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Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
  • Forecasting Never. Works
    @JonGaltIII
    Great post.
    It's a tired old debate that at best provides confirmation bias to those who want to believe it or just don't want to try to beat the market.
    To wit: I own 11 dedicated, actively managed stock funds. All 11 easily beat-to-blow away their bogeys. 10 of 11 do the same vs the S&P, the only one being a SCV fund that I bought last year. This scenario has been the case with my port for about 40 years now.
    When I say blow away, I mean blow away....
    I don't own it any more, but take a look at FLPSX, which I bought near its inception and owned (as my only fund for about five years circa early 90's and) all the way up to the last couple of years.
    Value of $10K, 12/27/89 to Current:
    VFINX: $208,480
    S&P 500 TR: $215,986
    FLPSX: $495,523
    Note: There are no typos there and your eyes are NOT deceiving you.
    True, LOTS of funds fail to beat their bogeys and many come nowhere close to matching the S&P. That's why statistically writers can truthfully pump out hair-on-fire (Thanks, Dick!) articles like these.
    It's really not that hard to beat the market. Simply BUY the funds in the smaller percentile that ALWAYS do, or at least ALWAYS do over time.
    Also, use of the word "NEVER" is usually not a good idea in these contexts. LOTS of PMs and analysts last year predicted Small Caps, Value, Foreign and EMs were places to be this year. So far, they weren't right, they were very right.
  • Forecasting Never. Works
    Thanks for sharing. If I understand the premise of the article - it's really about Index Funds vs. Active Management. It makes a compelling case for just investing in the S&P 500 Index and not trying to find the "hot hand" or chase a portfolio manager because they can't consistently beat the Index 95-97% of the time. It's what Warren Buffett is doing with his money when he passes away.
    I understand the Index vs. Active discussion and I own some index funds. I agree that it's very difficult to have a portfolio that consistently beats the S&P over the long term.
    Using MFO Premium ... let's take BFGFX as an example. The fund has been around for 14 years. It's +4.8 to the S&P over the life of the fund. It's APR has never trailed the S&P in it's history and last year it beat the S&P by 96.7 and +31.7 the year before.
    Would it be safe to assume that this fund is part of the 3-5% that found a way to beat the S&P 500 Index (at least over the last 14 years)? What am I missing? Or is that the point? We won't be successful at trying to beat it over the long term. Genuine ?
  • Diversifying with Bond Funds
    Look closely at interest rate risk, usually measured by duration. Be wary of anything over 5 years avg duration. It is the reason I left a couple possible bond OEFs off my list.
    Note that PTIAX does not publish its duration. Spoke to them years ago and was told the reason is basically to protect us average investors from ourselves. Interest rate risk is not completely/accurately measured by avg duration and the firm does not want its avg duration to be incorrectly interpreted as a measure of PTIAX's interest rate risk.
    Disclaimer: LT owner of PTIAX and comfortable with whatever avg duration it has, albeit largely unknown.
  • Diversifying with Bond Funds
    PIMIX had a sizable drawdown in 2020, -11.3% and finally recovered for the year. So the risk aspect is higher than expected. Performance-wise the fund is way way too big and trailed other bond funds for last several years.
    PRSNX had a smaller drawdown and recovered quicker. 2020 was a unusual year where the boring total bond index fund performed quite well. Will see how bonds will do this year with higher inflation, but Fed will keep rate flat for another year.
  • Diversifying with Bond Funds
    My update - PTIAX and RCTIX is not available in TRP Brokerage. I am deciding between PIMIX, HSNIX and TRP's own PRSNX...I've owned PONAX in another account and they have receovered well from March 2020 volatility. Next, from what I can see the PRSNX seems to protect better on the downside and it's USD Hedge adds a unique wrinkle. The top performer in the past 3 & 5 years, HSNIX, seems to take the most risk and potentially protect less. Although it came roaring back...
  • Shout-Out to @hank
    Although, I no longer post on the MFO board I still visit and read it. The last time hank visited was December of 2020. His extended absence gives me pause. With this, I'll be keeping him in my thoughts and prayers. Hopefully, he will be back soon. Skeet
    Here is a link to the last post made by hank. https://mutualfundobserver.com/discuss/discussion/57465/which-of-these-2-funds-is-riskier-safer-over-the-next-1-3-years-dodfx-vs-dodix
  • Wealthtrack - Weekly Investment Show - with Consuelo Mack
    Thank you for posting. Have not follow Royce funds since they were sold to Legg Mason. I hope the rotation will hold in the coming years.
