From the "feels like 2007 all over again".
Is this not a most wonderful statement from one the folks who think they are guiding the monetary planet into the zone of fulfillment?
​​Esther George, the president of the Kansas City Fed and this year a voting member on the Fed’s rate-setting committee, the FOMC, delivered a speech last week in Kansas City in which she specifically addressed the Fed’s role in skewing investor attitudes, and the possible consequences:
​​

A long period of unusually low interest rates is changing investors’ behavior and is reshaping the products and the asset mix of financial institutions. Investors of all profiles are driven to reach for yield, which can create financial distortions if risk is masked or imperfectly measured, and can encourage risks to concentrate in unexpected corners of the economy and financial system. Companies and financial institutions, such as insurance companies and pension funds, and individual savers who traditionally invest in long-term safe assets, are facing challenges earning reasonable returns, and so they may reach for yield by taking on more risk and reallocating resources to earn higher returns. The push toward increased risk-taking is the intention of such policy, but the longer-term consequences are not well understood.

How much would I be charged to obtain such enlightened advice from a professional in the field of economics? Priceless thinking apparently....,guess I should find out whether the FOMC is able to accept PayPal.
We investors are among a very large fleet of various ships and captains; attempting to not become rammed upon the seas of high investing; by one of the others in the very largest of the ships that is named: The Greater Fool.
Yer gonna need more than charts, graphs and fundamental studies to ply through this armada of fools.
Regards,
Catch

warning signs for treasuries
http://www.minyanville.com/trading-and-investing/fixed-income/articles/Two-Warning-Signs-For-Treasuries-us/1/14/2013/id/47292
rbc weekly commentaries
Market Week: January 14, 2013
The Markets
Equities didn't match the prior week's fireworks, but they still posted gains in the new year's second week. The S&P 500 hit a five-year high for the second week in a row. However, the Global Dow soundly beat all four domestic indices for the week, in part because of encouraging retail sales in Europe.
Market/Index 2012 Close Prior Week As of 1/11 Week Change YTD Change
DJIA 13104.14 13435.21 13488.43 .40% 2.93%
Nasdaq 3019.51 3101.66 3125.63 .77% 3.51%
S&P 500 1426.19 1466.47 1472.05 .38% 3.22%
Russell 2000 849.35 879.15 880.77 .18% 3.70%
Global Dow 1995.96 2051.22 2075.84 1.20% 4.00%
Fed. Funds .25% .25% .25% 0 bps 0 bps
10-year Treasuries 1.78% 1.93% 1.89% -4 bps 11 bps
Equities data reflect price changes, not total return.
Last Week's Headlines
President Obama nominated White House chief of staff Jacob Lew to replace Timothy Geithner as Secretary of the Treasury.
Increased imports of consumer goods such as smart phones were a key factor in widening the trade deficit in November. Exports also rose, but not by as much, according to the Commerce Department. As a result, the trade deficit rose 16% to $48.7 billion.
Ten mortgage servicers agreed to pay $8.5 billion to help resolve mortgage foreclosures that have been under review for faulty processing. The agreement, which will provide $5.2 billion in mortgage assistance and $3.3 billion in direct payments to borrowers, will bring to an end the case-by-case review of faulty foreclosures. In addition to participating in the settlement, Bank of America agreed to pay $10 billion to Fannie Mae to resolve allegations of faulty processing.
Eurozone unemployment hit a new record of 11.8% in November as 113,000 workers lost their jobs. However, European retail sales were up for the first time since July.
The Federal Reserve turned over to the U.S. Treasury almost $77 billion in profits from its 2012 quantitative easing efforts. The interest on Treasury bonds and mortgage-backed securities provided the Treasury's second highest windfall from the Fed, behind only 2010's $79 billion.
After its deliberations were made public, insurer American International Group (AIG) decided not to join a $25 billion lawsuit filed by former CEO Maurice Greenberg and other shareholders against the U.S. Treasury. That suit claims that the terms of the Treasury's $182 billion bailout of AIG, which has since been repaid, were too onerous.
Eye on the Week Ahead
Earnings reports, particularly those from key financial institutions, will join inflation, retail, and housing data as grist for investor decisions.
Key dates and data releases: wholesale inflation, retail sales, business inventories, Empire State manufacturing survey (1/15); consumer inflation, industrial production, Fed "beige book" report, international capital flows (1/16); housing starts, Philly Fed manufacturing survey (1/17).

