The successful momentum investors I think of over the years here at MFO are Junkster, rono and Flack. Probably others too. I believe they have been very successful at it. Me , not so much. It's hard to duplicate someone else's strategy.

FYI: Wall Street doesn’t expect technology stocks to repeat 2017’s banner year that has seen the sector return almost twice as much as the S&P 500 index. After four consecutive years of outperformance, tech companies face mounting concerns about the potential for increased government regulation and continued rotation by investors into higher-taxed industries as a result of U.S. tax reform. Most analysts see the bull market continuing, but at a less ferocious pace. Here’s a look at their predictions.
Regards,
Ted
https://www.bloomberg.com/news/articles/2017-12-20/party-s-over-for-tech-stocks-as-outlook-grows-cautious-for-2018

Hi @Mitchelg
You note a good point about flexibility with some investment houses. Several years ago I had a "finger problem" combined with a "too busy of a day syndrome" with a Fidelity purchase. I bought a Fido fund I had not intended to purchase. The fund happened to be one with the 60 day holding period or a 1% sell fee would be subtracted. I didn't realize the purchase problem until the next day. A phone call explaining the error removed the errant purchase and no fees were attached. Customer service/relationship has always been a most positive experience for us with Fidelity.
Never hurts to ask, eh?
Regards,
Catch

A nice piece by Grantham who pretty much covers the bases in his suggestions. And I get the feeling he’s as befuddled by today’s equity markets as I am. Makes a lot of different suggestions depending which way markets run. I get that he likes EM. The problem with those kinds of suggestions is they can take years to pay off. Might double next week. Might also fall 25% in a year before rebounding and rising 50% over 6 months. Not for the conservative investor.
One of his suggestions is “liquid alternatives” - which Investopedia loosely defines as hedge funds for the little guy (low minimums and few restrictions on redemption) - as the answer to the conundrum he sets up. But, with these you’re paying a ton in management fees and are highly vulnerable to the decision making of the manager. I’m not convinced most are any better at guessing which direction to lean toward at any given moment than most of us are. Some get it right. Many don’t. A change in manager can spell disaster for a previously successful fund. Shorting equities costs the fund additional money in the form of interest and also increases risk. So I’m not a fan of liquid alts.
@bee - The knock against PRPFX has always been that as an individual you can purchase the bonds, gold, silver, natural resource stocks, Swiss Francs, real estate and aggressive growth holdings (and in the same proportions) cheaper yourself than paying Mr. C to do that for you. My answer is: Yes you can. But who among us has the time, resources and wherewithal to do all that - and than to rebalance it all periodically? If anyone here is replicating the fund on their own, they haven’t voiced it. I don’t know what the “right” amount is for that type of holding. I hold a bit - and sleep very well on it. Guess it amounts to something like 5-10% of my total. Content to leave it alone and take distributions elsewhere. I do consider it something of a liquid alt - but not as normally viewed or defined in the investment community.

Whenever you read expressions like "innovative" and "sets itself apart" (here, "in that the minimum management fee goes to zero if the funds don’t outperform their benchmark"), you should be wary of hype.
Here's what M* had to say: "It's a rare [but not unique] situation in the industry. The performance fees of most other funds that levy them are structured in a way that makes a negative or zero net expense ratio mathematically impossible."
It wasn't writing about these funds. That's a quote from 2011, where M* was describing Bridgeway Funds. The title of that article was "Bridgeway Pays Shareholders to Invest, for Now". Bridgeway reduced management fees so low (well below zero, unlike Allianz) that the total ER of two funds were 0.00% or less.
Basing a performance fee on a twelve month performance is akin to companies jiggering quarterly performance to keep the market happy. A year is too short a period of time to allow a manager's strategy to play out. Instead, it encourages window dressing and conservative investing if the fund is slightly ahead, and excessive risk taking if the fund is way behind.
As noted in this CBS Moneywatch article also about Bridgeway in 2011:
"[Bridgeway's] aggressive performance fee ... is calculated on the fund's average assets over the trailing five years, instead of the more common three years".
Funds don't generally use one year performance figures. For example, Fidelity uses a rolling 36 month period to benchmark performance.
See also Barron's Should Fund Managers Get Paid for Performance