  • Why Are Republican Presidents So Bad for the Economy?
    Well I watched WAITING FOR SUPERMAN, so I guess I'm now allowed to state opinions again. It throws a ton of different issues into the air, so commenting intelligently on them would take as long as the documentary. While some may choose to disagree, I saw a lot of things which agreed with what I was saying: Kids who are willing to work hard have involved parents, and who operate under reasonable levels of discipline; self-applied or otherwise, are likely to be successful. Others will tend not be. Pretty much what I said going in.
    Yes, there are systemic problems. Yes, not all teachers are 'good', work hard, etc; just like any other field. The film strongly implied that unions were a major problem. Is it worth my time to point out that many of the very worst state educational systems (per the documentary) do not have unions while some of the best do? Is it worth noting to anyone that my home district, and the one in which I taught for twenty years, was 50% minority, provided free lunch to a huge percentage of its population, and was famously the inspiration for the NY Magazine article "Welcome to Newburgh, Murder Capital of NY".
    https://tcf.org/content/commentary/welcome-to-newburgh-murder-capital-of-new-york/?session=1
    Yet despite all of this, Newburgh integrated its schools by being one of the first NY districts to institute 'magnet schools'. While there were initially parochial schools; in time, ALL kids attended the public schools in Newburgh. People didn't flee because discipline was enforced and the educational program was superior to anything around. It was not uncommon for the very best students to graduate with a year of college credit. In my senior year, out of a class of approximately 1000, we ended up graduating 850; not the 300 and something suggested by the SUPERMAN documentary. Many of those who did not graduate chose to drop out as soon as possible and go to work. This was especially a problem with the latino population.
    Tenure is proclaimed to be a problem, and it can be in some cases...but...one has to ask why, after three years of observing, a district gets itself saddled with a poor teacher? Can part of the problem be poor administrator oversight? Or maybe good candidates don't grow on trees and districts have to take what they can get? Why would that be? As for getting rid of tenured teachers, the hitch seems to be that you have to document the problem, and that seems to be difficult for administrators to do (which comes back to that oversight issue).
    And if kids are being "passed along" and the school "failing" as a result, it's not the teachers doing it. In these cases, they are instructed to pass the kid along. Why would unions have any effect on THAT? If you abdicate your responsibility, have no standards, refuse to accept failure or impose consequences, how could you possibly expect a favorable outcome? We absolutely need to fix the system and get good people in there, but there is no simple and painless fix.
  • Long M* Interview with PRWCX's David Giroux
    I dont know if you can access this page from Bloomberg without a subscription but it addresses the equity duration issue less comprehensively in the context of bond duration as well
    https://www.bloomberg.com/news/articles/2021-02-06/danger-lurks-in-global-markets-transfixed-by-rising-bond-yields?sref=OzMbRRMQ
    "Equity duration is a bit trickier to grasp. Some use dividend yields to calculate how many years it will take to get one’s capital back without any dividend growth, with more time equating to higher duration -- broadly speaking, a lower dividend rate means a higher duration."
  • Why Are Republican Presidents So Bad for the Economy?
    Crash asserted nonsense and I called him on it with substantiation. Then he started handwaving about a just society but calling for more flunking of kids.
    Whatever.
    Racqueteer, this may not be the best month to trot out the tired bootstraps argument yet again. It does remain perennially popular among some of us nonminority types, and even among some minorities too. Why can't everyone be like the Jews and the Asians and others similarly situated? What racism? What structural inequality?
    As for my career, I have been a teen worker, HS teacher, university TA, and most recently sometime HS coach and sub. Also parent and grandparent. Also married to an elem-schoolteacher for a decade. I do know the gut feeling of being in a difficult classroom. It all can be very discouraging, not to say difficult to have insights about.
    But I know that this is pernicious crap at the talk-radio level: 'You can't solve real, significant problems --- not at the root --- by throwing money at those problems.'
    The problem, to me, with BOTH sides is the unwillingness to bend from some absolutist stance. To my way of thinking, everyone is entitled to a fair chance. That may entail more help to some individuals than others. Ultimately, however, good intentions aside, I can't MAKE someone do what is necessary to be successful. And, like the reality or not, the society in which one lives has a huge impact on the outcome. Money is almost certainly an issue, but attitude on ALL sides is as well. "Throwing money" at a problem isn't the same thing as properly funding productive strategies. If we as a society were actually serious about the issue, we'd have better pay in hard to staff districts than in affluent ones. We have just the opposite. Further, it would be more 'help' to struggling students to have classrooms which are orderly (disciplined) than not.
