Reply to @Charles: Very beautiful pic!
Here's an example of a lesson learned. I invested - probably about a year and a half more or less, in a London closed end fund (it's on the US pink sheets) called Dolphin Capital Investors. It is invested heavily in Greek (and surrounding area) resort property. It had been ob-lit-er-ated, going from about $3 and change to about 30 cents. The property owned is gorgeous - just beautiful. The book value, if one were to believe book value, was a couple of bucks. The investment was rather tiny - a lottery ticket bet.
A while later, the situation in Europe got worse and it hadn't done anything (was likely already at the point where anyone who'd wanted to sell had GTFO). Again, the position was small enough that it didn't matter, but it wasn't doing anything and I just gave up on it. Had I waited not that much longer, Third Point took a stake in it in the Fall and it just about doubled. The situation in Europe was getting worse, but the story hadn't changed - the land was still impossibly beautiful, still traded at a fraction of book - and I didn't need to sell. It wasn't doing anything and I got bored and wanted to move on to something else. Had I waited a little longer, the idea would have started to play out as I'd hoped it would. Who knows - it still trades at a fraction of book value (at about 26% of book value, according to Yahoo Finance), but the idea being that I learned a lesson from being too short-term on an idea.
The Andersons is an unfortunate instance in terms of volatility. There are not too many plays (in terms of publicly traded companies) on what I call "agricultural infrastructure" at all in the world, and fewer as they get bought up (Viterra, which was bought by Glencore, which I own) or are in the process of maybe getting bought up (Graincorp, which I owned and then sold when Archer Daniels Midland made an offer).
The Andersons is a very Americana company - Ohio company with grain elevators around the Midwest, a railcar operation, Fertilizer operation, ethanol operation and a small retail operation - there's even a division that makes things out of corn cobs, such as pet bedding. Family operation that started as a single grain elevator and still remains family-run. A couple of the smaller aspects I could do without, but a lot of great, productive assets. Still, it's a very small float and it's almost absurdly volatile. The seasonality of it, if it plays out again, makes for a great trade, but it's too bad as I'd love to own the assets over a longer-term. If the Archer Daniels Midland/Graincorp tie-up does not happen, I'd own Graincorp again in a second, as while that isn't low-key either, it has a terrific dividend policy.
Instead, I own Glencore, which is highly volatile, but offers a global collection of productive assets (including hundreds of thousands of acres of owned or leased farmland), is well-managed and rather infamous. ("The Biggest Company You Never Heard Of": http://www.reuters.com/article/2011/02/25/us-glencore-idUSTRE71O1DC20110225 - "Bigger than Nestle, Novartis and UBS in terms of revenues, Glencore's network of 2,000 traders, lawyers, accountants and other staff in 40 countries gives it real-time market and political intelligence on everything from oil markets in Central Asia to what sugar's doing in southeast Asia." "Their knowledge of the flow of commodities around the world is truly frightening." )
It also is another instance of a story playing out as it absorbs Viterra and Xstrata (and possibly more over the next couple of years), becoming both a large-scale commodity company and the largest commodity trading company on the planet.
Glencore has not done as well as I'd hoped and it's been a long, strange trip with the Xstrata merger that involved sovereign wealth funds and mediation by former Prime Minister Tony Blair in the middle of the night. (http://www.dailymail.co.uk/news/article-2200655/The-million-dollar-man-How-Tony-Blair-wafted-Claridges-secure-massive-pay-day-just-hours-work.html) "Tony Blair made $1 million in less than three hours by brokering late night talks between billionaire businessmen trying to save a £50billion mining deal."
However, despite issues, I remain a long-term holder, as I think Glencore remains a value and unique in terms of what it offers. Additionally, I think it's evolving as it becomes a much larger entity.
Mark said: " Consider the market investment road you traveled to reach that point and how long it took you to reach that end. I'm assuming that it's a radical departure from the vista you perceived when you began your investing travels. It certainly is for me."
I think the market has an incredibly short-term mentality in modern day and I think people are effected by the rapid money flows one way or another - as I've noted before, the average holding period for a stock has gone from several years to several days. However, I think there's real downsides to attempting to keep up with what's working now aside from the fact that I think it quickly becomes exhausting and not enjoyable. Personally, for me, it becomes a matter of having a selection of duller, consistent, low beta names and a selection of bets on various themes and/or assets that are - to varying degrees - more aggressive. If the story changes, I'l definitely reconsider, but I don't see selling anything I own for quite a while, and will continue to reinvest dividends when possible.
________________________________________________
As for fundamental problems that keep people out of the markets, I think:
1. If you are an investor in this country, it's likely that you taught yourself to some degree, because there is nothing at the high school level regarding personal finance. I think that's terribly unfortunate. I think to some degree it's the desire of financial companies not to have the populace (as a whole) highly educated in terms of investing. Still, if everyone was educated in personal finance at the high school level, you wouldn't have situations like the Facebook IPO, but I think you would have less volatile markets and a population that would likely see greater benefits from financial markets. People are still going to chase hot stocks, there's still going to be issues, but if people go out of high school with basic knowledge about personal finance and investing, I really don't see a downside.
2. I think people remain insecure and concerned about the big picture (as noted above) and do not want to commit to anything not believed to be safe. However, I'm a little concerned that a lot of average people do not understand the workings of the fixed income market and will be disappointed if bonds really turn after believing that they are safe.
3. Trust is broken and that will take time to repair. People don't trust the markets and I think to some degree I don't blame them. The media doesn't explore the reasons why people are staying out of markets, nor does it try to assist people - you instead get stories in Smart Money and the like that essentially scream, "YOU'RE MISSING IT! WHAT'S WRONG WITH YOU?" It doesn't help anything or anyone.