Appendix: I struggled to uncover the options trading in which PRWCX engaged at one point. Geez - had to go way back to their December 31, 2011 Annual Report to locate it.
FWIW - “Before we review the portfolio, we want to briefly discuss the Capital Appreciation Fund’s covered call overwriting strategy, which we have employed for more than three years. Covered call overwriting involves buying a stock and then selling a call option—a contract whereby we agree at a future date to sell the stock at a predetermined (strike) price if the stock is above the predetermined (strike) price. In return for selling this call option, we are paid a premium (typically 3% to 6% per annum) that provides extra income to the fund and its investors. While this strategy caps our upside in an individual stock (usually 10% or higher), it provides incremental income that can enhance total returns and lower our downside risk. Over the last three years, this strategy (return combination of underlying stocks, call income, and dividend income) has generated a stronger return than the fund itself and has done so with materially lower risk. As of December 31, 2011, a little more than 20% of our equity holdings have calls written against them. Given the excellent returns and even more excellent risk/reward profile of this strategy, we believe it will continue to play a meaningful role in your fund.”

Good find @Hank!!

Trailing comment.
Thanks to all that have made comments on this thread.
I now have a few trailing comments that I'd like to make.
One of the things that goes back to a comment I made was that "some distributions are taxed while some are not" is that non deductable contributions when removed in a sense are not taxed but become factored in with the normal distribution thus reducing the part that gets taxed. Since, I made some non deductable contributions to my traditional ira through the years this is something my accountant has to deal with each year as I take distributions. (I do not think this was covered in the link I provided).
Again, since I hold enough income generating securities that kick off a good amount of interest, capital gains and dividends (I take all fund distributions in cash.) thus far I have not been forced to take any in kind distributions. In addition, I use that sleeve system and KCMTX would become a member of the global hybrid sleeve which is found in the growth & income area of the portfolio. Although, the size of the position when it comes to the overall portfolio would be small it would have a greater influence within its sleeve which now consists of CAIBX, PMAIX & TIBAX. I would build KCMTX's position over time through excess income generation over and above the required needed for RMD's. So, having a good income stream is beneficial because it provides the opportunity to add new positions without having to sell other securities to make the buy (from my perspective).
On my comment about how certain types of income gets taxed this applies more to taxable accounts; but, since interest, dividends and capital gains are a part of total return along with capital appreciation I felt it worthy of comment.
One of the great things about investing is that choices can be made in a fashion that allows each of us to obtain our goals. The comments I made center around what I do; and, by no means was I saying that they would be right for others to follow. With this, there is no one right way (or wrong way) to have success (or failure). We can each govern as we feel best.
I wish all well this Holiday Season ... and, most of all "Good Investing."
Skeet

I was trying to locate a 2 or 3 year old fund report for PRWCX to refresh my recollection of their strategy back than (2014 or 2015). Can only locate the most recent annual and semi-annual reports on their website. Is there a way to go back in time and see what a fund’s manager was saying a few years ago?
(I realize that with some fund managers the tune never changes. :))

Just finished reading 'The Wizard of Lies' aka Bernie Madoff, and got to wondering if PRWCX could be a.....nah? Or could it.....nah.

It’s a small niche mostly mid-cap fund that morphed into a bloated large-cap mostly blue chip fund than transformed itself into a pseudo hedge-fund trading options on its equity positions for defensive purposes. Some call it balanced. Price says it’s closed - but otherwise isn’t saying exactly what it is.
Who was Madoff? Did money beat a path to his door?
—
Appendix: I struggled to uncover the options trading in which PRWCX engaged at one point. Geez - had to go way back to their December 31, 2011 Annual Report to locate it.
FWIW - “Before we review the portfolio, we want to briefly discuss the Capital Appreciation Fund’s covered call overwriting strategy, which we have employed for more than three years. Covered call overwriting involves buying a stock and then selling a call option—a contract whereby we agree at a future date to sell the stock at a predetermined (strike) price if the stock is above the predetermined (strike) price. In return for selling this call option, we are paid a premium (typically 3% to 6% per annum) that provides extra income to the fund and its investors. While this strategy caps our upside in an individual stock (usually 10% or higher), it provides incremental income that can enhance total returns and lower our downside risk. Over the last three years, this strategy (return combination of underlying stocks, call income, and dividend income) has generated a stronger return than the fund itself and has done so with materially lower risk. As of December 31, 2011, a little more than 20% of our equity holdings have calls written against them. Given the excellent returns and even more excellent risk/reward profile of this strategy, we believe it will continue to play a meaningful role in your fund.”

