I spent a lot of time on Page 63.
Paints an interesting picture.
-The negative volatility of stocks is very similar to bonds over a 5 year rolling average...negative 2% vs negative 1%...interesting.
- An all bond portfolio performs equally well compared to a 50/50% (stock/bond) portfolio over a rolling 10 year average...very interesting
- Over long rolling periods (20 years) stocks are 3 times more profitable and less risky than bonds. Or another way of looking at it, it would require only 33% funding in stocks to equal 100% funding in bonds to reach the same financial goal. Also, an all stock portfolio has a greater chance of earning a significantly higher "low end" long term return (6% vs 1%) vs an all bond portfolio over a 20 year rolling period.
Thought on Retirement strategies:
-Fund Long term (rolling 20 year needs) using a 100% stock portfolio, expect 8X on the initial investment.
-Fund short term (1-5 year) retirement needs with 100% bonds
-Fund mid term (rolling 5 years, rolling 10 years, rolling 15 years) retirement needs with a 50/50 portfolio of stocks and bonds. Might look like VWINX (40/60).
Page 62
At age 65, a husband and wife have a 90% that one will live to 80 years old and a 49% chance one will live to 90. Plan for 35 years of retirement withdrawals.
Fund age 65 - 70 withdrawal needs with an all bond portfolio. The likelihood that you will pull money from this portfolio at a loss is lower compared to the 100% equity portfolio and the 50/50 portfolio over this 5 year rolling period. The bond portfolio has a potential maximum loss of (-8%) verses (-15%) for the 50/50 portfolio and (-39%) for the all equity portfolio. Plan for these kinds of negative outcomes (sequence of return risks).
Funds for age 70 - 75 withdrawal needs (5-10 years away) might best be constructed as a balanced 50/50 portfolio. Weigh the risk / reward to ST/low duration bonds or cash like substitutes to the Total Bond Index to the Total Stock Index.
Fund age 75- 80 (10-15 years away) as well as Age 80-85 (15-20 years away) with:
-100% equities which would add more downside risk (only -1%), as well as higher possible positive returns (19%)
- 100% bonds portfolio or 50/50 portfolio provide almost identical returns variances with the 50/50 portfolio having slightly better downside risk. Neither of these two portfolios lost principal. Funding for worse case outcomes plan for the withdrawal amount to at least equal the investment amount.
Fund ages 85-100 withdrawal needs with an all equity portfolio. Determine each years Inflation adjusted withdrawals. Worse case scenario for an all stock portfolio over 20 years is a positive 6%. Fund for the kind of outcome. Fund this portfolio at 33% of the withdrawal need...for example if you will need $10K (in today's dollars) and (inflation adjusted @ 2% for 15 years), your total need would be about $350K for these 15 years of withdrawals, so one would need to fund 33% of $350K or $117K in today's dollars. $117K hopefully grow to at least $350K in 20 years in a buy and hold all equity portfolio.

"Gary1952">What is too conservative? I have a basic AA of 50/50. But the 50% bond OEFs have 50% (25% overall) in low duration/lower yielding "safer" type funds. The other 50% (25% overall) is in higher yielding multi/non-traditional funds. I own no "ballast" funds such as core/core plus OEFs. Is this too conservative or not conservative enough? My goal is to target 3-4% yearly income from divs, CDs and growth.
My market correlation for 10 years is .35%. The max draw down is -.42% for the bond OEFs.
I know it is my judgment but I am curious what others think.
Gary, In a more specific response to your post, you and I use very similar kinds of funds, although I break my funds down into funds for my taxable account, and funds for my tax exempt (IRA) account. In my taxable account if use more of the "safer" bond oefs, but with a wide variation if diversity. So, for example, DHEAX is the short term bond fund I use, but I consider it more risky than DBLSX and less risky than FIJEX. There is an argument that you could use just one of these short term bond funds, or you could use more than one of these funds for more diversification. I use 4 very different nontraditional bond oefs in my taxable account because they are all "conservative" for me, but they don't always perform the same in a given set of market conditions. PUTIX is my most risky nontraditional bond oef, MWCIX is my least risky nontraditional bond oef. I also own a municipal bond oef which is a HY MUNI (AAHMX) and this is one of the least risky HY Munis you can own. I used it to replace BTMIX, which is a very good short term investment grade muni bond oef, but I felt I was ready to move up in risk. I have considered NVHAX, but it is more risky than AAHMX, and NHHAX has some history of significant peak to trough losses and a larger "worst 3 month performance period" than AAHMX. I am still considering adding NVHAX to my portfolio in 2020, but if I do, I will probably make it much smaller position than AAHMX. In the past I have used MMHAX as longer duration and more risky bond oef, but I am not inclined to use it right now because I am not comfortable with its risk level. I am very clear that many investors will use much more risky bond oefs in their taxable account because there are a lot of pundits thinking they will sail through 2020 in the same way they sailed through 2019--that may fit their conservative criteria, but not mine.
When it comes to my IRA account, I use several multisector bond oefs that are more risky than what I will use in my taxable account. I rank order multisector bond oefs in roughly the following low to higher risk: ANGIX, VCFAX, PIMIX, PTIAX, JMUTX, JMSIX, PUCZX, IOFIX. All investors can make an argument for these funds being "conservative" based on the criteria they use. For me, I have chosen to only use VCFAX and PIMIX, but I don't dismiss the rationale from others to use some of these other funds. For me, I would not touch IOFIX with a 10 foot pole, but there are many others who believe this is the next great multisector bond oef.
At any rate, it appears to me that you are using relatively conservative bond oefs, but you could very easily change your criteria for other bond oefs to fit your investing roles you have defined for each fund.

