Index Funds: The 12-Step Recovery Program for Active Investors

by Mark T. Hebner

The financial services industry has a dark secret, one that costs global investors trillions of dollars every year. This secret quietly drains the investment portfolios and retirement accounts of almost every investor. In 1900, French mathematician Louis Bachelier unwittingly revealed this disturbing fact to the world. Since then, hundreds of academic studies have supported Bachelier’s findings. Unfortunately, investors pay little attention to academics and Nobel laureates. What is the dark secret? It’s that managers don’t beat markets. In fact, markets outperform managers by a substantial margin over long periods of time. Index The 12-Step Recovery Program for Active Investors offers overwhelming proof of this and shows investors how to obtain optimal rates of return by matching their risk capacity to an appropriate risk exposure. A globally diversified portfolio of index funds is the optimal way to accomplish this. Most investors continue to embrace an active investing strategy despite the extensive academic research demonstrating its futility. Market timing or speculating on the next winning stock, fund manager, or investment style are all akin to gambling. Below-market returns in investment portfolios and pension accounts are the result of investors gambling with their hard-earned money. This twelve-step program will put active investors on the road to recovery. Each step is designed to bring investors closer to embracing a prudent and sound strategy of buying, holding, and rebalancing an index portfolio. Index The 12-Step Recovery Program for Active Investors is the treatment of choice for wayward investors. It has been praised by Jack Bogle, Harry Markowitz, Burton Malkiel, David Booth, Paul Samuelson, and Theodore Aronson, among others. Investment advisor Anders Oldenburg of Seligson & Company nominated the previous version as one of the three “All-Time Greatest Investment Books,” along with the writings of John Bogle and Warren Buffett.

Genres: Finance, Personal Finance, Business

401 pages, Hardcover

First published January 18, 2012

Reviews

[Daniel · Rating 4 out of 5]

I learned a lot from reading this book. It sure opened my eyes. My favorite chapter was the one on stock pickers. I thought that if a person looked hard at a company and made sure it was good that that was the way to invest. I thought stock pickers knew what they were talking about and could tell the future. I think this is a good book on index fund investing.

[Edwin Santesson · Rating 5 out of 5]

Invest and relax, så simpelt men så sant

[Brian Schnack · Rating 5 out of 5]

The antidote for active investing. Or rather a reasoned walk through on why your financial planner is the one driving the Benz, not you.

Or better yet, a simple guide to trusting your retirement to the long term upside of a balanced, passively-managed portfolio across indices of global, (ostensibly) free markets.

[Andres Pimentel · Rating 5 out of 5]

Very informative

This should be a foundational book for someone who wants to have an understanding of the different dimensions of risk. It's imperative knowledge for portfolio construction.

[Pallavi Deshpande · Rating 4 out of 5]

Beautiful book. A very innovative designed way to explain finance/index funds. I just loved the book and its design.