A very nice run for the last 10 years ! What will the next 10 years bring for these funds ?
A look see how they performed in 4/th Qter 2018 would have added to the article.
Derf

@Mitch - Makes very good sense. Thank you.
May I suggest that placing a comma after “following“ might avoid possible confusion as to meaning?
“For sharp quick increases and decreases all stock classes are highly correlated and will have large movements together. But for the next several years following, this diversification smooths out returns and lead to less variation in recovery.”
(Another approach might be to place the comma instead after “diversification” - depending where you want the emphasis.)

Also the diversification analysis from the article is not that useful. For all the swift large declines as far as I go back (back to the 1987 crash), everything goes down sharply together (no diversification advantage). However in the subsequent recovery there were big differences in different asset performance. In this case for all 2-3 year periods that include 2008, EM stocks largely outperformed USA stocks (probably largely because China hugely stimulated their economy, while the US was frozen on fiscal policy and Europe raised interest rates before eventually lowering them), and this really helped even steady my own portfolio performance. People need to look at diversification in a more modern context. For sharp quick increases and decreases all stock classes are highly correlated and will have large movements together. But for the next several years following this diversification smooths out returns and lead to less variation in recovery.

FYI: Investors paid less to own funds in 2018 than ever before. Our study of U.S. open-end mutual funds and exchange-traded funds found the asset-weighted average expense ratio was 0.48% in 2018, down from 0.51% in 2017. We estimate that investors saved roughly $5.5 billion in fund expenses last year thanks to this 6% fee decline, which is the second-largest year-over-year decline we have recorded since we began tracking the trend in asset-weighted average fees in 2000. The asset-weighted average expense ratio has fallen every year since 2000. Investors are paying roughly half as much to own funds as they were in the year 2000, when the asset-weighted average fee stood at 0.93%; they're paying 40% less than they did a decade ago and about 26% less than they did five years ago. The asset-weighted average expense ratio of passive funds was 0.15% in 2018 (versus 0.25% a decade ago) compared with 0.67% for active funds (0.86% in 2008). This means active-fund investors are paying about 4.5 times more than passive-fund investors on each dollar, the widest disparity since 2000
Regards,
Ted
https://www.morningstar.com/content/dam/marketing/shared/pdfs/Research/USFundFeeStudyApr2019.pdf?cid=EMQ_&utm_source=eloqua&utm_medium=email&utm_campaign=&utm_content=17040

For me, I have, for the most part, through my many years in investing, trimmed my equity positions into strength and expanded them on weakness. As to old saying goes ... buy low, and sell high.

I don't disagree with this comment, but a different argument can be made for the other side of the coin, trimming to early in an up trend (opportunity cost) and buying while the market is falling - try to catch that proverbial falling knife. In both cases it's timing the market. Always hard to time it. Always a gamble.

If there’s such a thing as good financial porn that was it. Remember grabbing a copy or so off the supermarket stands in the spring of ‘97 and enjoying them outdoors as it warmed in these parts. Those were transitional years. One year from retirement and had recently let go of my fee-based plan advisor - ill prepared to manage the accumulated assets on my own.
Some other things which helped shape my thinking back than were Andrew Tobias’ The Only Investment Guide You’ll ever Need and a recent book by John Bogle: Bogle On Mutual Funds: New Perspectives for the Intelligent Investor. The WSJ was still pretty good reading. And, of course, Rukeyser’s weekly interviews with the likes of John Templeton / Perter Lynch were influential. Bill Fleckenstein had some good free columns online in those years and helped instill in me a wariness of markets (probably excessive) which still prevails today.

There is nothing more positive than skepticism amid rising prices. I would be more worried if this market was more embraced and investors were much more enthusiastic. I can’t predict any better than anyone else. But the momentum coming off the December lows was among the fourth greatest of the past 60 years. August 1982 and March 2009. We saw how much higher the market went over the ensuing years. Strength begets strength. The problem is the other was January 1987 and we also know what occurred 9 months later.

