@cman, yes, certainly agreed, current duration is not in and of itself a good fund selection strategy for actively managed funds....... especially the more 'actively' they manage. They can have significant changes in the bond sectors they are invested in, as well as the maturities/duration and quality metrics of their investments. So at one point in time they may emphasize short term very high quality bonds, and at another, intermediate term junk bonds, if they like the credit spreads.
In your prior post: "That gives plenty of time for good managers to manage duration".
I have doubts about the 'plenty of time' issue, and the whole issue of: will the fund take steps to manage duration, and to defend their portfolio.
I vividly recall the days when it was easy to get 10% interest on an FDIC insured certificate of deposit. And the days when inflation and rising rates must have devastated portfolios.
The reason I thought USFIX looked interesting is that they are already managing duration right now; already positioned for a rise in rates, so this is probably a fund manager that actively manages or at least is very conservative with respect to duration.
What I don't like about the fund is the 1.0% expense ratio, which I think puts any bond fund at a sig. disadvantage. And unfortunately, the unconstrained bond funds that I have found have high expense ratios too. Or sales loads, which I consider to be confiscation for those who don't use financial advisers.
I have a portfolio which is extremely overweight in equities, and need to find some fixed income funds that will serve the safety net/ballast portion of a portfolio, and not tank in case interest rates 'normalize'/rise, and not tank in a bear market for stocks.
You also mentioned, with respect to a passive allocation: "or a well diversified fixed income allocation across interest rate and credit quality spectrum".
I would seriously consider a passive allocation.
For my purposes, which of course you didn't know about when you made you comment, I don't think investing across the interest rate and credit quality spectrum is the way to go. Since my purpose is to use fixed income as a safety net, it should err on the side of caution, and therefore be invested 'as if' rates will normalize/rise. The purpose is to protect the portfolio for when equities do poorly. So I can't risk having the fixed income portion go down when equities go down. This calls for short duration fixed income investments, as I see it. It also calls for quality fixed income rather than across the credit quality spectrum, c.f. 2008 when junk bonds and low quality fixed income tanked right along with stocks.
Of course, the short term high quality fixed income investments yield almost nothing now. I don't need income from my fixed income investments, only downside protection, but investing in fixed income with almost no yield is not my idea of a good investment.
You are a highly knowledgeable investor, and you analysis/assessment, and specific suggestions are appreciated. Whatever detail you are willing to provide is appreciated, whether in a public post or a PM/private message. Thanks!

David Winters was on CNBC today about this. I have never looked at his funds and don't follow KO to know what they may have done or not.
My first impression is that Winters is a lousy communicator even if he has a valid point, not that fund managers need to be. Combine that with media airheads, there is just smoke and dust.
From what I understood his main gripe was that KO had orchestrated a large flow of money from the company to the management. His inability to explain it clearly makes him irrelevant in this fight. From what I understand, the actions of KO, if he is correct isn't very different from the practices at most large corporations even if that seems wrong to a bystander.
If a company has a lot of cash, it can do two things with it. Either invest it in the company to grow the company top line or return it to shareholders via stock buy backs or increased dividends. The latter is what Carl Icahn is trying to do with Apple.
The modern American Management doesn't see a company this way because the shareholders have benefitted from the huge generational inflow of money into equities leading to multiple expansions. They see it more like a Limited Partnership where the top management directly benefits from the company finances while the shareholders bet amongst themselves as a derivative and realize their gains from each other. The recent moves by companies to create non voting share classes goes further in this direction.
So, from the management perspective, they play all kinds of financial games to get the top 5% in the company to take as much as possible for themselves.
The common compensation practice is to tie the compensation to share price. Conceptually, this is wrong in many ways since it incentivizes the management to prop up the share price which may be uncorrelated with the health of the company.
Two easy ways to do this is to do share buybacks or increase bottom line by cutting costs (mostly from reducing labor costs with layoffs and outsourcing). Neither of these necessarily imply the company is growing but both increase the share price and consequently the variable compensation of top management.
American Airlines management a few years ago while on the verge of bankruptcy, was an eggregious example of this. They negotiated a wage decrease with its unions under threat of bankruptcy and set up a compensation scheme to reward themselves if the share price went up. Typically these schemes are top heavy because an average employee gets very little as result of that and their wages make more sense than the individual gain from options.
The airline realized net revenue from this cost cutting and the top management got bonuses that totaled almost the entire net revenue. The per employee distribution of this bonus gave them a few cents on the dollar of the wage cut they had agreed to.
In the case of Coca-Cola, the argument from Winters seems to be that if the company had just done a cash buy back, the shareholders would have benefitted. But KO set up a compensation scheme that rewarded the top 5% handsomely based on share price. This compensation was in stock grants. On paper, this looks great. After all, the management is being rewarded for improving shareholder value.
The problem is how this happens. The stock grants and options dilute existing shareholder value and hurts both. If a company has a lot of cash, it can buy back enough so that the share price increase offsets the dilution and increases it just enough to trigger the bonuses to top management.
So what has happened is that you have transferred a chunk of cash from the company to top management and used more cash to prop up the share price. Instead, if they had used all that cash to just do a buyback, all the gains would have been realized by shareholders. It is a zero sum game in this financial engineering which has very little to do with growing the company. The too management is taking no risks with stock bonuses because they are the ones who decide to use cash to prop up the share price and they know exactly how much.
American corporate management at its finest. But it is not people like Winters that is going to change this.

