FYI: For Joel Tillinghast, investing is as much about avoiding mistakes as picking winners.
In 28 years of running the $38 billion Fidelity Low-Priced Stock Fund FLPSX, +0.02% he has done plenty of both.FYI:
Regards,
Ted
https://www.marketwatch.com/story/fidelity-fund-manager-investing-successfully-is-about-minimizing-regrets-2017-11-06/print
M* Snapshot FLPSX:
http://www.morningstar.com/funds/XNAS/FLPSX/quote.html
Lipper Snapshot FLPSX:
https://www.marketwatch.com/investing/fund/flpsx
FLPSX Is Ranked #6 In The (MCV) Fund Category By U.S. News & World Report:
https://money.usnews.com/funds/mutual-funds/mid-cap-value/fidelity-low-priced-stock-fund/flpsx

FYI: A few years ago I wrote a post that is still far and away my most popular called What if You Only Invested at Market Peaks? I still regularly receive comments, caveats, and questions about this one.
A recent follow-up question from a reader asks:
What if you only put your money to work at below average P/E ratios?
Regards,
Ted
http://awealthofcommonsense.com/2017/11/what-if-you-only-bought-at-below-average-pe-ratios/

FYI: U.S. investors have poured into “risk-parity funds” in the last few years. Advocates say the complicated strategy of investing in stocks, bonds and commodities offers better returns than traditional balanced funds that invest in a mix of stocks and bonds.
Regards,
Ted
http://www.ajc.com/business/atlanta-money-manager-brings-sophisticated-mutual-fund-main-street/BJ524YWOYIG0g8rTRR3UnN/
M* Tactical Allocation Fund Returns:
http://news.morningstar.com/fund-category-returns/tactical-allocation/$FOCA$TV.aspx

In general, if I were 30-40 years from retirement I’d prefer to use a pre-tax program like the Traditional IRA. At 10 years from retirement I’d begin transitioning (through Roth contributions and/or conversions). At 60+ I very much like the Roth concept. So these considerations affect my view of the anticipated change (not favorably).
Reason: I have no confidence in being able to anticipate the rules of the road as Congress, the executive branch and federal courts may define them 65-75 years from now (anticipating 35-40 years of making contributions and 30-35 years of withdrawing money. The “promise” of tax exempt contributions exists now. Use it. The promise of tax exempt withdrawals in 75 years is anybody’s guess. I do, however, have a somewhat higher predictive confidence for 20-30 years out. So for a shorter time frame like that, I’ll take my chances transitioning to a Roth-type product.
Memory is a funny thing, especially with politicians. Who knows what the federal budget, tax collection needs and political mood of the nation will be so far out? For some perspective - 75 years ago (1942): Pearl Harbor had just been attacked, FDR was President, the interstate highway system hadn’t yet been built, and the setting for one of my favorite films was taking shape along Nantucket Beach (BTW - not the actual filming location).

@BenWP, from reviewing SEC filings I believe the strategy changed in October 2015. At that point the only name change was to replace AllianzGI with Fuller & Thaler. The name change to explicitly include "Small Cap" happened at the end of January this year. I believe the strategy actually changed in 2015 because the stocks in the portfolio before and after the change were very different, from clearly large cap names I recognized easily to mostly names that I didn't recognize or know are a lot lower on the capitalization spectrum. M* also changed the category designation, showing the portfolio in the small blend box of their 9 box in 2015 and which I assume relates to where they finished the year and then changing the category designation to small blend in 2016.
I'm not particularly concerned about turnover because I would buy it in my IRA if I decide to do that and their performance in the small blend category, albeit for just 2 years, might be even better than their previous performance. If you're willing to put any weight on 2 years and you're comfortable with the total assets chasing the strategy then it's pretty interesting. I normally compare small blend funds to my favorites, VVPSX, MSCFX and FSCRX as well as IWB rather than peers, which is an extension from what Sam Lee was talking about to include a few small cap funds I really like, have held and/or would like to hold (VVPSX), and these guys look great for the last 2 years. I think I'd like to see how they do in a more extended negative market because they haven't done anything special in the few isolated negative months in the last 2 years and they didn't do well against my comparisons in January 2016. Can't someone whip one of those up just for comparison's sake?

