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Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
  • 401(k) Choices: What To Do When You Leave Your Job
    Yes they can, though there may be laws I'm unfamiliar with when the distributions are involuntary (e.g. if the company exercises its right to close a small account or if your mother is required to take distributions by the IRS).
    Years ago I worked for a small company that used class B (contingent deferred sales charge) shares. (The 1% 12b-1 fees were used to pay for the cost of the plan - common in small plans.)
    The "financial advisor" who set up the plan for the company "promised" that the deferred loads would be waived. But when the company was acquired and I left (taking my plan money with me), I was charged those fees. I'm not sure if I raised any objections with the acquiring company, but it would have been hopeless in any case.
    msf in Fund Discussions
  • Would Your Retirement Portfolio Last If The Market Crashed?
    Hi Guys,
    This article by author Andrew Hallam has a very simple answer to the question offered in the title of that article: an easy qualified Yes even under stressful market reversals. It's qualified because it uses past market crashes to define the severity of a downturn, and it postulates an investor who has a baseline drawdown schedule of 4% with an unwavering commitment to continue that schedule even as his portfolio diminishes in value. That may not be easy to do.
    But if those constraints can be satisfied, Hallam concludes that an easily defined investment program satisfies the portfolio survival issue. Simply buy a set of low cost Index funds and stay the course. No further action is required; don't panic, don't try alternate actively managed funds.
    Just buy and go away. Things couldn't be more simple. However, it's not clear to me that spending could be significantly reduced as a retirement portfolio suffers a couple of years of negative returns. It's always good to be flexible, but flexibility has its limits, especially if the food budget comes under attack.
    Regardless, not reacting to every market action, and constructing a low cost Index dominated portfolio is not a bad overall strategy.
    Best Regards
    MJG in Fund Discussions
  • The YouTube Channels For Investors To Watch Now
    Ray Dalio has made a splash here over the years and his presentations are very swimmable (understandable) for the average investor.
    https://youtube.com/results?sp=CANQFA%253D%253D&q=ray+dalio
    Might be nice to get others to earmark their favorite gurus via you tube in this thread.
    bee bee in Fund Discussions
  • Wasn’t September Supposed To Be A Bad Month For Stocks?
    FYI: For all the talk about how bad a month September has historically been for US equities, this September surely isn’t fitting the mold. Through Monday afternoon, the S&P 500 has gained 1.4%, which is a good return for the first half of any month, let alone the month that has historically been weaker than any other month. Looking a little bit deeper, though, it should be noted that the first half of September has historically been considerably stronger than the second half of the month. The chart below shows a distribution of the median returns for every stock in the S&P 500 during the first half of September over the last ten years. As you can plainly see, well over half of the stocks in the index have seen gains during the first half of the month; 359 to be exact. Overall, the median return for each stock in the S&P 500 is 1.02% with Ulta Beauty (ULTA) leading the way higher with a median gain of 18.43%, while Advanced Auto Parts (AAP) brings up the rear falling 3.07%.
    Regards,
    Ted
    https://www.bespokepremium.com/think-big-blog/wasnt-september-supposed-to-be-a-bad-month-for-stocks/
    Ted Ted in Fund Discussions
  • Robert Shiller: Mass Psychology Supports The Pricey Stock Market
    Professor Shiller has been saying this for several years now. Since nothing happen and the herd continues to plow forward. Haven't we all seen this before prior to dotcom and subprime bubbles?
    The more pertinent question is what to do to protect the downside? Personally I have been rebalancing to other asset classes with low correlation to equity on quarterly basis. I like to hear other viewpoints.
    Hard to answer not knowing your age and whether you are in the accumulation or preservation stage. This seems though like the most unloved bull market ever. As for asset classes with low correlation I would be very careful. There is an academic Pied Piper who has been preaching this approach for over a decade. First it was via collateraized commodity futures ala PCRIX/PCRDX then it was managed futures via AQMIX/QMHIX and we have seen how that has turned out. Now it's reinsurance via SRRIX which recently took a 11% hit one week. All the while that some are embracing uncorrelated assets the markets just keep hitting one new high after another. Seems the winners and those accumulating the wealth as always are the investors staying the course in plain vanilla index funds that mimic the market who don't fret about market timing.