Hi Guys,
It was a different investment community forty years ago. In that hazy past, the odds were that individual investors were mostly trading with each other.
In that yesteryear, private investors executed 70 % of the daily trading volume; institutions accounted for the remaining 30 %. The science or art of investing was very primitive; it was basically dumb, weak money exchanging stocks with equally dumb, weak money. There were remarkable exceptions; these exceptions quickly became rich (and sometimes poor again cyclically).
Today, that structure has been completely reversed and turned on its head. Now the bulk of the trading (like 70 %) is done by smart, strong institutional money. As an individual investor, it is highly likely that if you are trading some equity position, an institution is taking the other side of that gamble.
That trading partner poses a significant threat. Over time, he has become relatively and absolutely a more powerful opponent. His advantages are manifested by his composite unbounded financial resources, his unfettered timeline, his formal educational background dominated by top-tier MBA graduates, his mathematical sophistication especially in the statistical and operations research arenas, his unlimited research time commitment, his supercomputer access, and his sheer numbers.
The institutional participant is a daunting challenge to private investors. It is not a fair or a level playing field. It is something like the championship Baltimore Ravens professional football team competing against a ragtag group of tag football high school part-time players. The outcome is basically predetermined.
In the early 1990s, Peter Lynch published his blockbuster best seller “Beating the Street”. He projected that the “average Joe” could tame the excesses of Wall Street. Lynch ended that exceptional tutorial with 25 Golden Rules for superior investment outcomes. However, even at that earlier date, the private investor was becoming overmatched by the resources and skills of the institutional giants.
Even the legendary Peter Lynch magic was eroding. His major outsized performance was registered in the late-1970s to the mid-1980s. In that glorious period, his firm permitted him to participate in the inefficient small company and foreign company marketplaces. He invested so broadly and prolifically that it was said that Lynch never saw an investment opportunity that he did not like. But the times turned against him in the late-1980s, and he struggled to generate market-like rewards for his now excessively large client base. He salvaged his reputation by retiring in 1990 at age 46 after a few very mediocre years.
Interestingly, Jeff Vinik, Fidelity managements replacement for the departing Lynch, was soon summarily fired in 1996 when he attempted an ill-fated timing rotation to bond positions. Even as early as the 1990s, the major investment houses were clamping down on the freedom of choice prerogatives that were afforded earlier superstars like Peter Lynch. Vinik eventually recovered while launching and managing a highly profitable Hedge Fund operation. He currently owns a host of professional sports franchises around the world.
That’s spectacular success, even for a Jersey-boy. It does prove a major point. Rare as they likely are, active investing can have huge paydays.
But, there has been a sea change that has made the task far tougher for today’s amateurs, semi-pros, and even full time professionals. Everyone is substantially smarter, better informed, and can react with computer-like lightening speed.
The global statistics collected at places like Morningstar, Dalbar, and Standard and Poor’s demonstrate just how demanding it now is for the part-time investor to produce excess returns above market Index averages. When reviewed in total, these data sets are dismal for the individual investor. On average, we investors recover only about one-third of the returns that the mutual funds that service us deliver. We are pitiful in our entry-exit timing maneuvers. The marketplace is essentially a winning institutional game now.
I recognize there will always be a few highly skilled, insightful, and lucky souls who will outperform the dominating monoliths. They will be rare birds indeed. There are so many smart, informed, and talented financial outlets nowadays competing for the golden ring that they tend to neutralize one another.
They cancel each other out, quickly negating any momentary advantage, and deliver sub-par performance to their customers because of the continuous frictional cost to compete so energetically. Costs are like a hole in a water bucket; it’s a constant drain to wealth accumulation under all circumstances.
So, currently, my takeaway is that it is nearly impossible to “Beat the Street”. That’s just not going to happen for most of us.
But some segment of us will persistently try. Many current MFO members are in this camp. What is the game plan, the strategy, and most importantly, the prospects for this brave band of fearless warriors? Let me invent a likely generic profile to explore the issue for comparative purposes.
The committed private active investor is middle aged with a college degree. He is smart, dedicated, motivated, and industrious. He exchanges ideas on websites like MFO, accesses Morningstar for needed mutual fund data, and probably visits sites like Pony Express Bob to identify momentum attractive candidate funds for consideration. He likely deploys technical analyses using charts to guide perhaps a sector rotational strategy. It is a time-consuming struggle to access and absorb the mountainous pile of data available. Constant attention is necessary. Decision making is a lonely process.
Given the dominance of institutional investors these days, his competition is probably an institutional giant. Perhaps it’s a Boston behemoth, perhaps one of Chicago’s monsters of the midway, or perhaps it’s a team from the illustrious New York Genius network. Surviving against that cohort is hazardous duty. Given their many advantages, the odds of outwitting and outplaying these fierce and tireless opponents must approach zero. And adding the heavy burden of costs into the equation only deepens the challenge.
Given today’s environment and the lineup of market participants, what Peter Lynch interpreted as an individual investor advantage has morphed into a decided disadvantage. Currently, an active private investor is definitely playing a Loser’s game.
Why fight the tape? Since smart institutional investors engage to neutralize one another, an increasing number pf this elite club are joining the passive investment universe. Their numbers will swell in the future. It is doubtful that these numbers will ever penetrate the 50 % level, since institutional warriors enjoy the hunt and the profit incentives too much. That’s all goodness because active market participants are necessary to supply the requisite market pricing mechanism. Pricing competition keeps the marketplace roughly efficient.
Indexing is a reasonable solution to this dilemma for individual investors. It guarantees just short of market rewards if the low cost and low trading disciplines as advocated and practiced by outfits like Vanguard are followed. Even Warren Buffett has acknowledged the wisdom of this approach for most investors.
I encourage you to seriously consider the passive Index option for a more comfortable retirement. Although I currently own a mixed bag of actively managed and passively managed mutual funds/ETFs in my portfolio, I am slowly switching to more and more low cost passive holdings. Portfolio management need never be a overly simple either/or decision; compromise is a useful tool to reduce risk.
So it might well be time to step away, not to smell the roses, but to readdress your portfolio mix. The accumulating evidence overwhelmingly demonstrate a participant sea change and a slowly developing tsunami of institutional investors flooding towards the Index option. Recognize those perturbations and respond to your own special interpretations of those factoids. The institutions are making smarter decisions these days; just look at their profit margins
Certainly there will always be winning active investors who produce outsized market returns. Jeff Vinik is one such wizard. But there will also be lottery winners too. The key is to forecast these winners and their persistence. That’s a Herculean chore. Fat chance on accomplishing it.
Talk to you guys further down the road.
Best Regards.