@ MFO Members: Have read and invested in Frank Holmes for years, he kinda GROW's on you, and then he doesn't !
Regards,
Ted :) :) :)
GROW:
YTD: 142%
1-Yr. 126%
3-Yr. 4.9%
5-Yr. -(7.84)%
10 Yr. -(14.33)%
http://performance.morningstar.com/stock/performance-return.action?t=GROW&region=USA&culture=en_US

FYI: ( For those of you who are not aware David Snowball was Marla Brill's gatekeeper on her mutual fund website.)
For most of the last few years, investors have largely ignored emerging market stocks as the prolonged and positive momentum of the U.S. economy and healthy corporate earnings reports kept them satisfied with stocks closer to home.
Over the five years ended August 31, the annualized return for the MSCI Emerging Markets Index was 5.3%, while the S&P 500 returned 14.4%.
Regards,
Ted
https://www.fa-mag.com/news/are-emerging-market-etfs-getting-frothy-35389.html?print

Sorry, LLJB, I should have been clearer. I've been reading work on the adviser's site, which is more extensive. https://www.fullerthaler.com/news. They've run the strategy in several wrappers back for a couple decades. Microcap, if I recall correctly, is 17 years old.
The original adviser (Undiscovered Managers) sought out Fuller and Thaler based on their private work, that fund was then sold (perhaps twice?) before Fuller and Thaler moved from sub-adviser to adviser. The previous owner of the fund withdrew something like 90-95% of the fund's assets when it became independent, which allowed them to transition from a larger cap product (which the adviser wanted) to a small cap one (which they wanted). I'll see if I can extract more info about the small cap accounts.
David

I'm thinking that sometime in the future Roth withdrawals will be taxed once contribution principal has been removed. So, if you invested 100k in the form of contributions in your Roth, through the years, the first 100k taken will not be taxed; but the investment gains after contributions will be taxed when removed or some form of this. This one of the reasons I never opened a Roth account in the first place.
If and when the government needs money ... Hello, taxation.
My "Crystal Cube" when polled gave the "yes" answer ten out of ten times.

Hi @johnN,
The powers that be on the board have asked all posters to write a short blurb about the subject matter they are linking. I have noticed that you have recently just been posting links the past couple of months. So, why are you not doing as the rest of us and writting a short recap? Is it no longer required?
I do like reading what Dr. Madell thinks. In this edition, I found it interesting in viewing the asset categories he listed and feels will outperform over the next three to five years. Seems, LCG was not one of them.

Hi @Roy
Interesting question.
As a stock over the last 20 years, TROW has generally performed well in bull markets and poorly in bear markets. I believe this to be an investor sentiment phenomenon as opposed to a passive investing issue.
TROW has $22B in market cap. They are a long way from being forced to go private IMO.
Frankly, I think passive investing/robo advisors etc. may be the ones hurting most if we enter a long term bear market. The better active managers have a chance to outperform the stock market by a wider margin in that environment than they do in a relentless bull market.

I think we can all agree that the last 10 years have been abnormal... GFC, elongated recovery boosted by QE. I have no crystal ball to tell you when things will turn, but I do believe they will and we will all be on this forum posting about our low (maybe negative) absolute returns.

Abnormal or not, but many Baby Boomers, especially the older ones, have firmly secured their retirements due to the past 10 years (or 9.5 years to be more precise) and have or are transitioning to a more conservative mode. The joys of being old! First it was the decades of the roaring 80s and 90s and then the QE driven decade. For most, no skills required, just being a full fledged participant.

True, and that's great. However, for investors still participating in the markets, we can't fall victim to the end point sensitivity here...

I think we can all agree that the last 10 years have been abnormal... GFC, elongated recovery boosted by QE. I have no crystal ball to tell you when things will turn, but I do believe they will and we will all be on this forum posting about our low (maybe negative) absolute returns.

Abnormal or not, but many Baby Boomers, especially the older ones, have firmly secured their retirements due to the past 10 years (or 9.5 years to be more precise) and have or are transitioning to a more conservative mode. The joys of being old! First it was the decades of the roaring 80s and 90s and then the QE driven decade. For most, no skills required, just being a full fledged participant.

I think we can all agree that the last 10 years have been abnormal... GFC, elongated recovery boosted by QE. I have no crystal ball to tell you when things will turn, but I do believe they will and we will all be on this forum posting about our low (maybe negative) absolute returns.

@Lewis: No question Greenlight Capital has an outstanding record with an annualized return of 16.1% since it's inception in 1996. However, its a question of what have you done for me over the last ten years, not much !
Regards,
Ted Greenlight Capital S&P 500
3-Year Cumulative -7 (-2.4%/year) 29 (8.9%/year)
5 Year Cumulative 19.1 (3.6%/year) 98.2 (14.7%/year)
10-Year Cumulative 55.6 (4.5%/year) 95.7 (6.9%/year)

https://www.gurufocus.com/profile/David+Einhorn
Einhorn’s Greenlight Capital was funded in 1996 and through August 2006 had stellar 29% annualized returns. Since then not so stellar ending 2016 which shows a NEGATIVE 2.4% annualized for three years, +3.6% annualized for five and +4.5% for ten.