Reply to @msf: Thanks msf. I was initially reacting to the "vested interest" reference. Have read your response in more detail & would say yes: Lowell was overstating his case. However, to be fair, I did not take the "getting smoked by literally inferior products" to be a reference to Vanguard - though its placement near the reference to Vanguard's costs is a bit curious. Who knows what the BBW editors did to the actual transcript? Your stats are most interesting. Both houses seem quite low cost. Yes, at 10k the advantage seems to flow to Vanguard. ... Ah - financial journalism! Added Bloomberg BW to my Kindle subscriptions recently & less than enthralled by it - but only couple $$ a month. Read this two weeks ago and thought I'd toss it out for discussion this morning. Glad you were able to provide so much data for those considering these fund groups.

Seems like a good idea to moi ... all I can think to suggest would be to add the expense ratio to the general-info template, encourage the managers to write in simple English and avoid financial jargon, and clearly communicate that this opportunity doesn't include an invitation to conduct marketing on the regular discussion pages. I agree that 150 words is about right for a brief explanation and case statement.

That's an interesting idea, kind of like mega-Tweets!
I really like David's regular Commentary reports on new funds and funds in the shadows, so I hope that this would not replace that reporting and his personal insights.
I would think it would be better for these fund managers to be able to say whatever they wanted rather than only responding to members' questions. That way, they'll be able to make the case for why their funds are unique and not have to limit themselves to specific topics. (Perhaps there could be one, general guiding question, such as: In your elevator speech, tell our members what makes your fund stand out in the crowd?)
At the end of each elevator speech, perhaps there could be the chance for MFO members to make comments like they do in the regular discussion areas. But also: could those fund managers be able to join those threads too if they wanted to, and respond to the readers? (Of course, there's no reason why they couldn't be MFO members themselves, right, and do this already? Or is there a MFO rule that members can't tout funds if they have a financial interest in the company?)

Hi hank,
You noted:

I'll also try hard not to comment further on the bond markets; as I've made my skepticism known and don't wish to seem antagonistic towards those holding different views.

Per your link above to the original "name the bond blowup" thread; the thread was in jest to some point for naming, but with a defined serious note. While it may be true that Treasury issues theoretically can not move a lot lower in yield; I know that you would agree that in spite of the fact that some other bond types get their yield clues from 10 year Treasury issues, there are many bond types.
Your comments are always appreciated and needed here; otherwise this forum becomes of less value. You never know when a word or statement you write will help have a strong and positive meaning to another reading at this board, someone you will likely never know or meet; other than through words here.
With some exceptions, I do my best to consider who may be reading anything I comment about or upon. Are they new to the world of investments and trying to figure out the difference between investment grade and high yield bonds; or large cap versus small cap equity? Perhaps someone is reading here who has a PhD in economics or is bright enough to have achieved the status of a certified financial planner; and reading my formally uneducated economic viewpoint(s), and then scratching their head. Speaking for myself, I am sure there have been more than enough times; as I have no problem running my mouth about some things, that any number of people who read here are quite sure that I don't begin to know what I am talking about or have a clear understanding of a given topic. That indeed is true about this vast world of investments. I intake as much as I choose about investments and all areas that drive the marketplace; but I also have other desires, with the family being foremost, of which I willingly place my other hours of the days, weeks and the year.
I grew up and into an equity-centric investing world. Either our house has changed or the investment world has changed; or both. Perhaps our house has merely expanded our horizons and suitable investment sectors. I personally find little comfort in many investing sectors; at least to the point of asurrance of a globally healthy structure. There are way too many bonds being issued by everyone; and I remain skeptical about valuations for companies, too. The mantra remains, "growth". But, at what cost? Some days the investment world reminds me of the best of the "hawkers" on tv trying to sell something to anyone.
Hopefully, our house will realize in a timely fashion; when we are indeed stretched to far into particular investment areas and have already started changes to the portfolio that may present stability and returns.
Regards,
Catch

A great link by Ted that everyone should read. It reinforces something I have been pounding the table about here, there, and everywhere for years and that is on a risk return basis, junk bonds clobber stocks. Over the past 20 to 30 years you have basically the same returns from the S&P as you do from junk bond funds but at only about half the volatility. In my world, volatility kills so that is why junk bonds have been my one true love in the financial arena going back to 1991 when I *luckily* made my first foray into them.