Good article Ted. I liked the part about frequency of checking portfolio (which I do daily =)) most interesting:

In a financial context, myopic loss aversion is represented by the frequent evaluation of a portfolio’s performance, which can lead to shifts in an investor’s long-term asset allocation mix. Checking a portfolio’s performance more frequently increases the likelihood of seeing a loss, which produces more mental agony than comparable gains satisfy. This, in turn, can cause investors to tolerate less exposure to more volatile assets.

I think you got some of the key companies David. Andy is right about FMI.
Here are a few more for you to consider, including some with high profile, like Ariel, Fairholme, First Eagle, Hussman, Jensen, Leuthold, LKCM, Osterweis, Third Avenue, Torray, Weitz...
Acadian Asset Management LLC
Advance Capital Management Inc
ALPS Advisors, Inc.
Ariel Investments, LLC
Azzad Asset Management, Inc.
Capstone Asset Management Company
Century Capital Management, LLC
Fairholme Capital Management LLC
FCA_Corp
First Eagle Investment Management, LLC
Heartland Advisors, Inc.
Hussman Strategic Advisors, Inc.
Jensen Investment Management, Inc.
Lee Financial Group Inc
Leuthold Weeden Capital Management LLC.
Luther King Capital Mgmt Corp
Osterweis Capital Management Llc
Pear Tree Advisors, Inc.
Robeco Investment Management, Inc.
Third Avenue Management LLC
Thomas White International Ltd
Torray LLC
Wallace R. Weitz & Company
Yorktown Management & Research Co Inc
Here are the funds:







BTW1. I counted some 770 fund families managed by 1400 companies. Can you believe?
BTW2. I left Artio off the list, but it too qualified I think.
BTW3. A related theme perhaps is new funds by established companies that run counter to their tradition...PIMCO with equity funds, Matthews with a bond fund, come to mind.

Whitebox Long Short WBLFX was masterful through the financial crisis...

Here's ASTON/River Road Long-Short ARLSX more recently:

Got it?

Reply to @Hiyield007: Hello again Hiyield. I suspect that this reluctant bull still has some room to run. But please beware, HFMDX, WSBEX, and SMVLX each drew down 50% during the financial crisis:

Hi Guys,
Like Old Joe, I found Morningstar’s Don Phillips article on the active-passive controversy interesting; it contained both elements of fairness and balance.
But, but it was incomplete and shallow in its analyses of the debate.
First, I think very highly of Don Phillips and the Morningstar organization that he helped create as one of its founding fathers. Both he and the Morningstar firm are knowledgeable, fair-minded, and trustworthy. I often exploit their resources.
However, in the referenced article, Mr. Phillips’s work was unfinished in that it did not probe deep enough to really test some of the main components of the active-passive mutual fund debate. Here are a few of the shortcomings and issues that I discovered in the article.
One overarching cautionary factor that must always be considered when assessing Morningstar research is that the outfit’s primary purpose is to uncover superior actively managed mutual funds and stocks. Their main raison d’etre (in addition to making a profit) is to identify superior fund holdings. So Morningstar has a financial incentive to highlight active fund management. I freely acknowledge that Morningstar does yeomen work to enforce this incentive.
Phillips erects an easily destroyed false strawman to advance his goal. He says “Although the public perception that all active managers trail the market is false”. That’s a strawman target; we know better. I propose that almost all seasoned investors fully realize that some small fraction of actively managed funds will deliver superior results (positive Alpha) for extended periods. The problematic issue is to identify this rare group a priori. Morningstar evaluation methods have always struggled and often failed with this assignment.
The Phillip’s study is based solely on category ranking, a mere ordering of funds within the cohort. This approach simply does not go far enough in the assessments. The returns distribution curve is asymmetric around the market return normal, and mere ranking does not capture that asymmetry.
For example, in any given year, it is likely that about one-third of actively managed funds will generate excess returns relative its benchmark. These successful entries struggle to gain a few percentage points in superior performance. In general, the two-thirds underperforming funds generate sub-par results of a larger magnitude. Hence, when evaluating on actual investor rewards, active mutual fund management is an overall Loser’s game; the odds are not tilted to favor the individual investor.
Phillips reinforces the John Bogle argument that costs not only matter, they matter greatly. Honest Index funds, not some active fund masquerading as an Index product, but having high turnover and high costs, enhance the odds for a successful portfolio. Rick Ferri’s recent book emphasizes that as the percentage of active funds in a portfolio increases, the likelihood of producing excess Alpha above an Index benchmark dramatically decreases. Here is a Link to a Morningstar interview conducted by Scott Burns with Ferri:
http://quicktake.morningstar.com/widget/VideoPlayer.aspx?vid=352437
In a sense, the Phillips piece is an advertisement for low cost Vanguard products.
Finally, examine the table that compares Vanguard Index rankings against Vanguard actively managed products. Except for the longest 15-year period, the rankings are nearly identical. Certainly the costs are not. The natural question is: “What is the individual investor getting for the incremental cost of active management?” The answer seems to be “nothing” except for the 15-year timeframe. That data point is such an outlier that I suggest it should be revisited searching for perhaps an error. It is either an error or an anomaly.
So, I believe that the Phillips article was fair and balance, but it did not go far enough in its assessment. In the end, it is delivered returns that matter most, not just ranking within a category.
Best Regards.

Yes indeed, a world class fund that masterfully handled the 2008 financial crises and has been rewarded handsomely with $69B in AUM.

This is not surprising. I have never seen a company go from small-but-mighty to big-and-growing to fallen-on-hard-times to giving-up-the-ghost in such a relatively short time span. It wasn't that long ago that Artio International Equity Fund was as good as it gets. I will be curious to see if there is any kind of autopsy done after the closing that will provide real insight into what happened. Right now, I have some pretty good ideas, but they are just guesses. Pell and Younes were the wunderkinds of international fund managers for a number of years. Now they will not even remain with the new company. Of course, there is not much left to manage. No word on what will happen to Artio Total Return Bond Fund, which has continued to do well, despite loss of assets. Sareholders of Artio (ART) have seen share prices plummet in three years from $30 to $2.10 (yesterday). What a mess.
This morning it was announced that Aberdeen Asset Management PLC ("Aberdeen"), a global asset management firm based in the UK, agreed to acquire Artio Global Investors Inc. ("Artio Global" or "Artio") for $2.75 in cash per share. While this e-mail is coming to most of you in the middle of the night, I wanted to be the first to inform you of the transaction and provide you with as much information as possible at this time.
With the decline in our assets under management over the last couple of years, we felt that there would be significant benefit in partnering with an organization like Aberdeen, which has vast financial strength and a global footprint of analytical resources. We are confident today that this transaction is in your best interests.
Aberdeen was formed in 1983 and as of December 31, 2012 had over $314 billion in assets under management. The firm has offices in 23 countries including the US where Aberdeen operates as a registered investment advisor.
Like Artio, Aberdeen is focused on institutional and intermediary clients and has core competencies in international and global equity as well as fixed income. In addition, Aberdeen offers property and tailored solutions. They have an extensive network of 500 investment professionals located around the world.
Given the similar investment-centric cultures both firms follow, Aberdeen believes that Artio's High Grade and High Yield strategies will complement its existing capabilities. At the closing of the transaction, it is anticipated that Aberdeen will add Artio's High Grade (Total Return Bond) and High Yield teams to its core fixed income capabilities. Both these fixed income groups will benefit from the increased resources Aberdeen offers. Richard Pell and Rudolph-Riad Younes will continue to manage our International and Global Equity strategies through the closing of the transaction at which point Aberdeen will take over management responsibilities, subject to client consent. After the transaction closes, it is currently expected that they will not transfer to Aberdeen.
The transaction is subject to customary closing conditions, including US antitrust approval, the consent of a majority of Artio Global's shareholders and the consent of certain Artio Global mutual fund shareholders. The transaction is currently expected to close by the end of the second quarter or early in the third quarter of 2013.

