I'd beg to differ, at least slightly, on a few points. Risk does not matter more in absolute terms. You can eliminate almost all risk and get almost no return and that's not really what matters most. Risk matters when you don't have a long enough time horizon to deal with volatility or you don't have enough discipline, which is true of most human beings, to stick with it when things get ugly.
The problem I have with funds that hold lots of cash, and this fund even more, is that we know the statistics about how hard it is for a manager to overcome his/her expense ratio over time. It seems to me when a manager holds large amounts of cash the hurdle is even higher unless they're good or lucky with their timing.
Unfortunately there's no evidence that this guy is good or lucky with his timing and he's charging a 'high' expense ratio for the privilege. He did great during the credit crisis and then he plodded along until the S&P caught up with and surpassed him. He ranks in the 72nd percentile of small value funds over 10 years, the 97th percentile over 5 years and the 88th percentile over the last 3 years. Anyone who's psychologically ill-equipped to deal with volatility should be equally ill-equipped to deal with poor performance for so long.
I don't think there's anything wrong with wanting a smooth ride if you're willing to pay for it and this fund has been very good at that. IMHO, however, the price here is too high.

I own PVFIX as a strategic part of my portfolio, as far as I understand the fund is continuing to perform its expected role in my portfolio. I am adding new funds to PVFIX through recurrent monthly investments. I am trying to resist the temptation to change my strategy due to the continued Bull run.
Question: Have we learned anything that would change the March 2015 Commentary on PVFIX?
“By any rational measure, for long-term investors Pinnacle Value is the best small cap value fund in existence.
There are two assumptions behind that statement:
1. Returns matter.
2. Risk matters more.
The first is self-evident; the second requires just a word of explanation. Part of the explanation is simple math: an investment that falls by 50% must subsequently rise by 100% just to break even. Another part of the explanation comes from behavioral psychology. Investors are psychologically ill-equipped to deal with risk: we hate huge losses and we react irrationally in the face of them but we refuse to believe that they’re going to happen to us, so we rarely act appropriately to mitigate them. In good times we delude ourselves into thinking that we’re not taking on unmanageable risks, then they blow up and we sit for years in cash. The more volatile the asset class, the greater the magnitude of our misbehavior.”

FYI: Pacific Investment Management Co. said that it has exited all its holdings of Italian bonds on the conviction that the yields were too low to compensate for the nation’s mounting political risks.
Pimco unwound its investments this year in a move that marks an about-turn for the $1.5 trillion fund, which had the securities among favored choices two years ago. It now maintains a neutral exposure to peripheral European assets. JPMorgan Chase & Co. and Barclays Plc say the odds of Italy facing snap elections as early as autumn have risen, with the U.S. bank predicting an increase in the nation’s bond yields in such a case.
Regards,
Ted
https://www.bloomberg.com//news/articles/2017-06-05/pimco-pulls-out-of-italy-as-jpmorgan-sees-risk-of-autumn-vote

Discussed this with a recently-retired client. We (our wives and us) simply don't buy clothes the way we used to, and probably will buy even less into retirement. New suits, no. Dress shirts, no. Dress shoes, no. New cars, no. Same goes for many other household things. We just are not shopping nearly as much. If that is true for much of the boomer generation, it helps to explain the pickle in which the big malls find themselves. Instead, the boomers are spending dollars on more meaningful things like travel, concerts, grandkids, volunteering, etc. It's not that we are pulling money out of the stock market (we are not, contrary to what some predictions were 10-15 years ago). We are simply changing our spending habits: spending less overall and for sure not spending as much at the malls. It goes to my comments on my most recent Retirement Blog.

Keep in mind that much of this is RETAIL money, investors trying to follow whatever trend is hot. I would suggest that more than a few of the funds on this list could have banner years. MALOX is ahead of the S&P 500 ytd. TGBAX is up more than double the gain of VTABX. JPMorgan Core Bond is ahead of VBTLX. At some point, investors will abandon the current "hot" funds and sectors, and move on to something else that has caught the next trend.
On the other hand, this is not to suggest that more than a few of the funds on this list are in serious trouble, if not on the brink of liquidation. How many times can a fund sustain outflows of more than 50% and survive? WASYX is a case in point. M* numbers are incorrect on it. Current assets are only about $230 million, down from about $1.5 billion just 3.5 years ago. It would appear this one is a goner, for a number of reasons. M* numbers must include privately-managed dollars as well as mutual fund assets for each fund. This being the case, the situation is even more dire for the mutual-fund only assets.

