I think Charles analysis is spot on. I would like to venture a guess if anyone can verify. FAIRX performance at beginning of last decade was fueled by EXACTLY the same kind of stocks that gave it stability, but which proved to be its downfall in the latter part of that decade, i.e. "Financials " and "Value" stocks. I think coming out of the tech bust, a lot of Financials were "value stocks". How deceptive.
Regardless of whether I'm right above, just like Yacktman at one point, Berkowitz has stuck to his guns and needs some kudos for that. As people on this board know, I bought this fund for trading since it seemed really down and out and have a nice gain in it. If only Berkowitz stops going on CNBC and/or falling all over Bartiromo, I might even consider keeping it as a long term holding. After all, I'm leaning toward go anywhere funds anyway so this fits the bill, while I keep wondering why M* will not classify FAIRX as a financial sector fund.

Reply to @davidrmoran: Come on...credit where credit is due. You're certainly right about the volatility, but since inception FAIRX has delivered great absolute (and even risk adjusted long term) returns. He's just posted 2Q2013 shareholder letter, which I'm delightfully surprised to see.
And, here's performance plot from Fairholme site:

In the letters, he's obviously relishing BAC and AIG returns. And, trying to call attention to FAIRX's good performance over almost any five-year rolling period. As well as arguing his rationale for Freddie/Fannie holdings and attendant lawsuit.
In FOCIX letter, he acknowledges "MBIA bonds were sold in the period, resulting in an above average return." That's an understatement. While holding Sears and JCP.
In FAAFX update, which is where I'm currently invested with Mr. Berkowitz:

The Fund’s annualized and cumulative performance returns since inception remain below those of the S&P 500 Index for the same period. We believe that the Fund’s portfolio is well-positioned in unique, small-quantity securities of recovering financial institutions to reverse that relative performance difference. Time will tell.

He makes no mention of what I believe was a misplayed holding in MBIA stock.

Reply to @Old_Joe: When you bail companies out and label them "Too Big To Fail" and "Systemically Important Institutions" (A systemically important financial institution (SIFI) is a bank, insurance company, or other financial institution whose failure might trigger a financial crisis, http://en.wikipedia.org/wiki/Systemically_important_financial_institution), then I don't understand why anyone is surprised. Beyond that, their lobbying certainly takes priority to our government over things like actually progressing the economy.
These are like financial oil companies. Only when they have a "spill" and damage the economy, our government caters to them.
"The Wall Street bastards have not been in the least dissuaded from ripping off any and all that is in their power to do so. Those who have "have no problem with unabashed capitalism" should be very happy, indeed."
Lol, we bailed them out and gave them the "systemic risk" card that they can play whenever they get in trouble.
"Eric Holder made this rather startling confession in testimony before the Senate Judiciary Committee on Wednesday, The Hill reports. It could be a key moment in the debate over whether to do something about the size and complexity of our biggest banks, which have only gotten bigger and more systemically important since the financial crisis.
"I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy," Holder said, according to The Hill. "And I think that is a function of the fact that some of these institutions have become too large."
http://www.huffingtonpost.com/2013/03/06/eric-holder-banks-too-big_n_2821741.html
So who are you going to be mad at first: Wall Street or the government who continues to cater to its every need?
___________
As for Visa, I think the issue will be worked out in a manner satisfactory to Visa. I just continue to see a move towards a cashless society in the next decade. Spain banned cash transactions above 2,500EUR last year (http://www.thedailybell.com/3814/Spain-Bans-Cash) and I think many of the reasons they did so appeal to other governments and others. Fee debate aside, I think moving towards cashless benefits retailers in a number of regards.
Square (which Visa has invested in) has allowed anyone, such as someone at an art fair or farmers market, to accept cards. The Apple store has started selling a "Square Stand", which turns an IPad into a complete point-of-sale register.
Eventbrite is an app that people can use to sell tickets to local events and manage everything - from payment acceptance to scanning tickets at the door. Over 120M tickets have been sold via the service. (http://www.eventbrite.com/features/)
As I've said a bunch of times, AT & T has said mobile data demand was up 50% y/o/y. I have my concerns about things big picture, but I do continue to be interested in a number of themes, particularly mobile. Within mobile, there's social, but I think mobile payments and mobile fitness (Nike, others) will rise considerably in coming years.
Beyond that, more and more things will be connected to the internet in the coming years. "The Ford Focus Electric will use the embedded AT&T wireless connection to send and receive data about the car, Ford announced today.
Through the new MyFord Mobile smartphone app, owners will be able to plan trips, monitor their vehicle's state of charge, locate charging stations, remotely lock/unlock doors, use a built-in GPS system to locate the car and receive alerts." (http://reviews.cnet.com/8301-13746_7-20046093-48.html)
The US has lagged other countries in terms of adoption of EMV cards and mobile payments, but that will likely change in coming years.
Cash registers will eventually start to go away in some stores in favor of mobile terminals, and the cash register real estate can be freed up for other things. Whole Foods doesn't accept checks anymore and I wouldn't be surprised if other retailers follow. You're going to see cards that have LCD displays and keyboards (http://gizmodo.com/5958721/i-really-want-a-credit-card-with-a-lcd-screen-and-touchscreen-keypad) and you'll see a coupon on an ad, scan it with your phone and both pay and use your coupons with one swipe of the phone at check-out.
Check company Deluxe doesn't even have checks featured on the front of their website, they have things like search optimization and website design. Checks are 59% of the company's revenue (down from 64% in 2009.) Not that the company can't go forward, but saying that they are clearly looking at other avenues for the future - "Marketing and Other Solutions" has gone from 12% in 2009 to 19% last year. (http://seekingalpha.com/article/1536002-get-your-deluxe-stodgy-stock-here)
It's a digital society of digital interactions; it's remarkable to me that Google can come out with a new phone (Moto X) that is "always listening" for commands. What's particularly fascinating is that I have read next-to-no articles that display any concern about the fact that your phone is "always listening" to you.
I don't think things change overnight by any means - there's no way they could. Still, I continue to think we're in the 7th inning of money as we know it.