Hi Guys,
Not withstanding Ecclesiastes 9:11, in some instances the race often does go to the swiftest. Timely decision making and committed execution are primary assets in the investment universe.
Over the last week nothing much has changed in that investment world except that Michael Lewis’ book “Flash Boys” is now receiving wide publicity. The book is new; High Frequency Trading (HFT) is not. We have just been made more aware of its pervasiveness.
Being early into the marketplace is surely not a novel concept. The Rothschilds used carrier pigeons to secure a time advantage in the 17th century. Jesse Livermore practiced it all the time, and after he gained renown as a heavyweight stock plunger, he needed methods and ploys to disguise his intentions. Copycats have always existed. Today, the mutual fund houses (like Fidelity) deploy more sophisticate tactics to the same end.
The issue of HFT was ushered into the investing community with the development and introduction of computers into the financial marketplace in the 1970s. Decision making and execution speed have always been a powerful weapon in the professional investor’s weapon arsenal.
Algorithmic trading and HFT have been part of the investing environment since the 1980s. Like it or not, a tested and verified algorithm doesn’t take long to evaluate a dynamic evolving situation, and doesn’t make errors in execution. So it consistently generates superior outcomes than when a human being is in the loop. HFT became common in the late 1990s, and dominated the trading volume by the mid-2000s. In 2009, it is reported that HFT constituted roughly 70% of the daily trading volume.
I’m sure you guys remember the stories a few years ago that touted these HFT houses who located a few miles closer to the North New Jersey market computer facilities to benefit from a reduced hard-wire access physical distance. Now that’s really working hard to establish a microsecond trading advantage.
Recall the 1987 stock market crash. The most likely causes for that dire event were the popular use of the Black-Scholes Option Pricing model and the overused Portfolio Insurance concept. The primary causes for this fiasco are still debated however. Another example is that, after much detailed study, the May, 2010 Flash Crash was finally attributed to the HFT cadre. Recovery was all within a one day timeframe in that instance.
So far, recoveries seem to have been rapid, and the impact of HFT on a private investor’s end wealth seems limited; my zeal for the equity marketplace is not quenched by this disclosure.
One indisputable benefit from all this computer technology is that trading costs have been substantially lowered. I remember the excessive costs I begrudgingly accepted in the mid-1950s when I bought my first stock. Wow, the price to play was huge.
Are these HFT outfits gaming the system? Yes, but historically there have been financial adventurers who have always played in that dark arena. The SEC rules committee diligently tries to minimize their impact, but clever stock operators find and exploit loopholes. However, from a personal perspective, I suspect the money drains from these operations have little impact for my buy-and-hold style of mutual fund market participation.
So, I don’t get too exercised over Lewis’ new book. The book reviews suggest that the presentation is very asymmetrical; it is not a balanced research project. It has an agenda. At some point I will read it, but I feel that I need not rush.
Based on an aroused public, I’m sure one outcome from its release will be that various government agencies will expedite investigative efforts which have been under way for several years now. That’s goodness. Some rules loopholes will be closed, but just as night follows day, new loopholes will be discovered. As a group, investment professionals are forever searching for an exploitable edge, and they find it.
None of this dampens my enthusiasm for the US marketplace. It remains basically a fair game for small time investors. It is one of the few investment opportunities that offer a high likelihood of outdistancing the erosive effects of inflation. I’m more or less sanguine over the Lewis revelation.
I want to congratulate all the MFO contributors to this excellent exchange. Your diverse and carefully documented positions on this matter really added needed depth to the continuing HFT discussion. Thank you all.
Best Regards.

Dear friends,
Ed and I spent a fair amount of time in the past month interviewing really experienced fund managers. We targeted, in particular, guys who had a lot of success in a larger firm but who then chose to leave (often in protest of asset bloat). Our conversations focused both on the performance of their new fund (or funds) but also on their view of what it takes to succeed, both as investors and as business owners. The only person we approached who didn't respond was Chuck Akre.
We'd imagined a story on what it takes to succeed as the manager of a newly-launched fund but Ed has been trying to get us to step back a bit and be sure that we're asking the right questions of the right people. Rather than hurry a story out the door, we agreed that I'd profile the funds this month and that we'd post a richer story next.
Beyond that, he and Charles have been doing some awfully careful thinking and writing of a sort that I don't see anywhere else in the financial media.
And, okay, I did sneak in a cheap shot or two at ill-considered maneuvers in the industry. We're still trying to imagine the shape of our organizational future, but I did spend a few lines sharing word about the direction that readers asked us to take.
And I've promised several folks: next month back to little, newer funds that you've never heard of.
For what all of that's worth,
David

The debates on CNBC today regarding this are really some of the most heated/angry I've seen in quite some time. It's been a while since I've really watched CNBC and thought a fight was imminent.
Liked the response from Lewis to the vacant Sue Herera's question of whether or not this will result in further declines in investor trust: "Are you really under the illusion that the individual investor trusts Wall Street... the financial crisis wiped out any residue of trust for Wall Street even if they ever had it."