Definitely paring down the optional stuff except for good whiskey. Jameson 18 years is not on the chopping block.

Jameson 18 might need to be in consumer staples.

Definitely paring down the optional stuff except for good whiskey. Jameson 18 years is not on the chopping block.

I have owned PVFIX for many years. My initial investment is approaching "doubling" in the fund. When I first purchased the fund, Mr. Dreysher used to write accompanying articles to PVFIX shareholders, which I haven't seen for some time. Fund is conservative and will not "shoot the lights out" in a bull market, but I don't have to worry about my investment. I don't think the fund has passed $68mm for some time.
I remember a couple of years ago his number one holding was "Capital Southwest (CSWC)" which I still own today including its spinoff, CSW Inc.

Was just trying to get a sense of what owners of PVFIX are thinking at this time. I know besides me, we at least have 2 more who own this fund.
Energy and now Financials which seem to be rolling over has what kept this fund down. While over 40% of the fund is in cash, as per the latest information available, almost 70% is in Energy and Financials. I have always maintained it is silly to run out in the rain to find a narrow break in the clouds so you can stand with rain falling all around you but not on you. Relative Value, Absolute Value, whatever, no one can get it right if the sector is suffering. Can't expect miracles from the manager.
This fund has been good to me. I've taken lot of money out over the years in distributions and I'm still above my cost basis. I've been waiting to send money to it, but have refrained from doing so. My long term holds, I always do my ANALysis to see which parts of markets I think are doing well, but when I'm too wimpy to act on my conclusions, I take look at my funds to see who owns those parts of the market and send some money to those funds. Right now, that means *not* sending money to PVFIX, until XLE and XLF show some promise.
Would appreciate any thoughts on PVFIX from current or prospective owners.

Wonder how CEF commissions work. Like stocks and ETFs perhaps? Thinking not though.
Have been looking at purchasing CEF (yeah that is a CEF) for years but never did, and now SOR looking good.

You'd think Consuelo could take a break from interviewing Bill Miller, this is turning into a yearly interview. Beat the S&P 15 years in a row and then the fund tanked hard. I couldn't see why anyone would invest in his funds now. Maybe a lot of the other fund managers just deny her request for an interview.

Saturday morn'in to you,
So, a tiny bit on the "tongue in cheek" side of life; although reality tends to sneak in when we're not paying attention, eh?
Not too low on coffee this AM; but must get outside, as Michigan weather is glorious right now for most of the state, so a few quick notes or observations.
So, not much to add about the equity sector, eh? Ya'll are watching what you choose to see for returns YTD for your particular holdings. Exceptions being the commodities areas which are not having as much fun right now. I noted a few days ago about the below "bold" and the so-called defensive area equities moving up more than some other equity sectors. These have not sold back to end the week (Friday, June 2 closing values).
Sector summary
Sector Change % down / up
Energy -0.81%
Basic Materials +0.14%
Industrials +0.50%
Cyclical Cons. Goods ... +0.27%
Non-Cyclical Cons. Goods... +0.75%
Financials +0.19%
Healthcare +0.74%
Technology +1.02%
Telecommunications Ser... +0.17%
Utilities +0.02%
As to those pesky low bond yields. Well, we know lower yields = higher prices, and so a bit of money is being made here, too. The 10 year Treasury yield closed at 2.16% and the 30 year closed at 2.81% this week (list below, including shorter term yields and price moves for Friday, June 2.
These 3 etf's and closing percentage up for the week ending Friday, June 2.
LQD +0.8%
IEF +0.7%
EDV +2.7%
Yields as of June 2.
3 Month 0.95% +0.01 (1.06%)
6 Month 1.03% +0.01 (0.98%)
2 Year 1.29% +0.01 (0.78%)
5 Year 1.72% 0.00 (0.00%)
10 Year 2.16% -0.01 (-0.46%)
30 Year 2.81% -0.02 (-0.71%)
This link from Jan. 26, 2004 through June 2, 2017 is for "yield" not pricing. So, I'm sitting here looking at this chart and wondering if that 2 year yield path has any meaning relative to the 10 and 30 year yields, based upon prior years. Should this chart be showing me anything about short term rates and how they moved in early 2008 or any other periods that are of value today?
http://stockcharts.com/freecharts/perf.php?$UST2Y,$UST10Y,$UST30Y&n=3334&O=011000
What could be a meaningful summary of all the above? IF the equity players decide to "take the money and run"; one can imagine a move into the "safe havens", eh? Who is to say that such a move would not find the 10 year yield at .5% and the 30 year at 1.1%. These yields are still attractive relative to Japan and the Eurozone, yes?
Global 10 year yields
The marketplace is re-balancing our portfolio from a 60/40 equity/bond to a +70/30 and we're letting it ride; hoping to get out of the way if needed.
Well, we still live in interesting times; don't you agree?
Have a pleasant remainder.....
Catch