Reply to @ron:
Hi Ron,
Indeed it is different strokes for different folks. But even admitting that each retiree must seek his own unique comfort zone, a few general policy rules are suitable for almost all retirees.
I have done a zillion Monte Carlo simulations using a host of Monte Carlo codes including one that I developed for my own early application needs. Results do vary a little, but some general rules of engagement can be extracted from the myriad solutions.
The most obvious generic finding is that time dominates all other considerations, both in the accumulation phase and in the projected distribution phase. Almost everyone recognizes this non-controversial factor.
A very critical factor, especially during a portfolio’s drawdown phase, is returns volatility, its standard deviation. A few misguided MFO members insist that portfolio volatility is meaningless. That position is simply plain wrong.
What is critical for portfolio survivability is compound return. A rigorous equation links compound return to both annual average return and its standard deviation. Given an annual return, a volatility increase works to reduce compound return. During its drawdown phase, high volatility operates to enhance portfolio failure (bankruptcy) rates.
That’s why many financial advisors recommend a larger commitment to bond-like products within retirement; it operates to reduce overall portfolio standard deviation.
The MRD issue is really a non-issue; it is mandated by law. Penalties if violated are just too damaging to accept. Besides it doesn’t usually impact a drawdown plan if that plan follows a 4 to 5 % withdrawal rate. The MRD schedule doesn’t demand that level of drawdown until about age 78 or 79. So MRD requirements usually don’t impact investment decisions until that advanced age.
BobC is perfectly on-target when he generalizes that Monte Carlo retirement applications typically yield an allowable 4 to 5 % drawdown schedule during retirement. It was interesting that most of his clients adjusted cash flow needs downward during lean portfolio return years. His clients show considerable wisdom.
Monte Carlo simulations can be used to demonstrate that wisdom. Portfolio survival rates are dramatically improved if some flexibility in portfolio drawdown rate is practiced as a matter of policy.
For example, most Monte Carlo codes automatically increase withdrawals as a function of COLA changes. However, if a retiree is sufficiently disciplined and motivated, he can elect to sacrifice any inflation increase when his portfolio suffers a negative year. That simple tactic works wonders to enhance portfolio survival statistics. A host of other strategies can be implemented if the portfolio is exposed to a series of bad years.
Certainly, portfolio survival becomes a critical issue when current and projected future market rewards approach the planned withdrawal rates. Major surgery is required given that dire forecast. You can identify the critical tipping points for your specific portfolio by doing “what-if” scenarios using the Monte Carlo tool.
I wish you well in your retirement.

Grantham is taking one year CBO projection and using it as if it was the long term number. I have to call it as BS!
Here are some more details of the latest CBO projections.
http://blogs.wsj.com/economics/2013/02/05/charts-10-years-in-the-u-s-economy-according-to-cbo/
I think the Economy might grow slower going forward from 3% (real, i.e. after inflation) long term to 2% (real) and that might be higher than average for the developed world. Even China and other EM has cut their long term projections down.
I would also like to challenge the premise that Boomer generation is in asset liquidation mode and equity markets is likely to go down from here. However, while the Boomer generation was bigger than GenX (mine), the size of GenY is much bigger. GenY is at the beginning of asset gathering (home, cars in addition to Financial assets) while Boomers are not liquidating all assets at once. So, my expectation is that it will balance out. Besides, GenY is likely to consume more and Boomers is still be consuming, in particular health related consumption is likely to go up. People that are working in health care (typically younger people) will in turn spend their income on other sectors. So, the withdrawal effect of Boomer generation is going to be much less than claimed to be.
However, I agree with Grantham that stock market returns are not necessarily going to reflect the Economic growth. Grantham has given a number of reasons why fast growth did not always translate to high returns. One reason that was not managed is the stock dilution in those fast growing countries that companies in order to raise money to expand they offer more shares and even if the earnings are growing, on the EPS measure the earning growth is slow or declining. We have seen this in the last 4-5 years as EM has maintained much higher growth than developed world but stock returns were worse in many EM countries. The biggest is China.
To close up, just like many others Grantham reports are interesting intellectual exercise but their research is not particularly helpful for their own funds.

Hi Guys,
I submitted the following post to the MFO discussion group in late January recommending Monte Carlo simulations as a means to scoping the huge uncertainties with the retirement decision and an acceptable drawdown rate that generates a high likelihood of portfolio survival for the entire projected retirement period.
I believe it is applicable to the current discussion so I repost it here:
Retirement decisions are surely among the most difficult and stressful that anyone but everyone must eventually address. And the most successful retirements will be achieved the sooner that that issue is confronted; the earlier the better.
Up until just 20 years ago, that vexing problem could only be insufficiently analyzed using deterministic methods that completely failed to capture the uncertainty of future portfolio returns and its volatility.
Recently, these forecasting deficiencies could be mostly relaxed using Monte Carlo simulation calculators. I say relaxed because the uncertainties of the future marketplace can never be removed. However, Monte Carlo techniques can parametrically explore the impact of these uncertainties on portfolio survival likelihoods given various withdrawal rates. With super speed, these Monte Carlo simulations will estimate retirement wealth survival for whatever scenario the simulation user elects to study. Portfolio survival probabilities are the final output.
These calculations are completed with lightening speed on numerous websites these days. Here are Links to two such sites:
http://www.moneychimp.com/articles/volatility/montecarlo.htm
http://www.flexibleretirementplanner.com/wp/
The first Link is to the MoneyChimp site. It is simplicity itself and allows for both a pre-retirement portfolio estimated return and volatility and a post-retirement projected return and volatility. It is extremely fast as it performs 1000 random simulations. Since the controlling returns are randomly selected within the machine, identically repeating the same calculation will generate a slightly different probability outcome.
The second Link is to the Flexible Retirement Planner site. It is slightly more complex than the MoneyChimp site, but it is also more detailed in its analyses. For example, it divides your portfolio into taxable, deferred tax, and tax free components. Also it permits several spending options during the drawdown phase of the retirement.
Both sites provide excellent Monte Carlo simulators. I recommend you try both of them. Do numerous “what if” scenarios to test the survivability robustness of your approaching retirement.
I am certain that these Monte Carlo analyses will better inform your savings, your retirement date, and your portfolio withdrawal rate decisions.
I resorted to Monte Carlo computations when making my retirement decisions, and believe they emboldened me and gave me some needed comfort. By way of full disclosure, I did not use the two simulators that I referenced; they were not available at my critical moment.
When dealing with uncertainty and not deterministic events, Monte Carlo methods are the proper tools to apply.
Good luck and Best Wishes.
Many other Monte Carlo simulation sites are also available on the Internet
I like and occasionally still use the Financial Engines product developed by Noble Laureate Bill Sharpe. It is mathematically a rigorous and superior Monte Carlo tool. Bill Sharpe has dedicated his work to improve the lot of us small independent investors.
One issue that I currently have with Financial Engines is that I access it through my Vanguard affiliation so when it recommends some portfolio modifications, that sponsored site tends to follow the Vanguard tradition of fewer holdings and Index-like elements. The financial linkage with Vanguard provides a potential incentive for biased recommendations and makes their proposed changes somewhat suspect. That’s just me speculating aloud without any substantial evidence of any bias.
You can gain access to the Financial Engines website by visiting Terry Savage at the following address:
http://terrysavage.com/
By clicking on the Financial Engines box you can get a free one year subscription to that planning tool.
These Monte Carlo tools surely do not remove the uncertainty of future market returns, but at least you enter the arena better armed to deal with those uncertainties. What realistic returns you guesstimate from the marketplace will forever be a potent driver to any decision.
I hope this helps.

