The 12-Step Program for Active Investors

Introduction to Index Funds:
The 12-Step Program for Active Investors

Active investors ride an expensive and emotional roller coaster. Enticed by the lure of quick riches, they are easily led into gambling with their hard-earned money. They pick stocks, time markets and carefully select the latest hot-performing fund managers, hoping to hop on an brief and exhilarating ride to wealth without risk along the way. They remain oblivious of the potential destruction of their wealth from speculation.

The fantasies of fast money are born and fed at the crossroads where Madison Avenue creativity intersects Wall Street greed. Big brokerage firms know well the truth they hide — that trading and speculation erode the wealth that can be effortlessly obtained by simply buying and holding a globally diversified index portfolio. They keep their dark secret at bay, encouraging trust in an industry that is ingloriously reputed to facilitate one of the greatest transfers of wealth known today.

This epic rip-off is masterfully played out as commissioned brokers, active fund managers and highly-paid investment or pension fund consultants seek to perpetuate the myth that they add value when the facts reveal quite the reverse. More than 100 years ago, French mathematician Louis Bachelier determined that the expected return from speculation is zero, which becomes negative when considering costs. This conclusion unceremoniously slams the door on the hope that investors can succeed by bending their ears to hear the siren songs of Wall Street.

I know well the influence that big brokerages seek to carry with investors. After I received proceeds from the sale of a business years ago, I went to several big-name brokerage firms, certain they would responsibly grow my wealth. Twelve years later, I realized the folly of that decision when I compared the results of my own portfolio growth with that of a risk-appropriate index portfolio. I was shocked to learn how dearly I had paid for my belief that managers could beat markets, and I wondered how many more had suffered the same result and how otherwise intelligent people could be deceived.

After much research, I determined that active investors have varying degrees of addiction to gambling in the stock market. They become attached to the allure of quick riches and the ill-informed perception  that identifying mispriced stocks is easy, fun and profitable. They are convinced that they possess certain insight that few others have or understand. They make predictions about future events, backing up speculation with money. And they entrust their financial futures into the hands of the lucky, assuming they were skilled, unaware that luck is not a repeatable skill.

My first book, Index Funds: The 12-Step Program for Active Investors, comprehensively details these facts. Hundreds of colorful charts and graphs, along with original works of art, illustrate the pitfalls of active investing, detailing a superior investment strategy that is supported by reams of data-rich, unbiased and peer-reviewed academic studies. 

In 1935, Alcoholics Anonymous founder Bill W. developed the first “12-Step Program.” It offered alcoholics a step-by-step approach to replace their addictive behaviors with rational actions, and more than 70 years later remains the “gold standard” for treating victims of some 30 all-consuming addictions. This 12-Step Program for Active Investors seeks to help active investors reclaim their financial futures by investing in index funds backed by facts and data instead of relying on speculation.

The “big book,” as it is commonly called, conclusively reveals the many merits of a risk-appropriate, globally diversified index strategy. This updated and condensed version of Index Funds: The 12-Step Program for Active Investors also unlocks the secrets of scientific, evidence-based investment strategies. While the “big book” provides exhaustive analysis fit for investing enthusiasts, this condensed book simplifies the big book and help every investor, regardless of their level of investing experience, make better investment choices.

 

Start by Reading Step 1: Active Investor > Or click and choose any of the steps below to jump to that step.

 

 

Index Funds: The 12-Step Program for Active Investors Music Video (35 mins)

 

Mark Hebner gives a lecture on the 12-Step Program for Active Investors

 

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