Hi Guys,
Sorry.
A few moments ago I discovered that in my haste to post the Morningstar Long/Short equity fund roadmap research paper, I inadvertently neglected to close with my assessment of these evolving popular products. I firmly believe that readers should always be fully informed of the financial position that the writer has in terms of potential conflicts of interests and incentives.
For awhile I seriously considered adding long/short equity funds to my portfolio; they should contribute to a reduction in overall portfolio volatility, especially during market downturns. Ultimately I rejected the idea, at least for the moment. In the investment world, nothing is forever.
I suppose the main reasons for my rejection all devolve into two generic groupings: the accumulated performance of Hedge funds in this arena, and a generic application of the laws of probability.
Several well documented academic studies have assessed long/short strategies for a plethora of Hedge funds over an extended timeframe. These studies conclude that most Hedge funds fail to deliver superior performance within the long/short grouping, but a few do.
Most strategies fail because of trading costs that demolish the small percentage of excess returns that superior stock picking skills generate. For the few winning Hedge funds who manage to jump that hurdle, the issue of persistency bubbles to the surface. The historical research finds that persistent outperformance lasts for about one year, and then evaporates sometimes in the second year.
The earlier referenced Morningstar Handbook shows that for a decade, the average Hedge fund has produced superior returns over those generated by the average Long/Short equity fund cohort. The academic work demonstrates that Hedge funds have persistency issues, and Morningstar finds that their mutual fund equivalents do more poorly on a comparative basis. This is not good news for potential customers. The odds are a constant challenge.
The mentioning of odds provides me with an entry into my second reservation. A long/short fund is an operation that must make two distinctly disparate decisions that require separate decision criteria: to buy and to sell short. This doubles the skill set requirements which likely increase the odds of bad decisions. It adds complexity to an already complex environment.
In terms of probability, it seems to introduce a multiplicative effect on odds; the fund manager must be correct in the positive domain, and also correct in the negative domain. That would appear to be a daunting challenge. By the way, trading costs are likely to escalate.
Since the equity market returns are typically positive over 70 % of the time, purchasing Long-only equity positions seems like the most promising strategy over the long haul.
I believe that was the top-tier reasoning that prompted me to pass on long/short equity funds at this juncture. A secondary consideration was the lack of long-term performance records for many of the newly minted mutual funds in this category.
Best Wishes.

Well, will skip the writer's note about "Whip Inlfation Now" and Jimmy Carter; although the writer did get the proper decade.
As to bonds and safety....tis just a matter of full faith and trust and how many folks want to hold and buy them........otherwise, just very expensive T.P. and/or the collaspe of the financial system.
The writer also noted for bond investors with a 5-10 year time frame to "let bonds take their natural interest rate path".
Hopefully, there might be something in place within 5-10 years that would resemble a "natural" path for bond interest/yield rates.
Rates for the past 5 years have been artificial and may have to remain so for a few more years.
Flip a coin.....

