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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.

David Snowball's October Commentary Is Now Available
@MikeM2:
Here's a polish translation:
Polish say ‘go raibh maith agat’ for ten years of an Irish welcome:
irish times-polish-say-go-raibh-maith-agat-for-ten-years-of-an-irish-welcome

bee October 2016 in Fund Discussions
How To Invest In A Bond Market Gone Crazy: Tom Atteberry, Manager, FPA New Income Fund Video & Text
"This transcript has been automatically generated ~~by Sarah Palin~~ and may not be 100% accurate."
I ... we might ... is that we ... were talking about ... the zero negative this negative interest rate policies of Europe and Japan ... forcing that ... capital is here to look for yield somewhere else which means it comes to the US ... driving our rates down to ... the demand goes up ... and appear time when our conomy is really growing better than those in the lead is this to justify the low right ... now also causes a problem for the ... Reserve Bank is it thinks about raising short-term interest rates ... it's looking to hire a short-term interest rates but long-term interest rates of decline with the two of the same ... I have the more I The typical promise once you ... grow ... Swiss constraining what the Fed can do it ... so thinking about a flat yield curve or what its implication is that he is okay if you think of a banking takes EMCD money an entrance ... lens that money up to individuals and businesses ... if the CD rate rises towards very close to the rate that they begin to lead the money out ... they no longer make a profit doing that ... the declining about lending to do so what does it say constrained lending which is what you need to get an economy to grow faster ... discussing ... current unwinding its less profitable for ... the dude lets up ... we don't have a crystal ball to the ending we just look at the imbalances and along the spine economy slows down to justify the longer term rates a half because money is coming from overseas ... I really start to run the risk of things overheating inflation being Iran to reprice thoughts ... these are bought CEOs six return ... in the media ever return hire that inflation could justify credit risk whichever one ... after readjust that means that when prices decline to get you to the law ... so we look at it and so I am I really paid for ... lending money to look says she's the US government to a really well in the U S government money for ten years and one half percent ... Deutsche think over the next ten years ... that inflation is going to be higher than one percent milk was two or three with him how his either ... that doesn't owe us make sense ... so yes did realize ok ... I can lend out money that was how far can be one of three years maybe five years ... we understand the real you accept the lower return than in the interim ... which are thinking of longer term don't really want that money to come back ... for when the imbalances gone away ... yields might be higher I can then redeployed much more attractive return ... when you begin to trade office we look at what's the role that were playing in someone's portfolio for the war of the bomb components someone's overall portfolio worst bolstered the anchor for response to the local chili cook off ... Portugal's be the protector of capital ... bill the risk Apple is really all the equities for ... real estate deal other items to my puzzle remembering lower all this ... we look at that's ok the we need to play the role the role is anemic sure this is a low volatility strategy ... because we understand they're doing ... investors into another high volatility ... investing ... and that's ... more fun to do that ... you will find Indigo that means that ... I will underperform the ... longer term and is forecast to one ... so what will happen to them as he gets if ... rates rise so it is one of low caste to reprice the bowl sponsor bills longer portfolios we've chased yield stress and and with the result is going to be ... the value of their portfolios and rock ... it will probably drop by more the in the mountains income the chair generates of the end result for them as is the Total Return becomes less than zero

heezsafe October 2016 in Fund Discussions
Parnassus Statement on Wells Fargo
I bought PRBLX b/c of its eclectic set of holdings and fairly solid history through several market cycles, not b/c it's an ESG fund. That said, I'm inclined to trim/liquidate for a bit to see how this plays out in the markets, even though it's "only" 5% of the fund. Plus it'll let me trim my equities a bit and free up some $$ to pay for my new car when it arrives. ;)
Sounds like a good plan. The point I was trying to make earlier is that accounting for E, S, and G risks (that's what they are) among others is part of the fund's risk management approach, and the risk management over the years is what's made the fund successful: running about with the markets in good times, and protecting the downside in bad times.
For sure, though, they blew it this time.

AndyJ October 2016 in Fund Discussions
Scottrade Exploring Sale
When Junkster wrote about a modest account, I didn't realize that what he meant was that the account owner was being modest. :-) Nice job, and congratulations on getting that bonus.
While I feel that Fidelity is one of the best places going in terms of breadth of offerings, pricing, and service, I find they exaggerate a bit when it comes to dealing with groups having unique needs. Three personal examples:
- The linked article mentions HSAs. Fidelity offers HSAs to employees through their workplace, but doesn't offer HSAs to those unique individuals who hold HSAs independently. (Fidelity says it get lots of requests for HSAs, and it says it it is working on it, but it has been saying that for years.)
- I've written about funding a non-resident alien's US college education (a rather unusual need). Fidelity's response was basically - call around our various departments and figure it out for yourself.
- Years ago, I asked Fidelity for a bonus to bring an IRA to them, ironically from WF. As an alternative, I asked Fidelity to simply cover the transfer charge. Fidelity refused, saying it couldn't for tax reasons. See Junkster's boglehead thread for how this can be handled cleanly. So Fidelity lost out, Merrill Edge won, I got BofA credit cards with better rewards than Fidelity's Visa, and Fidelity lost a second time.
Fidelity handles "unique" needs that it has figured are worth its while, i.e. needs with a sizeable market, not "unique" at all.