First time poster, greetings to all, posting some investment thoughts via stream of consciousness, all feedback welcome
I'm heavily invested in Dominion Energy Reliability Notes, paying 2.7% / $50k+ investments, you are lower on the capital structure here, full access to your funds at any time, no FDIC but backed by the financial strength of the company. Does anyone have any experience investing in these Notes or have additional input?
Following closely the Bond OEF Investing for more Conservative Investors...does anyone on that thread really trust/know what their funds are invested in? Even conservative funds with asset backed holdings rated highly by the rating agencies you have to wonder don't you? Crazy how many high priced homes I see owned by folks who drive older beat up cars. Don't want to sound elitist but something tells me they are leveraged to the hilt which could spell trouble if interest rates/job market/economy changes. Driving up Sheridan Road in the affluent North Shore burbs of CHI seems every fifth McMansion is up for sale...and same homes been for sale seems like over two years...escape from taxes and/or many of those folks living in those expensive homes know we are in an epic asset bubble?
Heavily invested in Brookfield Asset Management (BAM) and Berkshire - B (BRK/B), consider them a sort of "defacto", well managed, mutual funds without the fees. Follow Akre and Ackman via GuruFocus new holdings, have invested in Agilent (A) and Descartes Systems Group (DSGX). Heavily invested in Medtronic (MDT) and Teleflex (TFX), we're all getting older and looking for the repeal of the ridiculous Medical Device Tax (taxes profits not revenue, huh, who thought that was a good idea, companies thus cut jobs or sent solid paying jobs overseas).
Not a fan of Mutual funds, no out performance, "skimming off the top" with their management fees. ETFs are not for me, do like their low cost but too linked to herd behavior, what goes up must come down, no? I'm amazed by how many folks who invest in their 401Ks etc just follow what they are told by the "plan representatives" and have no idea how the markets work or what they are invested in.
Investment style is "anti-fragile" ala Taleb. Majority % of investments in safe, very conservative investments (T-Bills, 5 year CDs), smaller % in DERI Dominion Notes and ~15-20% in handful of stocks mentioned above.
Comments?
Good investing to all,
B

What is too conservative? I have a basic AA of 50/50. But the 50% bond OEFs have 50% (25% overall) in low duration/lower yielding "safer" type funds. The other 50% (25% overall) is in higher yielding multi/non-traditional funds. I own no "ballast" funds such as core/core plus OEFs. Is this too conservative or not conservative enough? My goal is to target 3-4% yearly income from divs, CDs and growth.
My market correlation for 10 years is .35%. The max draw down is -.42% for the bond OEFs.
I know it is my judgment but I am curious what others think.

As primarily a bond oef investor, 2019 was a great year to invest in bond oefs, with many bond oefs producing double digit total return. Short term momentum investors, will cite the hottest bond oefs, as the funds to invest in for 2020. My experience is that bond oefs will eventually return to a TR that is close to their history, and so there is a tendency to chase performance, buy funds that won the short term performance race, and assume they are the best investments going forward. Often those hottest performers in a given year, will become below average performers in subsequent years. If you are a momentum investor, who focuses on shorter term performance, then you simply sell a fund when it crosses a moving average loss point, and move on to other funds with a better short term momentum performance pattern. I am not good at trading, so I tend to focus of funds with smoother performance patterns, with good capture ratios, and attempt to be patient when bond oefs have "cooler" performance periods. You have to determine what kind of investor you are, and what roles you want a given bond to play in your portfolio.