FYI: Bill Miller remains the only mutual fund manager in memory to beat the S&P 500 fifteen years in a row. He did it while he was managing Legg Mason Capital Management Value Trust from 1991-2005. After a couple of episodes of serious underperformance in 2006-2008 and 2010-2011 Miller left the fund and in 2016 left Legg Mason to launch his own independent investment advisory firm, Miller Value Partners.
Regards,
Ted
http://wealthtrack.com/miller-hedge-fund-timing/?action=edit
M* Snapshot LGOAX:
http://www.morningstar.com/funds/xnas/lgoax/quote.html
M* Snapshot LMCJX:
http://www.morningstar.com/funds/xnas/lmcjx/quote.html

fwiw, VWINX has barely kept up with PONDX the last couple of years. VWELX is outperformed by a 50-50 mix of PONDX and DSENX, a balanced combo I suggest to about anyone. Never gonna be in 401ks, though.

Finally! Someone talking some sense. It doesn't matter if one does not agree with every reason provided in the article for making this argument.
Unless you are invested with absolutely incompetent manager over the long run it is going to matter diddly. The quest to measure against index is futile. One needs to focus on absolute returns and permanent loss of capital. What I call ANALysis. This lets me navigate my retirement accounts even when I get locked out of repurchase when I am forced to sell on whipsaws in index funds. I just go into another "large cap" fund or a target retirement fund.
What I like is a "smooth" line going upward all the time and I'm okay if the slope of that line is below the index slope. I just need my slope to be smoother and I have been achieving it for the past 10+ years. I'm perfectly fine seeing a "flatline" in my portfolio before my models tell me to start moving "upward" again, and I don't try catching the index slope.

FYI: So far so good?
On May 25, Wall Street closed the 100th trading day of 2017, with the S&P 500 having risen 7.9% over that period. That’s a strong start to a year—the fourth-best start of the past 20 years—but don’t worry if you didn’t miss the rally. According to data from LPL Financial, not only has the market never ended a year with a negative return after such a start, but such a beginning typically augurs well for gains through the rest of the year.
Since 1950, there have been 23 years, not including 2017, where the S&P rose at least 7.5% over the first 100 trading days. In all those instances, the market ended higher on the year, with an average annual gain of 23.4%. Based on where the market ended 2016, such an annual gain would mean the benchmark index SPX, +0.76% ends the year around 2,760.
Regards,
Ted
http://www.marketwatch.com/story/the-sp-500-has-never-had-a-down-year-after-a-start-like-2017-2017-05-31/print