msf October 2016 in Fund Discussions
Parnassus Statement on Wells Fargo
Here from the 6/30 report/commentary is their public explanation of why they bought it in the first place:
We decided to buy Wells Fargo after many years of waiting for the right entry point. At the time of our purchase, the stock was trading at a slight discount to other regional banks, and at a major discount to the overall stock market. In addition, the company had just lowered guidance for important return‐on‐capital measures at its May investor day. We think the company will meet or exceed these new targets, which should provide support for the stock over our three‐year investment horizon.
As for the quality of the company, simply put, we think Wells Fargo is the best large bank in the country. It has an enviable balance of fee income and net interest income, a widely diversified customer base and a culture that emphasizes risk management.

AndyJ October 2016 in Fund Discussions
Consuelo Mack's WealthTrack: Guest: Bruce Berkowitz, Manager, Faitholme Fund
FYI: An exclusive interview with a deep value investor whose outstanding long term track record has been seriously tested in recent years. Why Fairholme Fund’s Bruce Berkowitz says there is light at the end of the tunnel.
Regards,
Ted
http://wealthtrack.com/berkowitz-fairholme-turnaround/
M* Snapshot FAIRX:
http://www.morningstar.com/funds/xnas/fairx/quote.html
Lipper Snapshot FAIRX:
http://www.marketwatch.com/investing/Fund/FAIRX
FAIRX Ranks #207 In The (LCV) Fund Category By U.S. News & World Report:
http://money.usnews.com/funds/mutual-funds/large-value/fairholme-fund/fairx

Ted October 2016 in Fund Discussions
Americans' Median Net Worth by Age -- How Do You Compare?
Hi Davidrmoran,
Indeed"The Bell Cirve" unleashed a firestorm of controversy when released. Actually, that was expected and one of the reasons why my wife and I purchased the book. It did not disappoint. It is still hotly debated, and Murray still vigorously defends it. Here is a Link to a relatively recent interview:
http://www.aei.org/publication/bell-curve-20-years-later-qa-charles-murray/
Controversy is not bad. When the subject matter discusses white/black performance scores, one should anticipate controversy-squared.
I haven't opened the book since 1995 so I dusted it off. It is a heavy weight study with an extensive Bibliography and 7 appendixes. My copy is a serious 845 pages long. I'm sure I didn't agree with all its findings or its methodology but I do remember being impressed with the work it reflected.
When I was in the military, I was assigned to score standard tests given to all recruits. It is not an overstatement to reflect that many answers from both whites and blacks were ridiculous. That's a sorry reflection of our educational system. Now that's a "glittering generality".
I don't plan to visit the tome again. There are more updated assessments of the topic if it attracts your interest.
Best Wishes.

MJG September 2016 in Fund Discussions
Seafarer
I moved from MACSX to SFGIX a couple years ago. It made sense to me personally not to have 2 funds following similar agendas, especially when one of those funds (SFGIX) was using a larger geographic scope to accomplish that agenda. Just trending the 2 fund's returns for any time span pretty much proves that was the right move.
But that said, I'm not a proponent of multiple funds in any cap-size or sector type fund. I believe many-of-the-same funds detract from total return. Might as well go with the index since you watered down the managers skills. But that's just me.

MikeM September 2016 in Fund Discussions
Scottrade Exploring Sale
I have most of my accounts at E*TRADE as a legacy BrownCo customer and have been pretty happy with the collection of NTF funds they have. Customer service seems to be the main issue. For years I dealt with a guy who was great. He got things done, he went to bat for me when I needed or wanted something like making Grandeur Peak Emerging Markets fund available quickly after launch, and he always followed up on questions I had.
More recently it's the opposite and I find customer service much more stressful because not only are more of the answers bad answers for me, which has to be expected sometimes, but I have to chase after them more for answers. Sometimes they've provided answers that seem more like they just want to be done with my question and move on to the next one rather than actually trying to make the customer experience better- even if the answer isn't what I might hope for.
Though I would go elsewhere for TF funds (e.g. Scottrade $17, E*Trade $20, or Fidelity with $5 to add shares to an existing position).
@msf, is your comment about Fido pricing when adding to an existing position their general approach? I can't find that anywhere on their website or in my account documents. I have a small account at Fido and have always avoided TF funds because I mostly like to add to positions over time, but if the $50 fee was just on the first purchase and each additional purchase was only $5 I might reconsider in some cases.