@old_skeet, the old concept of market makers isn't feasible any more in the electronic world of multiple exchanges.
If you read my post above, you will note that it is price discovery that is the key. Market makers did that earlier but their business model fell apart with small spreads. Staying in the market at all times is a separate issue for abnormal conditions and addressed further down.
HFT traders with access to bid data serve that particular purpose of price discovery by arbitraging spreads. Somebody has to do this and people in the media doing pop journalism aren't thinking of how this works wirhout HFT in their rants against HFT with very little understanding of how the markets work. It is a good litmus test for financial market literacy in the media.
Providing a stay in the market at all times function provided by Market Makers entails risk for them. They have to be compensated for it. The earlier bigger spreads justified it. You cannot force somebody to do it unless you either guarantee against loss or pay them enough to take that risk. Who is going to do it? Any way you do that, the cost will be borne by the investor transactions eventually.
However, that function can be eliminated if you can manage panic situations rather than designating somebody to take a loss in those situations. This is still work in progress as the few flash crashes prove it but eventually with enough circuit breakers and trading rules, you can make that function unnecessary minimizing panic induced disorderly selling. That is the better solution, so that the cost of a designated loss bearer service doesn't get folded into every transaction even in normal times
But all this misunderstood pop demagoguery is hiding the real problems inherent in this HFT based system. That we have a systemic risk created with increasing volume of HFT trading in that as pointed out liquidity can dry up instantly. This is not something you can prevent except by paying someone to guarantee it at all times but what you don't want is the system collapsing in such situations.
Currently, the system will come to a halt with no alternative price discovery if the HFT traders go away. So we have a "too big to fail system" of HFTs to get that price discovery. Just like the banks providing critical credit to economy, this gives leverage to the HFT traders to abuse the system. Rules to regulate the behavior runs the risk of driving them away from a critical function we need. This is the problem SEC has got until they can regulate the exchanges to remove this systemic risk. So, they are not in a position to do much, this pop book not withstanding.
The spread arbitrage which is what creates the price discovery isn't the "abuse". You don't need ticket scalpers for game tickets to determine a price. So the analogy doesnt hold.This arbitrage is what kept Market Makers in business earlier so this is nothing new and not specific to HFT.
The actual abuse comes from HFT not in arbitraging spread but in potentially creating FALSE price discovery based on the access to bid data. Even when there is a balanced market in bids with a tiny lower bid to buy than to sell until someone decides to move where there is no need to arbitrage, HFT traders can move the markets in a manipulative way with phantom bids, phantom trades, buying up sell inventory when they detect trending buy interest to drive the prices up. All this is legal for regular traders without using insider information.
But when HFT traders do this because of the access to bid data not available to other traders then you are allowing them to trade with the equivalent of " inside information". This is the type of trading that fits Ritholtz' phrase of "trading with no redeeming social value" though he doesn't seem to understand the nuances to differentiate this from bid arbitrage which does have a redeeming value of price discovery.
These are the kinds of things that need to be brought to light and regulated and hopefully this book will rise the awareness to pressure the SEC to come up with a mutual solution with HFT traders to prevent abuse that won't kill price discovery and bring the markets to a halt.
Even if the book is being used as a sawed off shotgun to fire indiscriminately at HFT trading without understanding how that might throw the baby with the bath water in this pop outrage.

Agree.
Have not yet read the book. Although I love most of Lewis' stuff (eg., Moneyball).
Just seems though to be same topic covered by Scott Patterson's Dark Pools, but by a more popular author. Not sure there is anything here that the financial community, including talking heads, have not been aware of and calling attention to for a few years now.
If HFTs have both preferential information and connectivity, hard to see how that combo does not facilitate front-running and undermine the markets. It does seem like latest manifestation of what has probably always existed in the markets, in one form or another, and probably always will...but that does not mean we should not rail against it (eg, Sarbanes–Oxley).
So, maybe Lewis will help...1000 hands on the wall.

There is a bit of financial demagoguery going on. Hopefully, it results in some transparency and increased knowledge. The problem with HFT is not in "front-running" but what else happens around it. HFT isn't competing with common investors or mutual funds in the way it is portrayed here.
The key to understanding this is price discovery. Imagine a trade in very slow motion. Someone puts in a bid to buy a stock at $5 because he thinks it is fair value. Another puts in a bid to sell the same stock at $4 because he thinks that is a good price to get out for him. Now, is it fair to sell it at $5 or at $4? In either case, one of them got shortchanged given the buy/sell interest. This the basis of a market trade and a problem that needs to be solved.
One might say, buy at the lowest sell bid price or sell at the highest buy bid price. But that only works if a buyer publishes his bid and the seller doesn't or vice versa. So neither have an incentive to publish their bid. What happens if there are no buyers or sellers at a reasonable price at some point in time and some one wants to sell or buy and has no reasonable basis to bid?
You might say, each publishes their lowest and highest prices and sit on it until someone bites. The problem with this system is that the spreads become high and may diverge from the actual value of the share. We see this happen with thinly traded ETFs for example.
This problem existed long before electronic trading and was solved by using Market Makers. These are designated entities who put their own both buy and sell orders to provide a current floor and ceiling around the current price. They are not investors competing with regular investors but entities providing a financial service. Not unlike the spreads created by foreign exchange kiosks with a buy and sell price. These entities were allowed access to current investor bids to determine their bids.
These entities are risking money with their bids and they are not charities but they are not investing for stock appreciation but rather arbitraging the spread and do what might be called front-running, if they see an imbalance in bids. That is the price of the service offered to create price discovery not considered fixing the market. The effect of that arbitrage is to decrease the spreads and give orderly movements of the price up or down rather than a sequence of crashes. Investors tend to lose more without this system in place.
This human solution didn't scale to electronic trading and when the trading was moved to pennies than fractions, the returns for market makers became too low for them to provide that service. In addition, with multiple exchanges, real time spreads between exchanges became a problem.
It is incorrect to think that long term investing doesn't require instant price discovery. There are buyers and sellers at any instant whether they are investing for the long term or not. The fair pricing of assets for mutual fund transactions, for example, requires a "correct" price at all times even if all investors are investing for long term. Without efficient price discovery, there is no sensible investing possible without losing money to pricing inefficiencies.
The solution for the electronic world was to move this market maker arbitrage to traders themselves who would create that price discovery with their own bids. Again, these are not investors that compete with regular investors but help keep the price discovery efficient and get incentivized by the spreads. Faster the trading ability, more efficient the price discovery as the spreads are arbitraged away. Note that while they make a penny or two, it helps investors with a correct price rather than a stale price at any time.
The money made by these entities for this purpose is the cost of that service, not unlike the transaction fees by credit card companies for the credit card service they provide. As in a true free market solution, rather than select and designate market makers, anybody can become one by investing in the infrastructure to do fast trading. The competition keeps the spreads low.
So, the common objection to HFT as "front-running" or trading with an advantage over small investor is more demagoguery than reality because it caters to ignorance and prejudices.
That is the theory.
If you want to fix this, one ought to come up with another system for this that provides similar price discovery and equally scalable.
The problems with HFT are potential abuses of this access and the unintended or unexpected quantum effects as the decisions are made faster and faster relying on software that is prone to bugs and limitations. But that has nothing to do with this massive book related PR.

