@MFO Members: It's been about 20 years since I first linked Max Gunther's Zurich Axioms to the FundAlarm Discussion Board. One of the major problems I see on the MFO Discuaaion Board is that many members don't take enough risk. Here's what Max Gunther had to say about risk. " Put your money at risk. Don’t be afraid of getting hurt a little. The degree of risk you will usually be dealing with is not hair-raisingly high. By being willing to face it, you give yourself the only realistic chance you have of rising above the great unrich."

The biggest risk is not taking risk. I agree. The problem is easy to convince someone who started investing in 1990, not 1999. Blaming the investor is the easiest thing to do.
Trading is not always speculation. And it is not "market timing". Ask those who got out of the market the last 2 times it went down 50%. Don't just say they never got back in soon again. They slept well and someone has to produce proof they are worse off today. And until the next 50% correction.
"If you had invested $X in year Y...." is all available in hindsight. In the real world things work differently. When I'm 80 (nah, I don't think I'll live that long, I couldn't afford it, but dream with me a bit...) and I don't have responsibilities, sure I'll go to Vegas.
PS - by the way I've never been to Vegas. I know, I suck.

I like your approach @Ted and I believe you are correct in your assessment of risk-averse MFOers. Your three top fund holdings revealed in a recent thread show that you walk the walk. For my part, I put a slice of my active portfolio into PTIAX for diversity's sake, but you won't see me agonizing over or discussing bond durations or other arcane metrics fixed income investors revel in. According to my age, I should have 25% equity exposure, but it's closer to 75% because I believe I'll be around for 20 more years, a long-term target. I realize what the risk is.
A few years ago my TIAA advisor showed me a graph depicting a line going straight up from 2000 to 2014. It represented the performance of TIAA's fixed income portfolio returning 5% per annum. Stocks came nowhere near that level of performance. I felt kind of dumb until I realized that no one could have told me in 2000 to put everything into bonds and I now doubt many TIAA investors achieved that extraordinary performance. I've done fine in equities despite periods of lagging performance and I've enjoyed the ride. 2008 was a sickening time, but it didn't last forever and it provided a great time to put more money into stocks.

@MFO Members: It's been about 20 years since I first linked Max Gunther's Zurich Axioms to the FundAlarm Discussion Board. One of the major problems I see on the MFO Discuaaion Board is that many members don't take enough risk. Here's what Max Gunther had to say about risk. " Put your money at risk. Don’t be afraid of getting hurt a little. The degree of risk you will usually be dealing with is not hair-raisingly high. By being willing to face it, you give yourself the only realistic chance you have of rising above the great unrich."

I'm getting exposure to this sector with PRMTX. Rolling averages for all time increments over the last fifteen years are all rolling positive.

@ Congratulations, you beat me to the Merriman article, but in the future you should link like this:
1) Paul Merriman: Have Value Funds Become Too Valuable?
2) Give An Introduction:
For many years I have advocated that investors overweight the equity side of their portfolios toward value funds, which very often outperform more popular growth funds.
3) When possible always link in printer-friendly format.
Regards,
Ted

Have to say I'm like @AndyJ. Only MAPIX remains in my portfolio and Asia no longer feels like the go-go region it was 25 years ago. Seafarer and Grandeur Peak got my Matthews dough.

Similarly, I swapped MACSX for Seafarer...and also found a place for 2 GP funds. I do still have MAPTX, as it was my first experience with Matthews and still serves a unique purpose and accounts for itself very well. I am contemplating MINDX also, for an area I think will shine over the next 20 years purely due to demographics, and Matthews is where I would turn for that expertise.

Have to say I'm like @AndyJ. Only MAPIX remains in my portfolio and Asia no longer feels like the go-go region it was 25 years ago. Seafarer and Grandeur Peak got my Matthews dough.

@briboe69, How about SGENX? I own both IVWAX and SGENX. The performance and risk profile are comparable.

A great fund, I've owned it for 20 years. I'm a little concerned about asset bloat with SGENX, so I also own FEBAX since there is a lot of overlap between the two. My four largest holdings in order are PRWCX, FEBAX, IVWAX, and SGENX. My main goal is capital preservation first, growth second, despite being only age 45.