LLJB September 2016 in Fund Discussions
Scottrade Exploring Sale
VF - not sure if you're reading this correctly. Years ago, TDA had no NTF funds, plus a high transaction fee; the combo meant I didn't even take a look at them.
But that was years ago. These days, it's got a very respectable stable of NTF funds. Though I would go elsewhere for TF funds (e.g. Scottrade $17, E*Trade $20, or Fidelity with $5 to add shares to an existing position).

msf September 2016 in Fund Discussions
How Do You Compare With The Typical Mutual Fund Owner?
Hi @Old_Joe
Recall doing the mean, median, average and likely other identifying words for math questions with our daughter in middle school.
Now, the median age of our and 9 neighbor vehicles is 8 years. Some of us have more repair items and dependability problems than others. Do you need more info?...... :)
Lastly, if you see Mr. Stumpf cruis'in around town; please give him the appropriate Italian salute from me........
Take care of you and yours,
Catch

catch22 September 2016 in Fund Discussions
John Waggoner: Expect Higher Than Average Capital-Gains Distributions This Year: Morningstar
Interesting. I would have expected modest distributions because it seemed we got hefty distributions last year. That was a year of small growth after some hot years, so I thought those distributions would have cleared out much of the capital gains.
Apparently a culprit is people fleeing actively managed funds generally. (This leaves the same amount of gain to be distributed among fewer shareholders.)

msf September 2016 in Fund Discussions
How Do You Compare With The Typical Mutual Fund Owner?
Hi Guys,
I'm a sucker for presentations that are in the heavy weight statistical category. I'm often surprised by the survey numbers. That was again true as I read the referenced mutual fund owner report.
Not much to my surprise, I'm doing quite well on a comparison basis. I am more than comfortable on an absolute basis. I'm not surprised that the so-called GI generation is at the bottom of the curve in terms of mutual fund ownership. That industry was just making a positive market penetration during our meaningful earning and saving decision years.
I was a very lucky and fortunate soul during those years. In a totally random event, I was introduced to Jack Bogle. He is a very convincing advocate and salesman. He won that day and continues to win.
The most surprising statistic for me is that the median fund owner only has 3 funds. That's a basic minimum for portfolio diversification. I typically have a fund number that bounces around 10. But I also have a portfolio,size that greatly exceeds the averages presented in the survey report. I trade infrequently and am very much into cost control. I suspect many MFOers practice the same general policy.
Best Regards.

MJG September 2016 in Fund Discussions
Consuleo Mack's WealthTrack Preview: Guest: Bruce Berkowitz, Manager, Fairholme fund
FYI: (I will link intereview as soon as it becomes available for free, generally early Sat. morning)
Regards,
Ted
September 30, 2016
Dear WEALTHTRACK Subscriber,
Few money managers have the conviction, wherewithal, stamina and independence to stick with positions that remain unpopular and unprofitable for years before paying off. This week’s guest is one of the few! We’ll be joined by Bruce Berkowitz, a deep value, long-term investor who rarely gives interviews. I have been interviewing him on WEALTHTRACK since 2007 and he has always generated a great deal of interest.
Berkowitz is Founder and Portfolio Manager of the three Fairholme funds - his Flagship Fairholme fund, launched in late 1999, the Fairholme Focused Income fund started in 2009, and the Fairholme Allocation fund begun in late 2010.
The Fairholme fund, for which he was given Morningstar’s Domestic Stock Fund Manager of the Decade Award in 2010 has delivered 10% annualized returns with dividends and distributions reinvested since inception, nearly triple the market’s total return.
However, the last decade has been much more difficult. The fund has badly lagged the market over the past 10, 5 and 3 year periods despite having several stellar years including 2012 and 2013 when it crushed the market and led its Morningstar Large Value category, gains that were offset by a big decline in 2011 and then another subpar performance in 2014, hurting its track record. The fund, which once had over $20 billion in assets, is now a fraction of that.
Berkowitz is famous for taking big positions in a handful of companies that are generally shunned and panned by Wall Street when he is accumulating them. He has made a fortune over the years in concentrated stakes in health care, energy and financial services. He has also poured a fortune in recent years into companies such as Florida real estate company The St. Joe Company and retailer Sears, as well as financial firms such as Fannie Mae and Freddie Mac, which have yet to pay off.
There’s a well-known saying “Don’t fight city hall”… but Berkowitz is taking on the entire U.S. federal government. Fairholme is engaged in a multi-year lawsuit against the U.S. government over its handling of the conservatorship of the two mortgage giants, which although hugely profitable, are still under government control and paying enormous dividends to the government - but not to preferred shareholders like Fairholme. I began the interview by asking him why he is so committed to fighting this battle.
If you are unable to join us for the show on television, you can watch it on our website, WealthTrack.com, starting over the weekend. If you’d like to see it earlier, it is available to our PREMIUM subscribers right now. We also have an EXTRA interview with Berkowitz about his views on the presidential candidates. He says it is more about the team than the candidate.
Thank you for watching. Have a great weekend and make the week ahead a profitable and productive one.
Best Regards,
Consuelo