Baloney.
Here's best part of article:

One important metric is the price-to-earnings ratio. In 2000, for the 10 biggest stocks in the S.&P. 500 by market cap, the P/E ratio was 62.6. Today, the comparable number is only 16.1. Back in March 2000, Cisco had the highest P/E ratio among the 10 biggest stocks, at 196.2, followed by Oracle, at 148.4. Those numbers were so high that when sentiment turned, the stocks plummeted.
Today, only one stock in the big 10 has a P/E above 30: Google, the sole Internet company in the group. Its P/E is 33.3, double the current average for the S.&P. 500’s 10 biggest companies, but compared with the levels that prevailed in 2000, it is reasonably priced. If earnings grow rapidly, Google could conceivably be profitable for investors at its current valuation.
The point is that even if prices are high in the overall market, they are being backed up by earnings to a much larger extent than in 2000. That’s important, because back then, when the dot-com bubble burst, the downdraft brought most companies down with it. And that’s why some people applauded when shares of King Digital, the Candy Crush maker, dropped 16 percent on their first day, while the rest of the market was largely unaffected.
Declines like that might be good news if the result is a less bubbly market over all, said Jeffrey Kleintop, chief market strategist at LPL Financial. “It’s O.K. if the market turns a little against some of the highfliers,” he said. “We seem to be seeing investors beginning to focus more on valuation this year, and that’s good because for many companies earnings will be growing.” And if the market cycle heads in a happy direction, earnings, not manias, will be driving the story.

Hi Guys,
Wish and you shall receive.
There is no shortage of retirement planning tools and services; there are legions of them. They have been available for decades, and are getting better each and every day. The issue is not access to these fine resources, but in choosing one or more that you understand and trust. Note that I purposely suggested using more than one such calculator as a means to test result stability.
All the major mutual fund houses (Fidelity, Vanguard, T. Rowe Price) offer free access to their retirement planning toolkit. Many years ago, I deployed early versions of these tools to inform my retirement decision. I’m sure these extended calculators have improved since that time.
I supplemented these tool sets with my own Monte Carlo simulations. Projecting portfolio likely status, with an odds distribution map, is directly in the Monte Carlo’s wheelhouse in both the accumulation and distribution phases of a portfolio’s lifecycle. The mutual fund houses now make liberal use of this tool.
The Internet is almost choked with competing resources that do the same job, many of them are free and easy to exercise. In earlier posts, I mentioned many of my favorites. Here are three such references. This limited list is certainly not comprehensive, but it is representative of what is available with just a little effort by the pre-retiree.
I suggest that you consider the following resources if you want to engage in any needed retirement planning task:
http://corp.financialengines.com/
http://www.moneychimp.com/articles/volatility/retirement.htm
http://www.flexibleretirementplanner.com/wp/
Access to Bill Sharpe’s Financial Engines is somewhat limited, but the other two Links are absolutely free. Financial Engines and Vanguard have partnered, so access is available through a Vanguard account.
These are user friendly simulators. I’m sure other MFO members can substantially add to this brief list.
The simulations run so rapidly that numerous what-if scenarios can be explored in short order. The job is iterative in nature. It is strongly influenced by user investment asset allocation preferences and the uncertainty of unknowable future market rewards. An investor’s optimistic or pessimistic attitude governs the exploration range of inputs. The Monte Carlo calculators permit a testing of the outcome odds sensitivity to this range of unknowable events.
In the end, the user gets to judge if a projected portfolio survival probability satisfies his own personal comfort zone.
A retirement decision is never risk-free. But these Monte Carlo-based simulators enhance the likelihood of a solid decision. The ball is always in the investor/candidate retirees court. Please consider using these Monte Carlo tools to improve the chances of scoring the winning basket.
Sorry, I prepared my comments before some of the intervening submittals, so some of my post is redundant.
Best Regards.

Further along savings assets start to "grow" (in one year) in significant ways. They may begins to equals your yearly savings or even a year's salary. I believe it was at that point that the idea of retirement from a day job starts to become a possibility. For many of us, the 2008-2009 downturn ripped many of these thoughts from our heads. But when assets consistently throw off enough earnings to satisfy an individuals financial spending needs that individual starts to feel a sense of critical mass.

