Maybe its not easy or possible to follow the fund's strategy precisely but its most certainly possibly to follow Harry Browne's basic Permanent Portfolio strategy at a much lower cost. I tend to think there's a time and a place for almost everything and I have no doubt the risk parity concepts will have their day. Grantham thinks that's somewhere between 6 months and 2 years in the future so I'm not sure I'd want to go there quite yet but I probably have a higher risk tolerance than many people.

It would be interesting to know his active share because for the last 10 years he's more or less hugged the S&P 500 the whole way. My guess is he has a reasonably high active share but his returns during the credit crisis were very similar and his upside since then has been the same. I guess we have to give him a decent amount of credit for only trailing the S&P by 24 basis points annually for those 10 years, and the big party he throws has to be worth something (if you're into that) but I think most of his outperformance was during the '90s. Since then I'm not sure he's been anything spectacular amid his ever growing stable of funds that have made him a billionaire.

estimates he has generated $23.5 billion in investment profits since then.
He expects to double that number in the next five or six years.

That depends on on a continuing bull market for the next 5-6 years. I don't think so.

FYI: Ron Baron started his mutual-fund firm in the 1990s and estimates he has generated $23.5 billion in investment profits since then.
He expects to double that number in the next five or six years. That’s not a market call, because the 74-year-old investor doesn’t make them. He expects to do what he has always done, which has involved beating the market long term at a point when most investors have given up on active management.
Regards,
Ted
http://www.cetusnews.com/business/Ron-Baron-Explains-His-Investing-Strategy--Company-Growth.HJXZ2rwx4G.html

FYI: Nearly three years ago, Schwab launched its free robo Intelligent Portfolio and today has over $10 billion in assets. Schwab did not disclose what was in it, so I bought one in order to write about it.
I was somewhat critical in my personal look at the Schwab Intelligent Portfolio as well as a follow-up revisit of Schwab months later. Though there have been some changes, it’s still a 16-fund sophisticated portfolio.
Regards,
Ted
http://www.etf.com/sections/index-investor-corner/simplicity-vs-schwabs-robo-portfolio

FYI: By virtually any measure, U.S. stocks are expensive. Under one especially harsh lens, the cyclically adjusted price-earnings ratio popularized by Robert Shiller, equities relative to 10 years of profits are more stretched than any time in a century, save the dot-com era.
But there’s still a methodology that bulls can take comfort in -- price not just to earnings, but to earnings growth. Favored by legendary investor Peter Lynch and known as the PEG ratio, the technique takes the standard valuation snapshot and adds time -- time for a stock to grow into its price.
Regards,
Ted
https://www.fa-mag.com/news/forget-cape-ratio--peter-lynch-tool-has-s-p-500-getting-cheaper-36555.html?print

FYI: S&P 500 sector weightings are important to monitor. Over the years when weightings have gotten extremely lopsided for one or two sectors, it hasn’t ended well. Below is a table showing S&P 500 sector weightings from the mid-1990s through 2012. In the early 1990s before the Dot Com bubble, the US economy was much more evenly weighted between manufacturing sectors and service sectors. Sector weightings were bunched together between 6% and 14% across the board. In 1990, Tech was tied for the smallest sector of the market at 6.3%, while Industrials was the largest at 14.7%. The spread between the largest and smallest sectors back then was just over 8 percentage points.
The Dot Com bubble completely blew up the balanced economy, and looking back you can clearly see how lopsided things had become. Once the Tech bubble burst, it was the Financial sector that began its charge towards dominance. The Financial sector’s sole purpose is to service the economy, so in our view you never want to see the Financial sector make up the largest portion of the economy. That was the case from 2002 to 2007, though, and we all know how that ended.
Unfortunately we’ve begun to see sector weightings get extremely out of whack once again.
Regards,
Ted
https://www.bespokepremium.com/sector-snapshot/bespoke-sp-500-sector-weightings-report-january-2018/