    Edit. That should have been SRRIX above not SSRIX now corrected
    Junkster Junkster in Fund Discussions
  • Robert Shiller: Mass Psychology Supports The Pricey Stock Market
    Hi @Sven,
    I too have been more conservative within my portfolio and have been moving money left within my portfolio into more conservative asset positions due to relative high asset valuations. I have reduced the number of equity funds in my domestic equity sleeve (from six to three) along with reducing the large/mid cap sleeve (from six funds to three) and in the global growth sleeve reducing the number of funds there (from six to three) and moving a good bit of this money into mostly hybrid funds. In addition, some of this money was used to restart my CD ladder along with using some idle cash.
    This rebalance (of sorts) has take place over time (last couple of years) and was not done in one setting. In addition, while I have reduced the number of equity positions I have strived to maintain good sector weightings in what I call the "Big Three Sectors" of technology, financials and heath care. In addition, overweighting the materials and utility sectors this year has, thus far, also turned out to be a positive.
    The use of hybrid funds was done for multiple reasons. One, the ones I chose kick off relative good income distributions ... and, two, they usually position in the faster moving market currents of both the fixed and equity sides. Thus far, this seems to have been a good move for it has increased my income generation by about ten to fifteen percent (from where it was a year ago) while at the same time helped produced some good overall portfolio returns.
    For me it has been: "So far ... So good."
    Peace.
    Old_Skeet
    Old_Skeet in Fund Discussions
  • Robert Shiller: Mass Psychology Supports The Pricey Stock Market
    Professor Shiller has been saying this for several years now. Since nothing happen and the herd continues to plow forward. Haven't we all seen this before prior to dotcom and subprime bubbles?
    The more pertinent question is what to do to protect the downside? Personally I have been rebalancing to other asset classes with low correlation to equity on quarterly basis. I like to hear other viewpoints.
    Sven in Fund Discussions
  • M*: There's Likely More Risk (and Less Reward) In Foreign Small Caps
    Just skimmed this article (for lack of time). But it appears to be (at surface level) a thoughtful and well documented article.
    -The first part of the statement is acknowledged in probably 80% (could be 100%) of the prospectuses of funds investing in any type of foreign securities to any extent. Usually it goes something like "Investing in foreign securities carries additional risks, which include, but are not limited to ... (enumeration of several risks)". So, not much new here.
    - Far as I can tell, he's basing the second half of the argument on some kind of regression to mean argument - based on some kind of foreign small cap outperformance in recent years. I too subscribe to the regression principal - though the time frames involved for it to play out often last decades. A very young writer predicting today a regression back to some (lower) mean might well have grown very old before the regression actually occurs. Additionally, he seems to view foreign small-cap markets as one market. Of course they are not.
    For most long term fund investors, I think one or two good international funds is a better way to go, assuming you want international exposures. Let your manager slice and dice as to various cap sizes and particular economies in which to invest. I'm probably swimming against the current here. The fund companies profit from our willingness to buy very narrowly focused funds - usually having higher levels of risk and higher expenses. And investors' relentless pursuit of every possible extra 10-cents worth of higher return helps support them.
    hank in Fund Discussions
  • Mutual Fund Plunges 11% Last Week As Hurricane Hits Florida
    Not sure how this has lost money over the past 3 years as it was up 25% over the past 3 years before IRMA and is still up 12.69% with essentially zero volatility (with the exception of the past 2 weeks). It also goes back to portfolio construction and that is why advisers use it. Take a look at the chart of AIG and Berkshire over that time period and then take a look at SRRIX. Volatility in those stocks is HUGE while SRRIX has next to none. It's about building a diversified portfolio where this is just one component. People pull from their portfolios over time and risk adjusted returns is most important. No client closes their eyes for 10 years and then opens them on the ten year anniversary to see how they did. How you get there day by day is most important. Modern portfolio theory.
