FYI: Are we in a rare “super” bull market? In our exclusive annual outlook for the U.S. economy and markets Ed Hyman, Wall Street’s #1 ranked economist for a record 37 years provides answers, with leading value manager Matthew McLennan.
Regards,
Ted
http://wealthtrack.com/1-economist-hyman-leading-value-manager-mclennan-discuss-economic-surges-super-bull-markets/

@msf,
Maybe not so thorough...thanks for your input.
Also, wouldn't a portion these new highs (referenced from the previous recent price) be coming off recent lows? If the market drops 20% in one day (Black Monday?) and on Tuesday the market rose to a "new recent high" and then over a number of incrementally higher highs (days...weeks...months...years) many more "new recent highs" would be necessary to retrace that 20% loss (with a 25% gain). In-other-words, markets may need more 'sunny days" to make up for the "dark days" because of the math - a 20% loss requires a 25% gain just to get back to even?
ISTM that losses often happen over fewer days and in larger negative increments...gains often happen over many more days and often in smaller positive increments.

"Likelihood of legislative changes to bring the tax rates back up after 2-4 years seems high."
Conversely, if one assumes there won't be any legislative changes, the tax rates will still revert in eight years (after 2025). So prognostications aside, it seems like a good idea to take advantage of the changes while one can.
If you are in a higher bracket, another change that makes larger conversions more feasible now is the virtual elimination of the AMT. (It hasn't been eliminated, but it now kicks in at such a high level that it's all but gone.)
Normally I consider Roth conversions somewhat of a wash if one uses some of the IRA money to pay the taxes on converting, but now may be an exception. Assuming you're over 59.5 (so that withdrawals are not penalized), the benefit is that you could be paying a lower rate on your pre-tax money now than if you wait and withdraw it later.
For example, suppose you're in the 22% bracket, but were and will be in the 25% bracket. If you've got $1000 in the IRA, you convert $780 and use the remaining $220 to pay taxes. If you wait until your tax rate reverts to 25%, then you'll get a net $750 after-tax.
Of course, paying for the conversion with non-IRA is always better, even now.
You do have to watch for side effects of increasing AGI, as bee noted.
One other gotcha - if you were itemizing deductions before but will be taking a standard deduction now, then your marginal rate just went up on the state level, even if it dropped on the federal level. For example, you might be somewhere like Calif. or NYC where your local income tax rate is around 10%. Previously, that cost you only 7.5% (because you got to deduct it against your 25% federal rate). Now, if you don't itemize, you pay the full 10%. So you're paying around 2.5% more at the local level, essentially wiping out any reduction in your federal marginal rate.
Finally, remember that you can no longer recharacterize if you change your mind.

This leaves me with the impression of numeric legerdemain. Start by bringing up that old chestnut - decades to recover from the 1929 stock market crash to scare you, and then palm it - don't use that crash when looking at market returns. We don't want you to get too scared.
How long did it really take to recover, considering deflation (in the 30s) and dividends? Mark Hulbert wrote this article in the NYTimes, entitled: "25 Years to Bounce Back? Try 4½"
Even using raw stock prices, that's 25 years for the Dow (Nov 23, 1954) per Hulbert, or about 30 years inflation adjusted, or 25 years for the S&P 500 (Shiller data) or 26 years inflation adjusted. It looks like the 28 year figure was pulled out of a hat.