Reply to @fundalarm: I took Hiyield007's title to be sarcasm. Many bonds - especially lower quality ones - are off to a good start. PONDX's +.84% YTD equates to roughly +43% on an annualized basis. (my sarcasm:-) As for Mr. Gundlach - from the little I've read - he sounds a bit extreme (whacko?). But, not sure I'd call him a "self-proclaimed expert." He does have some standing in the financial community.

I would not invest in TPNTF (the actual fund trades on the London market, TPNTF is just a pink sheet foreign ordinary share), as Third Point Offshore traded with an absolutely enormous discount during the financial crisis (at one point nearly a 50% discount to NAV) and while the discount has narrowed quite a bit, it remains (nearly 20%, although it was briefly in the single digits last year.)
It's not that a discount is necessarily a bad thing, but the level of discount has moved around wildly during the fund's history - too much, I think, and I don't want to have to worry and/or trade around a discount to NAV.
Additionally, the pink sheet version is highly illiquid and doesn't trade much. The London version doesn't trade much, either, although it's certainly more liquid than the pink sheet version.
I think the reinsurance vehicle - if it ever goes public - will be interesting to see if it performs any better than Greenlight RE, which I've owned on a couple of occasions over the last few years and will not likely own again. The concept of an alternate way to invest with a David Einhorn is compelling, but the focus seems almost entirely on the reinsurance business, which has never seemed to be a standout. People seem to continually wait until it gets around book value (which it is slightly under book at the moment), then sell the mild jumps when they (at least in the past) have come along, but as a long-term holding, I don't care for it unless the reinsurance side starts to become a stronger performer.
In a situation where a star investor invests the float of an insurance business, I think Fairfax Financial Holdings is a more interesting stock - that company's float is invested by Prem Watsa, who is considered the Buffett of Canada. Watsa saw the financial crisis coming and shorted subprime and other financial entities - which was part of the reason Fairfax was up in 2008. It has not done quite as well since, although hasn't done badly. Watsa became a substantial shareholder in RIMM and is now on that company's board.
Lastly, while Loeb is a great investor (as is Einhorn), in terms of public vehicles, I'd rather suggest Marketfield (although MFLDX shares are now closed) than TPTNF or GLRE.
In terms of Third Point Offshore, Mebane Faber has written a bit on this (on his blog and in his book, "The Ivy Portfolio") and other, similar London-traded funds (and had at one point planned an ETF of them - then 2008 happened.)
http://www.mebanefaber.com/2012/08/13/hedge-fund-etf/
Global X filed for an ETF fund-of-funds of these funds early last year, but the fund has not happened.
http://www.mebanefaber.com/2012/03/27/13f-listed-hedge-funds-etfs-on-the-way/
Bill Ackman has been preparing a London public hedge fund, as well, which is now looking like it will happen sometime early this year.
http://www.valuewalk.com/2013/01/pershing-square-capitalizes-new-hedge-fund-with-over-1b-ahead-of-ipo/

Reply to @catch22: "We can't whine about our risk adjusted return for 2012."
Catch: You've kept no secret of your returns. But, I'd love to hear you quantify (1) the yardsticks you use to measure the risk of various assets you own and (2) the tools you so employ to obtain these measurements. I'd expect that to be a daunting task - as there seems little agreement here or in the financial media regarding varying degrees of "risk" re: cash, bond, commodity, real estate, and equity sectors.
I'd think both the yardsticks used to quantify risk as well as the specific techniques and instruments employed to measure it vary greatly in the real world. John Hussman calls HSGFX "risk adjusted" - but it turned out a negative 12% last year. I'm sure in his mind that was the price that needed to be paid in the interest of reducing risk for his investors. I also suspect David Tice or Jim Rogers. uses a different risk metric than say - the folks at Dodge & Cox or T. Rowe Price. So ... let's hear yours. The returns you've portrayed. What makes you believe they were praiseworthy on the risk-reward spectrum? In other words, how do you know they were achieved with relatively little risk?

