Mark J. Higgins, CFA, CFP® Author, Speaker, and Founder of The Enlightened Investor, LLC

An Experienced Investment Advisor

Prior to founding The Enlightened Investor, Mark served as an investment consultant for more than 12 years. In this role, he advised the trustees of large institutional investors such as endowments, pension plans, and corporate plans. In aggregate, the trustees of these institutions had fiduciary responsibility for more than $60 billion. Over the years, Mark observed many fundamentally flawed practices that led to suboptimal investment outcomes for both institutional and individual investors. Curious as to why these flaws persisted, he conducted extensive research of financial history to trace the chain of events that produced them.

Becoming an Enlightened Investor shares the results of this endeavor. The overarching goal is to help individual investors and institutional trustees to develop a deeper appreciation for the invaluable lessons of financial history and use them to make better decisions. It is his sincerest hope that readers will use this book to improve their personal investment performance and the performance of those whom they serve.

Mark graduated from Georgetown University Phi Beta Kappa and Magna Cum Laude with a bachelor's degree in English and Psychology. He received MBA from the Darden School of Business at the University of Virginia. Mark is a CFA charterholder and CFP® practitioner.

My Inspiration for Becoming an Author

I never had aspirations to be an author, but after reading hundreds of books, academic papers, and studies on financial history, I was surprised that a comprehensive book on the financial history of the United States did not exist. I concluded that the absence of such a book was a glaring deficiency for both the academic community and the investment profession. I wrote Becoming an Enlightened Investor to help alleviate this deficiency.

Helping You Make Better Investment Decisions

Conducting research for the book has proven to be the most valuable educational experience of my life. The most shocking discovery is that almost every financial event that occurs today involves some combination of past events. By understanding how these events have affected markets in the past, one begins to understand the present and potential future with greater clarity.

It is my hope that this book transplants the lessons of financial history into the minds of readers throughout the world. I firmly believe that it will enable investors, trustees and investment professionals to make better investment decisions.

My Favorite Quotes from the Annals of Financial History

Importance of Financial History

“Whoever wishes to foresee the future must consult the past; for human events ever resemble those of preceding times. This arises from the fact that they are produced by men who ever have been, and ever shall be, animated by the same passions, and thus they necessarily have the same results.”

– Nicolo Machiavelli

Investment Advisor's Fear of Obsolescence

"We lie loudest when we lie to ourselves."

- Eric Hoffer

Repetition of Financial History

“The world of finance hails the invention of the wheel over and over again, often in a slightly more unstable version.”

- John Kenneth Galbraith

Honesty in Investing

"People who are honest nowadays are accused of being mad."

- Hetty Green, the Queen of Wall Street

Distraction of Current Events

"Any time you hear financial experts talking about how the market went up because of such and such - Just remember it's all nonsense."

- Jim Simons

Ego and Financial Recklessness

“Nothing so undermines your financial judgement as the sight of your neighbor getting rich.”

- J. Pierpont Morgan

Confirmation Bias

“Facing a choice between changing one’s mind and proving that there is no need to do so, almost everybody gets busy working on the proof.”

– John Kenneth Galbraith

Asset Bubbles

“The descent is always more sudden than the increase; a balloon that has been punctured does not deflate in an orderly way.”

- John Kenneth Galbraith

Value of Securities Regulation

“After five short years, we may now need to be reminded what Wall Street was like before Uncle Sam stationed a policeman at its corner, lest, in time to come, some attempt be made to abolish that post.”

– Ferdinand Pecora

Folly of Tactical Asset Allocation

“There is a prudent maxim of the economic forecaster’s trade that is too often ignored: Pick a number or pick a date, but never both.”

– Paul Volcker

Role of Public Credit

“Exigencies are to be expected to occur, in the affairs of nations, in which there will be a necessity for borrowing. That loans in times of public danger, especially from foreign war, are found an indispensable resource, even to the wealthiest of them…it is essential that the credit of a nation should be well established.”

– Alexander Hamilton

Dangers of Speculation

"When a speculator wins, he don’t stop ‘til he loses.”

