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Financial Happenings Blog
Sunday, February 28 2010

The big players in the investment world continually remind us that it is through their research and expertise that investors will be able to achieve superior investment performance.  We are often reminded of this when we switch on the TV or open the newspaper.  Sadly the result is far from this with the active management approach often not providing the results investors deserve.  (Take a look at Our Research Based Approach report for more details.)

Our goal at A Clear Direction has not only been to work with individual clients to manage their investment portfolios but also provide general educative information about the investment process.  One area we have not yet developed is the provision of multi-media information to assist investors with understanding the best approach to investing.

Index Fund Advisors from the United States are continually developing a website which fills this gap.  For those who prefer to learn visually they have developed a range of videos and podcasts that are freely available on their website - .

To keep abreast of their latest offerings you can also subscribe to their free YouTube channel -

One aspect of these presentations is the series 12 Steps for Active Investors which provides 12 clear messages about the problems of an active investment approach.  Here is a list of the 12 steps:

Step 1. Active Investors: Recognize an active investor.
Step 2. Nobel laureates: Recognise that Nobel Prize winners researched the market.
Step 3. Stock Pickers: Accept that stock pickers do not beat the market.
Step 4. Time Pickers: Understand that no one can pick the right time to be in or out of the market.

Step 5. Manager Pickers: Realize that the winning managers were just lucky.
Step 6. Style Drifters: Comprehend active management style drift.
Step 7. Silent Partners: Recognize the partners in your returns.
Step 8. Riskese: Understand how risk, return and time are related.
Step 9. History: Understand the historical risks and returns of indexes.
Step 10. Risk Capacity: Analyze your five dimensions of risk capacity.
Step 11. Risk Exposure: Analyze your five dimensions of risk exposure.
Step 12. Invest and Relax: Invest, relax and stay balanced.

Click here for the full overview -

A word of caution, the materials are coming from a US perspective however the general principles are applicable to the Australian context with a few slight adjustments to take into account specific issues here.  I am also not a big fan of the drawings used but if you can get over those two aspects the IFA website and supporting videos and podcasts are well worth a look.

Scott Keefer


Posted by: AT 07:33 pm   |  Permalink   |  Email
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