Passive Investing Theory II @InvestSensibly

Theory Part 3Here’s the last two parts of a four part series of short videos explaining a market based approach to investing and diversifying globally.

Please enjoy these short, well made videos that pack a lot of good information into bite sized segments!

Part 3: “Part three of a four-part series exploring the foundations of passive investing and the men who have brought it to global significance. Market efficiency – the theory that markets reflect all available information – was explored in Eugene Fama’s Efficient Market Hypothesis in the 1960s, but has its roots a century earlier in 19th century mathematician Sir Francis Galton’s observations on ‘the wisdom of the crowd’ and ‘regression to the mean’; and later in the work of Nobel Prize-winning Austrian Economist Friedrich Hayek on stock prices.”


Source: Sensible Investing TV

Part 4: “The final part of a four-part series exploring the foundations of passive investing and the men who have brought it to global significance. Diversification has been called ‘the only free lunch in investing’ and is the driver behind Portfolio Theory, developed in 1952 by Harry Markowitz* and later expanded upon by the work of William Sharpe in his Capital Asset Pricing Model, and Eugene Fama and Kenneth French in their Three Factor Model. Portfolio Theory doesn’t have all the answers but undoubtedly has had a big impact on how we all invest.”

Source: Sensible Investing TV

*Harry Markowitz in on the investment committee at Loring Ward as of the time I’m writing and scheduling this post (26 Sep 14).

In the interest of disclosure: I do use DFA sub-managed SA Funds with most clients (not a fund requirement, but a business decision I’ve made for clients). This blog is not a solicitation; simply an explanation of the basic philosophy and approach of the funds.

About Larry Frank, Sr.

Larry R Frank Sr., MBA, CFP®, is an experienced financial advisor and a published author on Retirement Planning Research. Have a financial question? Click Here to Ask Larry

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One Response to Passive Investing Theory II @InvestSensibly

  1. Larry Frank, Sr. March 24, 2015 at 2:43 pm #

    How Many Mutual Funds Routinely Rout the Market? Zero

    according to NY Times article citing The Persistence Scorecard,” and it is conducted by S.&P. Dow Jones Indices twice a year …

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