@bee: Although it does not post estimated annual cap gains until they actual happen, Morningstar does show dividends and cap gains over the past two years by date and amount under quote section if you input the symbol

@msf, your point is well taken. As I at least have learned from MFO, it would have been smarter for me to focus on taking the one with the least negative volatility since that's what we're more sensitive to. Nonetheless, there's no doubt in my mind that some people would prefer your first option and others would prefer the second- if we were ever in a situation where you knew what the future would bring. If we don't know the future then those spikes might scare me more out of fear the bounce back wouldn't happen each time.
I also think your last point about splitting the portfolio into buckets or sleeves with different "goals" and different approaches is a smart way to do things. We're told to keep much more than a one month cushion in "cash" and we all have to be able to deal with the unexpected from time to time (I had my car inspected in October and ended up with a new muffler) so hopefully most people aren't walking a tightrope every month.
@MikeM, I think by definition if you own something that's an insignificant portion of your portfolio then it's not going to make much difference. One caveat, though, is that it's not really about the individual fund, its about the totality of your portfolio. I think, at least for myself, I'd be far more willing to put 20% in a balanced fund or several of them because I feel like I understand them better, I've read a lot more about the benefits of a "balanced" portfolio over many years and in most cases alternative funds aren't going to tell you enough about their process/algorithm to understand it at a level that might make you feel comfortable enough to make a big allocation. Funny enough, we don't actually know the details of how a balanced fund makes it's decisions either but I feel like I know more than I really do.
I certainly don't want to give anyone advice and this isn't what I'm doing with my own portfolio, but there's no reason you can't have both balanced funds and alt funds in a portfolio. They'll do different things for you depending on the type of alt fund(s) you choose but the combination could provide better diversification than just relying on balanced funds or a combination of stock and bond funds.
You mentioned early on that you like to compare these alt funds against a balanced fund like PRWCX. It might also be worthwhile to compare it to a very simple alt strategy like SMA10 or SMA12. You pay a lot for these complicated algorithms and if they can't beat something that you could do on your own with very little effort then they'd have to have something else really special to keep me interested. That could be a super smooth ride, far better tax efficiency or even the potential to generate positive returns in a big downturn, but in a lot of cases complicated isn't better.

Dogs of the Dow is an early rules-based strategy. Quant has come a long way since then.
I ran a simulation back to Jan 1999. One-year holding periods, rolling on a weekly basis. So 938 "years" were tested.
Dogs of the Dow (5 lowest priced Dow stocks from top 10 Dow yielding stocks) averaged 8.63% per year return vs 6.85% for SPY. Dogs beat SPY 57% of every year tested.
But the standard deviation from holding just five stocks was higher. So the average Dogs Sharpe and Sortino ratios were lower than SPY. And average Dogs max drawdown was higher than SPY.

@LLJB - you identified the crux of the matter that I was trying to address: "what return do you need, what's your risk tolerance and what's your time horizon?"
ISTM that investing for income is one response to this question. People in retirement need a certain minimum amount of cash monthly, they have a higher need for cash to more than barely get by, and beyond that want cash to enjoy their retirement. The more assured the cash stream is, the lower the expected long term result (and less money expected for that third tier - cash to have fun). That's what I was trying (apparently unsuccessfully) to illustrate with bonds.
I also mentioned annuities as a way to address some of the risk aversion. An annuity that pays out enough to meet just the first tier of needs (survival cash) can allay some people's concerns about having an adequate cash flow. As with most risk/benefit tradeoffs, that comes with the expectation of lower total returns.
Now to get into the weeds :-) One can remove reinvestment risk from bonds by purchasing long term bonds (say, 30 year Treasuries). If your retirement lasts longer than that, well, congratulations!
Would one automatically take the less volatile investment if two investments had the same expected long term returns? Not necessarily. Volatility is not identical to risk, and volatility (std dev) may not always be a useful figure. Since we're talking in the abstract here, I'm not going to worry about whether there are real world investments that behave as follows:
One investment returns 2%/month 50% of the time, and 0.0098% 50% of the time. You don't know which one for each month, but over the course of a decade it returns 230% (that's basically 1% compounded 120 times)). The other returns a rock steady 1%/mo, except for a random spike (down 50% one month, up 104.02% the next month).
The std dev of the first investment is 1.00 (since the monthly return each month is 1 ± 1). The second investment's std dev is 10.53. Yet I'd take that investment. All I would have to do is wait out the dip (crash?) for a month and I'd have a smoother ride. Keeping a one month buffer is all I'd need.
So much of this is subjective. Given two investments that you somehow know will have the identical performance over, say, ten years, and you will not be selling over that period of time, their paths to that return (volatility) don't objectively matter.
Which gets us back to addressing sequence risk. Some people will bifurcate (or trifucate) their portfolio into buckets to manage that risk, drawing from the most stable bucket and disregarding the volatility of the other bucket(s). Others will prefer investments that try to temper downside movements. It sounds like KCMTX might serve them well, at least if it provides the downside protection you described.

