Hi Davidrmoran,
Your desire to learn more on what quickly becomes a complex mathematically dominated topic is highly commendable and deserves respect. Good luck in your exploration. I abandoned my interest a few years ago because of my own persistency shortfalls.
The subject has been studied for decades from an investment enhancing perspective. It fundamentally explores the persistency of momentum in the marketplace for various timeframes: intraday, daily, monthly, quarterly, and on an annual basis.
The research seemed to demonstrate that on any time scale markets were never completely random; some momentum, some local dependence existed for rapidly disappearing time periods. A perfectly independent event would have a zero correlation. The numerous studies always showed values slightly departing from that zero. These numbers never seemed to depart by very much, but the researchers tested them and concluded they were not random noise.
These studies are called autocorrelations. They are linear regression analyses with some period time lag used in the self-comparison. The findings vary over various timeframes. They were dynamic and not constant. That's a warning signal.
I've not been impressed that these results generate actionable investment opportunities. If they did, we would all know about them.
I hope this helps. Note that I am not an expert in this field.
Best Wishes.

Hi Bob, thanks for the comments. I completely agree with you that after several fat cows one should expect several lean ones. But mean regression is something entirely different.
What you (and I, and most everyone else) are assuming is that there's some relationship between past and future (lean follows fat). Mean regression assumes the complete opposite - that each year is completely independent and random.
Now you don't believe that next year is disconnected from this year or the past few. Neither do I. So mean regression is not applicable. Even if it were, it never predicts bad years, just that if this year was good, next year will, more likely than not, be less good.
With respect to bonds ... If one buys a bond now, even a premium bond, whether the real rate of return turns out to be positive or not depends on rate of inflation until maturity. It doesn't matter whether nominal rates go up 1% next year, that's not going to affect the coupons, the return of principal, or the real return. (Except arguably by inference that inflation may rise in tandem with the rise in nominal rates - see Fisher hypothesis.)
Inflation is still hovering below 1%. (0.8% Y/Y as of July - see graph here). Target rate is 2%. If we approach that without overshooting (admittedly a significant assumption), then 10 year bonds, yielding 1.60% nominal as of 9/2/16 should generate a small but positive real return. It doesn't matter what happens to market rates; what matters once the investment is made is the rate of inflation.
Still, there's a difference between this barely positive real return and the historical real return of 1.6%. So I agree that one needs to plan for lower returns than the historical average for both bonds and stocks. Though it remains important to be clear on the reasons for that qualitative projection, in order to make good quantitative guesses.
I think your 4-5% (nominal) is a good, conservative figure for planning purposes. IMHO that puts real return somewhere around 2%.

Hi, msf. Given the fact that we have had out-sized returns for the S&P 500 the last 5 years (average of about 15.5%), with some sectors much, much higher, it is natural to expect that we could well have some lean years if longer-term average numbers are to be trusted. The 10-year S&P 500 average return is only 7.4%, a long way from the outrageously long historical number, which some retirement web sites still allow using. So if we are to have future average returns of around 7%, there will need to be some very poor years to bring the market average down to that level. Or we could have one or two awful years. Perhaps the need to keep words to a minimum meant a deeper or clearer explanation was left out. I hope this clears the water.
As for bond yields, I think the fact that we are in totally uncharted waters with interest rates might result in strongly negative returns for bonds. I am not aware that so many countries have ever suckered poor souls to buy bonds with negative yields. And while U.S. yields are higher than 0%, many bond prices are so high as to suggest owners could have negative returns if rates move up by just 1%.
I am not suggesting returns for stocks or bonds is about to be hideous, but I do believe that using an assumed average return of more than 4-5% for retirement projections is unwise.

Presuming that you have to use Fido funds, why not FISMX? 5* at M*. It's separated a bit from its index on M*, and the manager has been there 2 yr during part of the overperformance. I'm trapped in Fido for my 403B , so I don't ignore their 5* funds. Over years, small cap usually outperforms, and I'm assuming you want international exposure.

