Many investors may find themselves questioning their ability to remain in their investments right now. If you are concerned, please remember your time horizon for your investments. If your time horizon or liquidity needs have changed, please take the risk capacity survey to determine if an adjustment in your investments is necessary at this time.

If your risk capacity remains as it was when you invested in your Index Portfolio, we recommend that you stay put and keep your eyes fixed on the long term expected return of your investments.


With respect to what we are hearing now about the markets, it is critically important to understand that capital markets have shuddered in the past, and have re-emerged through the impressive resilience of capitalism. In fact, sometimes, markets have changed course just when the headlines seem the most apocalyptic.






I have posted to this site an important message from DFA’s Weston Wellington called “Is It Different This Time?” This insightful and informative presentation reveals, in part, that, time after time, headlines have been a poor predictor of future market movements. I encourage you to take some time to view Weston’s research regarding stock market hype in relation to stock market history.
Weston Wellington's "Is it different this time"


An important Marketwatch interview with Vanguard founder John Bogle provides further insight as to how to manage investments through this challenging time. He tells us that If you're following the rules of asset allocation, diversification and long-term horizon, stay the course. This is precisely the course IFA clients are on.

When Bogle was asked what individual investors should do now, he said: First, allocate your assets intelligently. If you're in over your head, on margin, you have to get some of your money out of the stock market.


This is sound advice. One way or the other, we are rapidly driving back toward the fundamental lessons of investing.

Many hedge funds that engaged in massive leverage are being washed out of the system. Good riddance. Investment banks that packaged and sold opaque collateralized mortgage tranches will be flung far from the industry, and with any luck, held to task for the misdeeds that have precipitated this market downfall.

Warren Buffett was right. Derivatives are financial weapons of mass destruction.

Certainly, there are some silver linings around this dark cloud. As painful as the last few weeks have been, Investors have learned, many, the hard way, that leverage and lack of transparency carry steep levies. But as we have heard before, when you lose, don’t lose the lesson.

Nobel-Prize winning economists and academics have revealed that broad-based diversification among low-cost indexes has shown to be the most prudent investing strategy over time. In fact, 1990 Nobel Prize winner Harry Markowitz, who I am pleased to announce is now an academic consultant to Index Funds Advisors, recently stated:

“In choosing a portfolio they should seek broad diversification, Further, they should understand that equities--and corporate bonds also--involve risk; that markets inevitably fluctuate; and their portfolio should be such that they are willing to ride out the bad as well as the good times."

A diversified strategy may not have prevented losses in this bear market, but, Index Portfolios have not suffered the sort of wipe-outs that have been seen among hedge funds, margin investors, commodities investors, or those who hold a handful of highly correlated investments.

When the markets do turn around, investors who buy and hold risk-appropriate doses of low-cost passively managed index funds will be poised to benefit as soon as the markets react to the unexpected news events that will lift them higher. In the meantime, as long as you invest according to your risk capacity and keep your eyes fixed on your time horizon, you should simply invest and relax.