Yale University recently announced a 23 percent return on its investments, swelling its endowment to a whopping $18 billion. The man behind that investment success is David Swensen. He’s made an average 16 percent annual return over 21 years — better than any portfolio manager at any other university.

Mr. Swensen has become passionate about trying to teach individual investors how best to save for retirement. When Mr. Swensen set out to write a book (Unconventional Success) explaining how the average investor could replicate his success at Yale, the research showed him that the odds of beating the market in an actively managed fund are less than one in 100.

We invite you to listen to or read this recent interview to learn more about Mr. Swensen’s experience and his advice. Many of the lessons should sound familiar. Click here for the article and audio

Overview: Following is a discussion of the findings of a paper that looked at the stock recommendations of the cable television show “Mad Money,” a lively and entertaining take on the typical format of a show that dispenses financial advice/information. However, as with all such “hot” news, by the time the information has been disseminated, it is already incorporated into stock pricing within our highly efficient markets, and thus no longer useful information on which to base decisions about trading. Instead, we would suggest that, rather than following recommendations that may or may not match an individual’s ability, need and willingness to take risk, prudent investors continue to adhere to their well-developed plan based on their long-term financial objectives. 

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Overview: Academic evidence has long argued that a crucial determinant of portfolio performance is asset allocation. Following is a discussion of several findings that suggest another important determinant of portfolio performance is an investor’s discipline to adhere to his or her chosen asset allocation. 

Click Here to Read Discipline and Returns Updated PDF

 

Overview: This paper discusses fifteen investment principles, all of which can be part of an overall prudent approach that includes building a globally diversified portfolio of passively managed asset class investments and adhering to a carefully formed, disciplined strategy regardless of market events.

Click here to see the full article 15 Rules for the Prudent Investor PDF

On August 16th, about forty-five Anheuser-Busch executives heard Rex Sinquefield, co-founder of Dimensional Fund Advisors and one of the creators of the first index fund, present evidence from an important study conducted in the United States and Great Britain.   Not surprisingly, the study reveals the dismal performance of active fund managers in both countries. Rex went on to explain how one can build a portfolio that captures better than market returns by adding small and value stocks to increase the expected return and lower the standard deviation.

Anheuser-Busch is just one of a growing number of corporations who have switched to a passive investment philosophy in their pension and 401(k) programs.  When faced with the data presented by academic studies as discussed in this presentation, more executives are beginning to understand how capital markets really work.  
Click here to see the complete Rex Sinquefield Summary PDF

This an overview of several long-standing findings from the field of behavioral finance. We would suggest that individuals who are aware of such behavioral traits may find it easier to adhere to their well-planned investment strategy and avoid acting on emotions that could lead to some common investing mistakes.

Click here to view “Investor Psychology” (PDF)

Hill Investment Group believes that few people have had the kind of philosophical and practical impact on the world of investing like Rex Sinquefield.

Upon his retirement, Rex Sinquefield recalls how the embrace of market efficiency and the construction of a database of historical security prices paved the way for the success of passive investment strategies at Dimensional Fund Advisors. Check out this LA Times piece by Tom Petruno.

Click here to view the full article (PDF)

Rex currently makes his home near St. Louis, Missouri and will be speaking at a special event for select Anheuser-Busch executives on August 16, 2006.

What is Monte Carlo? It is a statistical method for analyzing random phenomena such as market returns.

How can it help you? This basic overview of Monte Carlo explains why this tool is so helpful in viewing an uncertain future.

Download “Understanding the Basics of Monte Carlo” (PDF)