Interesting interview from Nov. https://www.morningstar.com/articles/1063412/these-renowned-stock-pickers-are-taking-change-in-stride
One gets a clear sense of the differences between these two fund managers but some similarities too… and even with dare I say Cathie Wood?
Favorite quotes:
TESLA
“Lynch: I think it’s a tough business. Selling cars that are expensive for the average customer, that require financing, is a little different than selling Internet ads. We did own Tesla for about three years. It was a small, more of a speculative-size position back when the first consumer reports came out around the product, and the company was starting to have a real revenue stream in front of it. But the constant need for capital from the capital markets does put you in a position, potentially, during times of uncertainty of relying on the kindness of strangers to continue the business model. Cathie Wood would say it’s not just about selling cars. There might be more to it than that—energy storage, energy services, and things of that nature. Still, ultimately, it’s a car company, and there are a lot of other big car companies that scale. They do a lot of things differently that are interesting, but ultimately the capital intensity and the constant need for external financing for us became problematic.”
ZOOM
“ Nygren: When we weren’t able to be in the office, we were using Zoom as much as anybody else was, and as a consumer, I loved the product. The concern that we had was that Zoom was being priced as if it were going to be the dominant market leader for a long time. But one conference call would be on Zoom, and then the next one on Google Meet, and then Microsoft (MSFT) Teams and BlueJeans, and they all look just about alike as a user.” <— He’s absolutely right on this point.
BUBBLE? Stocks vs Bonds
Nygren: “ I’m not going to sit here and argue that it’s a generational opportunity to buy equities or anything like that. But given where interest rates are, owning an equity like the S&P that pays almost a 2% dividend yield and has earnings that are growing at 6% or 7% a year, compared to a long-term bond, is an easy choice to make.
Lynch: “ But all things equal, I would rather own smaller companies with smaller market caps that we think could be much bigger over time than some of the larger companies that exist today.”
BITCOIN
Lynch: “ We talked about persistence earlier. Bitcoin’s kind of like Kenny from South Park. It dies every episode, and then it’s back again. As for adoption, it’s almost like bitcoin’s a virus and we’re all a little bit infected. Some people fully have gone there, and some people haven’t, but we all know about it. That’s interesting to me from a viral mechanism.”
BANKING
“Reichart: Bill, you own a lot of financials. How worried are you about disruption in the financial sector?
Nygren: Most of the financial names we own are selling relatively close to stated book value. In a world where they get disrupted and their business goes down every year, they could liquidate for relatively close to the current stock. Brian Moynihan [CEO of Bank of America BAC ] said that the pandemic has pulled forward mobile banking by a decade. If you go into a bank to a teller, it costs them $4 to process your check. If you do it at an ATM, it’s 40 cents. And if you do it on your phone, it’s 4 cents. The big banks are a disruptor there because they are so far ahead in mobilization for their clients. I don’t see a big downside for most of the companies that we own.”

@JonGaltIII, since you brought it up, I think you may be over analyzing. Just a question, why are you stressing over having "the best fund(s)" when there are absolutely no guarantees that the statistics will look the same next year or the year after? Isn't it all a guessing game, or at best an educated-guessing game anyway?
I'm probably different than most on this board but I'd say pick your horse and jockey and ride it. If your jockey (manager) consistently beats an index fund, say VBK, or is in most years a top 20% performer in the category, you've done great. Don't second guess a well thought out choice because your likely to second guess that choice in a couple years too.
Just my humble 2-cents.

The more I analyze and perhaps "over analyze" - I think I may need to give my 2 SCG funds WAMCX and MSSMX some more time. Using MFO tools (especially the Analyze button / Performance / Rankings / Ratings and Batting Average etc.) - it appears that WAMCX, MSSGX and NEAGX all perform high and low and switch back and forth in terms of performance with similar Ulcer over LT. Small Cap growth for you. There's no clear winner, if you will. The youngest fund on my watch list in this cat, DVSMX only shows 4 years of performance and it's been consistent. Perfect FCI. Ferguson Metrics FCI would lead me to conclude WAMCX is better than MSSMX but DVSMX (young fund) is best so far if I'm understanding it correctly. Not being declarative so if someone has a difference of opinion, I’m open to it.
Pro Tip for MFO Discussion Search: Use oldest share class symbol and you're likely to turn up more meaningful results.