At one point I noticed that PVFIX (which has a similar cash position as ARIVX) and MSCFX both had a large position in financials. Financials have obviously done well this year (look at FAIRX) so this might explain these funds outperformance.
I haven't gone back to check, but I also recall that the manager of ARIVX prefers steady, predictable companies. He likely shies away from the financial sector which has proven to be risky and volatile. Of course that can lead to missing some pretty big rallies.
For us as mutual fund investors, I think the only question you need to ask yourself is do you prefer a manager/strategy that could potentially exclude a company because they do not like the sector as a whole (or other such reasons), or if you prefer a fund that will invest wherever the best value might be (but which, like FAIRX, can spectacularly fail or underperform during some periods). Of course you can also hold both.
I hold ARIVX and while it's performance this year has obviously not been amazing, it has performed "as expected" meaning good downside protection, and reasonable upside given it's exposure. I don't see the need to change funds unless they stop performing as expected or my investment plan changes.

Reply to @Ted: Thanks Ted. I enjoyed it...and will blame MJG for egging me on.
Thinking a bit more about this last post...
There are 9 money-market funds that actually out-performed SP500 over their life times, and 8 these were lucky enough to launch between 1999-2000, just before the tech bubble...and the subsequent financial crisis of 2008.
American Beacon Money Market Select ASRXX is hands-down the top performing money market fund relative to SP500 over its 12+ life time...beating SP500 by nearly a percent APR. Here's the comparative growth chart from M*:

I realize that much of this relative over-performance is timing; nonetheless, if I had to choose...Schwab offers ASRXX for $1K min, institutional, and $2.5K min, investor.

Taco Bellrung: Think outside the bond.
Mercedes Bonds: Engineered to remove the human spirit.
M&M bonbonds: melts in your hand not in your mouth.
Maxed well House (of reprehensibles) coffer: Good to the last drop.
Booned, James Booned .007 of a basis point.
Energeezer bunny income: It keeps going and going (bond voyage)
Ben's Farm wine: a bold slash of fruit (bond appetit)
The point is not the upcoming bond debacle be that as it may
or may not but the present and ongoing debacle in terms of
risk/reward, the abysmal yield for a given level of risk.
Bondfire of the vanities, good one.
Since 2007, central banks have flooded the world financial system with more than $11 trillion.
http://www.globaliamagazine.com/?id=1404
$11t and counting amounts to conjuring the world's second largest economy
materialized from aether.

I'm slow on the uptake. Are we looking for any made up word about what we perceive to happen with bonds in 2013. Or is it any coined word relating to anything financial, fund, bond etf etc.
my silly bond words.
bondacious - what you are if you hold lots of bonds before the melt down
bondacity - not sure if it it is tied to mendacity or pomposity
bondificate - to speak pompously about bonds
port-bond-manteau - a tmesis of a bond portmanteau
billet-bond-doux - a love letter from your bonds saleman.
billings-bonds-gate - what you say to your bond salesman when he tries to sell you a bad one.
bondhomie - a bond with a pleasant disposition
bondegreen - see mondegreen
inbondicated - someone who is inebriated from having too many bonds.
You know you are inbondicated, if you are bondacious and have the bondacity to bondificate about port-bond-manteau, so beware the billet-bond-doux and prepare to reply with a billings-bonds-gate if you don't have a bondhomie. You heard me correctly, it was no bondegreen
There was a bondholder named Dave
his bonds, they would not cave
a new year
full of fear
bonds he no longer does crave

Reply to @hank: I share your disappointment with most financial reporting (and unfortunately, most "reporting" in general). Though this article was somewhat short on details, I did not find it quite as weak as so many others that seem to be written to fill column space.
The writer does point out that there has been a general movement from large cap equity to bonds, and from actively managed funds to index funds (including ETFs). He does not talk about how AF's bond funds in particular are doing because the article is about equity funds. He does point out that while there was this trend out of LC equity, it was particularly pronounced with AF, and goes on to describe how AF equity funds differ from those in other families.
In doing so, he talks about AF's equity funds' relatively poor performance, which has since improved. (He does not note that AF's bond funds's performance has been even worse, as that would not explain the outflow from their equity funds; it would only go to explain why AF's bond funds did not benefit from the equity outflow.) He describes AF's conservative nature, and highlights a particular bad move by AF (holding lots of financials). What he doesn't make clear is that many other families (though far from all) made the same misstep in 2008.
The article does not go into nearly as much depth as the M* article I linked to (below) about how Capital Research is changing the way its managers and analysts work on the equity side. But it is not completely lacking in observations about the funds' management style or AF's relative performance. I don't think I'd throw lump it together with so many articles that deserve excoriation.