As someday it may happen that a victim must be found
I've got a little list; I've got a little list-
Of society offenders who might as well be underground,
And who never would be missed--they never would be missed!
There's the pestilential experts who write for financial pubs;
All people who have flabby minds, and irritating rubs-
The fellow just behind, who you think is talking to you-
but when you turn to answer he's on his smartphone too.
There's the cretins who write letters from Internal Revenue-
"We've caught your little error and now the debt is due!"
And security folks who fumbling through your underwear insist...
"Remove your shoes, remove your pants- and complaining please desist!".
CHORUS: He's got 'em on the list... he's got 'em on the list;
And they'll none of 'em be missed- they'll none of 'em be missed!
Fake financial gurus, and that Suze Orman too...
follow their advice and you'll wind up with quite a lot to rue.
Super PACS and congressional quacks who never have a doubt
that each and every lobby pays quite well for what they tout.
Mutual funds that don't do so good (there's some of them above)
and important folks who must be first, so in front of you they shove.
Financial products of dubious worth and the lawyers not so fine -
and Wall Street firms with no idea of how to toe the line.
CHORUS: He's got 'em on the list... he's got 'em on the list;
And I don't think they'd be missed- I'm sure they'd not be missed!
And that autodialing nuisance, which just now is rather rife,
Pushing politicians, and their lies, into your private life--
That right-wing commentator- yes 'ol Rush has made the list!
They'd none of 'em be missed--they'd none of 'em be missed.
And especially political groups of a non-compromising kind,
Such as--What d'ye call them... Tea-whatever, and likewise... Nevermind,
And what's-his-name, and also you-know-who...
The task of filling up the blanks I'd rather leave to you.
But it really doesn't matter whom you put upon the list,
For they'd none of 'em be missed--they'd none of 'em be missed!
CHORUS: You may put 'em on the list- you may put 'em on the list;
And they'll none of 'em be missed... they'll none of 'em be missed!
With apologies to Gilbert and Sullivan- The Mikado
Note: the above is an adaption of a broad outline which may be found here.

Bought a bit to put away as a long-term holding. I own Gemalto (produces cards -http://www.gemalto.com/financial/cards/index.html, among a number of other things), Ingenico (makes the point-of-sale machines where you swipe the card) and Visa (payment processing/infrastructure.)

A few recent observations and threads just here on MFO alone:
• "high physical prices have cost consumers an extra $3 billion a year" ... (Link)
• "merchants were overcharged billions of dollars" ... (Link)
• JP Morgan Chase accused of rigging electricity prices; they'll pay the fine !!! ... (Link)
• Wall Street Creating "Home Rental Payment"-Backed Securities ... (Link)
• Americans Gambling on Rates With Most ARMs Since 2008 ... (Link)
and a quote from bee:
"One aluminum can at a time...one Kilowatt at a time...one pound of sugar at a time...one toll charge at a time...one mutual fund fee at a time...one local, state, federal tax (take yout pick) at a time...one bank fee at a time...one insurance premium at a time...all of these are dispersed costs that funnel and concentrate the benefit into a single trough like drops of rain into a single rain barrel." (end quote)
The Wall Street bastards have not been in the least dissuaded from ripping off any and all that is in their power to do so. Those who have "have no problem with unabashed capitalism" should be very happy, indeed.

Visa dropped like a rock today after a judge overturned prior ruling about debit card fees (of which Visa is the king). Anybody buying the dip?
I picked up more shares.
http://www.fool.com/investing/general/2013/07/31/why-visa-shares-got-hit-with-an-overdraft.aspx
"Two years ago, the Federal Reserve sought to cap fees per debit-card transaction at $0.12 apiece but was pressured into raising that limit to $0.21. After a contentious battle between financial-industry lobbyists and a retail coalition, U.S. District Court Judge Richard Leon overruled the central bank's authority, which appears to have put the ball back in retailers' courts. Leon's ruling says that the Fed disregarded Dodd-Frank regulations by "inappropriately inflating all debit card transactions by billions of dollars and failing to provide merchants with multiple unaffiliated networks for each debit card transaction."

