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Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
  • Latest Memo from Howard Marks

    A Look Under the Hood
    "Over the last 56 years, I’ve spent a lot of time making suggestions to clients regarding their investment processes and portfolios, and I’ve been on the client side as a member of various investment committees. But seldom have I been able to bridge the two, serving as an active participant in clients’ investment processes. I had an opportunity to do just that the other day, when I met with the board and senior staff of a U.S. state pension fund. I was asked to listen in and provide feedback on the results of a board-member survey their consultant had recently conducted and would be reporting on during the meeting.
    The content of the consultant’s session impressed me so much that I decided to write a memo about it. I’m not disclosing the names of the state and its consultant, for obvious reasons, but I’m very pleased that they agreed to let me use the content of the meeting as raw material for this memo.
    In the meeting, the consultant covered many of the things I consider “the most important thing” and often came down on the same side I would (admittedly, that might’ve contributed to why I was so impressed!). I’m going to sum up below the consultant's assessment of the board survey and my reaction. My hope is that this is as informative for you as it was for me."
    PDF Version
  • Westinghouse Nukes
    Vacuum tubes themselves do not "generate" much of anything but heat. They do, however, frequently require high or very high DC voltages to perform their amplification function. The high voltages required typically were output from a transformer with a 120 volt AC input, and a secondary with a high voltage AC output. This high voltage AC was then routed through a vacuum tube configured as a rectifier, which converted the AC input to a DC output, which was then routed to capacitors to filter and smooth that output.
    The vacuum tubes used in a small battery-operated portable radio required around 80-90 volts.
    The vacuum tubes used in a typical high wattage audio amplifier required around 250-500 volts.
    The vacuum tubes used in Coast Guard Loran amplifiers required several thousand volts, and a bank of 12 tubes output 1,000,000 watts of pulse power.
    image
    I worked on all of that sort of equipment for many years. When I retired as a SF Public Safety radio tech the SF Water Dept transmitters still used vacuum tubes. They were the cheapest city department of all, and never wanted to pay for anything new, like transistors, for example.
    Speaking of shocks though, I did receive a few, including from an 800 volt DC Coast Guard radio transmitter. That burned a bit. But the two worst shocks in my entire life were from plain old 120 volts AC. Came close to killing me, for sure- froze my reflexes making it almost impossible to move and free myself from the voltage source.
  • Westinghouse Nukes
    Article states that China's nuclear ambitions far outpacing the rest of the world.
    Comment section of the article is worth a read.
    Actually, the United States is the global leader in the construction of cheap, safe, powerful nuclear reactors. They just happen to all be owned and operated by the United States Navy (563 reactors over the past 75 years, at last count.) So if the Navy and China can build reactors, but US power companies can't, we should probably look at why that is.
    One obvious reason seems to be that neither the US Navy, nor the Chinese nuclear program needs to satisfy shareholders. Since they don't have to constantly cut costs to drive up stock price, they can instead focus on good design and safe operation. (I would have loved to see a Navy bean counter try to tell Admiral Rickover that there wasn't any money in the budget for something he wanted.)
    It's unrestrained capitalism that causes the problem, not the technology.
    https://nytimes.com/interactive/2025/10/22/climate/china-us-nuclear-energy-race.html
    Good points. The other problem (besides spent fuel) is that the public doesn't trust nuclear power generation. Three Mile Island, Chernobyl, etc spooked everyone pretty good. Few people would want it near their neighborhood. Maybe it is a problem with education, or trust?
  • How Bad Is Finance’s Cockroach Problem? We Are About to Find Out.
    Another scream of “Doom!” because fear sells clicks and keeps the base scared. But the kids (and the adults) are catching on: the monster under the bed is just a sock puppet.
    Ah, "Ms. Pier" lands again—gotta love the autocorrect rebellion. If you're firing shots at Karine Jean-Pierre's fresh-off-the-presses memoir Independent: A Look Inside a Broken White House, Outside the Party Lines (dropped October 21, 2025), you're not alone in calling it a tall tale wrapped in a pity party. As Biden's ex-press secretary, she spent years at that podium swatting down questions about his obvious decline like they were gnats. Now, post-loss, she's flipping the script: DNC betrayed Joe! Party's broken! I'm an independent now!
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  • This Day in Markets History
    From Markets A.M. newsletter by Spencer Jakab.
