Category Archives: Charles

An Improved MFO Portfolio Analysis Tool

By Charles Boccadoro

We introduced our Portfolio Analysis tool to our MFO Premium subscribers in September last year, which sadly seems like decades ago. The intro piece, appropriately titled “Introducing MFO’s Portfolio Analysis Tool,” was in response to David’s May 2017 article “Time to put on your big-boy pants and check your investments.” In it he demonstrated a simple method to answer the “how bad could it get?” question. Basically, based on the current funds held in your portfolio, how much pain (aka drawdown, aka Ulcer Index) might you experience in the next downturn?

The Portfolio Analysis tool does this Continue reading →

Newest MultiSearch Metrics

By Charles Boccadoro

The search for yield has never been tougher. The 10-year Treasury Rate is below 1% per year.

As a retiree of eight years now, with today marking Happy Medicare Day, I’m acutely aware for myself and many fellow retirees.

Fortunately, nearly all of the 140 Core Bond mutual funds through September in our Lipper (Refinitiv) database yield more than that 1%. And while none of these funds are “risk free” and many suffered drawdowns of Continue reading →

A Thirty Year Proposition

By Charles Boccadoro

New Bull Emerges in a Market Riskier Than It Appears

The S&P 500 is once again at all-time highs.

Month ending July 2020 total return data indicated the S&P 500 index had recovered all of its March drawdown, officially marking the end of the CV-19 bear and declaring a new bull market, which began last April. Unlike bears, which are announced as soon as the market swoons 20% from previous peak, bulls are known only in retrospect … although granted definitions vary. Commonly, a bull needs to climb 20% off its last maximum drawndown and subsequently go on to achieve its next all-time high; basically, it needs to get back above water before becoming official. That happened in July.

The following table summarizes the US bear and bull markets dating back to the Great Depression, which updates the version Continue reading →

Road Trip In The Age of COVID-19

By Charles Boccadoro

“If you want to really know something you have to observe or experience it in person; if you claim to know something on the basis of hearsay, or on happening to see it in a book, you’ll be a laughingstock to those who really know.”

Jonathan D. Spence, “Emperor of China”

Sensational headlines bombard us.

Each one is an attempt to get readers, listeners, and viewers to click, tune-in or subscribe. Embedded ads populate each article … and it does not matter whether you’re a subscriber or not.

A fierce competitive landscape vies for our attention. New York Times, Wall Street Journal, Washington Post, and The Atlantic meet Apple News, Buzz Feed, Facebook, and Twitter.

One can find Continue reading →

Not So Welcome Back ZIRP

By Charles Boccadoro

June begins the fourth month with yield on the 10-year US Treasury Note below 1%. Dating back to 1926, the yield has never been below 1%.

Since the Federal Reserve implemented its Zero Interest Rate Policy (ZIRP) in December 2008 to help combat the Great Financial Crisis (GFC), the yield has remained below 3% 113 of 138 months … or more than 80% of the time. The goal of 3% level seems to have become something of a new normal. It used to be more like 5%, the long-time average.

The last time the 10-year yielded below Continue reading →

Back To Basics

By Charles Boccadoro

“All NAVs are opinions.” ― Richard Jacobs

While March was one of the most turbulent months on record for the S&P 500, with real-estate and oil sectors acutely affected, investors in fixed-income also experienced a rough ride. Funds reaching for yield were hardest hit, especially those employing leverage. There are plenty such funds, driven by a seemingly never-ending period of zero-interest-rate policy.

Warnings of the Continue reading →

A Presumptive Bear Ends an 11-Year Bull Run

By Charles Boccadoro

In November 2014 we published a piece entitled, “Mediocracy and Frustration,” a lament of lame 3.9% annualized returns since the century began for the S&P 500. The historically low returns reflected two monster drawdowns blamed on the tech bubble of 2000 and the financial crisis of 2008 and 65 months of retractions 20% or more from peak.

As if that was not bad enough, every pundit was predicting eminent collapse, including two Nobel Prize winners. A beloved bull, it was a not.

They were wrong. All of them.

The bull lasted Continue reading →

Looking Under the Hood at Holdings

By Charles Boccadoro

“Don’t trust everything you see. Even salt looks like sugar.” ― Anonymous

The MFO Premium site now has fund holdings; specifically, top-ten holdings for equities and fixed-income securities, countries, and main industry sectors … thanks to our expanded Lipper (now Refinitiv) Global Data Feed.

What’s more, all are searchable with the site’s main tool MultiSearch. Here’s a screenshot of the new holdings metrics on Continue reading →

San Francisco Treat

By Charles Boccadoro

“Go West, young man, go West and grow up with the country.” ― Horace Greeley

My home state of California rates a close second to Pennsylvania.

On what scale?

Assets under management (AUM) by the fund companies.

At $6 trillion, it sports twice the AUM of New York.

While Pennsylvania is home to fund behemoth Vanguard, California is home to about Continue reading →

MFO Premium Webinar

By Charles Boccadoro

On Wednesday January 15th, we will host a webinar discussing latest features of the MFO Premium search tool site. Topics covered will include the new home page and user portal, the MultiSearch Portfolios tool, updated metrics for risk adverse investors, expense rating, expanded category averages, revised “Include Averages and Benchmarks” options, and finally allocation indices across ten decades.  

There will be two sessions, one at 11 am Pacific time (2pm Eastern) and one at 2pm Pacific time (5pm Eastern). The webinar will be enabled by Zoom. Please use the following links Continue reading →

Premium Site Updates: Fund Fee Rating, Category Averages, and Subscription Price

By Charles Boccadoro

Martini: No, it’s not stupid, Signora Mayes. L’amore e cieco.