http://www.sec.gov/Archives/edgar/data/935015/000119312513311543/d574422d497.htm
ARTISAN PARTNERS FUNDS, INC.
SUPPLEMENT DATED JULY 31, 2013
TO THE PROSPECTUS OF ARTISAN PARTNERS FUNDS, INC. (Investor, Institutional and Advisor Shares)
DATED FEBRUARY 1, 2013, AS SUPPLEMENTED JULY 22, 2013 AND JULY 31, 2013
ARTISAN SMALL CAP FUND
Effective as of the close of business on August 2, 2013, Artisan Small Cap Fund is closed to most new investors. The Fund will accept new accounts from certain investors who satisfy new account eligibility requirements. Eligibility requirements are described in Artisan Funds’ prospectus under the heading “Who is Eligible to Invest in a Closed Artisan Fund?”
Effective as of the close of business on August 2, 2013, the following paragraph is added under the heading “Purchase and Sale of Fund Shares” on page 31 of Artisan Funds’ prospectus:
Artisan Small Cap Fund closed to most new investors as of the close of business on August 2, 2013. See “Investing with Artisan Funds – Who is Eligible to Invest in a Closed Artisan Fund?” in the Fund’s statutory prospectus for new account eligibility criteria.
Effective as of the close of business on August 2, 2013, the following replaces the text under the heading “Who is Eligible to Invest in a Closed Artisan Fund?” on pages 56-57 of Artisan Funds’ prospectus in its entirety:
Artisan International Small Cap Fund, Artisan International Value Fund, Artisan Mid Cap Fund, Artisan Mid Cap Value Fund, Artisan Small Cap Fund and Artisan Small Cap Value Fund are closed to most new investors. The Funds do not permit investors to pool their investments in order to meet the eligibility requirements, except as otherwise noted below. Unless specified below, each individual in a pooled vehicle must meet one of the eligibility requirements set forth below.
If you have been a shareholder in a Fund continuously since it closed, you may make additional investments in that Fund and reinvest your dividends and capital gain distributions in that Fund, even though the Fund has closed, unless Artisan Partners considers such additional purchases to be not in the best interests of the Fund and its other shareholders. An employee benefit plan that is a Fund shareholder may continue to buy shares in the ordinary course of the plan’s operations, even for new plan participants. You may open a new account in a closed Fund only if that account meets the Fund’s other criteria (for example, minimum initial investment) and:
• you are already a shareholder in the closed Fund (in your own name or as beneficial owner of shares held in someone else’s name) (for example, a nominee, custodian or omnibus account holding shares for the benefit of an investor would not be eligible to open a new account for its own benefit or for the benefit of another customer, but the investor would be eligible to open a new account in that Fund);
• you are a shareholder with combined balances of $100,000 in any of the Artisan Funds (in your own name or as beneficial owner of shares held in someone else’s name);
• you receive shares of the closed Fund as a gift from an existing shareholder of the Fund (additional investments generally are not permitted unless you are otherwise eligible to open an account under one of the other criteria listed);
• you are transferring or “rolling over” into a Fund IRA account from an employee benefit plan through which you held shares of the Fund (if your plan doesn’t qualify for rollovers you may still open a new account with all or part of the proceeds of a distribution from the plan);
• you are purchasing Fund shares through a sponsored fee-based program and shares of the Fund are made available to that program pursuant to an agreement with Artisan Funds or Artisan Partners Distributors LLC and Artisan Funds or Artisan Partners Distributors LLC has notified the sponsor of that program, in writing, that shares may be offered through such program and has not withdrawn that notification;
• you are an employee benefit plan or other type of corporate or charitable account sponsored by or affiliated with an organization that also sponsors or is affiliated with (or is related to an organization that sponsors or is affiliated with) another employee benefit plan or corporate or charitable account that is a shareholder of the Fund;
• you are a client (other than an employee benefit plan) of an institutional consultant and Artisan Funds or Artisan Partners Distributors LLC has notified that consultant in writing that you may invest in the Fund;
• you are an employee benefit plan that is a client of an institutional consultant that has an existing business relationship with Artisan Partners or Artisan Funds and Artisan Funds or Artisan Partners Distributors LLC has notified that consultant in writing that the plan may invest in the Fund (only available for investments in Artisan Mid Cap Fund, Artisan Mid Cap Value Fund, Artisan Small Cap Fund and Artisan Small Cap Value Fund);
• you are a client (other than an employee benefit plan) of a financial advisor or a financial planner, or an affiliate of a financial advisor or financial planner, who has at least $500,000 of client assets invested with the Fund or at least $1,000,000 of client assets invested with Artisan Funds at the time of your application;
--------------------------------------------------------------------------------
• you are a client of Artisan Partners or you have an existing business relationship with Artisan Partners and, in the judgment of Artisan Partners, your investment in a closed Fund would not adversely affect Artisan Partners’ ability to manage the Fund effectively; or
• you are a director or officer of Artisan Funds, or a partner or employee of Artisan Partners or its affiliates, or a member of the immediate family of any of those persons.
A Fund may ask you to verify that you meet one of the guidelines above prior to permitting you to open a new account in a closed Fund. A Fund may permit you to open a new account if the Fund reasonably believes that you are eligible. A Fund also may decline to permit you to open a new account if the Fund believes that doing so would be in the best interests of the Fund and its shareholders, even if you would be eligible to open a new account under these guidelines.
The Funds’ ability to impose the guidelines above with respect to accounts held by financial intermediaries may vary depending on the systems capabilities of those intermediaries, applicable contractual and legal restrictions and cooperation of those intermediaries.
Call us at 800.344.1770 if you have questions about your ability to invest in a closed Fund.
Please Retain This Supplement for Future Reference

In agreement with both Scott and Hogan, I remember that when I was administering my mother's small estate with POA I made it a major point to send a complete monthly report on any and all financial expenditures or arrangements, and to invite inquiries or comments in case of any questions or disagreements. Not so much as a legal cover-my-tail issue as to make it very clear that each and every step was known to all involved, and in the absence of any objection, tacitly approved.
Good luck, for sure!
Add: I also agree with davidmoran, below, re Vanguard (I also own no Vanguard, due to circumstances.) For one thing, I would keep it within a single company and very simple at first, allowing all of the other interested parties to become used to your dealings so as to build their comfort level. If it were me, I would make the actual Vanguard statement available to them monthly, perhaps with a short summary of things as you see them, and maybe a comment on what you plan to do next, if anything, depending upon the evolving circumstances. A critical key to sanity here is achieving buy-in and trust on their part, otherwise you will be driven totally nuts.

