Interesting article near the end of Barron’s print edition (September 26, 2022) credited to Rick Lear of Lear Investment Management.
Caption - “What Investors Got Wrong About Risk”
Basic premise seems to be that fixed income, particularly bonds is, and never was, a proper method for managing / quantifying risk in a portfolio.
Excerpt:
“Risk is one of the most widely discussed topics in the business. It is also one of the most misunderstood. The investment industry relies heavily on a statistical tool called standard deviation to gauge risk. In technical terms, standard deviation calculates the dispersion of a data set, relative to its mean. In other words, the more varied an investment strategy's returns are, relative to its average return, the riskier that strategy is thought to be. Strategies with low standard deviation, where returns are tightly bunched up near their historic average, are considered more predictable and therefore less risky. This view of risk emboldened investors to rebalance into bonds at a time of growing market turmoil, as the broad fixed-income market's standard deviation, over the past three years, has been around a fifth that of stocks, implying that bonds are expected to lose less than stocks in a down year.”
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Not well versed in modern “standard deviation” methodology - which Lear critiques. However, he suggests that rather than mitigating risk with bond exposure one needs to be selective in holding particular assets that have offsetting risk characteristics. Humm … For most of the twenty-five years I’ve followed markets bonds have indeed been good volatility hedges. I suppose we might conclude from our recent 2022 experience to date that this time “things really are different.”
Check-out the year to date performance of your favorite conservative allocation fund. VWINX (albeit more of an income fund) is the best of the lot IMHO. Off more than 13% year-to-date by Fido’s accounting - worse than some equity funds. But still it’s held up better than TRP’s “Retirement Balanced Fund” TRRIX by a percent or two. In its early days TRRIX was labeled “Retirement Income Fund.” Fortunate, perhaps, that Price elected to rename it more than a decade ago.
(Sorry - Not able to provide links to the Barron’s print edition I draw from.)

What’s either encouraging - or scary - depending how you view it, is that virtually every asset class is in free fall. Oil’s in the 80s, down from north of $100. Gold’s under $1700, which is about as low as it’s been in 3 or 4 years. Bonds of course stink, unless you go very short term where rates have risen. Stocks of every stripe falling. When a fund like VWINX drops nearly a percent in a single day you know you’ve got problems. No secret why this is happening. Interest rates have soared. I suspect market forces in the face of 8% inflation are more responsible for the rate increases than the Fed’s words or actions. They take the credit. Market forces force their hand.
I’m not optimistic. However, I’d rather go down owning equities than churning out a few % in short term bonds. And there’s always the chance I’m overly pessimistic and at least some risk asset classes (gold, nat. resources, foreign stocks, etc.) will stage a rally. Wouldn’t take a lot to tilt the table in a diversified investor’s favor. A real interesting fund ro watch is AOK. Been beaten silly this year. It will rise again from the dead. But, when?

I chose to consolidate my holdings at a brokerage (Fidelity) for simplicity. I'm 80 and when I go, I'd rather not leave a mix of financial institutions for my executor to deal with.
(Not that I want this to happen soon!!)
My Dad passed away six years ago and I was the executor. Most of his investments consisted of stocks in a couple of TD Ameritrade accounts. But there were a few smaller bits. Each place he used was another place to figure out and contact, provide death certificates and instructions, etc. And always by mail.
I don't want to leave that mess behind.
My wife and I do have several accounts at Fidelity: Individual, joint, my IRA, several Roth IRAs. Most each contains a mix of mutual funds, ETFs and individual stocks. But they are all under one roof.
As msf noted, Janus has D shares only available directly with them. When I consolidated at Fidelity, the Fidelity folks handled the transfer from Janus. We wound up with a different class of shares (and probably a slightly higher expense ratio).
The CSRs at Fidelity are uniformly knowledgeable and helpful. For instance, when interest rates started going up in the Spring, I decided I'd better pay closer to attention to the Core account/MMF in each of our accounts. The random CSR I reached on the phone explained quickly and simply the differences and restrictions between FZDXX and SPAXX.
There are no fees to maintain these accounts.
I had never thought about the possibility that a big operation like Fidelity might have better security than a smaller investment house, but as Lewis Braham says, it seems likely. I access our accounts from my desktop computer at home (an iMac); when I am logging on, they must text a code to my cellphone which I enter. This process works very quickly and smoothly (and it makes me feel much more secure).
I tried using a Fidelity app on my iPhone, but I had to log on to the Internet though my browser anyhow, so I took off the app. Every once in a while I log on to check something, but not to do anything.
Anyhow, I'm very satisfied with Fidelity (and think my heirs will be also).
David