    On this day in 1895, the “horseless carriage” began to seem practical
    as the Chicago Times-Herald sponsored the first automobile race in U.S. history.
    The course ran along 54 miles of streets and roads made mostly of mud.
    The winner's average speed was about 7 miles per hour.
    The "horseless carriage" has been greatly improved over the years!
  • How at risk is this portfolio?
    First, I would like to say thank you for your responses. The purpose of this part of my overall portfolio was to provide ten years (need to add two additional positions) of relatively stable income to replace a pension that disappears upon my death, for the benefit of my wife. I never invested in bonds during my accumulation years, but have suffered some significant losses since I added bonds at various times since I have retired. This latest move into bonds was with the hope that maybe it would be different this time if I selected bond funds with good management. I have moved two funds into this portfolio to make it now ten, SCHD and CGDV. I may replace some of the present positions in bonds with other dividend-oriented funds. I have talked to a number of successful investors over the years, who have consistently recommended stocks that pay a dividend. Again, thank you for the responses. I probably need to figure this one myself. The ups and downs of stock funds are nothing new to me, and I accept the risks, but losing money invested in a bond fund is frustrating to me, since I have naively thought of them as safe spots. FYI, my wife and I are both 81 years young.
  • How Bad Is Finance’s Cockroach Problem? We Are About to Find Out.
    Another scream of “Doom!” because fear sells clicks and keeps the base scared. But the kids (and the adults) are catching on: the monster under the bed is just a sock puppet.
    Ah, "Ms. Pier" lands again—gotta love the autocorrect rebellion. If you're firing shots at Karine Jean-Pierre's fresh-off-the-presses memoir Independent: A Look Inside a Broken White House, Outside the Party Lines (dropped October 21, 2025), you're not alone in calling it a tall tale wrapped in a pity party. As Biden's ex-press secretary, she spent years at that podium swatting down questions about his obvious decline like they were gnats. Now, post-loss, she's flipping the script: DNC betrayed Joe! Party's broken! I'm an independent now!
  • Why buy the S&P 500?
    My SIL has been buying 50/50 VOO/QQQ for years now. He can already retire.
    In the early 1990s, a good friend invested in ten individual stocks, putting about $3,000 into each. The rest of his monthly contributions went into the S&P 500.
    Nine of those stocks didn’t amount to much — but the tenth, Microsoft, grew into more than $1.5 million.
  • Why buy the S&P 500?
    I have an advisor friend who started in the mid 90's. He said after the dot com bubble people were sheepish on tech sector for a good while, and before they really got a taste for it again, the great recession happened. For example the Q's maintained a very meager AUM 10 years after the dot come bubble. it took quite a while to recoup (2014ish) and it took a while for people to begin to invest in tech again. which when you look at the chart today you go well if they'd of just held on! but tech killed their portfolios in the dot com bubble. then banking system as we knew it failed 6-7 years later which once again gave everyone pause.
    I know a guy i went to college with who says he held onto the rydex nasdaq100 and fidelity select tech through out (imo its tall tales out of school) and maybe he did but thats a makeup most people don't/didn't have. LOTS of people in their late 20's and 30's with tech portfolios who have had it work for them quite a bit.
    so the answer is ultimately risk. I sometimes ask this question to the young coworkers who ask a similar question. why not just tech, why not 3Xtech?
    I do believe technology itself will likely lessen the time it takes from peak to peak in a recession. I have no evidence of this outside of the v shape recoveries we've experienced in the past handful of years. I feel like these would of drawn out longer 20-30 years ago.
  • How Bad Is Finance’s Cockroach Problem? We Are About to Find Out.
    Following are excerpts from an opinion article in The New York Times.   (This should be a free link.)
    It was early last month when observers noticed ominous cracks in the facade of one of America’s most important financial markets. Tricolor, one of the largest used-car retailers in Texas and California, abruptly declared bankruptcy. Federal investigators are reportedly looking into whether the company committed fraud by promising the same collateral to multiple lenders.
    Shortly after Tricolor cratered, something similar happened to First Brands, a company primarily known for making car parts. Its investors discovered roughly $2 billion in loans not on its balance sheet. That’s when things started getting scary. Fifth Third, a regional bank, said it had lent Tricolor $200 million, nearly all of which it now expected to write off as a loss. Same at JPMorgan Chase, which reported it was out $170 million that it will presumably never see again. At Barclays the figure is nearly $150 million. They’ll survive the loss, but the incident cast into sharp focus a risk that had otherwise lurked in the shadows, growing year by year: a cascade of bankruptcies that triggers a widespread financial crisis.
