Yet Another Wall Street Bear Folds
Stocks have surged to unprecedented levels amid improving earnings, a pickup in economic growth and an accommodative Federal Reserve. The S&P 500 has set 33 record highs in 2014 and is up more than 8% so far this year.
Strategists aren’t the only ones ditching their pessimistic views. Bearish sentiment among financial advisers dropped to 30.6% last week, the lowest level since 1987, according to the Investors Intelligence weekly poll.
“The history of sentiment reminds us that it’s more dangerous to have an evaporation of bears compared to a plethora of bulls,” Mr. O’Hara said. “The lack of bears is something we should not take lightly,” he added.
http://blogs.wsj.com/moneybeat/2014/09/09/yet-another-wall-street-bear-folds/?mod=yahoo_hs

OJ - thanks for the memories. While there's a lot more information available now than back then, I'm not convinced that investing is any easier. For example, in the past few years, the thinking on designing 401K plans has shifted from "offer everything" to "offer a well chosen, limited set of options", because people become paralyzed with too many choices and not enough understanding.
When I first started working, my employer (one of the largest in the country at the time) offered just four options - guaranteed interest, diversified equity portfolio, government obligations, and company stock. I just took a glance at my old records - it seems like I started with a 50/50 split - company stock/diversified equity. But then the stock market took a dive, and for the next several years it seems I put everything new into the guaranteed interest option.
Not the most insightful move, but understandable. In hindsight, I probably would have benefited as you did from an adviser. Some people may benefit when they're starting out. Some people have an aversion to dealing with financial details, and for them it is worth paying someone for that service for many years. (Aversion is not the same as inability.)
Just curious - the original IRAs (enacted in 1974, allowing for contributions starting in 1975) only allowed contributions if one was not covered by a pension plan at work. It wasn't until 1982 that the max went up to $2K, and you were allowed to contribute even with a pension. So when exactly were you first able to contribute to your IRA?

It's hard for me to read around the WSJ ad covering 80% of page and was unable to cut and paste the relevant passage. But, I'm very perturbed to read that Obama's 2015 budget would, if approved, make Roths subject to mandatory withdrawals at 70.5 the same as for traditional IRAs.
Let's hope that doesn't go through. Ability to defer withdrawals (and taxation) on that portion of retirement investment was the #1 reason I prepaid considerable taxes in order to convert a sizable portion of my Traditional to Roth only a few years ago. (My ... how quickly things can change.)
Issue here is financial "planning". I can invest and earn a decent return in a variety of ways (as can you). But, if government can change the rules in the middle of the stream ... how can anyone plan effectively for the future?
Edit: The thinking there is curious. Are they hoping for a court challenge as to whether the change could be applied retroactively? Than, if successful in court, perhaps implement the next stage - fully taxing Roth withdrawals? OMG - I'M beginning to sound like Fox News, :(

Honest to Pete! If folks are making financial adjustments/decisions on what a moose bellows/brays/bleats, or whatever moose do, then they really need to rethink their goals and objectives. Sorry, but what a waste of time.

FYI: Longtime stock picker Mario Gabelli earned $85 million in 2013, easily topping the pay of financial titans like KKR & Co.’s Henry Kravis and George Roberts, BlackRock Inc.’s Larry Fink and even Goldman Sachs & Co.’s Lloyd Blankfein, according to a survey of financial executive pay released Monday by the research firm SNL Financial.
Regards,
Ted
http://blogs.wsj.com/moneybeat/2014/09/08/mario-gabelli-wall-streets-highest-paid-ceo/tab/print/

McCully makes some good points regarding why inflation is low. However, I think his analysis is short sighted and somewhat superficial. Maybe that's just the way these financial guys view things,
Let's also consider:
(1) the influence of an aging population shifting from their free wheeling debt laden "accumulation" years to a life style where financial security (thru home ownership, insurance annuities, savings) is paramount.
(2) the near demise of labor unions - for assorted reasons
(3) the increasing wealth disparity around the world and the increasing influence of money In our domestic political process. As McCully points out, the wealthy benefit more from low inflation (and thus have an interest in keeping it low) because their savings erode less rapidly. Debtors, on the other hand, benefit more from an eroding Dollar by repaying their debt in "cheaper" ones.

@jlev
Please let us know what they say. It certainly looks like a great majority of the monies collected with 12b-1s are going to broker-dealers. I'd be interested to know whether the move to only allow clients with funds held through GP's distributor to continue to contribute are to avoid complications with individual fund platforms, a move to eventually cut 12b-1s (or other fees), or both.
Pages 42-3 in GPROX's SAI discuss the 12b-1:

"Under the terms of the Plan, the Trust is authorized to make payments to the Distributor, as defined later in this SAI, for remittance to retirement plan service providers, broker-dealers, bank trust departments, financial advisors, and other financial intermediaries, as compensation for distribution and/or shareholder services performed by such entities for their customers who are investors in the Fund. Financial intermediaries may from time to time be required to meet certain criteria in order to receive 12b-1 fees. The Distributor is entitled to retain some or all fees payable under the Plan in certain circumstances (which may exceed actual expenses incurred), including when there is no broker of record or when certain qualification standards have not been met by the broker of record."