I am still holding ARTMX in a taxable account and it too has not performed well in the past 3-5 years. To add insult to injury, from 2013 to 2015 it has distributed LTCG's of 8% to 16% of NAV and with an ER of 1.19%.
I will cut the cord this year before its November distribution and put the proceeds in VIMAX and call it a day. I never had any business of tilting to Mid-Cap Growth in the first place.
Mona

What do any of these (except for DSENX / DSEEX) have that PRBLX does not?

Brings to mind the discussion a couple of years back about MFO's crowning of SMVLX as a "great owl" before it had shown what it does in a market unfavorable for its schtick.
PRBLX of course balances riskier sectors (tech, industrials) with defensives (staples, utes) so it doesn't get killed in down-markets.

I own BLVAX. I bought it because I wanted a low volatility fund that was actively managed, rather than a passive low volatility ETF index, as I thought it was possible low volatility stocks as a whole could be getting expensive. BLVAX pays attention to valuation, so it might not go down as much if low volatility stocks are sold off after the prices have been bid up the last few years.
It looks like BMO has a couple different websites with little information about their US based mutual funds. You may have come across this, but in case you did not, here is a link to their BLVAX page where you can get the fact sheet and quarterly commentaries, as well as links to their other funds.
https://www.bmo.com/gam/funds/g/us/equity/bmo-low-volatility-equity-fund

Robert Cochran's column, in its use of mean reversion and inflation/real return, has left me befuddled.
"Reversion to the mean" simply expresses the tendency of next year's returns to be closer to the long term mean than the current year's returns are.
Underlying mean reversion is the assumption that each year's performance is independent of the previous one's. That is, mean reversion applies to random variables.
Assuming a long term mean of 9-10% for stocks (as stated in the opening sentence), and assuming 2016's return comes out about 12% (extrapolating from 8% YTD), mean reversion suggests that it is more likely next year's returns will be lower (closer to the mean of 10%) than higher (further from the mean). That's all.
Many prognosticators suggest that stock returns going forward will average around 4-5% (with an assortment of solid reasons backing this up). Mean reversion would seem to cut against this, as it implies, quite literally, reversion (coming closer) to the mean of 10%. IMHO this just shows that mean reversion doesn't apply here - yearly returns are not random variables.
Regarding real returns and inflation - if inflation is assumed to run at 2-3% (it isn't now, but it is expected to increase), then SS should also increase in nominal terms 2-3%, not the 1% projected. In real terms (as measured by CPI-W), SS payments do not decrease.
The 5% average figure for bonds over the past 15 years suggests that "bonds" means 10 year bonds. See here (geometric average over past ten years was 4.71% for 10 year bonds). That same source also shows an average near 5% (4.96%) for the past 85 years. Arithmetic averages are similar, though slightly higher (a small fraction above 5%).
So it seems fair to use last century's (100 year) average real returns for 10 year bonds as "normal" returns. That average real return was around 1.6% in the US:

If you prefer, 1.7% real return for 1900-2002 (based on Shiller data)
So I don't understand what the big deal is about a 0-2% real return going forward. That sounds about normal.
If anything, achieving typical real returns with lower nominal returns and lower inflation is beneficial to fixed income investors. That's because taxes are based on nominal returns, not real returns. So achieving the same real returns and paying less in taxes (lower nominal returns) seems like a plus.
In the broad picture, I agree with the expectation that both stock and bond returns will be lower going forward. But not as explained. Stocks may violate mean reversion (i.e. overshoot the mean on the low side, rather than simply dropping closer to the mean). Parallel increases in prices and rates would keep bond real returns closer to zero.

Umm ... From my grad school years I recall having to read a hellova lot over short periods. Some days I never left the dorm room or dressed beyond a pair of underwear.
So, while not sure about 500 pages a day, I do know you can consume a voracious number of pages if you really set your mind to it and otherwise exclude having a life.
:)

Artisan's management fee has consistently above average among actively managed funds. Many did mind as long as their performance is good. Some of their strategies over the last several years have been lagging badly. For example, Artisan Sm Cap Value has been liquidated and folded into Mid Cap Value. Artisan International, one of the oldest fund, has been lagging badly relative to Vanguard Total International Index fund.
Yes, they close their funds to protect the existing investors. At the same time they launch many new funds. Hate to see a good shop goes down the road that Janus did. Like you said, going public is a bad idea.