I'm withholding judgment on ARIVX for the time being. On the one hand, it's performing more or less as expected, and I do not have any problem with the manger's assessment that stocks are overvalued. On the other hand, PVFIX, another small-cap fund that held 50% cash at the beginning of the year (now down to 36%), is up 18% YTD. Might be because of its significant overweighting of financial companies, which is notably absent in ARIVX's portfolio.
Appleseed Fund APPLX / APPIX is another more conservative fund that is performing "as expected." It seemed to be lagging earlier in the year but has since caught up somewhat because of better resilience to volatility. Again, not a disappointment but one that I will continue to monitor.
I sold FAIRX fairly early in the year but do not have sellers remorse over it. No need to be greedy.

Have some cash. Been doing a little tax-related selling. I expect my portfolio to get creamed a little today. Have one more position to sell and may do so today. Then if anything I own gets way oversold, I'll be in there buying. For the good of our financial futures, people need to stop electing children who don't play well together to Congress.

Andrei and Scott thanks for taking the time to respond. I understand the funds, and their appeal to some investors but by and large I still believe that most folks can get along without them. That doesn't mean we can't discuss them, use them or think about them. If it works for you I'm cool with it. For me it just doesn't seem to make sense to have a 10% or less hedging/shorting strategy, maybe even far less than 10% because you will never fully know how hedged/shorted these funds are. That's why I said if you wanted that type of allocation then give the fund manager all of your money. Otherwise these funds just seem like you're trying to head up river backwards or with an anchor in the water.
The reason I referenced 401k's is that I believe that's where most folks get their exposure to mutual funds. I don't have any figures to show you but I believe that those of us who go out and purchase a mutual fund on our own outside of work retirement plans, and/or without the help or assistance of some financial adviser or planner are quite small in number. When I see alt funds I often wonder who is the audience they're targeted at.

I don't think your prior post created much of a storm, personally. I'm open to reading people's thoughts and opinions that do not necessarily have a glowing CXO Advisory score. I like reading younger people's ideas (such as a number of writers on Seeking Alpha.) Maybe I don't agree or maybe don't take much away from an article or maybe take a lot away.
As I noted in the prior thread, I enjoy reading financial articles of all types. If I disagree or agree, at least it's thought-provoking reading and maybe I take something away from the article.
I enjoy reading about companies that I'm unfamiliar with and even if I don't learn anything more than what the company does, it's a place to start if I am looking later for a company in a particular category/sector/etc.
Personally, I have a set of long-term core holdings that - at least currently - I can see holding for at least 3-5 years, and if longer, great. However, if I wanted to add another name, there's a ton of them bouncing around in my head, some of which I'm very familiar with and some I haven't researched - all of which I'm interested in to some degree, but haven't found a place in my portfolio.
Some of those were introduced to me by articles. I can't be aware of every company large and small across the globe, so articles are a good way to be introduced to what a company does and that's a starting point for further research and review. There's a lot that I've found on my own, as I like finding companies in foreign markets to invest in and there's little in financial media online or otherwise that isn't US-centric in its focus. That's a particular irritation - the US financial media is heavily focused on US multinationals and smaller stories in this country or elsewhere rarely get any attention. I haven't watched CNBC in a while, but the general, "What's Apple doing today" focus became infuriating.
Additionally, as for highly respected writers, well, everyone starts somewhere.
"I would caution here against a too rapid rush to adopt a “Wisdom of the Crowds” investment philosophy"
Sometimes the crowds are right, and one has to be flexible rather than being entirely in one camp with the crowds or fiercely on the other side. The crowds, however, move much faster today than they did a few decades ago. The average stock holding period is 5 days, whereas it was 8 years in the '60s (http://www.businessinsider.com/stock-investor-holding-period-2012-8)
As for people who made broader forecasts, it's a fact of life. Additionally, the way that media has changed and the introduction of smartphones and tablets has made it even easier for people both in the business and not to put their thoughts out there for millions to read. Whether one chooses to or not is entirely up to them, but again, I really don't see the problem with reading such articles if you can "filter" them and maybe take away a thought or two.
Even if one disagrees, at least they're thinking, which is more than can be said for the activity of watching most TV programming these days.
"In my original posting I mentioned Ken Fischer"
His performance may be incredible, but his ads are incredibly annoying.