According to AAII, the survey measures the mood of only about 300 mostly male investors, averaging about 60 years, who elect to participate. AAII considered whether their survey is a reliable contrarian indicator and concluded that it had mixed results:
"The failure of sentiment to work perfectly (as a market timing tool) highlights two important points. Though correlations between sentiment levels and market direction have appeared in the past, the AAII Sentiment Survey does not predict future market direction. Overly optimistic and pessimistic investor attitudes are characteristics of market tops and bottoms, but they do not cause stock prices to change direction. Rather, it is changes in expectations of future earnings and economic and valuation trends that move stock prices. The timing of such changes has proven to be difficult to predict with accuracy.
This leads to my second concluding point: Never rely on a single indicator when forecasting market direction. Rather, consider a variety of factors—including prevailing valuations, economic data, Federal Reserve policy, government policies and other prevailing macro trends—and allow for a large margin of error in your forecast. As the saying attributed to John Maynard Keynes goes, the market can stay irrational longer than you can stay solvent."
http://www.aaii.com/journal/article/is-the-aaii-sentiment-survey-a-contrarian-indicator

Regarding JoeD's inquiry on the question of VWINX during a rising rate environment, M* notes the following:
"Between June 2004 and May 2007, the Fed raised rates by 25 basis points on 17 separate occasions, hiking the overnight lending rate to 5.25% from 1.00%. During that three-year stretch, the fund's 9% annualized gain beat the category norm by nearly 2 percentage points."
For the next several years, I would guess that the performance of VWINX would be driven more by the equity markets than the rising bond rates. Performance versus its peers would likely mirror its past.
At least my money is riding on that.

I thought the bond bull market is over and falling rates cannot buoy bond prices like they have for the past several years, over the next several years. I do own GLRBX which is more bonds than stocks like VWINX. One can make the argument VWINX is better than GLRBX, but I dunno how one can predict VWINX will continue to deliver superior returns in a falling stock market with rising interest rates.
I own VWELX, but I'm looking at tactical allocation and world allocation funds vs true blue balanced funds for my non-stock exposure. Past performance is not a guarantee of future performance. If we keep doing hindsight analysis then based on how far back we go we might come up with different conclusions. Over last 10 years I believe VWINX and VWELX have returned about the same but VWINX has been less volatile because it has less stocks and more bonds, and because interest rates have been generally falling. The below chart is food for thought.

It doesn't matter whether you take:
$5K x equity growth + $5K x bond growth, or
($10K x equity growth + $10K x bond growth) x 1/2
Same result. Multiplication is distributive over addition.
You seem to be missing the overwhelming significance of not rebalancing. To simplify the arithmetic and make the effect easy to see over a few iterations (years), let's use these exaggerated hypothetical returns:
Each year the equity fund doubles. Each year the bond fund returns 10%. Each year the hybrid fund returns 60%. I think you'll agree that aside from the magnitudes, I've preserved the general relationship - largest returns for equity, hybrid fund returning just over the average of the equity and bond returns.
We'll use $5K for each of the equity and bond funds, since then we don't have to divide by 2 at the end of every step. Keeps arithmetic simpler.
Year 0: $5K equity + $5K bond, vs. $10K hybrid
Year 1: $10K equity + $5.5K bond, vs. $16K hybrid. Hybrid ahead by $0.5K.
Rebalance - we're trying to emulate a hybrid fund, so we rebalance for the same allocation
Year 1: $7.75K equity + $7.75K bond, vs $16K hybrid.
Year 2: $15.5K equity + $8.525K bond, vs. $25.6K hybrid. Hybrid ahead by $0.975K
Rebalance.
Year 2: $12.0125K equity + $12.0125K bond, vs. $25.6K hybrid.
Year 3: $24.025K equity + $14.21375K bond, vs. $40.96K
At this point, the hybrid is ahead by $3.72125K.
The hybrid lead is accelerating, as one would expect because its yearly outperformance of 5% (60% vs. the average 55% of the stock and bond funds) compounds year after year.
You can't say on the one hand that you want to keep a constant 50/50 mix (or 40/60 or whatever), and on the other hand say that you don't care, you're going to let your portfolio become equity heavy. Look at the actual fund figures. Without rebalancing, the portfolio evolves into one that's over 90% equity ($2,478,356 vs. $215,945).
In the 46th year, this 90/10 portfolio will pull away even further from the 40/60 hybrid. But 90/10 is not the mix that the investor wants to hold, year in, year out.