I've done that and then transferred the shares to a brokerage for convenience. I have seen soft closes where the fund says that shares purchased directly in a new account cannot be transferred for some period of time. But even then, the time limit does expire.
OTOH, Janus makes its cheaper D shares available only through direct investment. That's a little different from the situation described above. The shares weren't closed at intermediaries - they were never offered through those channels.

Only Class D Shares (the “Shares”) are offered by this Prospectus. The Shares are offered directly through the Janus Henderson funds to eligible investors by calling 1-800-525-3713 or at janushenderson.com/individual. The Shares are not offered through financial intermediaries.

Janus Value Funds Prospectus
For several years, Janus only allowed legacy investors - those who already had a direct account with Janus - to invest in class D shares. A couple of years ago it reopened direct investing to new customers. An interesting example of a fund family where you might want to invest directly (for lower cost) but couldn't.
https://ir.janushenderson.com/news-events/press-releases/news-details/2020/Janus-Henderson-Investors-to-Reopen-U.S.-Direct-Business-Channel-to-New-Investors/default.aspx

I can only think of a handful of funds perhaps worth buying directly, and even those I question if it's worth the trouble and the security risks. If you consider how much wealth the largest tech companies have, you have to imagine that they are the biggest draw for the best IT and tech security employees in the world. Where does that leave the small boutique fund family? I imagine some outsource the security of their accounts, but it's often an unknown. I have met or heard of accounts of IT folks at small businesses in recent years. I have been less than impressed. Is that guy who has trouble getting your printer to work also the one now supposed to protect your info? Perhaps I'm being overly paranoid. Then again there are certain large financial firms that have had tech problems lately, too. Meh.

Most of my holdings are with the fund families/transfer agent. For example, a newly opened/closed fund may be restricted with a brokerage, but not with the family that opened/closed the fund.

Yes, that's another good reason. Over the years I was able to buy shares directly in several funds under exactly those circumstances.

FWIW Have been investing with VG for 37 years and only have had a few minor issues/misunderstandings about what I needed. In fact, a few months ago they listed a fund family I argued for, and I have now owned one of their products, which I'll profile this fall.

Thanks FD. Yes $2500 min at Fido. And one more “fund performance site” to add to my collection and further mess with my brain.

I decided years ago to stop using ALT funds. They are not reliable and inconsistent. I developed my own timing system(link) that worked very well for me. I started practicing it in 2013.

Good idea. 26 weeks treasury is in the sweet spot near 4%, whereas the yields flattens out quickly beyond 2 years. Also the auction is taken place weekly on Monday at brokerages or directly at TreasuryDirect.
After September rate hike, treasury yields will go up again. Think treasury yield at 5% or more by year end is not unreasonable.

Check out FARIX much better performance(3 times in the last 3 years) with similar SD.
See (PV)

@hank

Good! Makes investing more interesting.

I think unpredictability is good in sports and works of art, but am less enthused about it for the finances of millions of Americans whose retirements are tied to securities markets. It’s one of the reasons I’m a strong believer in Social Security and don’t think it should ever be tied to the stock market.

@LewisBraham - I was speaking as 1 individual investor, which I’m sure you realize. Not everyone possesses your depth of knowledge or my keen interest in investing.
Oh, I agree. It’s absurd that individuals of every education level and walk of life and having vastly disparate incomes during their working years should be expected to manage a retirement portfolio during all their working years and than continue to manage such after retiring. Just nuts. I know well one such individual. Sure didn’t work for him, even with a company match which he did not take full advantage of. That 401-K money was 100% “out the window” after about 3 years into retirement.
I don’t know what the answer is, but would support better SS or other public initiatives to try and level the playing field..

Isn't ironic that many funds are having negative years and many may have capital gain distribution (dividends are not avoidable for taxation).