http://www.sec.gov/Archives/edgar/data/1413594/000110465913008659/a13-3126_4497.htm
497 1 a13-3126_4497.htm 497
ABERDEEN FUNDS
Aberdeen Emerging Markets Fund
(formerly, Aberdeen Emerging Markets Institutional Fund)
Supplement to the Aberdeen Funds Statutory Prospectus and Statement of Additional Information, each dated February 27, 2012, as supplemented to date.
The Board of Trustees of Aberdeen Funds (the "Board"), on behalf of its series, Aberdeen Emerging Markets Fund (formerly, Aberdeen Emerging Markets Institutional Fund) (the "Fund"), recently approved a proposal to limit inflows to the Fund in order to protect the integrity of the investment process that is used to manage the Fund. Accordingly, effective February 22, 2013 (the "Closing Date"), the Fund will no longer accept purchase orders from new investors or exchanges from other Aberdeen Funds into the Fund by new investors. However, the categories of persons described below will continue to be able to invest in the Fund:
• Existing shareholders, as of the Closing Date, will be permitted to make new investments into the Fund directly.
• Existing shareholders, as of the Closing Date, will be permitted to continue to purchase Fund shares through the Automatic Asset Accumulation Plan and through dividend and capital gain reinvestments.
• Existing shareholders, as of the Closing Date, will be permitted to transfer assets from one existing account to another account within the Fund, regardless of whether such account is under a different registration or holds shares of the Fund as of the Closing Date. Such shareholders will be permitted to make new investments into such account.
• Existing shareholders, as of the Closing Date, will be permitted to exchange shares within an existing account from one share class to another share class of the Fund, subject to any investment minimum or eligibility requirements detailed in the Fund's prospectus. Such shareholders will be permitted to make new investments into such account.
• 401(k) plans, other qualified employee benefit plans, and firm-wide model-based investment programs, each with existing accounts in the Fund as of the Closing Date, will be permitted to purchase additional shares in the Fund.
• Financial intermediaries trading in an omnibus structure that currently have accounts in the Fund or that convert fully disclosed accounts to an omnibus structure will be permitted to purchase additional shares in the Fund on behalf of existing or new clients or customers.
Existing shareholders, as of the Closing Date, who later sell all of their shares of the Fund will not be permitted to establish new accounts or reinvest in the Fund. In addition, the Fund reserves the right to accept purchases from institutions that have notified the Fund's adviser or distributor of their intent to invest in the Fund prior to the Closing Date, regardless of whether such institutions hold shares of the Fund as of the Closing Date. The Fund's Board, and officers and employees of the Fund's adviser and its affiliates, will not be permitted to purchase additional shares in the Fund after the Closing Date unless such investment is through a permitted channel (i.e., 401(k) plan). The Fund reserves the right to accept purchases from the Aberdeen Multi-Asset Allocation Funds, regardless of whether such funds hold shares of the Fund as of the Closing Date. The Fund reserves the right to accept investments transferred from other Aberdeen emerging markets vehicles at its discretion.
The Fund will continue to limit inflows to the Fund until otherwise notified.
Effective upon the Closing Date, the prospectus of the Fund is supplemented by modifying all references to the ability to purchase shares of the Fund as set forth in this Supplement.
Please retain this Supplement for future reference.
THIS SUPPLEMENT IS DATED FEBRUARY 8, 2013.

"The power of compounding is so phenomenal that a long-term investor should strive to avoid losses that interrupt the process. We did not believe the Federal Reserve would instigate an $85 billion a month bond buying campaign, dubbed “unlimited QE,” that’s focused on the unemployment level. Allocating roughly a trillion dollars at today’s record-high bond prices makes no sense. Excessive borrowing to buy wildly overpriced assets are common causes of capital destruction. Misallocation based on extremely easy credit has contributed materially to the two major market declines in the past 12 years. This past year the mindless rush for yield drove investors into the danger zone once again. “Stretching for yield” without understanding the source or true risk for yield contributed to the financial crisis in 2008. This year, across the globe, total central bank stimulus could exceed $8 trillion. This is unprecedented, can’t be ignored, and provides a powerful but artificial tailwind for equities."
Exactly. Very impressive performance and compelling fund, as well.