That's the first time I've seen it suggested that funds are more nimble if they are larger and are stuck with lots of cash that they have to invest regardless of what they can find.
If a fund owns good stocks, it shouldn't want to sell them (M&P tries to find solid stocks that it can hold for several years). If conditions change and a company's stock is no longer a good fit, the fund should sell it. Its cash flow is irrelevant.
The ability of funds to move easily in and out of securities is dominated primarily by the size of the positions being changed (relative to the size of the market for the security). Cash inflows are secondary. Often large inflows are detrimental, because they force funds to buy too much of a security (driving price up), or too fast (driving price up) in order to mitigate cash drag.
It is correct that funds are generally more tax efficient if they've got tons of cash pouring in. Their current holdings are dwarfed by the new cash, so any gains generated from the current portfolio are spread among lots and lots of new shareholders.
But if a fund is already tax efficient, either because it holds securities for years or because its securities don't spin off dividends, the tax impact of large inflows is less significant. All M&P funds invest with the intent of holding securities for years. Also small cap stocks are less likely to pay dividends. So I wouldn't be overly concerned about diminishing tax efficiency for this fund.
Many fund families that close funds do so too late. This is because they are optimizing their profits, not yours. Performance may tend to drop as funds get too large. But so long as this doesn't impact the fund family (e.g. diminished reputation harming flows into other funds), they're happy to keep money flowing to the large fund. (See Magellan.)
This is why a fund closure is often taken as a negative signal. But it depends upon the fund family. The mere fact that M&P didn't even try to go nationwide for years speaks to its lack of interest in drawing investments solely for the sake of increasing AUM.

Some Roth distributions are federally taxable (e.g. earnings if your Roths are less than five years old). "Any portion of your Roth IRA distribution that is included in your federal adjusted gross income (AGI), is subject to Michigan tax."
http://www.michigan.gov/taxes/0,4676,7-238-75545_43715-154072--,00.html
"if part of the [Roth] distribution is taxable, then Michigan pension withholding would be required on the taxable portion of the distribution."
http://www.michigan.gov/taxes/0,4676,7-238-43513_59451-263747--,00.html
As far as other fund houses go - there are a lot of wrong answers out there. My experience with front line customer reps is that some may give answers without checking details.
Sometimes it's hard to get past front line reps. I once spent six months arguing with an electric supplier because they were charging tax to residential customers, when the city law explicitly exempted residential customers from tax. (They ultimately stopped collecting the tax but said it would take awhile to compute refunds.)
I got an answer from Fidelity earlier this year that I believed was wrong (again, a tax question). It happens. I was able to work around that answer, so it wasn't worth a fight. But I did email them a link to an IRS page directly contradicting what they told me.

Hello,
A good article on rebalancing covering the why's and how to's.
For me, the best thing I did, years back, was to determine an asset allocation consisting of cash, bonds, stocks and other assets with target percentages being set for each asset class allowing for some range movement based upon market conditions, my needs and most important my risk tolerance. Over time, I developed a matrix that helps me determine just how much stocks, the most risky asset class, to hold from time-to-time based upon certain market condidtions but keeping within my asset allocation range for stocks.
Currently, my range allocations are as follows: Cash Allocation range 15% to 25% with target currently being set at 20% ... Income Allocation range 25% to 35% with target currently being set at 30% ... Growth & Income Allocation range 30% to 40% with target being set at 35% ... and Growth Allocation range 10% to 20% with target being set at 15%. In doing a recent Morningstar Instant Xray analysis on my portfolio the results were cash 25%, bonds 25%, domestic stocks 30%, foreign stocks 15% and other assets 5%. With this, I am currently light in my income allocation due to an anticipated rising interest rate environment, neutral in my stock allocation and heavy in my cash allocation. Note, some of my hybrid funds must have recently bought stocks because not too long ago I was light in stocks as well as bonds.
In general, my market valuation matrix determines how much stocks I will hold from time-to-time on the investment positions that I set the allocation on and is based, in most part, on some valuations measures I use to gague the market. These include both technical and fundamental measures along with some room for my other measure that allows for some reasoning and is known, by me, as my SWAG mythology, Scientific Wild Ass Guess, which includes some investment folklore. For the hybrid funds that I own, I let the fund manages determine what assets to hold and how much of each while I determine how much of my portfolio is to be invested in hybrid type funds. In doing this, this allows for some adaptive allocation movement, within the portfolio, through asset movement and repositioning within the hybrid funds held. Currnetly, the hybrid funds make up about 40% of the overall portfolio.
For me, rebalaning form time-to-time has indeed, I feel, been beneficial.
I really did enjoyed reading the article.
Thanks @Ted for posting.
I wish all ... "Good Investing."