@bee, this is very wise thinking and something that resulted in a significant career change for me a few years ago. Not exactly retired but no longer beholden to a job.
After the critical mass (which will be different for each), a salaried job is a very poor investment in the bigger picture. Tax treatment of wages vs capital is so skewed in this country that typical upper middle class wages make no sense whatsoever except as means to accumulate capital as much as possible before you get out (which most people unfortunately don't do). Either you earn in the $180k+ range though in most cases it comes with a high stress or BS at work or you earn less than $60k or so in wages which comes with a lot of benefits which are not means tested and helps the growth of capital with favored tax treatment.
It is much easier to get a net return on capital after critical mass than it is to get on career growth because the game is stacked for capital and against wages and there are signs that it will be increasingly so.
If there was a tool out there for people to estimate their critical mass needs easily and early, it would help immensely in this new normal of short careers and stagnating wages.

Wish I had the author's problem...
I think Bob Brinker (who I stopped listening to on the radio a long time ago) would refer to a concept he called critical mass. A place where money is longer is a daily concern. I interpret this as an amount of money that meets the needs of an average retiree over an average retiree's lifetime invested in growth and income producing vehicles.
I believe we first grow our assets by saving. As saving accumulate (through investing savings) these assets start to represent multiples of our earned income. I remember saying to myself, "Cool, I have savings (assets) equal to a years salary (earned income)."
Further along savings assets start to "grow" (in one year) in significant ways. They may begins to equals your yearly savings or even a year's salary. I believe it was at that point that the idea of retirement from a day job starts to become a possibility. For many of us, the 2008-2009 downturn ripped many of these thoughts from our heads. But when assets consistently throw off enough earnings to satisfy an individuals financial spending needs that individual starts to feel a sense of critical mass.
Pensions, Social Security, and annuities help solidify some of these investment assets into income streams for those who chose to stop earning an income.
Here's Bob Brinker's website definition of Critical Mass:
A state of freedom from worry and anxiety about money due to the accumulation of assets which make it possible to live your life as you choose without working if you prefer not to work or just working because you enjoy your work but don't need the income. Plainly stated, the Land of Critical Mass is a place in which individuals enjoy their own personal financial nirvana. Differentiation between earned income and assets is a fundamental lesson to learn when thinking in terms of critical mass. Earned income does not produce critical mass......critical mass is strictly a function of assets.
Regardless of all this, I still pick up dropped change.

Are Stocks Pricey or Cheap?
by Barry Ritholtz - March 29th, 2014, 9:30am
In their book “This Time Is Different: Eight Centuries of Financial Folly,” Carmen Reinhart and Kenneth Rogoff show that after a major credit crisis, recoveries are typically far softer. Weaker GDP, slower growth and mediocre job creation are typical. That sums up our economic experiences since 2009 rather well, don’t you think?
That has not stopped the guessers from looking at every twitch of the data as the start of something significant. As we discussed last year, economic data are very noisy. This year, a lot of the numbers have been disappointing. Retail sales have been weak, auto sales have missed consensus estimates, and housing has been soft.
Normally, without some rational explanation, I would be concerned about that sort of data. This year, for a change, the weather is a legitimate excuse. I usually mock the retailers who complain that it is cold in Minnesota in January (Really? Who could have seen that coming!?) But this has been the winter of our discontent. I’ve lived in New York for half a century, and I do not recall ever having this many days where temperatures were in the teens and single digits. We had snow in 49 of 50 states, according to the National Climatic Data Center. At the same time, a drought struck western states, and California had its hottest winter on record.
I am willing to give the economic data the benefit of the doubt for another month or two. Were the recent data legitimately affected by the whacky winter weather, or is this the start of an economic downturn? We shall find out before the Fourth of July fireworks are upon us.
http://www.ritholtz.com/blog/2014/03/are-stocks-pricey-or-cheap/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+TheBigPicture+(The+Big+Picture)

http://www.sec.gov/Archives/edgar/data/1377031/000116204414000360/ecologicsticker2014328.htm
497 1 ecologicsticker2014328.htm EPIPHANY FFV GLOBAL ECOLOGIC FUND
Class A shares: EPEAX
Class C shares: EPECX
Class N shares: EPENX
a series of
Epiphany Funds
106 Decker Court, Suite 226
Irving, Texas 75062
Supplement dated March 28, 2014 to the Fund’s Class A and C Share Prospectus, Class N Share Prospectus, Summary Prospectus and Statement of Additional Information, each dated March 1, 2014
____________________________________________________________________
Effective immediately, the purchase of shares of the Epiphany FFV Global Ecologic Fund (the “Fund”) is suspended. This Fund will be liquidated on April 28, 2014. However, shares are eligible for exchange into another Epiphany Fund.
Accordingly, the prospectus has been amended:
References to Epiphany FFV Global Ecologic Fund. All references to the Fund in the prospectus and SAI are deleted effective as of April 28, 2014.
Suspension of Sales. Effective immediately, the Fund will no longer accept orders to buy shares of the Fund from any new investors or existing shareholders.
After March 28, 2014 and prior to April 28, 2014, you may 1) exchange your shares in the Fund for shares of any other Epiphany Fund, at the respective Epiphany Fund’s current asset value per share; or 2) redeem your investment in the Fund, including reinvested distributions, in accordance with the “How to Redeem Shares” section in the Prospectus. Unless your investment in the Fund is through a tax-deferred retirement account, a redemption is subject to tax on any taxable gains. Please refer to the “Tax Status, Dividends and Distributions” section in the Prospectus for general information. You may wish to consult your tax advisor about your particular situation.
ANY SHAREHOLDERS WHO HAVE NOT EXCHANGED OR REDEEMED THEIR SHARES OF THE FUND PRIOR TO APRIL 28, 2014 WILL HAVE THEIR SHARES AUTOMATICALLY REDEEMED AS OF THAT DATE, AND PROCEEDS WILL BE SENT TO THE ADDRESS OF RECORD. If you have questions or need assistance, please contact your financial advisor directly or the Fund at 1‐800‐320‐2185.
You should read this Supplement in conjunction with the Prospectus and Statement of Additional Information dated March 1, 2014, which provide information that you should know about the Fund before investing and should be retained for future reference. These documents are available upon request and without charge by calling the Fund at 1‐ 800‐320‐2185.
______________________________________________________________________
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE

http://www.sec.gov/Archives/edgar/data/831114/000110465914023942/a14-9135_1497.htm
497 1 a14-9135_1497.htm 497
The RBB Fund, Inc.
Robeco Investment Funds
Robeco Boston Partners Long/Short Research Fund
Institutional Class
Investor Class
(INVESTMENT PORTFOLIO OF THE RBB FUND, INC.)
Supplement dated March 28, 2014
to the Prospectuses dated December 31, 2013, as supplemented
THIS SUPPLEMENT CONTAINS NEW AND ADDITIONAL INFORMATION BEYOND THAT CONTAINED IN THE PROSPECTUSES AND SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUSES.
THIS SUPPLEMENT SUPERSEDES AND REPLACES THE SUPPLEMENT DATED FEBRUARY 28, 2014.
Effective end-of-day March 31, 2014, the Robeco Boston Partners Long/Short Research Fund (the “Fund”) will be closed due to concerns that a significant increase in the size of the Fund may adversely affect the implementation of the Fund’s strategy. The Fund will still be offered to certain existing shareholders of the Fund and certain other persons (who are generally subject to cumulative, maximum purchase amounts) as follows:
a. Purchases of Shares by discretionary fee-based advisory model programs or financial advisors who manage discretionary fee-based wrap accounts that systematically trade in and out of a Fund based on model portfolio allocations;
b. Persons who already hold Shares of the Fund directly or through accounts maintained by brokers by arrangement with the Company;
c. Existing and future clients of registered investment advisers and planners whose clients already hold Shares of the Fund on transaction fee and non-transaction fee platforms;
d. Existing and future clients of consultants whose clients already hold shares of the Fund;
e. Employees of the investment adviser and their spouses, parents and children;
f. Directors of the Company; and
g. Defined contribution retirement plans of private employers and governed by ERISA or of state and local governments.
Other persons who are shareholders of other Robeco Investment Funds are not permitted to acquire Shares of the Fund by exchange. Distributions to all shareholders of the Fund will continue to be reinvested unless a shareholder elects otherwise.
Robeco Investment Management, Inc. (“Robeco”), however, reserves the right to reopen the Fund to new investments from time to time at its discretion, should the assets of the Fund decline by more than 5% from the date of the last closing of the Fund. In addition, if Robeco reopens the Fund, Robeco has discretion to close the Fund thereafter should the assets of the Fund increase by more than 5% from the date of the last reopening of the Fund.
Please retain this Supplement for future reference.

American Funds won't even let you open an acct with them unless you go thru a financial advisor. Even then, you have to pay 5.75% load.

http://www.sec.gov/Archives/edgar/data/1006783/000110465914022553/a14-8775_4497.htm
497 1 a14-8775_4497.htm 497
TURNER FUNDS
TURNER EMERGING MARKETS FUND
Supplement dated March 25, 2014
to the Prospectus dated January 31, 2014
THIS SUPPLEMENT PROVIDES NEW AND ADDITIONAL INFORMATION BEYOND THAT CONTAINED IN THE PROSPECTUS. THIS SUPPLEMENT SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS.
On March 25, 2014, the Board of Trustees (the “Board”) of the Turner Funds determined to close and liquidate the Turner Emerging Markets Fund (the “Fund”), effective on or about April 15, 2014. This decision was made after careful consideration of the Fund’s asset size, strategic importance, current expenses and historical performance. In connection with the pending liquidation, the Fund will discontinue accepting orders for the purchase of Fund shares or exchanges into the Fund from other Turner Funds after the close of business on March 26, 2014.
On or around the close of business on April 15, 2014, the Fund will distribute pro rata all of its assets in cash to its shareholders, and all outstanding shares will be redeemed and cancelled. Prior to that time, the proceeds from the liquidation of portfolio securities will be invested in cash equivalent securities or held in cash. During this time, the Fund may hold more cash, cash equivalents or other short-term investments than normal, which may prevent the Fund from meeting its stated investment objective.
BECAUSE THE FUND WILL BE CLOSED AND LIQUIDATED ON OR ABOUT APRIL 15, 2014, WE RECOMMEND THAT YOU CONSIDER SELLING OR EXCHANGING YOUR SHARES PRIOR TO THAT DATE. You may exchange shares of the Fund for any other Turner Fund open to new investors. You may sell or exchange shares on any business day by contacting us directly by mail, telephone (1-800-224-6312) or via our website (www.turnerinvestments.com). If you invest through a financial institution, you should contact the financial institution for more information on how to sell or exchange your shares. If you still hold shares of the Fund on or about April 15, 2014, we will automatically redeem your shares for cash and remit the proceeds to you (via check or wire) based on the instructions listed on your account.
The sale, exchange or liquidation of your shares will generally be a taxable event. You should consult your personal tax advisor concerning your particular tax situation.
Please contact the Turner Funds’ Investors Services team at 1-800-224-6312 for more information.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE.
TUR-FS-30-02