Hello Everyone,
My father has just set up a trust for his 4 children to inherit from his estate. We are slowly moving assets into the trust. The account will eventually hold around $600,000 to $800,000. We need to begin to think about how to invest the money. My father likes Vanguard and we plan to open up a Vanguard Brokerage Account there. I would appreciate any ideas you have for choosing funds to invest in. My father is in assisted living and still going strong, so we are looking to invest over the next 5 to 10 years.
I am choosing the brokerage account because it allows us to invest in funds outside Vanguard. I really like FPA Crescent, FPACX, and want to hold it in the account. My father is very Vanguard-centric, but I hope to include a few funds from outside the company.
We do not want to invest the funds all at once, so I am really interested in your help with where to hold the money while we begin to dollar cost average into our selected funds. We do not need to invest for income and are hoping to grow the money over time. I am not sure about investing in bonds funds, especially in the current climate. I am a little worried about putting everything into stock funds having lived through the last financial disaster and the tech blow up.
Thanks so much for your help. I have already bought several funds for my own account from information learned by following David's excellent site.
This is what I have bought for my own account from reading information here: FPACX, PRWCX, FAIRX, FAAFX, ARTGX, MSMLX, and ARIVX. I also own Vanguard's Wellington, Primecap Odyssey, Special Health Care and Capital Opportunity in my own Roth IRA.
Kindest regards,

Hi Guys,
Correlation coefficients are not static entities. They may have nice long-term statistical averages, but they are dynamic over shorter timeframes. It’s like the story of a man drowning while attempting to cross a stream with an average depth of a modest 2 feet. The tragedy was caused by the unknown dangerous water depth at mid-stream.
Any investment strategy that is based on an invariant correlation coefficient is exposing itself to substantial hurt and perhaps even risking ruin. The historical database clearly demonstrates the dynamic correlation relationships between individual holdings and categories of the marketplace. Correlations are compliant subjects of both group and individual market perceptions. The interactions are complex and defy characterization.
Regardless of what correlation coefficient values exist in a placid trading environment where prices move slowly as a function of modest supply/demand imbalances, these same correlations accelerate towards a perfect One level as bubbles approach their critical bursting point. The 2008 equity meltdown serves as an excellent illustration of this phenomena; there was literally no place to hide.
Correlation differences among candidate holdings are a great tool to help designing a diversified portfolio to reduce overall portfolio risk by attenuating its volatility (standard deviation) while sustaining projected annual returns. This operates to keep annual compound (geometric) return at a more optimum level while reducing anxiety level.
But projected returns depend on the constancy of the correlations. Remember that this is a critical approximate assumption in the model, and models are never perfect. So constant monitoring is needed to respond to changes in the market’s interacting elements.
Incomplete modeling, evolving markets, and simply bad calculations are commonplace in the business world. I’m sure this observation surprises nobody.
Whenever I think about the imperfections of the investment universe, I’m somewhat comforted by reflecting on similar faults in the engineering world. Since I’m an engineer by both training and practice, I am qualified to recognize these deficiencies. Even in this scientific community, errors and mistakes in both design and execution happen all too frequently. So in one sense, I understand the problematic issues in the investment arena.
To illustrate, when I was at university, the professors repeatedly reminded us of infamous engineering failures. The 1907 Quebec Bridge and the 1940 Tacoma Narrows Bridge collapses were often emphasized. If you are not familiar with these disasters, here are two Links to short films that summarize these events:

Great stuff about Tacoma’s Galloping Gartie. Here is a short film that documents the series of Quebec failures:

The Quebec story has a particularly instructive sidebar. I’m told that the Canadian engineering establishment saved pieces of the failed construction. The story closure is that all graduating Canadian engineers are awarded a ring that has a small piece of the Quebec bridge imbedded in it. I don’t know if this story is true, but it’s emotional theatre.
It’s something to think about. Engineer’s are trained to keep hubris under control. That goes double for investment decisions.
If the engineering disciplines can generate such epic failures, it is not shocking that the undisciplined wild-west of the financial disciplines can also devolve into major calamities.
Best Wishes.