Many of us fail to take a long-term perspective and view things over a full market cycle. I'm a firm believer that things will inevitably turn and a lot (not all) of these hedge funds that investors have rapidly fled from will prove they are actually effective investments. This will ultimately lead to investors piling in again, chasing returns and in 10-15 years we will go through the process again. "It's like a circle."
https://youtube.com/watch?v=qmzxR0zfIN0

https://www.thestreet.com/story/1305526/1/make-a-bundle-on-the-sps-rejects.html

The S&P 500 is often mischaracterized as a passively managed index of large stocks, but in 2000, its managers became seriously aggressive -- adding (and subtracting) four new stocks each month, on average. In the process, the index was systematically stripped of small and mid-sized value stocks from Jan. 28 to Dec. 11 in favor of large-cap growth stocks -- largely from the technology sector, and at exactly the wrong moment.
You didn't know that stocks are sometimes removed from the index for subjective reasons, just as they are at any ol' mutual fund?"

2000 was merely the culmination of five years of irrational exuberance on the part of the S&P committee: "Starting in 1995, it has evicted old stocks from the S&P 500 and stuffed in new ones at an unprecedented pace"
http://money.cnn.com/2001/06/13/zweig_on_funds/zweig_on_funds/a.htm (Jason Zweig)
----
"Good luck on picking a recent winning fund and having that fund repeat its superior performance."
Do I detect a bit of bias? Many of us look at length of management (irrelevant to recent performance), MPT statistics (generally not even available for recent periods under three years), etc.
M* analysts, for whatever else you may think about them, often award gold and silver metals to funds with abhorrent recent performance. YACKX (gold, 87th percentile YTD), BERIX (silver, 91st percentile YTD), DODBX (gold, 77th percentile YTD), FMIJX (gold, 97th percentile YTD), MAPOX (silver, 77th percentile YTD), OAKLX (gold, 89th percentile YTD).
Recent winning performance is not a necessary condition for selecting funds going forward, and I doubt many people here constrain their selections so narrowly.

Hi Guys,
I apologize if these S&P study results were previously posted on MFO. I miss plenty, but much more importantly, the S&P findings conclude that active mutual fund management misses even more. Here are two recent research Links from that firm.
The first essentially concludes that globally about 95% of actively managed funds underperform their Index over periods that exceed 3 years. The specific numbers change but the underperformance is dramatic, is persuasive, and is not too surprising. The second Link talks about fund performance persistence. Again, a very dismal set of statistics is presented. Persistent superior performance simply does not exist, with perhaps a very, very few exceptions.
https://us.spindices.com/documents/spiva/spiva-us-year-end-2016.pdf
https://us.spindices.com/documents/spiva/persistence-scorecard-december-2016.pdf
Enjoy, but much to much detail in these reports. However, the bottomline conclusions are significant and easy enough to understand, Owning a portfolio of actively managed mutual funds is likely ( high probability ) a losers game. Good luck on picking a recent winning fund and having that fund repeat its superior performance. The outlook is not encouraging given the probabilities and the potential excess plus or minus returns relative to a fair Index.
There's a simple solution here.
Best Regards

Cash is trash? That’s a dumb statement.
I wouldn’t tell that to my 88-year old widow neighbor. And while something surely will outperform cash over the next decade, it’s a fool’s errand to pretend to know which asset. Bonds are overpriced. Equities probably so. That leaves real estate, industrial metals, agriculture/timber resources, precious metals and energy. My guess is it’s one of the last group - but only a guess. That’s a pretty short interview. Dalio didn’t say, but I’d have to think a hedge fund would use cash at times while waiting for better opportunities to come along. Another approach is to sell markets short - but it’s expensive and can be deadly if you get caught leaning the wrong way.
-
Added 10/29 The comment by Dalio prompted me to look back in time. Had he said “Cash is trash today” he’d be nearer the mark. Those with short memories may not recall that we got into this situation because Dalio’s “superior“ asset classes mostly crashed and burned beginning in late ‘07 and continuing until March ‘09 when they began turning up. Today’s 1% cash rates are mostly the result of intense efforts by central banks around the world (and here at home) to reflate those assets.
Here’s a link to a longer term interest rate chart. Note that cash wasn’t always so trashy. For many years, especially in the ‘80s bank CDs of relatively short duration yielded in the vicinity of 7-12%. The chart doesn’t show money market fund yields. But my memory is that money market fund yields of 15% or higher were common for several of those same years. http://www.bankrate.com/banking/cds/historical-cd-interest-rates-1984-2016/
Is cash a good inflation hedge? No. Do yields on cash roughly track inflation? Yes. Looking to diversify further, a few months ago I added a limited term bond fund (OUSGX) to the small segment of my portfolio earmarked as an inflation hedge (areas expected to outperform during times of higher inflation). It joins a global bond fund, real estate, a real asset fund and an infrastructure fund in that category. Yield isn’t great right now (around 2%) but it would likely increase if severe inflation were to return.
As a daily reader of one European newspaper, I can tell you parts of the continent, notably the UK, have been dealing with meaningfully rising inflation. I’ve seen anecdotal signs it may be stirring in the U.S. In specific: lumber and construction supplies and fresh produce. The later may be linked to the reduced number of temporary immigrant farm workers coming into the U.S. for harvest and other ag functions.
Sorry so long winded.