    Tricolor and First Brands had also borrowed from a breed of nonbank financial firms known collectively as private credit, whose workings are much more opaque. Giving voice to a widespread sense that the losses had only just begun to pile up, Jamie Dimon, JPMorgan Chase’s chief executive, warned, “When you see one cockroach, there are probably more.”
    The 2008 financial crisis occurred in part because banks and other financial institutions were offering too many mortgages to borrowers who couldn’t plausibly repay them. When enough bad loans began caving in at the same time, they sucked big banks and the rest of the economy into the sinkhole along with them.
    Banks today are subject to stricter regulations, which have largely functioned as intended, keeping banks from making as many risky loans. Filling the void has been private credit. Today, firms like Apollo, KKR and Blackstone that manage and invest huge pools of money have gotten into the business of making direct loans, and they’re doing so at staggering rates. Now an approximately $2 trillion market, it is a leading option for many companies and consumers alike.
    Private credit firms say they can offer better terms than banks because they are not reliant on depositors who can withdraw their money and flee. But these firms are broadly exempt from the post-crash regulations that were imposed on the banking industry, so they are more able to make the kind of risky loans that brought down the economy the last time around. And they’re not exempt from the damage when those loans go south.
    The problem is that often the funds they rely on are not their own. They’re drawn from the money that has been entrusted to them by insurance companies, pension funds and, soon, 401(k)s. As was the case in the run-up to the big crash, these potentially risky ventures may therefore be fueled with the money of ordinary people who have no idea how it’s being deployed.
    Another troubling similarity: These not-bank banks, also known as shadow banks, do a lot of what’s known as financial engineering. That means packaging up a whole grab bag of debts — loans to corporations, leases on A.I. data centers, bills from plastic-surgery patients, car loans, anything, really — which are then sliced up and sold as new kinds of investment vehicles.
    Because the private and public credit markets are so closely connected, cockroaches in one part of the house will always spread to the other. Lending to risky borrowers has been on the rise for years. It is inevitable that after a period of excess, cases of insufficient due diligence by lenders and indeed fraud will pop up in public and private credit markets alike.

  • How at risk is this portfolio?
    I have one account that I tell myself is a safe spot, but is it really?
    Equal amounts in the following funds.
    RPHIX
    CBLDX
    ICMUX
    RSIIX
    DHEAX
    NRDCX
    RCTIX
    SWVVX
    What is a safe spot? In 2022 many bond funds lost 5-12%
    EGRIX easily beat the funds above in the last several years
    Within stocks:
    QLEIX has better performance and a sharper ratio (risk/reward) than VOO/SPY in the last 3 years.
  • Why buy the S&P 500?
    I was looking at our taxable accounts, and noticing the returns on our various tech-sector funds, and so I asked myself, why even buy the S&P 500 these days--not that I am actually in the market for adding much of anything to the taxable at this point.
    If I was 20-30 years younger, why not just buy a tech fund--or four in the case of my taxable (because I like baskets)--and rearrange the rest of the deck chairs to suit my druthers, i.e., risk tolerance?
  • ➩ ➩ ➩ 11/18:  MFO site: Balky / Errors / Unresponsive
    I rebooted the server again this morning. A service keeps getting hung up, slowing the server to a crawl. I'm working to get a new server ready as quickly as I can, but I'm not sure I'll be able to save all of the customizations we made many years ago. Keeping my fingers crossed.
  • The REAL Economy: 'Empty shelves, higher prices’- Americans tell cost of Trump’s tariffs
    Those (inflation) numbers do not comport with my own experience. It feels greater than what the BLS has published. Some time ago I cited a replacement window identical to one purchased 7 or 8 years earlier. The price had jumped from $400 to over $700 while the delivery time had increased from 3 days to 6 weeks. Your experience may differ.
    Then there are the lumber prices you were quoting a few years ago. In May 2018 (7½ years ago), lumber was at $600. It's now at ... $600. And forget about Covid, when everyone was sheltering in place and renovating. Prices topped out above $1600.