He says that "Starting in 1941 still encompasses a large part of those dark days in the market, and World War II". But by starting in 1941 (so that the initial high water mark is Jan 2, 1941), many of those "dark days", especially between 1943 and 1946 appear to be "happy" or "benign" days (new high water mark or within 5% of the most recent high).
Watch him turn dark nights into bright days.
Taking days at random strikes me as dubious. What's the chance that a day will be within 5% of the most recent high? Very good if the previous day was. Likewise, if yesterday the market was down 40%+ from its high, then the chances are much better that it will be down 40%+ tomorrow than if the market just hit a new high (it has never fallen 40% in a single day). While each day's movement may be random, one day's price is usually pretty close to the previous day's.
Certain things are obvious. Since the market has an upward bias, it will spend more time near highs than near lows. Just as obvious is that new highs will bunch - you're not going to hit a new high unless you're currently at or near a high. 2017 was a good example.
What are the odds of falling into a bear market if the market is already in a correction? Better than if it's hitting new highs. That's also obvious because it has a lot less to fall (a bear must begin as a correction). Conversely, if you're already in a bear market, what are the odds of entering a "second" bear market (i.e. falling 20% more)? Pretty small, because rarely does the market drop 40% or more.
So making use of any of this is tricky - too slow a trigger and you may smooth things out (miss the very bottom) but risk missing the rebound; too fast a trigger and you may get faked out and miss a rising market because it dipped for a week or a month.

A great shortened trading week for bonds - lead by emerging markets, high yield corporates, and world. Added to my existing positions there and sold half of my lagging bank loan. That puts me at 70% in the three strongest and 15% bank loan with 15% in cash which I hope to deploy next week. Junk corporates historically have been especially strong in Januaries so not sure what to expect after this strong opening week. We have heard ad nauseum about the tightness in credit spreads and junk not offering much value. I am not enamored of junk but open to being surprised. I thought I was going to be less aggressive than I was this week in Bondland. Old habits are hard to break.
Not a popular opinion but not a fan of PIMIX/PONDX - at least if you are looking for open end bond outperformance in 2018. Otherwise with the best bond manager on the planet an excellent fund for contented retirees. A bit too staid the past many months and wondering if asset bloat is finally catching up. Non agencies have hit a wall and that may have contributed to its lack of oomph recently. I actually hope though I am wrong and it is a another great year like 2016 and 2017 for PIMIX. That would mean like in the aforementioned years double digit gains in other areas of Bondland for 2018. That would sure be a pleasant surprise.
Edit: I would also include PTIAX having an uninspired 2018.

Considering the tax-law changes, I am wondering what experts here think about the advantages of rolling over IRAs/legacy 401ks into Roth-IRAs. Likelihood of legislative changes to bring the tax rates back up after 2-4 years seems high.

This article seems like a good 2018 read for market forecast returns:
Some sniglets:

Quote: I totally reject the notion that bonds have more risk than stocks. A broadly diversified stock fund has more risk in a day than a similarly diversified high-quality bond fund, such as iShares Aggregate Bond Fund (AGG), has in a year. Never forget that on Black Monday 1987, stocks lost over 20% in one day, which equates to six standard deviations (six sigma) of the AGG in one year, meaning it should happen no more often than once out of every 294,117 years.

seven-warning-signs-of-market-gurus-and-which-forecasts-you-can-trust

Well ... well ... well! What do we have here?
There are many ways to price the market. I can remember within the past couple of years Liz Ann Sonders of Charles Schwab use to tout the Rule of Twenty as being plenty. I have not heard her speak much on P/E Ratios recently.
Old_Skeet uses a blended P/E approach using both the TTM and FE. In this way credit is given for what stocks have done and are expected to produce. Then, I apply the Rule of Twenty as being plenty. My number computes to a P/E ratio of 20.7 as of market close 12/29/17. Still pricey at this number indicating the 500 Index is about 4% overvalued, by my p/e mythology.
The 500 Index Blended P/E ratio is one of the feeds I use in my market barometer.
And, so it goes ...

@davfor Thank you for your advice. As you manage your sister investment what is an average withdrawal rate to compensate expenses and to refill her emergency fund ? Does her portfolio balance gradually decrease and, if yes, how many years you plan to get income from the investment?