@randynevin, Thanks for mentioning this fund.
Seems like the perfect example of where cost matters.
Each share class charges a different set of fees (Expense Ratio & Loads, 12-b1, etc) causing most of this distortion in the NAVs of the same fund over time. Not sure if this "split" is in the best interest of the shareholder or the marketing department.
The advisor share class NBGAX (1.35% ER) is almost 80% more expensive as the institutional share class NBGIX (0.86% ER).
There is a share class NBGSX (R6 shares) that has an ER of 0.75%.
Share Classes:

Looked at over the last 29 years (1988- 2017), a $10k invested in the same fund but different share classes would have netted the following:
NBGIX = $313,098 (over 12% more in the investors pocket than NBGAX Advisor share class) The Advisor "share" was 12% more than Institutional "share"
NBGAX = $274,324
NBGNX = $301,654
NBGEX = $298,384

Finally, This fund seems to manage downside risk very well so you pay for that and this fund seems to have a track record to prove it can manage downside risk better than many of its managed peers and especially the index (VISGX).
Also, over the last five years PLTIX seems to have exhibited some positive "Factor Based" results in the Samll Cap Growth space.
Over the last 10 years 3 other funds that compared well against NBGSX (PRDSX, VRTGX, and CCALX):

The only reason I see to differentiate between income (dividends) and appreciation is sequence of return risk.
If you invest in a bond, you know that you will receive that same interest payment, month after month, regardless of how the price of the bond fluctuates before maturity. When it matures, you can roll it over and continue on.
If you invest in something that doesn't pay enough interest/dividends to meet your cash needs, then you'll have to sell assets to make up the shortfall. Investing for income and investing for total return may have the same long term performance, but with an equity investment you may be forced to sell at an inopportune time. (You may also wind up selling at a fortuitous time when the market is soaring.)

If you assume long term performance is the same then you would always choose the less volatile option, wouldn't you? If you're time horizon is less than long term then its a very different question. The thing with an actual bond, though, is that it may provide the certainty of a fixed income stream until maturity but rolling it over at maturity is subject to all the point in time risks of higher/lower interest rates. That could be better or worse than the timing risk of needing to sell equities along the way to meet your needs except all your risk is associated with one point in time rather than having the flexibility to manage the timing of your risk depending on how you feel about the market.
If you just consider mutual funds you should, in theory, expect a higher return over time from a more volatile asset, but the question of which you prefer seems just like any other investment decision- what return do you need, what's your risk tolerance and what's your time horizon? KCMTX has been almost as volatile as the S&P 500 over the last 3 years, more volatile over the last 5 and the returns are lower while its mostly been a risk-on environment and invested in equities. PRWCX has been a good amount less volatile so you've been getting something for the cost of lower returns.
As a general rule I'm a believer that funds like KCMTX are intended to outperform when there's a significant downturn that lasts long enough for the portfolio to move away from equities and into other asset classes that will do far better. The last 8 years has been pretty difficult because most of the downturns, even the more painful ones, have been relatively quick and that causes whipsaws rather than advantage. One day that's going to change and when it does then we'll really see how good KCMTX's process is. If it performs really well during a big market downturn its volatility and risk-adjusted returns will also look a lot different. At this point, though, I think you have to be really happy if it captures a good portion of the upside and doesn't get whipsawed too often. I don't think it should be a big surprise that it has more volatility and lower returns.