>> ... be careful. The downturn could go on for a number of years. (But might not). Don’t think you know all the answers. Nobody does.

love it, simply love it
[[edited to add /sarc tag]]

+1
All true OJ. A guess would be it has to do with the speed of change (in rates). Over time people will get used to 6% mortgages or higher if their income / net worth keep pace.
I well remember the 60s / 70s as a teen age “nerd” who subscribed to U.S. News & World Report at 15 and normally read it twice on a weekend. You may recall that the dollar weakened considerably over those inflationary years as cost of living rose from maybe 5% in the 60s to double-digit by the late 70s. Not to be overlooked, gold soared from $35 to over $800 by the mid 70s. Houses appreciated nicely and just about everybody in the world agreed they were the best investments.
We baby boomers “goosed” the home buying frenzy helping push up interest rates. By contrast, equity investing lagged by about a decade but took off in the 70s as I recall. Once we had our homes, new cars (and in some cases kids) we began investing for retirement. My first home in the late 70s carried something like a 10-11% fixed rate mortgage. As my income kept pace - based on COL adjustments plus “stepping” (increases based on years service) - that interest rate didn’t seem onerous.
So, simply put - It takes time for consumers and markets to adjust to new realities. I think in a plane what we’re witnessing right now might be called “bow shock.”

I don’t give investment suggestions @JohnN. ….. :)
Just don’t like people throwing out a bunch of largely unsupported assertions in an attempt to shutter somebody else’s stated point.
As I said on another thread, be careful. The downturn could go on for a number of years. (But might not). Don’t think you know all the answers. Nobody does. I believe Chairman Powell is quite unpredictable. He’d make a good poker player because it’s hard to know what’s really going on in his mind. So, people making decisions based on what he says or what they think the FOMC may do are taking a big gamble.
One non-investment suggestion is to watch some benchmark funds that you think approximate your risk level. (Don’t have to own them.) Than see how your portfolio holds up against those benchmarks. If you’re doing a lot worse over time, that’s something to worry about, Being very conservative I use a number of conservative allocation funds for guidance: VWINX, TRRIX, PRSIX, ABRZX and AOK. And I keep an eye on the excellent PRWCX even though I no longer own it. Some really outstanding long-term conservative allocation funds (like PRSIX) are down double-digit this year. Tells you something.
Generally speaking I’d rather buy something that’s down 40% over one year than something that’s risen 40% over the same time. But it’s not quite that simple. You really need to look at the stock or fund’s longer term history as well as the nature of the investment.

Curious...do you think the technicals would indicate something like $95B coming off the CBs balance sheets and the impact on stonks, rate hikes and the impact of policy errors contributing to inflation continuning on and on....why do many think the fed will pivot anytime soon with inflation still running so hot (and even hotter in reality than what the gov't says it is)....that 4% 1year Tbill looks purdy good to me right now...Baseball Fan