For Perspective:
“The Dow Jones Industrial Average's highest closing record is 26,828.39, set on October 3, 2018. It followed a record set the previous day.” https://www.thebalance.com/dow-jones-closing-history-top-highs-and-lows-since-1929-3306174. On Friday the DJI closed 26,542. That put it 287 points below where it was roughly 6 months earlier. Call it an uptick if you like. For anyone with longer than a 6 months time horizon, the market, as measured by the DJI, is still in recovery mode following the late 2018 selloff.
Massive downward spirals in markets are exceedingly rare. I’m aware of only 2 in this country during the past 90 years that reached or exceeded the 50% range (‘29-‘32 and ‘07-‘09). In addition, Japan’s Nikkei may be worth a look. In 1989 that index, in a developed market with an economy second only to the U.S. at the time, peaked at 38,916. 30 years later it rests at 22,259.
No intent by me to shape anyone’s views one way or another. My recent shift to a static allocation model with only occasional rebalancing has distanced me from the daily / seasonal market gyrations. It’s more boring, potentially less profitable, but also reduces the danger of shooting myself in the foot.

For me, I have, for the most part, through my many years in investing, trimmed my equity positions into strength and expanded them on weakness. As to old saying goes ... buy low, and sell high.
From my perspective, this is a grossly overvalued market and I'm not putting new money to work at this time. This does not mean that it want go higher; but, I'm thinking the returns will be very thin during the nearterm.

Lots pundits stating no doubt another large recession likely occur 6 to 36 months... We don't really know exactly when
So if you are doing well/near retirement and thinking time to bail out, extremely happy w previous 10+years profit then maybe best time to get out..
I reduced mother portfolio to 30%equities and 70% bonds fixed-income recently

Anyone using this up tick as a reason to take some profit ?

Interesting question. But why are you calling today’s market conditions an

“uptick” ? U.S. equity markets today have barely clawed their way back to where they were 6-12 months ago. “Rebound” or “recovery” might better describe today’s market. @Derf, I share your apprehension. While I don’t have access to the Barrons story, I suspect it’s bearish in sentiment. Problem is: These warnings are becoming like a “broken record”. (For those too young to remember vinyl, “broken record” was a phenomenon characterized by the unstoppable repetition of a few notes or words - over and over again.)
Read virtually any respectable financial publication from Barrons to the MFO Monthly Commentaries over the past 8-10 years and you’ll find warnings about overvaluation, lofty levels, dangerous markets, overbought markets, over exuberance, etc.. Yet, had you heeded those warnings 3, 5 or 8 years ago and moved to ultra-safe investments like cash and limited duration bonds you’d likely have been left standing in the dust along the road as markets marched higher.
Does this make me optimistic going forward? No - not in the least. But something isn’t adding up when you compare the decade old flood of warnings about valuations alongside actual U.S. stock market performance over the same period. One possibility (but only a possibility) for those fixated on indexes is that the 10-year steady march higher since 2009 will eventually be erased by a sudden, rapid, downward spiral in valuations. Let’s hope that doesn’t happen. Should it occur, however, it might make the roughly 18 months slide from late ‘07 to early ‘09 look like a Sunday picnic.*
I don’t get paid to give investment advice here, so offer none. :) I share your concerns and I’ve done what I can to lower overall risk in how my retirement monies are invested - appropriate to age and a 10-20 year time horizon. But there are no guarantees. And, whatever plan / course one decides on, it needs to be tailored to age and circumstances. @Derf, I realize this does nothing to satisfy your concerns. But thanks for the question anyway.
*From its peak in 2007 to its low in 2009, The S&P 500 Index fell roughly 50%.
https://www.frbatlanta.org/cenfis/publications/notesfromthevault/0909

Absolutely super post Hank. One that younger investors should save as a reference.

Anyone using this up tick as a reason to take some profit ?

Interesting question. But why are you calling today’s market conditions an “uptick” ? U.S. equity markets today have barely clawed their way back to where they were 6-12 months ago. “Rebound” or “recovery” might better describe today’s market. @Derf, I share your apprehension. While I don’t have access to the Barrons story, I suspect it’s bearish in sentiment. Problem is: These warnings are becoming like a “broken record”. (For those too young to remember vinyl, “broken record” was a phenomenon characterized by the unstoppable repetition of a few notes or words - over and over again.)
Read virtually any respectable financial publication from Barrons to the MFO Monthly Commentaries over the past 8-10 years and you’ll find warnings about overvaluation, lofty levels, dangerous markets, overbought markets, over exuberance, etc.. Yet, had you heeded those warnings 3, 5 or 8 years ago and moved to ultra-safe investments like cash and limited duration bonds you’d likely have been left standing in the dust along the road as markets marched higher.
Does this make me optimistic going forward? No - not in the least. But something isn’t adding up when you compare the decade old flood of warnings about valuations alongside actual U.S. stock market performance over the same period. One possibility (but only a possibility) for those fixated on indexes is that the 10-year steady march higher since 2009 will eventually be erased by a sudden, rapid, downward spiral in valuations. Let’s hope that doesn’t happen. Should it occur, however, it might make the roughly 18 months slide from late ‘07 to early ‘09 look like a Sunday picnic.*
I don’t get paid to give investment advice here, so offer none. :) I share your concerns and I’ve done what I can to lower overall risk in how my retirement monies are invested - appropriate to age and a 10-20 year time horizon. But there are no guarantees. And, whatever plan / course one decides on, it needs to be tailored to age and circumstances. @Derf, I realize this does nothing to satisfy your concerns. But thanks for the question anyway.
*From its peak in 2007 to its low in 2009, The S&P 500 Index fell roughly 50%.
https://www.frbatlanta.org/cenfis/publications/notesfromthevault/0909