Mr. Auxier runs Auxier Focus Investor AUXFX.
Link to his latest quarterly report:
http://auxierasset.com/2012/12/31/auxier-report-year-end-2012/
Since 1999, this guy knows how to control risk and still beat the market:

Down side and draw down deviations 7.4% and 8.6%, respectively, through end of last year.
He also initiated an institutional share class last year with a bit better ER of 1.1 for $250K min versus 1.25 for investor class. Auxier AUM is currently $270M, up from $147M when David first profiled AUXFX a couple years back, now archived.
From Mr. Auxier's latest commentary:

The power of compounding is so phenomenal that a long-term investor should strive to avoid losses that interrupt the process. We did not believe the Federal Reserve would instigate an $85 billion a month bond buying campaign, dubbed “unlimited QE,” that’s focused on the unemployment level. Allocating roughly a trillion dollars at today’s record-high bond prices makes no sense. Excessive borrowing to buy wildly overpriced assets are common causes of capital destruction. Misallocation based on extremely easy credit has contributed materially to the two major market declines in the past 12 years. This past year the mindless rush for yield drove investors into the danger zone once again. “Stretching for yield” without understanding the source or true risk for yield contributed to the financial crisis in 2008. This year, across the globe, total central bank stimulus could exceed $8 trillion. This is unprecedented, can’t be ignored, and provides a powerful but artificial tailwind for equities.

Prospective investors in the Fund often ask why we steadfastly avoid such high-profile tech stocks as Apple and Facebook that dominate coverage on CNBC and other financial media. Our answer is that we prefer to own comparatively mundane businesses like Unilever and Tesco PLC that actually have benefited from technology’s inexorable march toward lower unit prices and profit margins.

And from David's original profile:

Management’s Stake in the Fund: rather more than $2,000,000. Mr. Auxier reports investing his entire personal retirement into the fund and has committed to never selling a single share while he still manages the fund. The company reports that “everymember of the Auxier team has significant percentages of their personal net worth invested in the Auxier Focus Fund.”

Reply to @David_Snowball:
The "quirk" is likely due to the marketing channels used, not M*'s creativity. If one looks at the prospectus of an Active Port (R) fund (there are five on the list of 25), one sees they are no load, but:

Class A shares of the Active Portfolio Funds are offered only to certain eligible investors through certain wrap fee programs sponsored and/or managed by Ameriprise Financial, Inc. or its affiliates.

No different from "real" load funds that waive loads when sold through wrap accounts - there's no need to impose a fictitious load here, since the sole way it is sold is "load-waived".
Same as with BYMIX - also listed as a no-load fund, and also for the same reason. Its prospectus reads:

In general, the fund's shares are offered only to current or former Wealth Management clients of The Bank of New York Mellon Corporation and to certain investment advisory firms, individuals and entities that receive a transfer of fund shares from a Wealth Management client, brokerage clients of BNY Mellon Wealth Advisors or BNY Mellon Wealth Management Direct, and certain employee benefit plans.

It doesn't matter what you call these funds. Whether you call them "no load", "front end load", "level load", they are taking investors' money like C shares. You can pay the fund company an extra 1%/year (most of which the distributor turns around any pays to the broker), or you can pay your broker an extra 1%/year wrap fee to get the front end load waived. It's just a packaging change - and it's a change that largely happened many years ago.

Egan Jones was barred for 18mo from issuing some govt-related ratings (http://dealbook.nytimes.com/2013/01/22/egan-jones-barred-for-18-months-on-some-ratings/.) No surprise, given that they downgraded the US (as did S & P.)
Not saying that S & P is without fault by any means, but the timing this far afterwards is rather interesting, as is the fact that pretty much everyone involved in the financial crisis and incidents afterwards (um, where's Jon Corzine?) have gotten a slap on the wrist, but suddenly the two rating agencies that downgraded the US are in the spotlight.

The Justice Department, along with state prosecutors, plans to file civil charges against Standard & Poor’s Ratings Service, accusing the firm of fraudulently rating mortgage bonds that led to the financial crisis, people briefed on the plan said Monday.
dealbook.nytimes