The link is a nice try, but is talking about something different - money in employer-sponsored plans (e.g. 401(k)s). With all due respect to LLJB, I think you might be advised to ignore it, at least for now. Especially given your question asking to clarify whether 401(k) assets count in this IRA question.
Short answer - they don't; that's why I'm suggesting you pay no attention to 401(k) rules for now.
The only way your wife's 401(k) plan could mess with the IRA Roth conversion is if your wife rolled over the 401(k) money into an IRA (the existing one or a new one) before doing the conversion. Don't do that, and you're fine.
Dolphin's got it exactly right.
==========
Other details include:
- Since this is wife's first Roth IRA, she'll have to wait five years to get post-conversion earnings out without taxes
- If converted money is withdrawn in less than five years and wife is under 59.5 at the time, then there's an extra penalty. (The reason is that this is viewed as a backdoor for getting money out of the original IRA before age 59.5, which would have that penalty.)
Here's a description of the general 5 year rule for all Roths (explaining the first item above):
http://fairmark.com/retirement/roth-accounts/roth-distributions/tax-free-distributions-from-roth-iras/
Here's a description of the Roth conversion/early withdrawal penalty issue (second item):
http://fairmark.com/retirement/roth-accounts/roth-distributions/distributions-after-a-roth-ira-conversion/

I like to have a variety of bond funds since you can often find bargains in one segment of the market while others are rallying. For the past few years I've been picking up shares of GIM and now it's finally paying off. Patience and faith required!

FYI: Years of experience have taught me that to be a successful active investor requires a very specific set of characteristics, and that many investors attempting to actively manage their portfolios today lack the emotional and personality traits necessary for success.
Investors with passive portfolios—assuming they are adequately and broadly diversified—face only one real point of failure: reacting emotionally to a market selloff and selling their holdings, often near a market bottom.
But investors who use actively managed strategies face two points of failure:
Regards,
Ted
http://jimoshaughnessy.tumblr.com/post/158366040139/successful-active-stock-investing-is-hard-here

Sorry, IMO lack of courage of your convictions. I still have hope they will sell out of WFC. Trump + Low borrowing + Stock Purchases is behind most of market gains, and especially in financials. It is not due to manager prowess. So let's not say his decision to not sell WFC worked out in the best interest of shareholders. That's not different than saying he knew another stock was going to go up 100% and decided not to overdo idealism and bought that stock.
“People thought socially responsible investors were do-gooders doomed to fail,” HTF is he a do-gooder? Oh of course. Staying in WFC is also helping society.
Dodson doesn’t envision hiring a successor at the Endeavor fund any time soon.
“If you’re wondering about a precedent, I would like to point out that Warren Buffett is still managing Berkshire Hathaway and he is 86 years old,” he wrote in last month’s letter. “I’m only 73, so I have a long way to go.”

WTF? Buffett has enough successors at BH.
Just like so many articles, it is meant to excuse the manager. Finally, no mention of WFC beyond opening shot. Why even bring it up in article? Only to gloss over it?
It is wrong to sleep with your neighbors wife. Doing to the contrary once in a while is not not overdoing morality. WFC should have been sold.
PS - Cannot resist calling out the over-the-top bullshit. "The thin boyinsh looking money manager" WTF?!?!?!?! If he is boyish looking then I'm a fat 3 month old baby.

>> hardly seen a fund actually use it
?? Depends on what proportion and what circumstance, right? FPACX and other FPA funds are famous in this regard, but there are others, Weitz Value IIRC, Delafield a couple years ago, some others; just google for articles.

I agree, other notable examples: PVFIX 45%, ICMAX 38%, FMIMX 17%, RYSEX 12%.

>> hardly seen a fund actually use it
?? Depends on what proportion and what circumstance, right? FPACX and other FPA funds are famous in this regard, but there are others, Weitz Value IIRC, Delafield a couple years ago, some others; just google for articles.