Ah, the investors LAMENT, eh? We all have our days, weeks and years, yes?
Per the way back music files, from The Shirelles, in 1961, a partial descriptive lyric could be:
"Mama said there'll be days like this
There'll be days like this, mama said
(Mama said, mama said)
Mama said there'll be days like this
There'll be days like this, my mama said
(Mama said, mama said)"

(Apparently the fund’s 2019 results). Seems to me the markets today are outsmarting even the smartest investors. Call that an oxymoron if you like. But nobody ever claimed that the markets are always rational.
“Watchers argue Dalio has been overly focused on his 2017 book, ‘Principles,’ which he continues to promote on LinkedIn and Twitter years after launch. The 70-year-old hedge has been popping up everywhere to tout the book, including a recent video interview with rapper and entrepreneur P. Diddy.“
Give me a break!

There seems to be a few threads and increased interest in Munis recently. I have always found this category more impacted by seasonal trends than most bond oefs. Here is an article that highlights that seasonality:
The Four Seasons of Muni Bond Investing
FEBRUARY 14, 2019 BY SAGE ADVISORY
Timing is everything. For a municipal bond investor, annual seasonal trends can provide great entry and exit points, if executed properly. There are four distinct seasonal periods that occur annually due to structural factors inherent in the municipal bond market. If timed correctly, municipal investors can increase their probability of successfully trading these markets and reap the reward of better returns.
The four seasonal periods that affect the municipal market on an annual basis are January Reinvestment, Tax Season, June/July Redemptions, and the Holiday Season Slowdown.
January Reinvestment
Although not the heaviest period of bond maturity and coupon payments, January 1st does experience an elevated level of cash that needs to be reinvested. In addition, the lingering effects of the Holiday Season Slowdown contribute to a limited amount of new issue supply, as well as diminished levels of secondary supply offered by broker/dealers. This strong technical environment tends to last anywhere from a few weeks to well into February, depending on the direction and magnitude of market flows. For investors who can time liquidity needs, January represents one of the most advantageous times of year to raise funds.
Tax Season – late March through April
From late March until the end of April, the municipal bond market tends to see both a reduction in demand as well as a heightened level of selling to fund tax payments. (Selling tax-exempt municipal bonds to fund personal federal and state tax liabilities remains one of life’s great mysteries.) Regardless, tax season provides an attractive entry point for investors, as limited demand and improving new issue supply tend to push valuations to more attractive levels.
June/July Redemptions
The heaviest period of maturing bonds and coupon payments is during these two months and represents anywhere from 40% to 60% of annual redemptions. Typically, municipal issuers come to market during this time, which offsets the demand pressure from reinvestment. Unfortunately, over the past several years, municipalities have been paying down debt and reducing debt issuance, which has created a net negative supply environment. As long as new issuance remains below the long-term averages, municipal bonds will remain supportive during June and July and provide investors an opportune time to rebalance portfolios (such as reducing credit risk).
Holiday Season – late November through year-end
Thanksgiving should indicate a warning sign to investors regarding optimal liquidity and ample supply. During the week of Thanksgiving, the markets may be open; however, the focus of the market is limited. The last week of November and the first two weeks of December represent the final opportunity for investors to efficiently trade before the market essentially shuts down for the year. Junior traders and reduced staff remain the norm during the last two weeks of the year. Market making and risk taking are severely restricted and a noticeable liquidity premium on bonds is apparent. Fortunately, for those investors looking to put cash to work, the ability to purchase bonds from forced market sells offers the opportunity to add exposure at discounted levels.

DODFX is a volatile fund that can have multi-year streaks of good or bad performance. I was going to say that despite that, it's not a white knuckle fund - with performances in, say, the top 2% or bottom 2% - until I checked. It came in at the 98th percentile in 2015 and the 2nd percentile in 2016.
That sequence goes to show that you have to look at this fund over several years. Its 72nd percentile performance in 2017 and 81st percentile standing in 2018, when combined with its 7th percentile returns in 2019 and also YTD lands it in the top 3/8th (38th percentile) over three years.
Another good year and this fund is going to wind up with a great 3 year record and it will have pulled its 5 year record up quite a bit. If one is willing to hang tight, I don't see a reason to believe that it won't continue to do well, long term. It reopened in part because of nearly a half decade of outflows. So while large, I don't expect size to be a significant issue.