Anyone who can frequently time these sorts of situations in this kind of market (and speaking of this kind of market, apparently even Al Gore was chatting about the negatives of people having such a short-term mentality on investing on Charlie Rose the other day, I didn't see it) deserves credit. It's difficult to have a long-term mentality in a time period that's exceptionally short-term in its thinking.
As I noted a while back, the average holding period in the '60's or so was around 7 years. The average holding period now is literally around 5 days (http://www.businessinsider.com/stock-investor-holding-period-2012-8).
Beyond that, stocks are yanked around by constant news and noise from an increasing amount of sources, including a couple of Twitter hoaxes that had a significant effect recently on a couple of stocks (http://www.reuters.com/article/2013/01/30/us-sarepta-idUSBRE90T1CF20130130) - one dropped 25% after someone posted faking being famed short seller Muddy Waters. I mean, we live in a time period where someone can tweet pretending to be someone else and just wreck a stock.
The nice thing about this new MFO feature is that I would think it's pretty easy for funds to do and it provides both value to readers and the funds - especially a way for smaller funds to get exposure.
"We are candid about our mistakes as well as our successes and speak in plain language instead of confusing financial jargon."
The candid nature is refreshing. I really like this feature quite a bit, and the fund sounds interesting - looking at the top 25 names, it's certainly a unique and interesting mix of names (although I'd be curious about the reasoning behind being long Gamestop.)
Additionally, Charles again with the terrific work/graphs/research.
Edited to add:
As for HLF: Monday, February 4, 8:02 AM Herbalife (HLF) -13.8% premarket, as the NYPost reports the company is now under official investigation. Releasing 192 complaints filed against Herbalife over the past 7 years, the FTC redacted some sections, saying it didn't have to divulge information obtained through a law enforcement investigation. Comment! [On the Move]
(although that could reverse tomorrow or in an hour. Who knows.)
Lastly, an interesting discussion of an Australian hedge fund manager's experience with Herbalife and thoughts on Ackman (http://brontecapital.blogspot.com/2013/01/notes-on-visiting-herbalife-nutrition.html). His blog (at the link) is also an interesting read in general.

I like the "Elevator Talk" addition David.
A peek at Rocky Peak's recent holdings shows Radio Shack RSH, which Scott and I have been posting about lately - it has rebounded an extraordinary 50% YTD:

So, of course, I had to look a little further into RPCSX.
The small cap fund category has several notables - many favorites on MFO, like ARIVX, RYSEX, PVFIX, MSCFX, ARTVX, HUSIX. So, a tough group to get noticed in, especially given the modest returns RPCSX has delivered out of the gate since inception last April...but it has had its moments.
Morningstar shows 578 US small caps, or about 6.5% of all funds, oldest share class only, as of Dec 2012. Their caps average from $50M to $3B. (There are 43 so-called micro caps included with average caps under $500M.) Here's further break-out of small cap demographic:

RPCSX holds 42 equities, as of Sept 2012, fairly evenly distributed across its portfolio at 1.5-3% each, with average market capitalization of $1.1B.
Another of its holdings, Duff & Phelps Financial DUF, announced a going private transaction on the last trading day of the year - the stock jumped 20% :

Before that, Mr. Kerr reported that another holding, CoreLogic (CLGX), a So Cal provider of real estate data, rose 44.9% in the third quarter. He sold the position after achieving a 62.3% gain from purchase, explaining the rapid price appreciation "exceeded our conservative calculation of intrinsic value..."
More recently, he's added Herbalife, which Dan Loeb's Third Point hedge fund also bought 9 million shares, or 8% of the company. (Loeb's long position runs counter to the massive short put on by Bill Ackman's Pershing Square.)
On its website, Mr. Kerr provides monthly updates and commentary, along with descriptions of how he invests and his guiding principles for RPCSX. Here are some takeaways:

Rocky Peak Capital Management strives to optimize long-term returns with a focus on mitigating risk.
Downside risk is often considered one of the most crucial elements of stock selection. You win in both investing and sports by avoiding frequent and big mistakes.
Most of our research is done internally, free of Wall Street biases and short-term focus.
To quote legendary investor Sir John Templeton, "To buy when others are despondently selling and to sell when others are greedily buying requires the greatest fortitude yet pays the greatest reward."
We will not chase the popular or fashionable investing trend of the day.
A long-term time horizon...a minimum of two to three years is required to recognize the performance benefits of this style of investing.
We are candid about our mistakes as well as our successes and speak in plain language instead of confusing financial jargon.

Since inception last year, RPCSX has out-performed some seriously good and high lifetime performing funds, like gold-star Perkins Small Cap Value JSIVX, FMI Focus FMIOX, Conestoga Small Cap CCASX, Royce Micro-Cap Invmt RYOTX, Turner Emerging Growth Investor TMCGX, and gold-star Artisan Small Cap Value Investor ARTVX:

But it well under-performed others, depicted below, like Walthausen Small Cap Value WSCVX, Mairs & Power Small Cap MSCFX (on fire Max), Huber Capital Small Cap Value Inv HUSIX, TETON Westwood Mighty Mites AAA WEMMX, Pinnacle Value PVFIX. (It has just about broken even with its small value benchmark.)

As Mr. Kerr states, eight-nine months is hardly enough life to make a performance assessment of RPCSX. But in that time, the fund upheld its promise to minimize down side and draw down risk. The fund he previously co-managed, now called Core Street Capital (CSC) Small Cap Value Investor CSCSX, produced high life-time risk adjust returns returns based on Sharpe (in top 20% of more than 100 small caps between 12 and 15 years old), but with fairly high down-side volatility. By the numbers, since Oct 1998: 10.5% APR, but 13.4% DSDEV and (gulp) 18.8% Ulcer Index, which resulted in 47% draw down in 2008. For me at least, I hope Mr. Kerr does indeed correct "mistakes that my former colleagues and I made such as not making general or tactical stock market calls, or not holding overvalued stocks just because they are perceived to be great quality companies."
If RPCSX does manage to keep its down side in check going forward, here are some of the lower volatility, no-load small cap funds (with attendant performance and risk) that I believe Rocky Peak will ultimately be compared against, oldest to youngest:

In any case, for now at least, I am adding Rocky Peak RPCSX to the notable list.