    Having spent almost 30 years teaching mostly chemistry and physics in a heavily minority district, I know that I was drawing my classes from about half the population. Even THAT population was underperforming its potential; a situation which became WORSE over my career, Discipline issues became a greater and greater issue as time went by; since the schools didn't want to have 'bad statistics'. This despite the fact that, in a class of 1,000 students, there were probably only a dozen kids accounting for 75% of the serious instances. Instead of controlling THOSE kids, 'we' lightened up on enforcement and the problem spread.
    I don't want ANY kids to fail, but the reality is that, if you set standards, SOME will not meet them. The 'solution' isn't to lower the standards so that EVERYONE 'succeeds'. If you don't end up actually KNOWING anything, how is that 'succeeding'? Anyway, by all means, make it possible TO succeed, but don't expect that you can make everyone DO it.
  • Why Are Republican Presidents So Bad for the Economy?
    David, if you're not a teacher (and have never been one?), you can't begin to argue the issue with any insight.
    Gotta admit, I stopped reading your post there.
    Following that logic (?), do you also hold that if you've never played professional sports, you can't possibly be an insightful professional sports commentator, writer or analyst? Or is that somehow different? And if so, how?
    Lemme know so that I can wash my brain of anything I ever learned from Vince Scully, Bob Costas, Tom Verducci, Paul Zimmerman...
    Me, I went to school for ~20 years, have two relatives (both with PhDs) who taught for years, am married almost 45 years to a retired school teacher, live in a neighborhood overstocked with retired school teachers, and have audited the books of about 20-25 schools. But, OK, I've never been a teacher. Do I, and others with similar bios, also NOT have any insight on the issue?
    Fair enough, Stillers; I made too sweeping a statement going in. I would suggest that the cases you cite involve people who either have, or have access to, direct knowledge of the field involved. I submit that opinions tend to be less valid if not supported by actual evidence and experience. If you could be bothered to go beyond that flawed introduction, I'd be interested in your thoughts.
  • Long M* Interview with PRWCX's David Giroux
    ITCSX is open at Schwab No load /with a fee - annual returns going back ten years within .05 -.15 basis points below PRWCX - Most likely as a result of the slightly higher ER .
  • Why Grantham Says the Next Crash Will Rival 1929, 2000

    I never listen to any predictions. As a trader I only pay attention to prices, charts and trends lately and NOW. They tell me in real time what the market is doing. In the last 10 years I was invested at 99+% of my money at 97% of the time. The key for me is to invest all my money all the time and no cash, BUT, when risk is high to be in a high % of cash for days to several weeks.
    FD! Out of curiosity, you say you are invested 97% of the time - but not always in stocks, right? When you say the “market” it’s any and all markets, isn’t it? I’m not judging, just looking for clarity.
  • Why Are Republican Presidents So Bad for the Economy?
    David, if you're not a teacher (and have never been one?), you can't begin to argue the issue with any insight.
    Gotta admit, I stopped reading your post there.
    Following that logic (?), do you also hold that if you've never played professional sports, you can't possibly be an insightful professional sports commentator, writer or analyst? Or is that somehow different? And if so, how?
    Lemme know so that I can wash my brain of anything I ever learned from Vince Scully, Bob Costas, Tom Verducci, Paul Zimmerman...
    Me, I went to school for ~20 years, have two relatives (both with PhDs) who taught for years, am married almost 45 years to a retired school teacher, live in a neighborhood overstocked with retired school teachers, and have audited the books of about 20-25 schools. But, OK, I've never been a teacher. Do I, and others with similar bios, also NOT have any insight on the issue?
  • Small Caps
    As I’ve noted... I’m in a fair number of MS funds... They have been @stillers for me (oops I mean Stellar) for me the last couple of years. This year looks strong as well. @BenWP shared a really interesting Baron EOY report which led me to this story: https://www.barrons.com/articles/more-than-two-dozen-funds-returned-more-than-100-last-year-heres-why-thats-not-good-news-51612570231
    It seems to be a quick generalization of why Morgan Stanley funds have had such terrific returns as of late. It also implies that they may just be lucky by selecting a few high flyers like Fastly and Stitch Fix and the writer opines that the long term performance is not as as consistent with MS funds. I always appreciate alternate views to mine. So I’ll continue to keep an eye on my MS funds but perhaps it wasn’t just sheer luck. Perhaps they are on a consistent long term path of identifying real winners. The performance in small caps, growth and International is something to marvel at.
