Dear friends, welcome to the March, beginning of spring, greening of the year, edition of the Mutual Fund Observer. We’re glad you’re here.
Every semester, I am reminded that the jeremiads are wrong.
In this case, they’re the thousand casual, caustic dismissals of the generation now sitting in college classrooms: addled, self-absorbed, screen-enslaved, and lost, we’re told. I have heard the charges. I have read the research. I worry about the kids.
Then I walk into the room Continue reading →
Investing is always an uncertain project, generally undertaken in uncertain times, building with uncertain tools. It’s great if you own shares in Xanax’s parent, Pfizer, but frequently miserable otherwise.
Three factors make the current market a source of epic uncertainty: valuations are historically high, concentration is historically high, and safeguards are historically weak. Let’s agree that by “historically” we mean something like “since modern civilization nearly ended withthe Great Depression,” so about Continue reading →
I propose that those of us over sixty have been blessed with the experience of living through multiple drastic and dramatic pullbacks, which have been real-life stress tests on what we actually feel and do in a financial crisis. We have personal experience to draw on to pre-plan for the next inevitable drop.
I grew up listening to the stories of the Great Depression and the Dust Bowl from those who lived through them. I graduated from high school during the stagflation of the 1970’s when unemployment was high, and inflation shrank the purchasing power of the dollar. The bursting of the Dotcom Bubble taught us that stocks had not reached a permanent plateau of higher valuations. People shifted focus from the technology bubble in stocks to an emerging bubble in housing, and the Great Financial Crisis resulted from Continue reading →
A friend of mine asked me to write “Perpetual Income for Dummies,” covering a simple portfolio for a conservative investor that generates steady income to cover withdrawals. The objectives of the “Perpetual Income for Dummies” Portfolio are: 1) income of $40,000 for a $1M portfolio in 2016 that rises with inflation, 2) average ten-year annual return of 7%, and 3) minimize the drawdowns during the COVID and TGN bear markets. The unique part of this study is to estimate the income by year as a constraint in a self-constructed optimizer using Excel Solver.
I compare this portfolio with the Vanguard Wellesley Income Fund (VWIAX) and Continue reading →
Disciplined Growth Investors has launched their second mutual fund, the Disciplined Growth Investors Equity Fund (DGIQX). The fund is only nominally “new.” It technically launched on January 26, 2026, by way of a section 351 conversion (a sort of “in-kind exchange” that allows investors to avoid tax bills when exchanging one set of assets – say, appreciated stocks – for another, such as a fund or ETF) from a long-running limited partnership, Navigator Investors, LP. It opened to new investors on February 26 and will retain the partnership’s performance track record dating back to March 31, 1997. Over the ten years through December 2024, the Navigator fund Continue reading →
In celebration of an ancient tradition, recognizing that the new year starts with the arrival in March of spring, we wanted to share our second New Year’s resolution (after “Don’t Underwrite Lobotomies,” 1/2026).
“Yachts” have always been a curious flashpoint in the investor community. A half-century before J.P. Morgan sailed about in his floating palace, The Corsair (versions 1, 2, and 3), yachts were emblems of clueless avarice. The Gilded Age short-seller and noted wit William R. Travers supposedly uttered the question “but where are the Continue reading →
The Renaissance at Matthews Asia continues. After a period of considerable disarray, one of the firm’s founders, Mark Headley, returned from retirement to become CEO. On February 13, 2026, the firm announced that founders G. Paul Matthews, who founded the firm in 1991, and Mark Headley will acquire a controlling ownership interest in the firm. The buyback isn’t just a financial transaction; It’s a statement that the firm believes its problems were governance-related rather than market-related (the “Asia is dead” thesis). Winnie Chwang, Michael J. Oh, CFA, and Inbok Song “ceased to be” managers of three Matthews funds. Tiffany Hsiao’s profile Continue reading →
Welcome to the February issue of Mutual Fund Observer.
We’re glad you’re here.
I’ve always been fascinated by the interplay of climate and culture, the way that our physical world seeps deep into our cultural bones. After years of The News from Lake Wobegon, Minnesota, gained an almost mythical spot in my vision of people in winter. For those of you who haven’t visited, the temps in Minneapolis hit -21 degrees Fahrenheit in January, and the force of the wind deducted another 30 degrees from that total. That’s low enough that Continue reading →
Perhaps you may be amused by the similarities of this article, where I search through hundreds of alternative funds to slay the dragons of inflation and market corrections and the delusions of Don Quixote de la Mancha, who set out on misadventures for chivalry. I am not ready to denounce alternatives as foolish fiction, as Don Quixote denounced chivalry before dying.