I was reading the thread on Thermostat, which prompted me to peer at its risk-adjusted returns. Interesting. Of all funds and ETFs - equity, allocation and income together - only CTFAX makes it as a top 10 fund for the past three, five and 10-year periods. I was a bit skeptical because the discipline was revised three years ago to allow greater latitude in equity exposure. Nonetheless it remains locked-in to a top 10 Sharpe ratio. 8.7% raw returns over the decade, 16.9% over the past three years.
If Morningstar's to be trusted, the fund has hit its minimum permissible equity exposure (10%).
Fascinating and just enough to give one slight pause.
Cheers!
David

The author's recommendations for the coming year resonate with me.
"Looking back over the past two years, one word comes to mind: extreme.
It’s been a period of extremes in the market and the economy.
Many have benefitted, but we’ve also seen excesses that aren’t necessarily healthy—from the rise in NFTs to the craze in SPACs to the boom in day trading.
That’s why, as you look ahead to the coming year, the theme I recommend is moderation."
Link

I enjoy reading the MFO articles. Anybody have thoughts regarding the article mentioning .....a 20% equity portfolio translates into receiving 60% of the returns of an all equity portfolio with about 25% of the volatility? Just a Thinking Fast and Slow type observation....volatility (SD) is a annualized metric that would remain in this case relatively consistent over time around 25% but the 60% yearly returns vs SPY compounded over a 30 year retirement horizon would not be 60% after 30 years. A significant difference in return. IOW's the value one receives from low SD does not compound over time. Although there is value inherent.

Rosenberg seems to think both long duration bonds and gold are an attractive play.
I’d actually intended to make a small spec play today with a bet on on GLDB, which combines a gold position with investment grade corporate bonds. Looking at the substantial damage today to that “cocktail” brew (the fund’s down nearly 2%), I decided to stay put. By chance, I rebalanced Friday and sold off a bit of OPGSX. That proved fortunate.
Predictions ….. Who the f knows? I agree somewhat we’re in a bubble. But, as Rosenberg mentions, it could continue on for years. The action today is nasty in the metals and bond markets for sure.
Thanks @bee for noting. It is one of the more in depth interviews I’ve seen.

Not a lot of port moves specifically for 2022. We are nearing end of 10th year of retirement. We use 5-yr retirement portfolio strategies and are nearing the end of our 2nd 5-yr plan (June 2022). All major moves towards next 5-yr plan have been gradual/cumulative over past six months or so and will be completed by June.
Core for next five years will consist of 11 AA OEFs (and possibly 1-2 more) that can be detailed here or via PM if anyone is interested. Still reluctantly holding a smaller slug of dedicated bond OEFs (HY Munis, BL, Multi, ST HY), significantly reduced in number and aggregate $ amount from initial 5-yr plan plan. Also initiated much larger explore section during 2nd, 5-yr plan that will carryforward in next one, comprised of a coupla indivdual stocks and a coupla dedicated stock ETFs and OEFs. Former 10-yr CD ladder initiated at start of retirement continues to see final rungs fall off w/o being replaced. Maturing CD proceeds continue to be rolled to much higher risk cats, primarily explore stuff. Keeping an eye on 5-yr CD rates this year as they inch back to levels that may be acceptable replacements for some dedicated bond OEF holdings.
Will continue to make (what are effectively) tax-free IRA w/d's for personal spending wants/needs up to taxable income threshold in lieu of making Roth conversions. Continue to be ~96% under the umbrella (read, in tax-deferred a/c's) and ~4% in taxable. Haven't paid a dime in FIT/SIT since final year of employment in 2012 (state has actually been paying us $50 annually last coupla years via tax credits) and starting to look like that will all continue for at least five more years or until RMDs are um, required. Life-long tax planning strategy has been to Avoid, Defer, Minimize, and pay them on our terms when we want (read, ultimately have) to pay them.
REALLY appreciated the contributions of many of MFO regulars. Keep up the great work and contributions here and Happy New Year to all!

I’m not hallucinating. Just misread Wood’s words. A total 40% appreciation is possible over 5 years.. 40% annually is totally wacko!

I'm imagining what the Upside/Downside capture ratio relative to the S&P 500 would have to be over the next five years to deliver a 40% annualized return after the longest bull market in history. You have to believe U.S. stocks are due for another five very strong years or that ARKK is run by the greatest investment genius in history to believe 40% annually is possible for the next five like the last five. And even if it is possible, will investors be able to stomach the volatility along the way or will they time their buys and sales poorly just like they did before?

Our KISS of a portfolio ended the year with 80% in PRWCX/TRAIX and 20% in AKREX. So, not a bad year with low to mid 70's exposure to equities by year end.
Our average age is 56 and probably have been on the light side of equities for our age the past 15 years since PRWCX has dominated our investments, but we are okay with that. We'll keep saving, but probably have enough saved for retirement already, just need to keep growing it at a modest rate for the next handful of years. Grateful to be debt free.
Have decided equity exposure is a bit higher than preferred at this point and am in the process of reducing AKREX and moving some of the proceeds into TRAIX and PRFRX for now which is also holding some inheritance monies my wife received recently from her folk's estate. Planning for our equity exposure to be between 65-70% when done rebalancing.