Wrote out a lot about this, but not really worth starting a debate- it's MFO, we're aware of index funds, you can argue this one with the Bogleheads. Mairs and Power: long history, great track records for all 3 funds, good stewards, the outperformance is due to active share and their investment process. You can't really compare 5 years of returns, it's not realistic.

"Nothing about retail prime funds being especially prone to risk"
I believe all MM's carry risk. The possibility of losing .01c means prone to risk in my mind compared to the history of MM's (for the most part) holding the buck in past years.

msf - your point is well taken. And, had not fund managers dipped into their pockets a few times to prop-up floundering money funds over the years, many of us likely would have experienced (probably minor) losses.
A benefit I see in keeping some $$ in Price's Government Money Market Fund is that it facilitates taking IRA distributions. Should there be a mistake in the way the money is taxed (or not taxed) it would seem a lot easier to straighten it out before the money has left Price's domain.
With Michigan's confusing mandatory withholding on pensions (which Price interprets to include IRA distributions) having that extra check is really nice. Of course when needed, the distributions are shifted from the money market fund to our bank account.
As for running a conservative ship with their MM funds, it's hard to beat Price. As you know, some houses in the past took liberties with these funds in search of yield - one of the reasons, I think, why the SEC saw fit to tighten regulations.

Geez - I've never lost a dime in a money market fund, going back 40 years.
Wish I could say the same about gold funds where I once lost a third of my investment over six months or the equity market which felt like Halloween in late summer of '07. And, Oh - also lost money with Dr. Hussman years ago. (HSGFX is still running true to form.)
Cheers.

In large part thanks to what's been available over the years RIGHT HERE, and going back to the predecessor iteration, yours truly discovered MAPOX and MSCFX and bought it, and I have been a happy camper, since.

Just look at the chart. These kind of finds should be bought with timing. It starts rolling over earlier and then when the turn comes it shoots up in massive outperformance at which point everyone starts noticing. If the market goes down, I bet it goes down. It's a low turnover fund. Look at its top holdings. You think they will hold well in market downturn?
Be patient until everyone starts cursing the fund. Yes, those people who you asked if they owned it will come and tell you :-). Then buy, hold for 2-3 years and then sell. I've done this twice with MXXVX. Did I buy perfectly? No. Did I sell too soon? Absolutely. One shouldn't dream of buying perfect lows and selling at perfect highs.
Needless to say I sold SFGIX too early. I didn't think it would become the fund it has. I figured dollar would stay strong and EMs wouldn't do well. I also didn't have as much gains in WAEMX so I chose to sell SFGIX. Did I leave money on the table? Yes, I don't regret it. Now I know it is closing. I bought a fraction, and will wait patiently for the trough.
You like SMVLX, you should do the same. I'm waiting on BVAOX right now. Also waiting on WGRNX, but I'm getting worried that wait will never end, the point being it's all right if that happens.
Love is not for Mutual Funds. For everything else there is VFINX, etc.

FYI: (Click On Article Title At Top Of Google Search) "Investing From The Ground Up"
Bob Mitchell and Joe Monahan have visited enough companies over the years to know what gives them confidence in a potential investment—and what makes them leery.
Regards,
Ted
https://www.google.com/#q=Investing+From+the+Ground+Up+Barron's
M* Snapshot CCASX:
http://www.morningstar.com/funds/XNAS/CCASX/quote.html
Lipper Snapshot CCASX:
http://www.marketwatch.com/investing/Fund/CCASX
CCASX Is Ranked #10 In The (SGC) Fund Category By U.S. News & World Report:
http://money.usnews.com/funds/mutual-funds/small-growth/conestoga-small-cap/ccasx