    I sound like a broken record here, but people tend to notice bad financial data (higher prices, losses in the market) more than the notice good financial data, like rising markets. That's why we have metrics like Sortino ratio and ulcer index. And why understanding behavioral finance is important to be aware of when investing.
  • The REAL Economy: 'Empty shelves, higher prices’- Americans tell cost of Trump’s tariffs
    Our excellent Medicare Advantage plan used to have zero premiums for years, but it’s increasing to $27 next year. Still, we can see any doctor or hospital in the U.S
    I'm going off on a tangent here, but private fee for service (PFFS) plans, as this Humana H8145-069 plan is, do not give you access to all (Medicare) doctors in the US. PFFS sounds like PPO only better (same rates in and out of network), but there's a diffence.
    With A PFFS plan, an out-of-network Medicare doctor must agree to be bound by the network terms of the plan or the insurer will not pay. Some Medicare doctors are "non-participating", meaning that they charge up to 15% more than the Medicare rates. (This is what Medicare calls an "excess charge", and the only Medigap plans that cover this are Plans F and G.) A non-participating provider who declines to waive this excess charge for you won't be covered.
    The out-of-network doctor must bill the plan for services they provide to get paid. Some doctors may not do this. I know one doctor who is fed up with dealing with insurers. Well, I know lots of doctors who feel that way, but this doctor refuses to bill any third party payer (insurer) other than Medicare. So you would not be covered in your PFFS if you went to this provider.
    In contrast, by law a PPO must pay a Medicare doctor the full amount they are allowed to bill, even if they are non-participating (see Q2, p. 36 here). And if the doctor refuses to bill the insurer, no problem. You pay up front and the insurer is required to reimburse you (less any required shared costs, i.e. copay and/or coinsurance). With a PPO you are covered for services by any Medicare doctor in the US. Though at a higher cost (e.g. copays) than with a PFFS. Just as Medicare Supplement Plans F & G cost more than lesser coverage from other plans.
    Humana Gold Choice H8145-069 (PFFS) Medicare Advantage plan is increasing from $0 to $27 for 2026. That’s an increase so steep you can’t even calculate the percentage!
    Sort of. The amount that you're paying for your plan, all in, is increasing from $185 ($185 Part B + $0 H8145 plan) to $233.50 ($206.50 Part B + $27 H8145). That's a 26% increase, still quite large but not incalculable (I just calculated it :-))
    It's fair to consider Part B premiums as part of the insurance cost. First, because one's actually paying that. Second, because some plans like H5216-345 reduce the amount you pay for Part B. This is a $0 premium plan (both 2025 and 2026). It reduced the Part B premiums from $80 ($185 - $105 credit) in 2025 to $76.50 ($206.50 - $130) in 2026. That's a 4.4% reduction.
    The extra $27 premium is for the drug portion of the PFFS plan (see Medicare.gov).
    That drug plan increase seems to be more the exception than the rule:
    According to CMS, Medicare Advantage drug plan premiums for 2026 are holding steady at considerably lower levels than stand-alone drug plans, on average, with many plans charging zero premium for drug coverage in 2026, as in previous years.
    https://www.kff.org/medicare/medicare-part-d-premiums-are-decreasing-for-many-stand-alone-drug-plans-in-a-number-of-states-in-2026/
    And stand-alone prices are dropping this year:
    A comprehensive KFF analysis will follow in the future, but it appears that substantial premium increases for PDPs across the board didn’t materialize, even as the Trump administration scaled back the level of support for additional PDP premium subsidies through the temporary Part D premium stabilization demonstration established by the Biden administration in 2024. ...
    In fact, for all but one of the 10 PDPs that were offered nationwide in 2025 and that will continue to be offered on a national or near-national basis in 2026, Medicare Part D enrollees in a number of states will see lower monthly premiums in 2026 than in 2025. This is consistent with CMS’s projection that the average monthly PDP premium will decrease by a few dollars in 2026.
  • The REAL Economy: 'Empty shelves, higher prices’- Americans tell cost of Trump’s tariffs
    Those (inflation) numbers do not comport with my own experience. It feels greater than what the BLS has published. Some time ago I cited a replacement window identical to one purchased 7 or 8 years earlier. The price had jumped from $400 to over $700 while the delivery time had increased from 3 days to 6 weeks. Your experience may differ.