For what interest it holds, Wasatch Small-Cap Growth is the only SCG fund that's both a Great Owl (risk-adjusted, entire market cycle) and Honor Roll (total returns, 1,3,5 years) fund; it has the additional endorsement of Morningstar, which recently elevated it to "Gold."
The Wasatch site says the fund is closed "to most new investors through third party intermediaries" which suggests it might not be closed to direct investment.

Agree with PRDSX. I have it in my T Rowe Roth IRA and won't sell it for at least ten more years as retirement approaches.

PRIDX. (TRP.) 2019: +24.6%. DODFX and PRIDX both had similarly bad years in 2018.

PRDSX, TRP fund. No load, a quant fund.
1-year: 29.74%
3 years: 14.24%
5 years: 11.95%
10 years: 14.99%
I've held it for several years. No plans to divest from it. It's true love. And you know, there's only two things that money can't buy: and that's true love and HOMEGROWN TOMATOES! Rest In Peace, Guy Clark. We miss ya.

Over the years I have been using a high % in one of the following funds NHMAX ORNAX OPTAX PHMIX by using momentum.

My HY Munis fund opened the year with a bang (already 0.7+% in just a week). All my taxable is invested in that fund. Time for me to add more money to HY Munis in IRAs, just like I did last year because it's better than Multisector funds.
See YTD (chart)

I bought Dodge and Cox International the first year it was offered-after doing quite well for the first years, it stumbled badly in ensoiuant years- however, hope springs eternal and it had a great 2019- may it continue !! any thoughts on the matter, you guys- and lassies??

This list is close to David's January commentary review of funds downside deviation. I looked at that in some detail and have the following two cents
1) AKREX concentration in several industries (20% MA and V) is concerning. A lot of it's outperformance was in the early years and it is similar recently to another fund that just missed the 10 year cutoff (see below), POLRX. Still AKREX seems to have accomplished this with a large chunk of cash onboard ( at least now)
2) FVD has six times the utility exposure of the larger market. Utilities have been o a tear but should they really be at 20 times earnings?
3) For folks who are willing to accept less upside for half the downside risk, MOATX and VWINX are stellar alternatives. Especially VWINX but I worry now that it’s 70 % bond position will not provide the ballast that allowed it to sail though 2008 with a maximum DD of only 18%. What happens when we get inflationary pressures and the bond market collapses? If it is because of increased growth the equities will make up but if it is due to our debt bomb…
5) I got scared off by DSENX opaqueness. A fund that just missed David’s 10 year cut off for his commentary is POLRX and it beats DSENX in almost every category, Upside/Downside ratio 1.24 vs 1.08, DSDEV 6.3 vs 7.4, APR 15.2 vs 15.1, MaxDD 12.8 vs 15.4. Ulcer Index 3.1 vs 3.3 Martin Ratio 4.6 vs 4.2. POLRX investment philosophy is clear and understandable although it has had the wind very much at it’s back in the last several years. Even so POLRX lost less than DSENX (14% vs 18%) in the fall 2018

VHT has been in our funds for several years.

As a trading vehicle, maybe, if you follow the sector and stay on top of it. As a buy-and-hold investor I'm not so sure long term. Personally I think the alternative energy space holds better prospects. Everyone will have to decide for themselves. Full disclosure: I've held EPD for about 10 years now and I'm thinking about trading some oil stocks.

Right. Sequence of returns risk is greatest at year 1 of retirement, generally the first 10 years or so of retirement have the major risk (decreasing yearly). The 5 or so years before retirement is also very significant in determining amount of portfolio available for withdrawal. During this 15-year period, be very diversified and if you don't maintain a consistent asset allocation (say, 60/40), be more conservative in this period.

MikeM "I don't know if <10 is the correct number or if it is 15 or even 20. But at some point you do dilute good managers or funds with not so good ones. And what typically goes with fund collecting is fund switching, translated, buy high and sell low. Just adding 2 more cents to what you said."
+1, more funds generally means more trades and more trades usually mean lower performance.
1995-2000 I invested mostly in one fund, US total index after I read Random walk
Since 2000 and after I started my best risk/reward funds, the max is 8 funds.
In the last several years it's 5 but many times just 3-4 funds. There is no reason for me to own my second best ideas but I also trade more often than others by being invested most times at 99+% and playing momentum. I don't recommend or promote it for anybody.
Over the years I helped many and I usually use 5-6 funds with 1-2 changes annually.
For investors who really want to be buy and hold investors, I would recommend indexes and/or Wellington funds (VWIAX,VWENX,VWEAX) because who knows what will happen 10-20 years from now, the expense ratio is very low and these are unique conservative funds that are managed by a group and not star managers.