FYI: The five dirtiest words in personal finance are “now, next, best, top and must.”
As in “Five money moves to make now,” or “The best funds for the new year,” or, doubling up “The next move all investors must make.”
For years, lines like those — appealing to base instincts of consumers — were a staple of Money magazine covers. The magazine used focus groups to test for cover lines that would make its product jump off the newsstand, and the same basic themes came up again and again.
Regards,
Ted
https://www.seattletimes.com/business/when-money-runs-out-magazines-demise-puts-consumers-on-alert/

I've cited this Kitces piece before:
Tax-Efficient Spending Strategies From Retirement Portfolios
https://www.kitces.com/blog/tax-efficient-retirement-withdrawal-strategies-to-fund-retirement-spending-needs/

The conventional view is that taxable investment accounts should be liquidated first, while tax-deferred accounts are allowed to continue to compound. ...
However, the optimal approach is actually to preserve the tax-preferenced value of retirement accounts and to fill the tax brackets early on, by funding retirement spending from taxable investment accounts [while doing Roth conversions] ...
... tap investment accounts for retirement cash flows in the early years, [and tap] a combination of taxable IRA and tax-free Roth accounts in the later years

Emphasis in original.

Interestingly, DODGX (Dodge and Cox Stock) wasn’t opened for more than 30 years (1965) after the inception of DODBX (Dodge and Cox Balanced) in 1931. I’m thinking that 1931 probably wasn’t an opportune year in which to try and sell the public on a stock fund. :)
1 MFS Massachusetts Investors Fund (MITTX) 1924
2 Putnam Investors Fund (PINVX) 1925
3 Pioneer Fund (PIODX) 1928
4 Century Shares Fund (CENSX) 1928
5 Vanguard Wellington Fund (VWELX) 1929
7 CGM Mutual Fund (LOMMX) 1929
8 Fidelity Fund (FFIDX) 1930
9 Dodge & Cox Balance Fund (DODBX) 1931
https://www.investopedia.com/ask/answers/08/oldestmutualfunds.asp

@young - I have no bias against TCW because frankly I don't know that much about them. However, the particular fund you inquired about gives me pause because:
°It is a very concentrated fund, +52% in the top ten holdings, +12% in the top holding, There's nothing wrong particularly about that except be very aware of what you're buying.
°The fund has a pretty short history (3 years). I'd like to see a longer performance history, more info on the manager, and more info on how the fund is managed.
°Expenses or should I say the expense ratio, is all that you can control when choosing funds and this one is a bit high given most of the other growth fund options out there.
°This is a small fund in terms of AUM, $87 million. Given the concentration of the portfolio you'd better hope that the manager is on his stock picking game.
So again I repeat, there's nothing inherently wrong here but be very aware of what you're buying.