Hi @Ted
The most critical wording/thought from the article:
"Bargain Hunting Fueling Outperformance
In the meantime, the health care sector, led by biotech, is seeing a resurgence in 2017 after a poor showing in 2016. Health care was the only sector within the S&P 500 to decline last year, as XLV shed 2.8%. Biotech fared even worse, losing 21.4%.
Thus, the year-to-date rally may have more to do with investors buying up beaten-up names than anything to do with potential changes in health care laws."
>>> A "value" discovery in a sector that has maintained a most decent monetary growth pattern for many years. NOT, unlike the rotations that take place between the large, mid and small cap, growth and value sectors. Value was the "rage" in 2016, eh?
The rotation for 2017:
http://online.wsj.com/mdc/public/page/2_3020-lipperindx.html?mod=topnav_2_3023
Summary: large money chasing the best place to invest for a decent return.
Regards,
Catch

A fair number of active funds outperform before expenses but not after / THis suggests its necessary to look for low expenseses.Active funds used to outperform many years ago but Federal regulations that required companies to provide information to all at the same time took away an edge large investors had.AS you probably know cash (particularly at current rates) is a drag on performance in Bull markets but must active funds have a few % in cash in part to avoid having to sell a position because of redemptions.
"The real question is how to find active funds that will outperform but selecting winners is very difficult though avoiding dogs is not so hard.
Sorry I can't provide a link but I think what I wrote is objective

FYI: Is your investment portfolio built to thrive when interest rates rise?
Now is a good time to find out. After years of low borrowing costs, rates appear to be headed higher as the U.S. economy improves, inflation ticks higher and jobs become easier to find.
Regards,
Ted
http://www.usatoday.com/story/money/markets/2017/03/14/rate-hike-investing/99126150/

I agree with @Mark that TurboTax takes care of the problem. I too did not like the late arrival of the K-1s. I avoid investments that generate K-1s because of an inheritance from my wife's family that has taken more than five years to settle, partially because my father-in-law died suddenly leaving MLPs and other tax-avoidance strategies for which no one knew the bases. If he were to know what the family paid the green eye shades and lawyers his repose would surely be disturbed and he might see the downside of pursuing an aggressive anti-tax agenda. (Sorry if I wandered into politics…)

FYI The below linked article, (Click Article At Top Of Google Search) was featured in this Week's Barron.s. As often
happens BX is up over 4% today. The Linkster has a position in BX and KKR
Blackstone Group ’s complex operating structure seems almost designed to turn ordinary investors away from its shares—technically, its units. They recently fetched $28.94, down from an initial offering price of $31 nearly 10 years ago. Yet the alternative-asset manager’s cash distributions could soon grow too large to ignore. Wall Street predicts a yield of more than 8% this year, based on a combination of steady, predictable management fees and lumpier performance fees that Blackstone earns when it exits profitable investments. Earnings used to fund those distributions could double in five years, judging by the pace at which Blackstone has been raising new cash and putting it to work.
Regards,
Ted
https://www.google.com/#q=Blackstone+Units+Have+40%+Upside+and+Yield+More+Than+8%+Barron's&*
BX Real Time Quote:
http://www.marketwatch.com/investing/stock/bx

Good article & ties-in with the WSJ ("Euphoria") article that @Tony cites in the Market Top thread. Martin Conrad mentions Benjamin Graham frequently here, but I found it a bit hard separating out Conrad's own recommendations (or biases) from what Graham taught. That's not to say he distorts Graham. But I have a sense Conrad makes a lot of observations/inferences that go well beyond Graham's teachings.
To learn more, I located an older Martin Conrad article (Barron's December 31, 2011) in which Conrad appears to take a very cautious approach to investing, and also puts an awful lot of weight on investor psychology. I already knew the "average" investor underperforms badly. But I didn't think it was this bad :
"In the 20 years ended 2008, a period that included the best decade of performance ever for stocks, the average stock-fund investor averaged only a 1.9% annual return (due to consistently poor buy and sell decisions) even though the average stock mutual fund returned 8.4% annually over the same period."
http://www.barrons.com/articles/SB50001424052748703522304577086891063798090
Market numbers for December 31, 2011 (date of above article):
- Dow Jones Industrial Average ( DJIA ) Close 12217.56 Down 69.48
- Nasdaq Stock Market Close 2605.15 Down 8.59
- S&P 500 Close 1257.60 Down 5.42
http://daytradingstockblog.blogspot.com/2011/12/dow-jones-close-123111-stock-market.html
Wondering about Conrad's (Graham inspired) recommendation that investors use low cost balanced or allocation funds for their core holding, I dug up an article which attempts to define specific fund recommendations Graham made (or would make today). Not very definitive - but may be of interest. http://www.gurufocus.com/news/164674/are-there-any-good-ben-grahamstyle-mutual-funds
Note - Was able to access the article @Ted linked the first time. When I went back later to read it again, the article wouldn't come up. Clearing your cache might work if you are having a similar issue.)