    TD1 in Fund Discussions
  • Mutual Fund Plunges 11% Last Week As Hurricane Hits Florida
    You are completely missing the point if you look at it the way that you do. It is a 100% non-correlated asset in a portfolio that does not derive any return from the economy, politics, interest rates, etc. If you had actually looked at the return of the fund since it launched in Dec 2013 you would have seen it had beaten the global stock market over that time period with zero correlation. Sure, there is risk in the portfolio, just like in every other investment I'm sure you have, but the driver of returns are completely different than everything in your portfolio. When your stock portfolio dropped -19% from May 2015 through February 2016 Stone Ridge reinsurance was up over +8% with once again, no correlation. The fee is high certainly, but I have no idea how you can say it has "nothing particularly unique" as it is the most unique mutual fund out there. They negotiate contracts with reinsurance companies to get this exposure. Just like when you get into an auto accident and your premiums go up guess what happens when a major hurricane hits???? Premiums go up too and guess who reaps the benefits of those higher premiums???? That's right, investors in the fund. It is not an investment to day trade (nor do they let you do it anyway) - hence the high minimum so people that actually get it can purchase it, and people who do not, don't get access. It is a buy and hold strategy. There is a reason why quite a few reinsurance companies have been around over 200 years.......
    TD1 in Fund Discussions
  • This Is What Vanguard’s Chief Economist Says Is The Most Important Economic Trend Of Our Lives
    Getting back to MFO, all shades of Tech Funds have performed well over recent years.
    @Ted has been a fan of Tech (QQQ).
    How do you expose you portfolio to Tech risks and rewards?
    bee bee in Fund Discussions
  • Bank of Japan now holds about 70% of country's ETF market
    Hi @catch22 and thanks!! My $54MM was calculated in a ridiculous way that I didn't think much about at the time. As of a few months ago the BOJ owned roughly $144BN of equity securities. My $54MM would be less than 4 basis points as an expense ratio and you're right it's not a big number in terms of what they hold but its still a lot of money.
    One interesting thing I read is that the BOJ's balance sheet is the same size as the Fed, but their GDP and population are about 30% of the US. They also didn't start this process until years after the Fed did and they're still going strong. So far I haven't read anything suggesting they're ready to stop printing money. I think we have to be a little worried about what might happen when the Fed starts reducing their balance sheet but I don't think I want to be anywhere near an investment in Japan when the rumors start. I've owned MAPIX for a pretty long time and been very happy with it but with 30% of the portfolio in Japan I might need to make it a smaller part of my portfolio.
    LLJB in Fund Discussions
  • Ben Carlson: The Front Test
    There are at least a few people here who seem to follow rules-based strategies and be quite happy with them. It's been quite a while since some have posted. In some cases I think the comfort comes because the goal isn't always to beat the market. In others it seems like a lot of Ben's points might apply.
    I have 2 rules of general rules of thumb that I'd welcome comments about. First, anyone who is sharing their rules-based strategy that's designed to beat the market is high risk to follow for the very reasons the article points out but also because if the idea was so good they wouldn't be sharing, they'd be getting rich and telling no one.
    The second rule is that any system not designed to beat the market could be really interesting if my goals line up with the goals of the system and the system has done better historically than I've done. That makes me want to study, ask questions and consider whether there's an opportunity.
    When I was younger I always wanted to believe it was possible to do what this article is warning against but years of experience has convinced me I won't be the one who discovers it.
    LLJB in Fund Discussions
  • Ray Dalio Book: "Principles: Life and Work": Video Presentation
    For those not aware; here is a Ray Dalio, 30 minute video of "How the Economic Machine Works"; that I posted several years ago. (You may have to click upon the play icon twice)
    You may learn as much as a 4 year econ student, in just 30 minutes.

    Regards,
    Catch
    catch22 catch22 in Fund Discussions
  • Warren Buffett Bet 10 Years Ago On the S&P 500 And Wins A Million Dollars
    Now, that would have been some bet --- forget SPX, gimme $10M if a savvy-managed bond fund beats your group of hedge funds.
    (PIMIX beat SPX by 50%!)
    Ivascyn is an even bigger bfd than many already know. The last four bullish years (actually a bit less), PDI has beat SPX by almost 11%.
    davidrmoran davidrmoran in Fund Discussions
  • Warren Buffett Bet 10 Years Ago On the S&P 500 And Wins A Million Dollars
    The user and all related content has been deleted.
    [Deleted User] in Fund Discussions
  • Active Managers Are Getting To Work
    "Vanguard economist Joe Davis kicked off the conference with his view of the future of work. In the next five to 10 years, studies suggest, 50% of jobs in the U.S. are projected to be lost to automation. India could lose 69% of its jobs, and more than 75% of China’s jobs could be wiped out. But Davis is optimistic: “We need to change our mind-set about technological change. Jobs do not get automated away, tasks do.”