Amounts Expensed Under the 12b-1 Plan
For the fiscal year ended April 30, 2014, the total amounts paid by the Investor Class shares of each Fund to ADI (substantially all of which ADI paid out as compensation to broker-dealers and other service providers) under the Investor Class Plan are summarized below.

I don't blame the workers at all. Why our education system does not include financial subjects is beyond me. I'm dating myself here but in grade school we were taught how to properly count change from a cigar box. Nowadays the cash register tells the person how much change to give, if that transaction is cash which itself is becoming less and less.
Parents should be teaching their children about finances too and that is lacking in most households.
Yep, too many choices with no guidance is not a good environment. I was also approached for advice as others knew my interests as well. What I saw the most was people chasing returns as they signed up for funds that did well the previous year. Another recipe for failure.
Target date funds are the best in those situations.

@msf Thanks for your excellent commentary and for taking the time to do it.
The first and only time this came to my attention was shortly after the financial crisis. Schwab increased their fees, apparently for the distinct privilege of placing a MF companies' funds on their platform, and about half-dozen fund companies were incensed enough to take the matter public and announced why they were planning to yank all their funds from Schwab. Some did, and set up hotlines for investors who would want to tranfer their fund shares outta there. Then the matter died quietly and I never heard any more about it.
so, I guess your answer to Paul is: "You'll never know exactly what the fund pays to the broker, because those fees are negotiated separately for each fund/family." That's probably close to the mark. Still, ya gotta wonder if some of this isn't disclosed in SAI fine print somewhere and escaping our attention?
But maybe some of these fees are creeping into a little bit of a skim from us and not being disclosed. Maybe that's what these recent SEC investigations are really about:
http://www.mfwire.com/article.asp?template=article&wireid=2&storyID=49595&bhcp=1
http://www.reuters.com/article/2014/09/04/us-usa-funds-sec-idUSKBN0GZ2HL20140904

MJG: Does your argument rule out use of "Target Date" funds (which adjust allocations over time)?
I tossed-out my earlier link to the scientific debate as to whether the universe exists in a steady-state or a dynamic/evolving one (just too far afield). However, I sense a doggedly steadfast devotion to principal on the financial question here similar to that many distinguished scientists of the past exhibited on the cosmological issue. :)
Re your original question. I believe there's good arguments on both sides. I'm not smart enough to say who's right. I will say my oft-repeated aversion to the "goanywhere" funds is based in part to your observations that calling market direction and getting the timing correct is exceedingly difficult.
Regards

Dex, if the 10 year goes to 1% before 3% send my your address and I will send you a check for $500. In no way, shape or form do I see that occurring but would be thrilled and the $500 would be a small pittance to what I would make on such a move.

@Junkster
I'm bookmarking this thread and will be sending you an email when it happens.
Look at European rates - Germany below 1%, Spain 2.06%!!!!!! and others heading that way.
Just as stocks have been surprising to the upside the US 10 year will do the same.
Many are looking for an uptick in inflation. I just don't see it. And I don't see an environment for inflation - for about 5 years. The financial challenges for individuals is too great.
Young - just out of school - college debt, and no jobs
Workers - losing benefits, wages stagnant
There are things like food costs going up but workers don't have any power so they have to cut spending to survive. Look at cable TV companies - losing viewers.

Looking at the current thread on CNBC it appears people are not interested in financial porn like CNBC (I don't mean MFO of course) Therefore perhaps the title of this thread should be better dead than read. I know these days I read financial magazines more for entertainment than investment tips mostly because I am convinced Gurus don't know more than I do; they are just better at communicating.
On another note
I have to disagree with the expectations of Old Joe whose comments are often excellent. Who else but salaried workers have 401ks so the first part is obviously correct but not helpful.. Self employed usually have SEPs or similar. Teachers overpaid or not probably have 403(b)s and Government workers often have pensions and to the extent they have defined contribution plans there is probably little or no match. Therefore I suspect that any teacher or Govt worker with 1 million dollars in his/her 401k is surely an excellent investor and is probably quite good at his/her job.

