I want to do it right. I want to help my clients understand the true nature of market pricing.
When you try to outsmart the market, you're not just up against the average investor, oh no, you're up against the grand collective meta-genius of millions of highly motivated and very smart investors, fund managers, wall street analysts, high-end advisors, hedge fund tycoons, and more. It's like betting you can outsmart God. You might get lucky a few times, and if you're susceptible to the common human foibles of psychology, you might start to think you really are smarter.
Read this book and buffer yourself against the lure of beating the market. Read these chapters of thoroughly research-backed wisdom, and no longer be fooled or tempted by Wall Street brokers, commissioned advisors, and other salesmen who would deceive you (and themselves) into thinking there is a shortcut to quick compounding. If you fall into that trap, you'll pay more in fees and gain less in growth, as your brokerage slowly transfers your wealth right out from under your nose and into their coffers. Their careers are on the line, so they will lie, cheat, twist, and otherwise put lipstick on the pig of active investing. Don't fall for it.
Index Funds should be read by anyone with any money, and anyone who thinks they will ever have any money. I hope that includes you.
And if you are not able to handle it then you should have a bigger share of bond funds. He also makes a great case for not just buying index funds but buying specialized index funds called Dimensional funds. The book is wonderful and full of lovely pictures graphs and charts a very enjoyable read from a terrific guy.
As well, it has something very uncommon: a genuine intention to help people increase savings.
Small investors need protection from too many advisors offering products they don't need, and this book shows the first and most essential step to be taken in this direction: education.