    Then there are the lumber prices you were quoting a few years ago. In May 2018 (7½ years ago), lumber was at $600. It's now at ... $600. And forget about Covid, when everyone was sheltering in place and renovating. Prices topped out above $1600.
    I sound like a broken record here, but people tend to notice bad financial data (higher prices, losses in the market) more than the notice good financial data, like rising markets. That's why we have metrics like Sortino ratio and ulcer index. And why understanding behavioral finance is important to be aware of when investing.

    Well, I did say “feels like.”
    The linked chart is interactive, allowing you to zoom in on the price level in 2018 (window #1 / $400) and in 2025 (window #2 / $700+). Sure looks to me like about a 10% annual increase in construction materials over that 7 year time frame.
    Producer Price Index by Industry: Building Material and Supplies Dealers
    Agree lumber prices were elevated during covid for many reasons (mostly consumers deferring travel and entertainment and investing in their homes). A wild ride.
    What I suspect is that the CPI hides a lot of the inflation in basic goods by factoring in “higher quality” for things like TVs, computers, automobiles, etc. Since you’re getting “more bang for the buck” with those high tech items it brings down the CPI. Old joke: “Have you ever tried munching on a computer chip?”
  • Galloway/Housel video. About a year old?
    “Did you guys listen to it?”
    Yes, I listened to the first 50% of the video - about 20 minutes worth. Somewhat familiar with Housel having purchased and listened to one of his audio books a year ago. And I caught a recent interview Meb Faber did with him. Won’t deny he has his followers. It’s easy to say: “Buy an index fund, shut your eyes and wait 40 or 50 years for your payout.” Book closed. No need to think any further. How realistic is that? Our “Buying / Selling” thread would grind to a halt!
    To an extent Housel resembles John Templeton in voicing an eternal optimism that the world is getting better and better and mankind will enjoy greater and greater riches as technology advances. Sir John was way more convincing (and sincere) I think. But even Sir John wouldn’t have spoken about a 50-year time horizon from investment to pay-out.
    I don’t agree with @Old_Joe that those glazed over eyes are drug induced! To me it’s the look of money. He’s thinking how much dough his books are bringing in.
  • Galloway/Housel video. About a year old?
    Housel says he’s betting to come out ahead 50 years from now on today’s investments. Must be nice.
    It sounds pretty recent @Crash. He talks a good line. And his books sell. Not my cup of tea. But many find him inspirational. :)
    Some bio on Housel
    He’s 41. So with that 50 year time horizon on payout from what he invests in today he should be able to buy himself a pretty shazzy new auto when he’s 91.
  • The REAL Economy: 'Empty shelves, higher prices’- Americans tell cost of Trump’s tariffs
    ”Remember that at 2% inflation it takes 5 years to lose 10% of purchasing power, still a problem for those on fixed income. But at 3% inflation, the same 10% purchasing loss occurs in around 3 years. A significant difference.”
    $100 now equals $90.57 of purchasing power 5 years ago with an average inflation rate of 2%.
    $100 now equals $91.51 of purchasing power 3 years ago with an average inflation rate of 3%.
    $100 now equals $86.26 of purchasing power 5 years ago with an average inflation rate of 3%.
    $100 now equals $84.20 of purchasing power 5 years ago with an average inflation rate of 3.5%.
    Compound inflation calculator if anyone wants to play around with numbers.
    Sorry - Those (inflation) numbers do not comport with my own experience. It feels greater than what the BLS has published. Some time ago I cited a replacement window identical to one purchased 7 or 8 years earlier. The price had jumped from $400 to over $700 while the delivery time had increased from 3 days to 6 weeks. Your experience may differ.
    Re FD’s remarks - From what I’ve read, housing prices have come down somewhat over the past year in parts of the country. One of the few areas that have. But mortgage rates are still much higher than just 3 or 4 years ago. So it’s a mixed bag.
    Who will buy these fantastic condos at these fantastic “low” prices?
    ”The median sale price for homes in Oakland, CA over the last 12 months is $850,000, down 3% from the median home sale price over the previous 12 months.” Source
  • U.S. national debt hits $38 trillion and Washington is ‘numb to our own dysfunction
    Good friend of mine has travelled to all 50 states since retiring 5 years ago. He started in a Transit van that he converted to an RV himself. Then bought a dedicated RV (used) and updated it. They are on the road 6 months out of the year.