Some history, courtesy Edward Luce, Financial Times:
In 1832, the British aristocracy saved itself by agreeing to loosen its grip on power. … The [passed] bill widened Britain’s electorate and diluted the political stranglehold of its landed elites. This was a key reason why Britain escaped Europe’s wave of 1848 revolutions. …
Much the same thing happened again in 1911 …. Once again, the Lords … opted for compromise over the threat of extinction … [voting] in favour of the Parliament act, which deprived the aristocracy ever again of the power to block fiscal legislation. This was how British welfare state was born. Meanwhile, the country’s peers continued to enjoy their status at the top of the ladder. It seemed like a reasonable trade-off. The working classes received social insurance; their social betters got to complain ad nauseam about “Le weekend”.
I was reminded of these key turning points — and indeed of the New Deal … — a few days ago when Ray Dalio, the hedge fund billionaire, wrote a plea to reform American capitalism…. few people have benefited more from today’s capitalism …. The system will never change unless more people like Dalio come round to his way of thinking. One or two others, including JPMorgan’s Jamie Dimon, are also making similar noises, which is good news. But too many still belong in the camp of Steve Schwarzman, the private equity billionaire, and Howard Schultz, the former Starbucks chief executive, both of whom have likened the idea of a wealth tax to Venezuela. A few years ago, Schwarzman compared the proposed — but still unenacted — closure of the “carried interest” loophole to Hitler’s invasion of Poland. I wish I were making that up. Alas, he really did.
As long as the bulk of America’s superwealthy continue to equate progressive taxation with fascism, or communism, they will hasten into being what they most fear. History tells us that elites who do not share power are ultimately doomed (see French revolution). Those with the wisdom and foresight to bend find they are far less likely to eventually break. The question America’s financial and tech elites must ask is “what price social peace?” I would say social peace is worth several carried interest loopholes.

Hi @Seven:
You bring up an interesting point. I am better playing the upside than I am the downside. This is the reason that I am currently running a 20/40/40 portfolio. Once, the downside comes then I can put some cash to work in an equity spiff position to benefit from the upside. Thus far, over the past ten years my average returns are higher than if I had just invested in some of the better rated hybrid funds over just letting the money sit in these funds.
By playing spiff position (from time to time) increased my total returns in the range of one to two percent per year. And, based upon the size of my portfolio this made playing the spiff position endeavor worth while for me.
I'm thinking we all need to invest to our strengths. As in investing, generally, no two card players are alike and the better ones will prevail with the better returns over time.

“I do know that I have bettered the returns of some of my hybrid funds over the past ten years ... “
“How others have faired I have no idea.”

The validity of your first assumption rests largely on your belief that your overall market risk exposure during those 10 years corresponded closely with that of the funds you’ve chosen to benchmark against. How one goes about that type of comparison is beyond my expertise and that of the vast majority of investors. But if you were running incrementally greater risk over the period than those funds were exposed to (in aggregate), than the assumption you’re attempting to demonstrate would be faulty. If, on the other hand, your overall risk exposure (to market fluctuations) was identical to or lower than those hybrid funds assumed, than you did indeed beat those fund managers at their own game. Since the decade was generally favorable for both equities and bonds, an accurate assessment of comparative risk (you vs the hybrid funds) becomes problematic.
Your follow-up statement (or question) is easier to address: Provided the risk level in your investments remained essentially the same as or lower than that of the hybrid funds you selected as benchmarks, than investors in those funds did fair more poorly than you over that 10-year period. Importantly, their lower returns were due in some small measure to the fact that you successfully gamed the system to your advantage by side-stepping the market losses they sustained - while at the same time not having to assume a higher level of risk in your portfolio.
One problem comparing oneself to mutual funds is that they possess both structural advantages and disadvantages which individual investors don’t have. One advantage for funds is having access to lower fee institutional class shares. Another is (sometimes) having access to funds created solely for in-house use. Reduced brokerage fees buying / selling in lots reflects another advantage. And, to the extent that fund managers can better afford, and are better afforded, access to company data and management, it’s a structural advantage that should serve to lower risk compared to individual investors. One big structural disadvantage however, is that they have little control over “hot money” entering and leaving their funds - especially money running away during downturns. This may force them to sell assets at temporarily distressed levels. Also, their ability to short-term “market time” is greatly constrained; though, as I’ve argued, that may well constitute a longer term advantage.

Hi @hank,
I think some try to go all in when the investing climate is in an uptrend and the all out with the climate becomes stormy. For me, I'm a long term investor that will move between certain ranges within my established asset allocation. Did I better the swing type investor or the one that goes in and stays in through the ups and downs? I'd like to think so ... but, there is no way to really tell because I've changed my asset allocation a couple of times over the past ten years.
But, I do know that I have bettered the returns of some of my hybrid funds over the past ten years. Three that I have marked myself against are FKINX, AMECX and CAIBX.
So, if I am able to increase my portfolio's returns by just 1% over what they have done annually pays me an addition 10K , or more, per year. For me, this makes being active in the markets worth while.
How others have faired I have no idea.