Hi Guys,
I’m always prowling for yet another mutual fund selection criterion that will improve my fund sorting and decision tasks.
Along those lines I’ve had either an epiphany or an inept debilitating mind-freeze. How about segregating funds into an elite group based on their differential performance in boon markets minus bust markets? Or by boon performance or bust performance separately? All three criteria might be deployed in the screening process to enhance decision making.
By forming a cyclical difference measure of a rewards retention gap, this number quantifies how much of a bull market return we get to keep in any following bear market exposure. The funds with the highest values by this measure will have demonstrated a worthy discipline with some timing capabilities to positively navigate both sub-components of a complete cycle.
By comparing the performance of a fund against some standard (an Index or an average of fund performance within a category), managerial skill might be discovered. It would be great to identify a fund that outperformed in a bull environment and protected profits in a bear environment.
To evaluate the proposed bull/bear cyclic performance gap statistic, and the absolute directional performance hypotheses, I culled data from the AAII “The Individual Investor’s Guide to the Top Mutual Funds” report. That report is prepared annually by AAII staff members. You might find it a useful summary document for retention. Here is a Link to the 2013 version of it:
http://www.aaii.com/files/topfunds/FundGuide2013.pdf
I did some simple calculations to test my hypotheses. I selected a few representatives from the listings of the 50 most widely held funds since these are major contributors to individual wealth, and a few more representatives from Balanced funds since these are likely to challenge the sensitivity of the proposed screening tools. The data was extracted from the AAII paper.
The most widely held funds that were examined are: VTSMX (baseline Index), DODGX, FLPSX, PRFDX, VPMCX, TRVLX, and FMAGX.
The Balanced funds that were examined are: the Balanced Domestic Category Average (the comparative baseline), DODBX, FBALX, FPACX, JABAX, MAPOX, OAKBX, PRPFX, RPBAX, VWINX, VWELX, and WBALX.
I recognize these are a rather limited sampling, but I succumbed to the lure of the summertime doldrums. For what its worth, here are my assessments based on the bull/bear criteria that I tentatively proposed.
From the widely held fund category, the bull/bear performance gap ranking clearly identified FLPSX as a superior star-performer. That finding is reinforced when using both the separate bull and bear market criteria. FLPSX outperformed the benchmark in the bull cycle and protected its outsized rewards in a relatively superior fashion during the bear meltdown.
The other funds, with the exception of FMAGX, delivered the goods in one cycle, but suffered in the other cycle; these exhibited mixed relative performance. FMAGX was equally terrible under both bull/bear event scenarios for all three candidate screens.
Within the Balanced fund arena, FPACX was a clear winner. It proved its mettle under both the bull and bear conditions. It scored highest using the bull/bear performance gap ranking, and registered two pluses within the separate period ratings.
Three other funds also generated meritorious ratings: MAPOX, VWINX, and VWELX. Using the performance gap measure, these three ranked very high in the standings. Also, they delivered one plus and approximately one neutral rating in the separate market assessments.
Surprisingly, given the staid and senior Dodge and Cox staff, DODBX produced barbell-like performance. It rated very highly in both the performance gap calculation and in the bull market scenario, but did little to protect that wealth accumulation during a bear market exposure. Dodge and Cox has been in the financial world since 1930, takes the long-view, but still had trouble managing the last bear market. It seems life is never simple.
I fully understand this analysis is not comprehensive enough, and, in many ways, is incomplete. Even if the array of absolute and bull/bear performance gap metrics prove acceptable as screening tools, they are surely not sufficient by themselves. They must be integrated with other screening signals.
Past performance, positive Alpha (excess returns), expense ratio, portfolio turnover rate, management policy stability and tenure, diversification into foreign holdings, number of positions, and risk metrics (volatility) relative to category averages are other meaningful screening criteria.
In the end, individual investors weigh each criterion differently to fit their private objectives and preferences. High annual compound return is often the primary goal, but must be fine-tuned to avoid sleepless nights.
By the way, the referenced annual AAII guidebook immediately supplies access to data that I need and use in my screening process. You might want to keep a copy handy to aid your fund decision making.
I submit this post to focus attention on fund screening criteria. Does historical performance in past bull and bear markets have any practical forecasting merit? I have recently added these bull/bear considerations to my personal screening list. Your comments on this topic are always welcomed.
Best Regards.

While past performance is no guarantee T.Rowe Price is very proud of the long term record of PRWCX capital appreciation and will avoid trying to ruin it by changing the funds strategy and though it has seen many changes in manager over a roughly 25 year period it has had very few down years in part because it seems to invest according to the don't lose money principle.
here are some performance data .note that 5 year record inclues 2008 where it lost about 27% >its currently about 60% stocks, 25% bonds and 10% cash. Its in the moderate allocation category which might be a good place to look for alternatives
1 Year 18.26%
3 Years 14.84%
5 Years 8.35%
10 Years 9.30%
Since Inception 11.33%
Inception Date June 30, 1986
Something more conservative might be something like vanguard wellesley (40% stocks ) plus a TIPs fund and or a floating rate fund and a short term bond fund. I am doubtful you should invest in something much riskier than these suggestions in order to acquire a large retirement fund. Still as suggested by others investing more (not necessarily bolder ) will have two benefits . You will know if it is possible to live on less (which may help you to decide at what age you should stop working and of course you will increase the size of the retirement fund. .
Still remember you are in much better financial shape than many in your position.