I made several moves today:
-Trimmed POAGX. I know that this is a violation of the rule of "let your winners run", but it hit the dollar threshold where my rules say to take some profit. Oh well...the proceeds go to this year's spend bucket.
-Established an initial position in ROSOX, a fund which has received some attention on this thread. I put this on my watch list ever since the fund holdings first came out last year and I saw with some surprise that a third of the holdings were in Japan. I hadn't given Japan any thought in years...but it turns out that this was a great call. This fund touches the bases where I need support, and fits in nicely with a combination of Matthews, Seafarer, Artisan, FMI and GP in my accounts to cover the breadth of foreign holdings, each with solid managers.
-I got tired of a large cash balance waiting for a consolidation, so I put a slug of cash to work in current holdings which I think are good for near term income and performance in spite of a future bump in rates...PIFZX, SSTHX, TGINX, and ZEOIX.

FYI: As the S&P 500 climbs higher and higher, its trailing 12-month P/E ratio continues to climb as well. And there won’t be much opportunity for multiple compression until the bulk of S&P 500 companies report Q4 numbers in late January.
As shown below, the S&P’s 12-month P/E is now at 22.88 — just a hair below 23.
Below is a chart showing the S&P’s P/E ratio going back to 1980. The line is red when the P/E ratio is above the level it’s at right now. As you can see, there have only been a few periods over the last 35+ years where the index’s P/E was higher. It didn’t once get above this level during the 2002-2007 bull market, but it was consistently above 23 during the final three years of the bull market that ended in early 2000. From 1998 to 2000, the S&P’s P/E expanded from 23 up to 30+ as the Dot Com bubble reached its zenith. Over this period, the S&P experienced a massive rally as the Tech sector soared. While valuations are indeed elevated right now, we always note that high valuations alone are not a catalyst for corrections or bear markets.
Regards,
Ted
https://www.bespokepremium.com/think-big-blog/sp-500-pe-ratio-approaching-23/

FWIW
I have been handling the brokerage investment account for a disabled sister for almost 20 years. Periodic withdrawals from that account together with SS (previously SSDI) have been her only source of income since her husband passed away several years ago. (By income, I mean dollars available to pay for living expenses. This could include some withdrawals of principal as I think on a total return basis.)
My first thought is there needs to be a set-aside of CASH. At minimum, I would suggest a 1 year set-aside, significantly more if rapidly increasing medical expenses are a significant concern. That set-aside provides a cushion for emergencies and also helps you to roll with the punches through the decades as the markets churn.
The comments @bee made about VWINX make sense to me. That fund has been around since the mid-1970's and has successfully navigated both rising and falling interest rate environments as well as both bear and bull stock markets. The comments @LewisBraham made about the challenging current market environment also make sense to me. So, going 100% into VWINX does not currently seem advisable to me. My SWAG suggestion would be putting maybe 35% of the assets available for investment into VWINX.
The general idea behind the suggestions @LewisBraham make for an investment mix also makes sense to me -- for the remaining 65% of the assets available for investment. My sister's account has included both RPAGX and ZEOIX since January 2016 (January is when most portfolio changes for the year are made).
VWAHX makes sense to me with maybe a little VWEHX mixed in if medical expenses will keep taxes from being an issue. Taxes might not be an issue anyway given the new personal exemption limits. That's something to look into.
Including a multi-sector bond fund in the mix also makes sense to to me - @Mark suggested PONDX. That fund has significantly outperformed VWINX when viewed since inception in 2007 due to its relatively strong performance during the bear stock market. But, can it continue to perform that well? Perhaps mixing it 50/50 with PTIAX in this component of the portfolio would make sense. Lumping GTEYX into your thinking about multi-sector bonds might also make sense.
If rapidly rising medical expenses are a potential concern, including a conservative bond fund such as DLSNX also makes sense to me. Holding a fund like this can also be a comfort when the markets turn against the portfolio.
A final thought. There needs to be some flexibility to decrease the withdrawal rate in the years following a major market decline unless STRICT NECESSITY does not permit this to happen. Otherwise, accepting the strong possibility/probability of the portfolio being exhausted as some point in the future is necessary.
I hope these general comments are helpful.....

Creative thinking is necessary.