Love the Roth for that reason - No RMD! Yogi says, “And they give ya real money… ” (not cheapened by taxes).
Maybe remotely related … I’ve had decent luck with some tax-deferred money I withdrew 2 & 3 years ago and put in PRIHX. It scores poorly on M*, as I think they’re comparing it to longer dated muni funds. So far, volatility seems more in keeping with a short term or ultra-short bond fund. But, of course that could change. A gain of nearly 4.8% in 2021 on such a liquid, stable (and largely tax exempt) asset wasn’t hard to take.*
*Footnote : The fund invests in below investment grade (junk) bonds and is subject to market risk!
@Tarwheel - I hear ya. Third year of mask mandates about to begin. Makes air travel, concerts, plays, museums, etc. less than enticing - especially, I think, for us older folks. Don’t even think about overseas travel!

@BaluBalu,
TANDX, ~10%
ARTTX, ~5%
FMSDX, ~5%
PVCMX, ~5%
I'm uber conservative...recognizing I have taken on "risk" by being way conservative past several years...still working, I didn't like being idle as I was "semi-retired" for ~ 18months...so live below my means.
Do recognize I've been ok with this during the past several years but past year have taken it on the chin with "silent losses"...due to severe inflation which appears to be getting worse as we head into new year (grocery store, heating bill, conversations with supply chain/vendor mgr's...many taking double digit increases at the beginning on 2022)
Best,
Baseball Fan

msf, thanks for your thoughts. Seems no provision for a bad market cycle of a few years.
They didn't require a withdrawal last year. & just maybe that is how they would handle a bad market of a few years ?!
HNY , Derf

It is complicated. I am not sure why there is so much focus on the "4%" rule when the IRS forces people over 75 to remove 4.07% of your retirement accounts. By 80 it is up to almost 5%.

This conflates 4% of starting amount (inflation adjusted) with 4% (or 5%) of remaining balance.
The 4% rule is supposed to enable one to spend down savings so that they are not depleted for at least 30 years. But the savings are, or may be, depleted at some point past that.
As one draws down one's savings, the 4% of the original value gradually evolves into 5%, 6% and more of the remaining balance. The RMD calculation is designed to automate this while adjusting for a gradually growing life expectancy.
That is, as one grows older without dying, one's expected lifetime expands. So year by year, one needs to plan on living longer and draw down a bit slower (as a fraction of remaining assets).

The estimable Professor Snowball wrote about ARKK in this month's 'Briefly Noted' commentary.
"Despite a multitude of warnings, here at MFO, at Morningstar, and elsewhere, investors absolutely poured money into the ARKK Innovation ETF in December 2020 and January 2021. The warnings were pretty straightforward: (1) you can’t buy last year’s returns, so don’t let those sway your decisions, (2) ARK was wildly understaffed and inundated (net $20 billion in 2020) with dumb money, and (3) manager Cathy Woods has a consistent long-term boom-and-crash track record, with the boom having just occurred."
"Good news for investors committing their money on December 1st: you’re only down 13% since then. Less good news for folks who made ARKK one of their New Years 2020 resolutions: you’re down 24%. Folks who gave shares as a Valentine’s Day present? They’re underwater by 39%."

“We expect a compound annual rate of return of roughly over 40% over the next five years.”
Perhaps her current picks will appreciate by that amount. But - will she have any investors left in her fund by than? Having played around with one of these hot potatos this year (DKNG) all I can say is “Ouch”.
I used to think gold mining funds were volatile!

Looking for some guidance here. As previously mentioned, I hold MSSMX and WAMCX and they have underperformed in 2021: 5.78 and 5.46. I noted @gk3105gklm comment about how he traded out of them as they are “ex champs”. Wondering what prompted that and when?
Running MFO premium for CSMCX FCPGX MSSGX WAMCX and NEAGX and it’s clear that MFO also dropped my two funds to a 1 and 2 rating in 1 year performance. Side Note: Wouldn’t it be great to have MFO alert you when a fund in your watch list or port dropped in overall rating? Valueline did that. Would it be in time or advantageous?
The rating drop was deserved based on this years performance. Sure. These two funds have highest risk in 1 and 3 year as well. 10 yr performance, MFO still doesn’t like MSSGX in terms of overall rating. It’s rated a 2 for 10 yr. I don’t recall that when I first evaluated. 20 year it’s a 5. FWIW: M* ratings based on past performance remain unchanged 5*.
NEAGX is rated 5 for all periods. Wondering why this fund didn’t make my screening process. I’m still reviewing this.
While I’m deciding whether to stay or make a change with these two funds, I’m equally as interested in learning how to better evaluate an exit or change. Not a momentum trader. “Consistent Underperformance” is somewhat subjective, no? Is that 1 year or 2 years if there’s been no change to mgmt or underlying fund strategy change. It could be what @BenWP said… just some bad choices in high flying small caps. What makes me confident that they will correct?