  • Why Grantham Says the Next Crash Will Rival 1929, 2000
    GMO should hide in the closet. Their predictions since 2010 are so off the mark. In 12/31/2010, they predicted that US LC would make 2.9%, the SP500 made over 14% in the next 7 years. They said that EM would be better and they trail by a huge margin.(link).
    Grantham is a bear for years. It's always "news" calling for a bear market. The 24/7 media machine wants you to read these articles and how they get paid.
    But hey, Gundlach predicted the 10 years treasury would be at 6% in 2021. Arnott told us that his massive research works and PAUIX had a terrible performance. Bogle told us regression to the mean must happen, and it didn't.
    2010: GMO's Grantham Warns of a Stock Bubble(link) WRONG
    2012: “People think the American market is very cheap. We don’t. Grantham is bullish about international stocks. (link) WRONG
    2014: Grantham: Big Stock Bubble ‘Will End Badly’ in 2016 (link) WRONG
    I never listen to any predictions. As a trader I only pay attention to prices, charts and trends lately and NOW. They tell me in real time what the market is doing. In the last 10 years I was invested at 99+% of my money at 97% of the time. The key for me is to invest all my money all the time and no cash, BUT, when risk is high to be in a high % of cash for days to several weeks.
  • MRLOX / MALOX all retirement in 1 fund - question for passive investor. Need advice.
    JG,
    interesting situ your friend has... making me think
    I read an article maybe 20 years ago, seems like yesterday... In investors business daily...said all you need is one growth fund and a money market, checking account
    Stated you keep adding to it and then when you get fed up with the daily grind you take monthly withdrawals. No reason to over complicate it
    Malox seems reasonable diversified
    I think if you did that with vwelx Wellington vanguard over the past 30 years you would have done decent
    Sometimes I believe we all tinker to much. I had a Harley Sportster back in the early 80's. The saying was, does it run good? Yes, then don't freak with it, just keep riding
    Good luck to you and your friend
    Baseball fan
  • Better Buy: Vanguard Growth Index Fund vs. USAA Nasdaq-100 Index Fund
    I used to own USNQX and sold it to purchase an interest in NASDX. I have owned NASDX for several years. I have more than doubled my investment since I have purchased it.
  • Long M* Interview with PRWCX's David Giroux
    Paul Massaro Article on Fixed Income:
    uncovering-opportunities-noninvestment-grade-credit
    On Duration Risk:
    ... if you're going to take duration risk, take duration risk in your equity sleeve, not in your fixed-income sleeve. Duration risk in equities is really cheap, given how attractive utilities are priced today relative to investment-grade or Treasuries
    On Holdings:
    But you can't outperform by 400 basis points a year or 300 basis points per year if you have 100 stocks. It's very, very hard to do that. You really need to be a little more concentrated.
    TRP's Floating Rate Fund = PRFRX
    Market inefficiencies...
    GARP-y Stocks = Growth At Reasonable Price
    -13% of the S&P 500 (according to Giroux)
    https://investopedia.com/terms/g/garp.asp
    I think what drives in many respects the multiple companies is a little bit supply and demand. So, the reason why this 13% of the S&P 500 that I call GARP, trades where it does, and it should trade higher, is that a value manager will often look and say, Well, these companies, they trade for 10% or 20% premium to the market, that’s too expensive, so I can't invest in those stocks. Growth manager says, you know what, these companies, they're only growing organically like 4% or 5% organically. I want to own companies that are growing 10% organically.
    So, in many cases, there's no natural buyer for these companies. So, that depresses their valuation to a level where, again, if you think about the market, the market, typically, in non-recession years, grows earnings at 6% to 7% kind of clip, gives you a 2% dividend yield. So, for a small premium to that, which you'd able to generate, is find the companies that are growing earnings at 10% plus, maybe a little bit more dividend yield, and have much less downside risk, because there's an inefficiency. The two big market participants kind of shunned these companies a little bit. So, what happens is, over time, they just compound wealth, and in many cases, the market becomes a little bit smarter over time and says, Oh, it used to trade for 18 times earnings, but it's actually a really good company, and you should trade for 20 or 21 times or 22 times. So, you get the compounding of the earnings and the dividend and usually, like the multiple expands.