I don't have any reason to doubt what DavidV or this person suggested but I'd look hard at the budget. A 4.8% consistent real return gets easier if you're able to reduce the costs in the beginning and allow the assets to do more work for you, especially while inflation is still relatively low.
It may not be possible or palatable but if this person lives in a high cost of living place it might be worth considering relocation as a way of reducing costs.
And if there's any possibility to work, even at a low wage job, increasing income reduces the burden on those assets, helps even with boredom and feeling productive, and provides an opportunity to build a slightly bigger nest egg for the future.
The most important years are those at the beginning because the impact gets compounded for many years to come.

What would you recommend to maximize his investment income?

The investment should be safe as there is no other money to live on.

I think this is the crux of the problem when trying to give advice on this. These 2 "wants" are contradictions. Old_Joe made this point a couple times. Basically expecting to withdraw $24k and increasing each year for inflation and wanting it to last 45+ years has little probability of succeeding with any 60:40 or even 80:20 portfolio for that matter. The 4% rule I believe is based on a 25 or 30 year life span. Bee spelled it out in her post. Hate to be a wet blanket, but anything less than 100% equities probably can't last.
Maybe it is more realistic to plan 20 years and reevaluate circumstances periodically.
P.S., here is where Monte Carlo would be helpful at least for a realistic view of expectations.

I've posted this article in the past, but seemed worth re-posting:
From Article:

Criteria:
The Retirement Income withdrawal will be 4% of the beginning investment value with each successive year's withdrawal increasing by 3% to allow for inflation. Any dividends collected in excess of this will be accumulated in a money market account (MMA) until the year the mutual fund produces less in dividend income than is required and the difference between the next year's household income need and the dividend collected is taken from the MMF. I'm assuming the interest rate on the MMA is zero. If the collective cash reserve is not sufficient…or non-existent…and the dividend collected that year is not sufficient to meet household income need, then sufficient shares will be sold at the end of the year to provide the required cash. This is repeated each December at the end of the month (last trading day).
VWINX is the clear winner. Providing 25 years of inflation adjusted 4% annual distributions with a residual value over 89% greater than its beginning value.

Article:
long-term-growing-income-open-end-mutual-fund-possible

If you want stability, income and some consistency, I would examine how funds performed in 2008 and other volatile years. For a pure fund portfolio I would recommend a combination of the following funds:
GTEYX
ZEOIX
VWAHX
SGHIX or RPGAX
Maybe 20% or 25% in each. You probably could get a fairly stable 4% annualized out of that. Maybe more, although I haven't run the combined numbers. For a little extra oomph you could add a small weighting to some less volatile emerging market fund.

I was asked to help building investment portfolio for a single disable person of 40 years old, having $500K in savings. The person does not own property, most likely, will not be able to work in the future, and his only income will be social security disability insurance benefits (about $1000/month) and income from investment. What would you recommend to maximize his investment income?

I bought CNRYX in part because of its nearly perfect tax efficiency in all previous years. But this year it distributed about 7%...

Another goal is to get even more fit and healthy. I don’t see the point of accumulating wealth if you can’t enjoy it by being both physically and mentally active. At my age I could go at anytime so want to hike and explore as much as possible while I am still here and able. Good luck to all in 2018!

Great stuff @Junkster. Fitness has been a daily habit of mine for several years now. Actually resumed bicycling at 68 or 69 and love it. My passion has always been “going somewhere” by plane since I first flew in 1974. So as long as I can walk, crawl or hobble out to an aircraft I’ll keep going. To the Keys in March. Afraid they’ll look a lot different after Irma.
Like you, I’ll eventually consolidate my fund investments. T. Rowe will be the place.
Regards

FYI: While index funds have had their share of critics, they could always rely on academia to defend them. Until now.
A small but growing number of academics are arguing that index funds are “evil” and “strangling the economy.” (These quotations are from the headline of a September article in the Atlantic magazine.)
If such attacks widen, index funds could face significantly higher costs in coming years even if they successfully fend off the legal challenges spawned by those academic naysayers.
Regards,
Ted
https://www.marketwatch.com/story/look-whos-attacking-index-funds-now-2018-01-02/print