FYI: Copy & Paste Barron's 3/25/14: Teresa Rivas
Regards,
Ted
The JPMorgan Value Advantage Select Fund (ticker: JVASX) has outperformed Warren Buffett since its inception nearly nine years ago, a streak that portfolio manager Jonathan Simon would very much like to keep alive.
Though Simon has not been in the game quite as long as the Oracle, he's got more than a quarter of a century of stock-picking under his belt. He has displayed a conservative bent and a penchant for companies with quality management teams focused on growing underlying value. The Value Advantage Select Fund earns a five-star rating from Morningstar and falls into the highest and second-highest percentile of its category for the past five- and seven-year periods, respectively, as well as since its 2005 inception. While the rising tide has lifted all boats over the past five years, Simon's stock-picking has added significant value: The fund has returned an annualized 28.5%, compared with a 23.8% gain for the Standard & Poor's 500, and a 22.4% average return for its pee
.
Today, Simon has some contrarian picks among retailers and a space once anathema to value investo
Simon: There is one particular area of the portfolio that's been doing really badly recently and is quite contrarian: the specialty retailers. On the one hand, it's the area causing me the most pain because that's where we've suffered the biggest losses recently. But on the other hand, it could be the biggest opportunity. The holiday season was not great for anybody, except for maybe Michael Kors (KORS), and there were fewer shopping days between Thanksgiving and Christmas than there were the year before. The weather was probably a factor, and I suspect we are in for some more bad news there. But that's fine; we'll recover from that. A really disappointing one has been Bed Bath & Beyond (BBBY), but it is a company that has always proven itself long term. They've had a temporary setback, but they'll figure out how to [improve] themselves. They have a very strong entrenched real-estate position, with cash flow on the balance sheet and merchandising expertise, so Bed Bath & Beyond is probably going to be fine over the long run.
Q: There are a number of large health-care names in your top 10 holdings.
A: A few years ago Pfizer (PFE) became a big holding because the management team really started to understand that they had to simplify the businesses, focus their research and development on really promising pharmaceutical development — as opposed to just spending lots of money — and spin off peripheral businesses. So Pfizer has been a big holding because management has focused the company, and they've spun off the animal health business, Zoetis (ZTS), in a very tax-efficient way. Now Merck (MRK) is going down a similar path; its management team is going to use very similar strategy and there is opportunity there. Finally Johnson & Johnson (JNJ), on the pharmaceutical side has one of the more promising pipelines of new products. With J&J there is more diversification, with the medical technology business and the consumer business. So really those three names are almost sort of core of the health-care weighting in the portfolio: We probably have 6% or 7% of the portfolio in those three names. All obviously have good dividend yields, they trade at low- to mid-teens earnings multiples, and we think that the management teams are doing a great
.
Q: The fund has a lot of financial exposure, and names like Capital One Financial (COF) and Wells Fargo (WFC) are among your top holdings.
A: Wells Fargo has been doing what it is supposed to, which is to be the big, high-quality blue chip of the banking sector. I still think Wells Fargo has significant earnings power over the next three years, particularly as interest rates normalize. There has been concern about all the money they made on mortgage originations when there was the massive [refinancing] boom, as that is not happening anymore. But I think there are enough other levers in the Wells Fargo arsenal to offset the decline in mortgage-related earnings. I like Wells Fargo a lot. It is still a core holding. It is still a massive overweight top 10 holding.
Capital One is a bit different. I'd say it has taken a bit of a breather recently. Capital One to me has a great combination of a high-yielding loan portfolio, because of credit cards and auto-related loans, combined with cheap deposits both through the branch system and also through the online deposit [business] they acquired from ING. To me that is a very powerful business model that Rich Fairbank, the CEO, has put together over the last two years; he really took advantage of the distress in the downturn. People get concerned that Capital One is not growing its loan portfolio at the moment. But really they've bulked up so much that they are really shrinking down to a more solid core, and I think the story is going to be a lot about stock buybacks and dividends.
We have other regional banks, and one of the laggards has been M&T Bank (MTB), which has been trying to buy Hudson City Bancorp (HCBK). The regulators keep making them jump through more and more hoops on the compliance side of things, and it's taking forever. My belief is that they will ultimately close that transaction, and there will be a lot of benefits to M&T. The stock has been out of favor now for about a year. But as you know I'm patient, so that's a name that I think is going to generate strong returns for the firm over the next two years.
.
Q: Any other relatively new names you wanted to mention?
A: One timber REIT called Rayonier (RYN) is a contrarian pick. The company made an announcement toward the end of last year about its expansion. It was spending a lot of money in expanding one of its manufacturing facilities down in Georgia, and we were a little worried that maybe they were adding too much capacity to the global market. Lo and behold, they said yes, they expected their pricing and margins to be under pressure for the next year or so -- the stock was punished pretty badly. We did an analysis, and we thought that in the long term it would work out and so built it into a decent size position. It has a real-estate section although it is partly forest products as well, and they announced at the beginning of this year they were going to split the company in two. The stock went down a little bit on the announcement. But we still think there is great value there, so it is a name we are going to hang on to. We think that sum of the parts will be greater than you have at the moment. The other oddball thing I did this year -- I actually invested in an airline. I missed the big run-up, but we started to accumulate Delta Air Lines (DAL). So that's highly unusual, but things have really changed in the domestic airline industry. It has really consolidated down into three or four main players: American Airlines (AAL), United Continental (UAL) and Delta, and then Southwest Airlines (LUV) as well and JetBlue Airways (JBLU), which is quite a bit smaller. I think those companies are maybe not delivering the greatest customer experience, but they are delivering good value and much better service. That is translating into much better returns and profit margins for the industry. And as long as they remain disciplined, I think that the stock is relatively inexpensive still, relative to earnings. So even though I missed the first leg or so, there is still more to come.
Q: Thanks.
M* Snapshot Of JVASX: http://quotes.morningstar.com/fund/f?t=JVASX&region=usa&culture=en-US
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I'm on the team but not for long. I like what David is doing with MFO and was supporting him with quarterly donations to keep the site above water. But after being told by ted to" lead, follow or get out of the way", I'm getting out of the way and going elsewhere with my time and financial support. Usenet has forum monitors and the ability to filter posters, I just wish MFO had that capability. Oh I'll check in every once in a while for interesting posts but anything with ted in it is flushed clockwise.