Hi Daves,
Congratulations on your upcoming retirement, and an especial congratulations for embarking on this early planning exercise. The planning will make you a happier and more confident warrior when that critical date ultimately arrives.
The advice already offered by other MFO participants is uniformly excellent. Allow me to add a few not so random elements that I addressed when making my retirement decision about 20 years ago. These are proffered in no special order of importance.
Carefully monitor and record you cost outlays until retirement. This will establish a reliable cost baseline. Some conventional wisdom suggests that you will do fine with about 80% of that baseline. Forgetabout it; that’s overly optimistic. Some expenses will definitely decrease, but others will take up the slack. You seem frugal so there is little room for further economy. Overall, assume your spending will be consistent with the last 5 year period.
Continue your commendable saving plan and increase it if possible. Your projected retirement nest-egg (like 300 K dollars) is nice, but not particularly healthy given that either you or your wife is likely to live for 30 more years. Stretching your portfolio to survive that extended timeframe will demand attention to detail and a flexible withdrawal commitment.
You will definitely need a mix of equity and fixed income holdings in your portfolio. Equities to boost the projected annual returns, and fixed income holdings to reduce portfolio volatility. The higher your anticipated drawdown schedule, the higher will be your need to commit to equity positions. But that does NOT equate into becoming a reckless gambler using highly leveraged products that often lead to financial ruin.
Given current economic conditions, it is unwise to expect a 100 % equity position to deliver returns north of 8 %. Consequently, even a portfolio that is 80 % committed to stocks is likely not to generate returns in excess of a 6.5 % maximum. If you decide that your anticipated withdrawals are north of 5 %, a delay in retirement should be seriously considered.
Historically, Monte Carlo computer simulations suggest annual drawdown rates in the 3 % to 5 % range are likely to result in high portfolio survival probabilities for a 30 year period. The 5 % level is recommended only if the retiree can momentarily downsize his withdrawal rate if the market delivers negative outcomes. For example, a retiree could elect to forgo a cost of living adjustment immediately in the period following a down year.
Over time, I have been a constant advocate for doing Monte Carlo parametric studies to support any investment and retirement decision. I particularly like the Firecalc.com website. I recently documented my assessment of this matter in a MFO posting on retirement planning. Here is the internal MFO link to my submittal:
http://www.mutualfundobserver.com/discussions-3/#/discussion/7029/a-better-retirement-planner
Please examine and deploy the analysis available on Firecalu. Do a few tradeoff studies to explore the portfolio survival probabilities for various scenarios that you get to postulate. It’s a great learning experience.
Costs matter greatly. Use passive Index funds whenever possible. You might benefit from the Lazy portfolios described by Paul Farrell in his MarketWatch column. Here is a Link to the Lazy portfolio options:
http://www.marketwatch.com/lazyportfolio
If you prefer active management, and are still cost containment conscious, you might consider a mix of Vanguard’s Wellington (VWELX) and Wellesley (VWINX) balanced funds, as well as the balanced mutual fund offered by Dodge and Cox (DODBX). These funds have served their clients well over long timeframes.
I hope this truncated summary helps, and I wish you success.
Best Regards.