http://www.sec.gov/Archives/edgar/data/915802/000091580214000043/grandeurpeakglobalreachhardc.htm
497 1 grandeurpeakglobalreachhardc.htm
FINANCIAL INVESTORS TRUST
Grandeur Peak Global Reach Fund
(the “Fund”)
SUPPLEMENT DATED SEPTEMBER 5, 2014 TO THE PROSPECTUS
DATED AUGUST 31, 2014
This Supplement updates certain information contained in the Prospectus for the Fund dated August 31, 2014. You should retain this Supplement and the Prospectus for future reference. Additional copies of the Prospectus may be obtained free of charge by visiting our web site at www.grandeurpeakglobal.com or calling us at 1.855.377.PEAK (7325).
Effective as of the close of business on September 30, 2014, the Fund will close to all purchases, except as described below (the “Hard Closure”). The Hard Closure of the Grandeur Peak Global Reach Fund means purchases will no longer be accepted into this Fund from either new or existing shareholders after September 30th, unless the purchase is part of one of the listed exceptions:
Institutional Shareholders:
•401k plans with an existing position
•Automatic rebalancing of an existing position (as long as purchase amounts are de minimis, as determined by Grandeur Peak)
Retail Shareholders (Direct Shareholders Only):
•Retirement Accounts
•Education Savings Accounts
•Minor Accounts (UTMA/UGMA)
•Pre-established Automatic Investment Plans
All Shareholders:
•Automatic reinvestment of the Fund distribution
These exceptions will be implemented wherever possible, but they may not be possible on all intermediary platforms.
As described in the Prospectus, the Fund’s investment adviser, Grandeur Peak Global Advisors, LLC, or the Fund each retains the right to make exceptions to any action taken to close a Fund or limit inflows into a Fund.
INVESTORS SHOULD RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE

FYI: - The tens of millions of dollars in annual fees that mutual fund companies pay to brokerages and their financial advisers to encourage sale of certain funds to retail investors are growing in size and variety, but the phenomenon is largely invisible to investors.
Regards,
Ted
http://www.reuters.com/assets/print?aid=USKBN0GZ2HL20140904

FYI: There are 40 exchange traded products in the asset allocation category—most of which are young with short track records.
Years ago, when financial advisors had a monopoly on asset allocation decisions, fees ran rather rich. Lately, though, with a surge in the number of index-based products promising to deliver asset allocation on the cheap, costs are shrinking. That’s a boon for investors but, as always, leads us to wonder if they’re getting value for the money.
Regards,
Ted
http://wealthmanagement.com/print/investment/what-s-asset-allocation-etf-really-worth

Hi bee,
I am not familiar with Isralesen, so appreciate if you can share some reference point of credibility.

Ted provided this link to other referenced articles.
financial-planning.com/thought_leaders/israelsen.html
If youe're asking me, "Is he a quack?"
Well, he does have a PHD after his name (so he may like to Piles it Higher and Deeper).

SEPTEMBER 03 2014
Aggressive central bank accommodation from Europe to Japan and a dovish Federal Reserve bode well for equities and bond prices.
Global CIO Commentary by Scott Minerd Guggenheim Partners
Back at home, we expect the Fed’s band will keep playing its merry tune for now. The voting members of the Federal Open Market Committee in 2015 will be even more dovish than the current committee. If there is a risk, it is that the Fed will keep monetary policy at a high level of accommodation for longer than previously anticipated.
Financial markets heard the sweet song of easy money from Jackson Hole loud and clear, sending equities up strongly while driving U.S. Treasuries’ prices higher and yields lower. The recent high of the New York Stock Exchange Advance-Decline Line supports this optimistic hypothesis, suggesting that stock prices will continue to reach new highs.
http://guggenheimpartners.com/perspectives/macroview/central-banks-pump-up-the-volume?

@David_Snowball As a resident of New Castle County, DE, I thank you for your unique perspective on the issue. The press and opposing politicians have been focused on whether the County Executive, whose Chief Administrative Officer (CAO) made the change, had the authority to change investment advisors unilaterally. I had seen no mention of the actual investments at issue until you linked to the press release which was likely written by the CAO, David Grimaldi. After having worked as a Financial Advisor (note, not Analyst) on Wall Street for a few years, Mr. Grimaldi fancies himself some kind of financial wunderkind. As evidenced by his analysis (or lack thereof) in this case, he is far from it.

FYI: Today in 1981: Uncle Sam issues new 20-year Treasury bonds at a 15.78% yield, an all-time record-high interest rate for any U.S. government issue. Analysts say they expect that yields will have to go higher “to attract stronger demand.” Yields promptly begin going down, and keep going down for the next twelve years.
Regards,
Ted
http://www.ritholtz.com/blog/2014/09/1981-20-year-treasury-bonds-at-a-15-78-yield/print/

@bee: Thanks Bee, I've always been a fan of Craig L. Israelsen. Here are some other articles.
Regards,
Ted
http://www.financial-planning.com/thought_leaders/israelsen.html