Don Quixote and Sancho Panza going to the wedding Gamaches (1850) by Honore Daumier Source: Artchive
For this article, I created the Grins and Giggles Portfolio with the objective to minimize the correlation between the funds for the past six years. I follow this up with the Last Laugh Portfolio Continue reading →
Quality investing delivered one of its worst years on record in 2025. Except when it didn’t. Some quality funds posted top-quintile returns while many languished at the bottom, a divergence so dramatic it demands explanation. The story isn’t that quality failed; it’s that the market split quality investors into winners and losers based on a single tactical choice.
“Quality” funds in 2025
87 funds and ETFs have “quality” as part of their name; 60 of those 87 funds trailed their peers in 2025. Most funds that pursue “quality” Continue reading →
I skimmed through a couple of books for this article about income, searching for ideas. They tend to be very general, tell the reader how to get rich, or focus on risky investments like stocks and real estate investment trusts (REITs). Exchange-traded funds that invest in REITs averaged drawdowns of 38% during the past six years, while the S&P 500 had a drawdown of 24%. Ouch! I have a different perspective on income. Funds should have a high reward for the risk taken. The book that I related to the most was Income Factory – How You Can Live Off Your Dividends in the Future: Grow Your Income with Dividend Growth and Income Strategies (2025) by Sebastian Johnen, because Continue reading →
Hi, Layla.
Chip and I are grateful for the help you’ve given us in learning to be a bit more physically fit, and we were delighted to hear that you were interested in learning a bit about … umm, financial fitness. I know it seems confusing and infinitely complex.
It isn’t. Really, you just need to have a bit of faith, a bit of discipline, and Continue reading →
A tradition dating back to the days of FundAlarm was to annually share our portfolios, and reflections on them, with you. My portfolio, indolent in design and execution, makes for fearfully dull reading. That is its primary charm.
This is not a “here’s what you should own” exercise, much less an “envy me!” one. Instead, it’s a “here’s how I think. Perhaps it will help you do likewise?” exercise. Continue reading →
The Last Titan departs: Fidelity’s last great star manager, Will Danoff, is preparing to leave the stage after nearly four decades at the firm and 35 years at the helm of Fidelity Contrafund, with his retirement slated for the end of 2026.
We have long argued that Fidelity in the 21st century had a great many good managers but only two transcendent ones: Joel Tillinghast at Low-Priced Stock and Will Danoff at Contrafund. They both had the ability to Continue reading →
We’ve scheduled our year-end review webinar for Tuesday, 6 January at 9 am Pacific (noon Eastern). We will use MultiSearch Screens and other site tools to highlight performance of funds across different market segments, as described in our latest post A Good Year. Please join us by registering here.
Welcome to the New Year’s issue of the Mutual Fund Observer. We’re glad you’re here.
Heraclitus, the famously elusive Greek philosopher, reminded his students that you cannot step into the same river twice. Both we and the river will have changed. According to legend, one of those students – snarky little barstid – replied: “I don’t think you can step into the same river once.” Even as we step, the river flows and changes.
As do we. Continue reading →
Sections: Climate and energy / Public health / Conservation & wildlife recovery / Social progress / Innovation & technology
For the first time in the industrial era, renewable energy generated Continue reading →
For most accounts, my primary investing objective is risk-adjusted return with dividends reinvested. I have set up automated withdrawals to transfer money from a conservative Traditional IRA (Core TIRA) in the Intermediate Investment Bucket to the Short-Term Investment Bucket. Having a steady income just took on a higher priority.
In this article, I look at how historical distributions fluctuate according to either the interest rate cycle or the stock market cycle, along with Continue reading →
Ninety years ago, emergent science and a self-assured entrepreneur came together to offer a quick and cheap solution to an intractable problem.
The press loved it. The public became enamored, and demanded more and more of it. The Nobel committee awarded a Prize for it.
It seemed like a good idea at the time.
It always does. Continue reading →
And what their answers tell you.
In mid-December 2025, I asked five AI systems – ChatGPT, Claude, DeepSeek, Grok, Perplexity – the same deliberately unfair question: “given current market condition and historic patterns, what is likely to be the highest returning asset class available to US investors in 2026?” The question is unfair because nobody can know that until 2027, and because it ignores all of the important stuff, information about the investor’s horizon, needs, and temperament, which is vastly more important than raw returns information.
Every system rushed to answer rather than Continue reading →