Frances: Oh, love is blind. Yeah, we have that saying too.

Martini: Everybody has that saying because it’s true everywhere.

From the 2003 film “Under The Tuscan Sun”

ER Rating

Morningstar has long championed funds with low expense ratios. In Ben Johnson’s piece earlier this year, entitled Fund-Fee Study: The Key Factors Helping Drive Fund Fees Lower, he states: “… fees are one of the best Continue reading →

A More Robust Down-side Market Metric

By Charles Boccadoro

“A ‘receding sea’ is not a lucky offer of an extra piece of free beach, but the warning sign of an upcoming tsunami.” ― Jos Berkemeijer

Most of the metrics we’ve implemented at MFO address down-side risk. Our principal MFO Rating is based, not on Sharpe, but on Martin, which uses the so-called Ulcer Index to normalize any excess return. Ulcer Index …

(Peter Martin was recently mentioned in Brain Livingston’s article: “Widely followed risk-return measure for stock portfolios is debunked after 55 years.” It is not Martin Ratio.)

Martin is a risk adjusted return measure that answers the question: how much Continue reading →

Introducing MFO’s Portfolio Analysis Tool

By Charles Boccadoro

“Everybody has a game plan, but the plan changes after the first punch.” – Cris Cyborg

Our June 2017 piece “How Bad Can It Get?” responded to David’s estimate of the pain he might experience given a severe market down-turn with his non-retirement portfolio. Fortunately, we’ve not yet experienced that downturn, but as he often does, he advised strongly that investors assess their portfolios based on the potential for drawdown. Better yet is for investors to do this when skies are blue, not when its raining and the roof starts leaking. The idea here is to help set expectations and avoid panic during the downturn, which until you’ve lived through one (and perhaps even then) is very hard to do.

We’ve just gone live on the MFO Premium site with a new tool that can help. Continue reading →

How Well Do MFO Great Owls Perform?

By Charles Boccadoro

“Okay … you smoke Hoyo de Monterreys. You’re a scotch man, single malt, not because it’s trendy
but because you’ve been doing it for forty years, and you stay with what works.
You have two great loves in your life, your horses and this company.
You wept openly the day the Dow hit ten thousand …”

Jack Campbell to Peter Lassiter in the 2000 film “The Family Man”

MFO first introduced its Continue reading →

Morningstar Investment Conference – 2019 #MICUS

By Charles Boccadoro

When people have no choice, life is almost unbearable …

But as the number of choices keeps growing, negative aspects of having a multitude of options begin to appear …

the negatives escalate until we become overloaded.

At this point, choice no longer liberates, but debilitates.

Barry Schwartz in Paradox of Choices

If last year’s Morningstar Investment Conference, which consolidated the once separate ETF venue, was one of the worst in memory, this year’s was one of the best.

Once again, it occurred in the beautiful and vibrant city of Chicago, where the 35-year old company Morningstar is headquartered, on May 8-10 at the sprawling but impressively run McCormick Place, which happens to be the largest convention center in North America. The conference’s 1350 registered Continue reading →

New MFO Search Tools Publicly Available

By Charles Boccadoro

We’ve supplanted our “Miraculous MultiSearch” and Risk Profile search tools with QuickSearch, which is now available on the MFO Premium site. It offers more features and is updated monthly. We’ve also consolidated our Great Owl, Three Alarm, and Dashboard (of Profiled Funds) tools to the MFO Premium site, similar info as before but more user-friendly and also updated monthly. All these tools remain available to public and trace back, in fact, to our legacy Fund Alarm site.

To help walk users through these tools, as well as to Continue reading →

Introducing MFO Premium’s Compare Funds Tool

By Charles Boccadoro

The Compare Funds tool displays all the data from MultiSearch Results table, our main search tool on the MFO Premium site, for up to 10 funds in an easy-to-compare and export/pdf format. Basically, it transposes the table from horizontal to vertical orientation. Thanks to our friends at Gaia Capital Management for requesting this display feature.

We use the Oakmark fund family to illustrate. Here’s summary only risk and return metrics across the current full market cycle through Continue reading →

The Ten-Year Bull

By Charles Boccadoro

“Happy days are here again! The skies above are clear again. Let us

sing a song of cheer again, Happy days are here again!”

Jack Yellen

February marked the tenth full year of the current bull market, which began in March of 2009. For those of you that held steady through the great recession or have just been lucky or wise enough be invested over this period, you’ve been well rewarded.

Through much of its first years, this bull market had little love, especially in late 2011 when it looked like we were headed back into bear territory. There have been a couple modest retractions since: the taper tantrum of 2013, January 2016, and Continue reading →

Using MFO’s Bear Market Rating To Help Contain Portfolio Drawdown

By Charles Boccadoro

“Never risk what you have and need

for what we don’t have and don’t need.”

Warren Buffett

December reminded us of how quickly the music can stop. The SP500 fell 9% turning a modest annual gain into a loss. Those hugging the S&P were the lucky ones.

Touchstone Small Company (SAGWX) was off 13.4%. Invesco S&P SmallCap Health Care ETF (PSCH) was off 16.1%. Both are dual MFO Great Owl and Honor Roll funds, which means they have a track record of top quintile risk adjusted and absolute return versus peers.

Other notables: Parnassus Endeavor (PARWX) off 13.8%, Hotchkis & Wiley Mid-Cap Value (HWMIX) off 15.2%, and Miller Opportunity (LMOPX) off Continue reading →