– George Lorimer

Gilded Age Economics

“It might be said that the development of American commerce and industry was made possible by natural resources, the unwise investments of Europeans, and the dumb good luck of domestic investors.”

– Robert Sobel

Gilded Age Markets

“For many denizens of Wall Street at the time, the measure of a man was not his honor, the value of his word, or even his net worth; it was the audacity of his scheming, regardless of whether the securities he was trading were legitimate, fabricated, or even his to sell.”

- Michael Hiltzik

Market Efficiency in the 1800s

“He [Daniel Drew] once told Gould that to speculate on Wall Street without inside information made as much sense as to drive black pigs in the dark.”

– Edward Renehan, Jr.

Panic of 1907

“If you have any money in that place [the Knickerbocker Trust], get it out the first thing tomorrow. The men in that bank are too good looking. You mark my words.”

- Hetty Green, the Queen of Wall Street

Panic of 1907

“In the history of every great catastrophe, you’ll find some masterly bit of stupidity set fire to the oil-soaked rags.”

– Edwin LeFevre

The Roaring 20s

"There is no way of constructing a rascality index, but if one could be made, the highs of the Drew-Fisk-Gould era would be overshadowed by the peaks of the 1920s.”

- Robert Sobel

The Roaring 20s

“Men have been swindled by other men on many occasions. The Autumn of 1929 was, perhaps, the first occasion when men succeeded on a large scale in swindling themselves.”

– John Kenneth Galbraith

The Roaring 20s

"An Aristocracy of Successful Investors advertised a new guide to investment. The headline read "He Made $70,000 After Reading 'Beating the Stock Market." No doubt whoever it was did. He might have made it without reading the volume or being able to read."

- John Kenneth Galbraith

The Roaring 20s

“Periods of speculative frenzy always draw both scoundrels and suckers to Wall Street, the way a three-alarm fire attracts onlookers and pickpockets.”

- Robert Sobel

World War II and the Arsenal of Democracy

“America is like a giant boiler…once the fire is lighted under it, there is no limit to the power it can generate.”

- Winston Churchill

Value of Honesty and Integrity

“The customer may not always be right, but he has rights. And upon our recognition of his rights and our desire to satisfy them resets our chance to succeed.”

- Charles Merrill

Market Efficiency

“My basic point here is that neither Financial Analysts as a whole nor the investment funds as a whole can expect to ‘beat the market,’ because in a significant sense they (or you) are the market.”

– Ben Graham

Inflation and Monetary Policy

“Inflation is always and everywhere a monetary phenomenon, in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.”

– Milton Friedman

Market Efficiency and Value Index Funds

“Sure, it’d be great to get out of stocks at the high and get back in at the low. But in 55 years in the business, I not only have never met anybody who knew how to do it, I’ve never met anybody who had met anybody who knew how to do it.”

– Jack Bogle

Market Efficiency and the Value of Index Funds

“[Efficient market theory] is only controversial among people that don’t want to believe it.”

- Eugene Fama

Investment Advisor Fallacy

“There are two kinds of investors, be they large or small: those who don’t know where the market is headed, and those who don’t know that they don’t know. Then again, there is a third type of investor…whose livelihood depends on appearing to know."

– William Bernstein

Cost of Complexity

“As a general rule of thumb, the more complexity in a Wall Street creation, the faster and further investors should run.”

– David Swensen

Overuse of Alternative Investments

“You don’t want to be average [investing in private equity]; it’s not worth it, does nothing. In fact, it’s less than the market. The question is ‘How do you get to first quartile?’ If you can’t, it doesn’t matter what the optimizer says about asset allocation.”

– Allan S. Bufferd

Overuse of Active Management by Institutions

“Any pension fund manager who doesn't have the vast majority—and I mean 70% or 80% of his or her portfolio—in passive investments is guilty of malfeasance, nonfeasance, or some other kind of bad feasance!”

– Merton Miller

Wealth and Happiness

“A calm and modest life brings more happiness than the pursuit of success combined with constant restlessness.”

– Albert Einstein

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