Ted September 2016 in Fund Discussions
Americans' Median Net Worth by Age -- How Do You Compare?
Many of the remaining jobs now require additional schooling. For ex, housekeepers in a hospital in the state I lived in used to be trained on the job. Now they have to be certified by taking a 9 month comm. college course. The job I had was on the job apprenticeship back in the 70's. Now it's a 2 year course and talk of making it 4 years is ongoing.
Commoners and peasantry might be the new term for the middle class.
That is a good point on how worker are actually getting paid less then the past. Workers got paid while being trained. Now workers have to pay for their work training.

DanHardy September 2016 in Fund Discussions
Americans' Median Net Worth by Age -- How Do You Compare?
The middle class benefited from manufacturing and production jobs that could be had right out of high school. These were decent paying jobs too. Automation and outsourcing to other countries has pretty much eliminated those jobs. Many of the remaining jobs now require additional schooling. For ex, housekeepers in a hospital in the state I lived in used to be trained on the job. Now they have to be certified by taking a 9 month comm. college course. The job I had was on the job apprenticeship back in the 70's. Now it's a 2 year course and talk of making it 4 years is ongoing.
Commoners and peasantry might be the new term for the middle class.

JohnChisum September 2016 in Fund Discussions
Is It Too Late To Get On The Municipal Bandwagon?
Like virtually all other bonds, munis have enjoyed the many years of lower rates. I check individual muni prices regularly, and seldom if ever find an investment-grade muni that is not selling 2-3% above par. While I won't say there is a bubble, it is clear that the easy money was made over the last 10-20 years. Most managers will tell you they would be happy to be able to pay investors their coupon and just hold NAV steady in coming years. We are quite cautious with all bonds right now, using shorter-duration funds and going with short-to-intermediate term funds. And bond fund expenses are a critical component. A fund that charges 75-100 bps or more has a huge headwind facing them as rates move higher. M* lists 222 short-term muni funds, with fully one-third of them having expenses of 75 bps or higher, some higher than 150 bps. Of course, these funds were SOLD to investors by banks and other commission-driven entities.

BobC September 2016 in Fund Discussions
Parnassus Statement on Wells Fargo
I agree. Parnassus should unwind their position in WF as quickly as they can. Not doing so attaches the WF stain to Parnassus. If the fund company had discovered that WF had been refusing to hire African Americans or had quietly been letting LGBT employees go over a period of years, rest assured Parnassus would have dumped them like rotten potato salad.

BobC September 2016 in Fund Discussions
Parnassus Statement on Wells Fargo
These disasters usually just drip on and on, unless senior management takes immediate responsibility ( remember this scandal has been known to CA newspapers for three years) and accepts appropriately severe personal punishment.
Stumpf did none of this, and deserves to loose all of his salary and delayed compensation since the process began... Of course he wont, not will the chief of retail banking, who will be allowed to retire on a little less..
We can hope that the AGs and DOJ go after them for conspiracy and fraud and, having ignored the criminal implications of the 2008 crisis, decide that enough is enough and file criminal charges.
As far as your or my investment in WFC I would ( and did ) sell now. Nothing good is going to come out of this for months to come and the stock will likely drop 10 0r 15% as the true legal and distraction costs start to mount

sma3 September 2016 in Fund Discussions
Where are the Female Fund Managers?
Honestly, I pay no attention. Don't see what gender or sexual orientation has to do with anything.
Have had many excellent female money managers, attorneys, surgeons, etc. over the years. And more than a few males who were real "clunkers."
We're still playing catch-up of course. That's because the stereotypes that existed unfairly many decades ago take time to change. When I was in high school counselors (and parents) were more likely to steer girls into careers in nursing and teaching and men into science, engineering or accounting. Helps explain why even today there are higher proportions of the genders in certain fields. So much has changed for the better. But it will take many more years to overcome the effects of those stereotypes.

hank September 2016 in Fund Discussions