Wow - Just waded through Grantham’s dissertation. Kudos to him and those who understand all these charts and comparisons to historical (hysterical?) bubbles. Do my fund managers at Oakmark, Dodge & Cox or TRP engage in this type of micro analysis? I rather hope not. And this type of analysis seems far removed from the kind of common sense horse wisdom voiced by the likes of Munger and Buffett over the years.
Remember the OJ trial? “If the glove doesn’t fit, you must acquit.” When pieces of a puzzle no longer fit together it’s time to take a second look and exercise some caution. That’s all I’m getting to. When you’ve got prolonged 2 - 2.5% returns on “safe money” alongside double-digit returns on most everything else, it’s time to take a second look at the big picture. Two more parts of the puzzle - In our part of Michigan there’s “Help Wanted” signs everywhere. Yet wages and wage inflation remain very low. And during the normally slow winter construction season if you want a granite countertop professionally delivered and installed you’re looking at a 2-3 month wait after placing an order because they can’t keep up with demand. Trying to obtain decent skilled labor for renovation work during the hot summer months nearly impossible nowdays, with entire city blocks packed end-to-end with construction vehicles.
Despite the indications of a sizzling economy and years of stock market gains, interest rates at both the short and longer end (AA+) remain stubbornly stuck in the 2-2.5% range and wage inflation low. Couple the low wages with various entitlement curtailments (everything from public education to medical care) and the “average Joe” is worse off today than a decade ago. So, IMHO many pieces of the broader puzzle appear out of whack. I don’t recommend panic selling of investments. I do suggest a bit more caution be exercised, be it through raising cash, diversifying risk assets more broadly, concentrating more on funds known to have weathered financial storms well in the past, paying off debt, or just investing some of the recent gains in your own “infrastructure” (home, transportation, etc.).
I am not a financial advisor.

"Old Joe simply doesn’t realize that all of us in Michigan are geniuses"
@hank, @ Catch22-
Actually, by chance I've known quite a few Michiganders and Michigeese over the many years, and with only one single exception they've universally been intelligent (well, maybe a bit short of "genius") and lots of fun besides. :)

@Old_Skeet,
I enjoy and appreciate reading you market valuation updates and I came across this chart that values the US Equity Market in terms of US GDP....Market Cap to GDP. A quote from the linked article below:

Market Cap to GDP is a long-term valuation indicator that has become popular in recent years, thanks to Warren Buffett. Back in 2001 he remarked in a Fortune Magazine interview that "it is probably the best single measure of where valuations stand at any given moment."

I believe it is an attempt at comparing the historical price of US equities to the historical US GDP data. Here's the historical chart which dates back to the 1970 - today:

I added two "best fit" long term (45 years) trend lines with a 20% channel between the lower trend line (red) and the upper (green). What I find interesting about GDP is that it is less speculative than the Equity market and a truer reflection of how well an economy is performing. So, by comparing the two I believe the speculative nature of equity valuation ("are stocks expensive" vs "are stocks it cheap") should reveal itself, at least when compared to what the equity market should be a true reflection of, GDP.
De-trending the data would look like this:

Here's are some other sites that track US Equity Valuation as a percentage of GDP:
https://ycharts.com/indicators/us_total_market_capitalization
Article on this Valuation Matrix:
market-cap-to-gdp-an-updated-look-at-the-buffett-valuation-indicator
Investopedia's Definition of What is the 'Stock Market Capitalization To GDP Ratio'?
marketcapgdp

Yes skeet, that is the news letter I was thinking about. Haven't seen it for quite a while.
Your post got me thinking about the comparison between a "leadership" investment style that is proposed by yourself and "Invest-with-an-edge" versus a strategy that really is the opposite, a value strategy seen in DSENX. Very small sample size since DSENX is fairly new, but I can see from the link you attached and from M*'s DSENX performance data that the "buy under-valued sectors" strategy has done much better then "the sectors in favor" strategy. Again, very small amount of data. Both have outperformed the S&P 500 though.
Who knows. That's why I've left it to the fund managers to decide.
Have to go get my Buffalo chicken wings and beer ready for our 1st playoff game in 17 years!!! Some inside tail-gating in this zero degree weather.... GO BILLS.