@Baseball_Fan - I’m trying to cut through your rambling macro analysis. Would you please address some of the following questions? Best Wishes
“Curious … Do you think the technicals … ”
What technicals? Not everyone uses technical analysis. Please identify which “technicals” you watch and base your investment decisions on? I’ve tried to help out by listing a few common technical indicators below:
- Moving Averages
- Moving Average Convergence and Divergence
- Relative Strength Indicator (RSI)
- Bollinger Bands
- Volume
- Exponential Moving Average
- Money Flow Index
“ … would indicate something like $95B coming off the CBs balance sheets”
Over what period of time? Do you have a source verifying this will be completed within a definite time period? It took over a decade for the Federal Reserve to amass their bond holdings, beginning with the near depression that threatened the economy between 2007 and 2009.
“and the impact on stonks” (sic?)
Not all stocks are the same. Financials? Commodities? Growth? Domestic or foreign? Also omitted here is any reference to time frame. Do you mean by the end or 2022 or are your concerns related to further out (5-10 years)?
“rate hikes”
Why would you consider rate hikes to be bad for equities? Financials tend to do very well when longer term rates rise. It is true that the most speculative areas tend to suffer as the cost of borrowing increases. (However, many are already down 50-70% this year.) But it’s not as cut & dry as you would have us believe. Rates have been extremely low for many years now. Bound to rise some day. Yet you and many others have over that time invested in equities for the long term - even knowing rates would someday rise. What changed?
“the impact of policy errors”
That’s a sweeping assertion based it seems on conjecture. Please explain why that risk is higher now than in March 2020 (the covid related financial crisis) or March 2009 (the beginning of the last bull market). Policy errors can occur at any point in time. So can other negative factors like war, political chaos, natural disaster. As investors in companies we’re accustomed to accepting those risks.
“inflation continuing on and on … “
Says who? Do you have some psychic in mind who can forecast inflation years out?
“(Will) the fed pivot any time soon … ?”
What particular “pivot” are you referencing? After you explain that, please explain why an equity investor should base long term decisions on this ill defined hypothetical concept.
“inflation still running so hot”
That’s redundant as you referenced it above. Here you seem to prophesy inflation will remain “so hot” ? … There’s no definitive way I know of to confirm / predict the level of inflation 1, 2 or 3 years out. Shall we base our long term equity investment decisions on such speculation?
“even hotter in reality than what the gov’t says it is …”
Isn’t this something folks have long ragged about on this forum and elsewhere? There’s been numerous threads over the years examining the various inflation measures (there are several). So, you’re entitled to your prejudice on that point. But why do you find the discrepancy between your own numbers and what the Federal Bureau of Statistics determines to be of greater importance today than it was 3 years ago or 10 years ago?
“that 4% 1 year TBill looks puffy good to me right now”
Good. Glad you find TBills a good investment for your needs. Bear in mind that’s for just 1 year. Equity investors by nature are investing for much longer periods. Contemplate that if you harvest your 4% TBill a year from now, you might find that stocks in general have appreciated more than 4%. I don’t think it’s at all unreasonable to think they might. (Some I own move 4% in a single day.) In such case, you will have lost ground and possibly face buying in to equities than at a net loss. If inflation is running as “hot” as you think, why are you comfortable with just 4%?

Yields........a chart view
This is not a performance chart, but a percentage of change chart in yield. I've peeked at this periodically for a number of years......for the chart perspective.
The chart is set for YTD. You may double click the 178 box below the chart, enter a different number of days and ENTER key; OR right click the box and choose from the menu.
The yield on any date will be shown with "hovering" the cursor on top of a selected chart line.
Pillow time.
Catch

Back to Crash's original question in the thread title: I watched most of JG's webcast today, and he was asked in the question queue what he meant. The answer was kind of muddled, but he's basically in the D. Rosenberg camp that the Fed's liable to overshoot and disinflation is likely to come on relatively fast and strong ... but not necessarily right away.
I like the data he presents each time, but take his predictions with half a cup of NaCl. Sometimes he's right on, sometimes he's too bombastic about something and it leads him astray, and sometimes he's onto something sensible but just way early. Like when he predicted, a couple of years ago, a major bump up in T rates ... like we're into now.
The positioning of his flagship fund DBLTX appears to be another "way early" call. I'd stay away until longer duration T's start to show some moxie. It is worth remembering that after the GFC, his old TCW fund and the new DBL version were knocking it out of the park for quite a while.
Summary: he's well worth listening to if you don't take it all as gospel.

@hank- Absolutely not... I thought that I was very clear on that: just hold them until this whole thing turns around. There's nothing intrinsically "wrong" with either of them.

Thanks @Old_Joe. Point taken. Generally, paying less attention to the ups and down of a holding is a good idea. However, if I owned something that had shed 43% of its value in fewer than 9 months I’d find it hard to “forget” about it. That leaves just 57% of the original pot. It would take, by my math, a 75% increase from there just to get back to even.
I hope I did not suggest there’s anything intrinsically wrong with TRP. I’m not informed enough or smart enough to know whether that’s the case. It’s a dog-eat-dog business they are in. Lots of top-notch competitors. To the extent investors have grown more fee conscious / fee averse over the years (owing in great measure to superb informative forums like Mutual Fund Observer), older higher fee management firms may well be at a disadvantage against some of their lower cost competitors.

Yup, Schwab has a bunch of stuff to finish the integration with TDA. I'm *still* waiting for ThinkDesktop to be migrated so I don't need to use that for streaming quotes/active charting and then switch into the website to place orders/trade. Hope that migration happens soon b/c the StreetSmart 'platform' they offer in my view is horrible and reminds me too much of the old Options Express (who they bought) active platform which gave me fits 15 years ago...I refuse to use it.