FYI: S&P 400
Regards,
Ted
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This came in my inbox this morning. Thought I would share.
Dear Valued Investors,
Those of you who know Matthews Asia well, or have visited us in San Francisco, may know that the most important piece of furniture on the investment team floor is our pool table. It has survived now for about 15 years and is in surprisingly decent shape. Its presence on the floor is a product of the Asian Financial Crisis of 1997—98, when Matthews Asia was still finding its feet. With markets collapsing around the region, our chairman Mark Headley decided that what Matthews Asia needed was a pool table to serve as a center of gravity, pulling analysts and portfolio managers away from their flashing red computer screens and getting them to discuss Asia in a more relaxed manner.
Back then, the U.S. dollar rallied while many Asian governments and corporations were laden with dollar debt. A few years later, however, a weakened dollar and strong global growth accompanied Asia’s comeback from 2000 to 2007. Conversely, over the past couple of years, the slowdown in growth in the region has been concurrent with the gentle rise in the dollar.
Towards the end of the second quarter of the year, indications that monetary policy might be tightened by the U.S. Federal Reserve, even as growth increased only moderately, caused a sudden liquidation of Asian assets and a rush to cash. As the greenback has strengthened, bonds, gold and equities have all fallen. Fortunately, however, Matthews Asia has some experience reflecting on volatile markets with the composure of a seasoned billiard player.
Investors appear to be rushing to hold cash—particularly in U.S. dollars—or, in some regards, shrinking their investment time horizons. As those timelines shorten, the opportunities lie further into the future. However, with money tightening in the U.S., Japan and China, economic activity could certainly be squeezed in the short term. I expect near-term GDP figures to be weak even as I aim to avoid a game of “guessing the quarterly GDP growth.” So, it may be time again to step away from those computer screens and consider the longer-term developments of Asia’s economies.
Media pundits exclaim that China’s shadow banking and wealth management products are “sub-prime,” casually comparing the current China liquidity squeeze to a “Lehman event,” a “Minsky moment” or a U.S. housing bubble repeated (all of which simply replaces analysis with catchphrases). China does not have a sub-prime mortgage market—people buy houses with cash. Nor are its households highly leveraged or the central government highly indebted. The average Chinese household still has a positive savings rate and the country as a whole runs a current account surplus. To be sure, China’s credit has grown rapidly in the past few years and the government has been acting to slow it, which will impact growth. But China is entering this liquidity squeeze with a market trading at 8.4x forward 12-month earnings* and one that has already fallen by nearly 70% since its peak in 2007. And it is not as if China lacks investment opportunities either at home or abroad that could cause it to get stuck in a rut as the U.S. has since the global financial crisis five years ago. So, whatever the current situation, it is not simply a replay of the U.S.’s recent woes.
Whereas the current monetary policy is bad for economic growth, policymakers already seem to be walking back on their hawkish comments while markets appear to have had some cushion from low valuations. There is no doubt that moves by monetary authorities can have a profound impact on growth; if everyone increases demand to hold cash just as the central banks slow the growth in the supply of that cash, spending will fall. And because, generally speaking, your spending is someone else’s income, we all end up poorer. But self-defeating spirals tend to end. I wonder how prolonged such a spiral could be this time. It seems strange, even bizarre, that monetary authorities in the U.S. and Japan would want to deflate expectations when inflation rates remain below 2% in the U.S. and are still negative in Japan. In my mind, this was much too quick on the draw! For, given the already reasonable valuations that markets were trading at before the sell-off, real value has emerged for the long-run investor. Even some of the high-yielding stocks, which had performed well in the recent past and had become somewhat expensive relative to history, were sold down aggressively on the back of rising U.S. yields and have since returned to reasonable valuations. I suspect that either growth will be stronger than we expect and support equity valuations or there will come a point in which the downwardly revised expectations of growth put a halt to the rise in bond yields.
So, whilst our pool table sees little action these days, we do appeal to the same sentiment that made it a Matthews Asia institution. Asia is still a region of strong demand in a world that seems stuck in a rut, with high unemployment and tighter money. Asia, too, has the potential to continue to grow at rates in excess of the developed world, due to its fast-growing rates of productivity. The region suffers in the capital markets, of course, from being seen through the prism of the U.S. dollar.
So, what to do in this environment? The strategies we employ to manage portfolios tend not to change. But we do have to be ever more alert for possible dislocations in market prices. This is to say that some stocks may be sold down over the short term. We may wish to trim other positions to add to holdings that have sold off aggressively or even to initiate new positions. But this should not be considered a change in our approach or a desire to “time” market movements. It is merely that our long-term view will seem relatively fixed in comparison to the short-run gyrations of market prices as speculators run to cash. Such price moves are likely to be unevenly distributed across countries and sectors, in our eyes, and we may have many new opportunities with which to implement our long-term view.
We would also like to inform you that, as of July 19, 2013, there were portfolio management changes to the Matthews Asia Dividend Fund. The Fund is now co-lead managed by Yu Zhang, CFA, and myself. Jesper Madsen, CFA, has decided to leave Matthews Asia, as of October 31, 2013, in order to pursue personal interests outside of finance.
As always, we feel privileged to be your investment advisor for Asia, and thank you for your support.
* Forward earnings are calculated by dividing market price per share by expected earnings per share.
Robert Horrocks, PhD
Chief Investment Officer
Matthews International Capital Management, LLC

Political Science was bad enough. Now U's are handing out degrees in Financial Engineering ?!?!?! I thought the term meant something bad. I guess its okay if it is Matthews. Better check some other fund manager at Matthews has degree in Chinese Math. Something sounds wrong about that too.
I want to really know why Madsen quitting finance. They shouldn't be allowed to keep it a secret.

Thanks for this news David. I too do not expect any changes in investment style for the fund. Mr. Horrocks will be one of the team and that is good news. I think the size of Matthews plays favorably here compared to say a Fidelity or Vanguard.
Here is the bio of Mr. Zhang from the Matthews website if anyone is interested.
Henry Zhang is a Portfolio Manager at Matthews International Capital Management, LLC, and co-manages the firm’s China and China Small Companies strategies. Prior to joining Matthews in 2007 as a Research Analyst, Henry served as an Application Consultant and Project Manager at Gifford Fong Associates for five years. Before moving to the United States, Henry worked for more than four years at Huaneng Power International, Inc., a NYSE-listed corporation, in China. Henry received a Master’s in Financial Engineering from the University of California, Berkeley and a B.S. in Finance from San Francisco State University. He is fluent in Mandarin. Henry has been a Portfolio Manager of the Matthews China Fund since 2010 and of the China Small Companies Fund since its inception in 2011.