@MikeM,
Thank you for the inquiry.
There are some similarities; but, no I am not copying his strategy.
To view his strategy you can view it by clicking on the below link and this will take you to the Market Leadership Strategy that he post weekly. I'm not sure how he ranks his investment choices or chooses them either. My ranking of assets is purely performance based for a number of time periods. You can build your on compass of assets you select then set them up in Morningstar's Portfolio Manager. The time periods I use to monitor are daily, monthly, quarterly, year-to-date, and one year. My two spiff compasses are composed of the 500 Index sectors and the second is a global compass that follows mostly the world regions (from Xray) plus a few others I selected. Maintaining and following the compasses has helped me better position money within my mutual fund portfolio. Plus, it takes me back to the dog track where I use to (many years ago) put a little spiff on the dogs. My strategy comes from a betting style I used at the dog track where I'd bet three dogs to wins place or show and modified it down to the Pack and Lead Hound Strategy for investment purposes.
Here is the link to Market Leadership Strategy that you referenced.
http://investwithanedge.com/market-leadership-strategy

@Old_Skeet, your sector momentum strategy sounds exactly like that momentum news letter you used to link a few years ago. Are you copying that guy's strategy? Can't remember the name of the letter or the guy who ran it. Invest in the 3 leading sectors and replace sectors based on current strength.
Kind of why I like the CAPE strategy of DSENX albeit the opposite strategy. They do do it better than I could.

"Crazy" (Patsy Cline)
(originally by Willie Nelson)
---My rework meaning of some of the lyric.
1. I'm or I or my, being an individual investor.
2. You'd or you, the investing marketplace
Crazy
I'm crazy for feeling so lonely
I'm crazy
Crazy for feeling so blue
I knew
You'd love me as long as you wanted
And then some day
You'd leave me for somebody new
Worry
Why do I let myself worry?
Wondering
What in the world did I do?
Oh, crazy
For thinking that my love could hold you
I'm crazy for trying
And crazy for crying
And I'm crazy for loving you
Crazy
For thinking that my love could hold you
I'm crazy for trying
And crazy for crying
And I'm crazy for loving you

---The below M* link is category returns through Jan. 5 (Friday). OMG just about covers my thoughts for YTD for many sectors.
http://news.morningstar.com/fund-category-returns/
The one domestic area that is suffering and gett'in no love, and began this slide in 2017, is "Real estate".
Rough overview for this household's portfolio.......
1. will maintain FRIFX in the real estate space, it's 2017 return was +7.3%, and the fund maintains it's 50/50 equity/bond mix.
2. our portfolio mix is about 70/30, equity/bond with about 50% of the equity being healthcare sectors. Most of the healthcare arrives from direct investment into funds, but other percentages are also part of broad based U.S. equity holdings. When healthcare equity moves up an average of 3% in 4 trading days, I do pay much more attention.
Still attempting to determine if there are particular equity areas that may be more happy from the "tax package"; or if the equity market will be one big "love fest".
3. A repeat of a personal statement over the years; that the primary goal is to preserve capital with growth over the long term exceeding inflation and future taxation of the monies. Just the standard no brainer, eh? :)
Hey, have you a song lyric that somewhat describes the markets???
Okay, got to go outside "again" to move snow from one location to another near the driveway and sidewalk. More snow coming, the weather folks state. I'll use "brain freeze" as an excuse for any errors or omissions with this write, as it remains too cold here in Michigan.
Take care,
Catch

FYI: The mutual fund industry has spent years trumpeting how costs have come down for investors. That’s true, but misleading. Asset managers haven’t exactly slashed their fees. Instead, the credit goes largely to investors—but some of them are being left behind.
Regards,
Ted
https://www.barrons.com/articles/the-great-fund-fee-divide-1515214360

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.