Hi @Ted, Are you not window dressing?
Skeet

I always assume in posts like that that the author also indicated earlier the date of purchase(s). So I would be fairly confident @Ted has done that somewhere along the way. He’s obviously a lot more aggressively positioned than most investors in their 70s or 80s are. I’m happy for his good fortune.
Personally, I’ve strived to leave visible documented “tracks” in the What Are You Buying, Selling, Pondering? threads as to my purchases and sales of a tactical nature. That’s only fair to readers. Some of those tactical moves reported over the past 3-4 years involved funds like: PRLAX, PRNEX, OPGSX, OREAX, QRAAX (closed) and PIEQX. Not perfect, but at least I’ve tried to be transparent. By that, I mean that if you’re going to write about how much a fund you hold has gained, you should also have noted your purchase at/about the time you bought.
Early this week I reported a small purchase of a gold and precious metals fund (OPGSX). Anyone following the “tracks” would find that I sold it in early September at/near a yearly high. And that it dropped more than 15% in the 3.5 months I was out of it. And, obviously, readers can note how it pans out in the coming months. IMHO these “buying and selling” threads have pretty much run their course. So I probably won’t share future buys and sells. Thanks to those who have contributed and continue to contribute to them.
Regards

http://www.etf.com/sections/features-and-news/one-strategists-etf-playbook-2018-0?nopaging=1
John Davi is known in the fund industry for his research, and now at the helm of New York-based Astoria Portfolio Advisors, he is managing some $115 million in ETF portfolios. For five years, he has been putting out an annual ETF Playbook, and he shares here what he likes and doesn’t like when it comes to ETFs for 2018.

FYI: It is that time of year, when the financial industry engages in its annual ritual of making forecasts, which is usually little more than the prelude to looking foolish. Titles like “Outlook for 2018, “What to expect in the new year,” or some variation thereof litter the landscape. Over the years, it has been my distinct privilege (and truth be told, pleasure) to point out how silly this process is.
Regards,
Ted
https://www.bloomberg.com/view/articles/2017-12-15/wall-street-wises-up-to-the-folly-of-forecasting

The point is a matter of my perspective, having covered this stuff for too long. People were saying the same exact things in 2000--valuations don't matter. They don't matter until they do. The idea that bitcoin related cryptocurrency stocks are being trotted out as a good idea by this manager is very disturbing to me. This is what this manager says;

"I don’t believe in Warren Buffett," he said. "I care about new things, things that are innovative, that are growing, that are changing the world."
He’s unfazed if those stocks look expensive. "Valuation is an immaterial part of the process for me," he said. "It’s the least useful piece of information you will ever get because everybody knows what the valuation is."

That is exactly what I used to hear back when investors were buying stocks like Pets.com in 2000, and a very odd and dangerous thing to say nine years into a bull market.

Hello,
About a month ago, or so, Parker Binion who is one of the fund managers on KCMTX began to post on our board.
For those that have an interest in KCMTX, as I do, I thought I'd post recent news on his fund in that it made it's annual distribution on December 13th in the amout of $1.69.
Looking back over the last five years KCMTX has paid out $4.57 in distributions while it has grown its nav from a starting value of $12.24 to current value of $13.06 (after distribution). With this it has demonstrted it's ability to to grow its value while at the same time make reasonable payout to its investors that might be seeking an income stream coming from capital gain distributions. Know that these annual distributions vary in amounts.
This fund is listed as a multialternative fund by Morningstar and one that actively engages the global markets. Since, it can hold just about anything the mangers choose I consider it a hybrid type fund. With a turnover ratio of 318% indicates that it is very active in changing its positioning. This fund reminds me a lot of Marketfield and Ivy Asset Strategy which I use to own but no longer do. As these funds grew in size they also became bloated, from my perspective; and, with this, it took longer and longer for their managers to reposition them. As their performance waned I sold them off.
I have linked below KCMTX's Morningstar Fund Report.
http://www.morningstar.com/funds/XNAS/KCMTX/quote.html
I wish all ... "Good Investing."
Old_Skeet