    Based on Vanguard’s analysis, tasks have changed for every occupation since 2000. Chefs, astronomers, and photographers saw the most change. (Economists the least, Davis joked.) He sees this as a positive, because automation means that workers can farm out repetitive tasks and devote more time to uniquely human ones, such as information analysis, communication, relationship management, and creative thinking.
    Active shops have responded to this technological threat by putting those “uniquely human” tasks into an automated form—strategic-beta ETFs "

    He sees this as positive because workers can farm out repetitive tasks. That's assuming the worker owns the technology and has a choice which tasks are farmed out. It is the business and technology's owners that make that decision and they will choose to fire many workers and replace them with tech. In the money management industry that means only those workers with skills that are uniquely human, that are so specialized that a computer algorithm which picks stocks can't replace them will survive. The terrible irony is many financial analysts and money managers who boast of "capitalist creative destruction" are about to see their jobs creatively destroyed by the technology they once invested in and celebrated. The question for every worker becomes what can you do a computer program, algorithm or robot can't?
    LewisBraham in Fund Discussions
  • Josh Brown: When The Hedge Is Worse Than The Thing Being Hedged; Black Swans & John Hussman
    I think LB makes a good case for holding cash or high quality bonds along with equities.
    But, holding short equity positions is inherently hazardous. (Theoretically, a stock can continue to rise forever.) It boils down to the skill of the manager to effectively implement a short selling strategy - and avoid losing his shirt in the process. Not to say using short positions to hedge equity risk is a bad approach - just that John Hussman hasn't demonstrated the capacity to execute the approach effectively. And, while he somewhat vehemently denies shorting equities, Hussman's HSGFX often behaves as if (effectively) short the market.
    Alternatives like gold, foreign currencies, commodities, real estate, etc. constitute another form of hedging. Personally, I like to keep a small hold in funds which include those types of assets. I fully recognize that that dilutes my returns as compared to being invested only in equities. Much disagreement exists on the board re the subject - and I've no desire to become a spokesman for PRPFX or any other fund investing in such alternatives.
    BTW: The brains at TRP have held for several years now that we're in the midst of a cyclical bear market in commodities. They would probably say that we're in the 5th or 6th inning. While I've disagreed a bit with that bearish outlook, I suspect they're mostly correct in the call. It's relevant here only in that commodities are often viewed as an alternative investment to equities.
    Yes. Agree with LB that equity markets don't always rise. They can (and do) experience significant multi-year periods of negative performance. And I fear very much that our instant-touch media (24-hour financial reporting and internet access) have magnified the always present human herd instinct. If correct, that implies both stronger bull markets and worse bear markets ahead than have occurred historically.
    hank in Fund Discussions
  • Josh Brown: When The Hedge Is Worse Than The Thing Being Hedged; Black Swans & John Hussman
    If the future is truly uncertain, why should investors have a long bias in their portfolios? All we know is that in the past this strategy has worked, not that it will work in the future. Applying some blind probability analysis based on that past performance without asking why that performance occurred denies the existence of that uncertainty. Investors need to figure out if the same assumptions that drove stocks up in the past still apply today and will continue to drive them up in the future.
    Among those assumptions--1. the continued dominance of America's largest publicly traded multinational corporations 2. If yes to one, a fair or cheap price paid for a piece of that dominance, i.e., valuation 3. strong or moderate macroeconomic conditions--low or falling interest rates, modest inflation, decent GDP growth, employment 4. stable or improving geopolitical conditions--no populist outrage, favorable tax rates, no losing side of wars, no cataclysmic climate disasters, zombie apocalypses, etc.
    All of these complex variables factor into the analysis into the ongoing might of the U.S. market. Rather than just empty performance numbers, real human history is what needs to be studied, having an awareness that the emergence of America as the dominant global economic superpower in the last 100 years is actually a rather unusual thing, which is by no means assured in the future. Even more unusual is the rise of the modern multinational corporation--a relatively new thing historically. Who's to really say how long the good times for stocks will last?
    LewisBraham in Fund Discussions
  • Late? That’ll Cost You 50%: (RMD)

    thanks to ted/bee/maurice/msf and all,for all your articles+comments over the years!
    ynot in Fund Discussions