The best you can do is understand what annuities really are and where it works and doesn't and make a recommendation based on it.
Opinions on annuities vary but a lot of them aren't necessarily from a good understanding of them. The sleazy channels through which many of them are sold doesn't help either.
The biggest problem is that people (even some here) don't understand risk and what risk management is and they may not understand the concept of insurance either. All this comes from a lack of intuitive understanding of probabilities.
Annuities are a mixed investment and insurance product. As such, they behave differently from both.
There isn't a mystery to how annuities work. Any individual has two financial risks - market risk and longevity risk. There are ways to manage this but there is always a cost to managing risk. So, it is a trade-off between the potential impact of negative consequences of risk and the cost impact of reducing it. This depends on the individual circumstances.
Annuities work by taking on market risk and longevity risk but for a price. They introduce an insurer stability risk, but I will neglect that for the moment because that is handled differently.
If you knew you were going to live exactly for X years, there is no longevity risk and you can take market risk by investing the money. The problem here is one of cash flow because if the markets enter a bear period, you cannot assume an income flow without risking shortfall. If you had an investment product that guaranteed some X%, then you can take longevity risk by investing and drawing down based on that return. But the problem is one of shortfall if you were to live longer than you expect.
Annuities try to solve that and aren't by themselves evil, only bad fit depending on circumstances.
Annuities are NOT instruments to give you better investment returns or let you come out ahead than investing in your own. Nobody can offer annuities if that was the case.
Hypothetically, imagine if you could invest by yourself based on some assumption of market returns and longevity, AND you could take out an insurance on market downturns or longevity so you got paid only if the market went down or you lived longer. There would be a premium cost to that insurance that would eat into the investment returns. If you never needed that insurance, you have paid a non-refundable cost but you got a guarantee in case that wasn't the case. If you needed that insurance payout, then you MAY come out ahead. That is the way insurance works and this is what annuities basically are.
The way the annuities are priced aren't a mystery. The insurance company calculates present value of cash in reverse with assumptions on market returns and longevity. So, they can calculate a payout schedule for which the present value is the amount you want to put into the annuities. They are also managing risk and they are not nonprofit, so they account for that in two ways - one, with an insurance pool they reduce longevity risk, the same way life insurance works and they give you a payout whose present value is less than the amount needed for the annuity. The cost of doing business is accounted this way. There is nothing inherently evil about this, just an evaluation of whether the insurance premium is worth the insurance.
What are the alternatives? Investing on your own. People who suggest you can do so and prevent cash flow or shortfall problems if you have a long enough period really don't understand risk. Investing gives you return for taking a risk, if the returns were such a no-brainer, why would the markets give you those returns?
The key to understanding this is that there are different kinds of risks and some people have better ability to take on some risks than others and therefore can get a return for them. For example, if you have a time period over which you don't need liquidity, than you can get higher returns over someone that cannot take that illiquidity risk. The longer the time period, the better the returns. You can do this easily in the accumulation phase but not necessarily in the drawdown period and so you cannot assume those guaranteed results if you need liquidity.
The instruments that provide a return without liquidity risk may require you to take on other forms of risk, a common one being inflation risk. Or, it could be interest rate risk. This may create a shortfall risk if in a drawdown period and so some people may be able to take it on better than others and so get returns for it. So, there is no getting around the fact that every option has some risk you are taking on, if you expect a return. No amount of looking at the past is going to change that. Rewards may be commensurate with risk but not guaranteed by it.
So, the decision comes down to evaluating what risks one is able to take and the products that are right for it.
The starting point for this in a drawdown period is an evaluation of the financial requirement, both in terms of the absolute minimum needed (to avoid large consequences such as getting evicted, not getting health care, not having food, etc) that people can survive on if necessary and a desired need that will let them enjoy life as they would like to. The former is where you want to take the least risk.
Ideally, if you have enough capital you can self-insure not because you will be a better investor but you don't have as much of a shortfall risk and you can take on cash flow risk in down markets from the buffer.
Most people don't have that much capital in retirement years, so the calculation becomes difficult.
The next option if the above is not feaaible is a combination of annuities and investments. Ideally again, buying an annuity for that absolute minimum calculated above to take care of minimum cash flow risks and investing the rest taking on shortfall risks for the "discretionary amount" may be an option with lower amount of capital than self insuring all risks. The older the people get, the more feasible this option gets.
If there isn't enough capital to even guarantee the minimum with everything in annuities, then the reality is that one is underfunded and not something that can be fixed easily. The only option might be to take market and longevity risks and hope for the best in the time left.
There may be a partial solution by buying annuities with inflation risk taken by you than annuities that take on inflation risk for you as well and hence more expensive.
The above is a framework for that calculation for each specific person. Annuities may or may not be a good fit depending on personal circumstances and the price of available annuities for the risks outsourced.
In any case, the decision shouldn't be based on uninformed or uncertain (by being unfamiliar) opinions on annuities, they are just another financial product with good and bad applications. Just avoid the sleaze channels through which annuities are often sold and explore the options available in the context of the needs of this couple. That is the best one can do.