FYI:
Regards,
Ted
December 15, 2016
Preview Clip:

Dear WEALTHTRACK Subscriber,
The U.S. has been the place to be for investors this year, even more so after the election of Donald Trump as President. Since November 8th, U.S. stock markets have been on a tear, reaching new records and extending their lead over international markets by a substantial margin.
As a recent Wall Street Journal headline put it: “The global dominance of U.S. stocks has been boosted by the post-election rally”, as well as the strength of the U.S. dollar, which has also been appreciating rapidly against other currencies. It hit a 14 year high Thursday against a basket of currencies. The market capitalization of U.S. stocks reached over $25 trillion in December, comprising more than 40% of the world’s stock market value, levels not seen since 2006.
No other country comes even close. Despite rapid gains in China’s stock market size and value, it still has less than a 10% share of global market value.
With low unemployment, corporate profits expected to pick up and stimulus anticipated from infrastructure spending, corporate tax cuts and regulatory roll backs more investors are jumping on the bullish bandwagon. Even the Federal Reserve acknowledges that economic conditions have improved significantly enough to allow it to boost interest rates this week, for only the second time in a decade. The way things are going, Fed Chairwoman Janet Yellen expects to raise interest rates another three times next year, in 25 basis points, or a quarter of a percentage point increments.
Improving conditions and this positive outlook are why the message from this week’s guest is such a stunner.
In a WEALTHTRACK exclusive, Wall Street’s top ranked investment strategist is saying it’s time to put on the brakes and get much more defensive!
He is François Trahan, Co-Founder, Partner and head of the Portfolio Strategy team at Cornerstone Macro, an independent macro research, policy and strategy firm he and his partners launched in 2013.
Trahan was recently inducted into the All-America Research Team Hall of Fame by Institutional Investor magazine, having been ranked the number one portfolio strategist for 10 of the past 11 years by institutional investors.
Up until recently Trahan was correctly bullish on the US stock market, as he has been for well over a year.
No more. He is adamantly telling clients that this rally should be sold. He will explain what has changed.
If you’d like to see the show before it airs, it is available to our PREMIUM subscribers right now. We also have an EXTRA interview with Trahan about what he describes as investing’s great mystery. Intrigued?
Plus, WEALTHTRACK is available on a YouTube Channel. So if you are unable to join us for the show on television, you can watch it on our website, WealthTrack.com, or by subscribing to our YouTube Channel.
Thanks for watching! Have a great weekend and make the week ahead a profitable and a productive one.
Best regards,
Consuelo

Roy, great to hear from you ! Thanks for all of your contributions over the years with FundAlarm. Please stay healthy and safe, with an overabundance of happiness !
Kevin

Glad to hear you are well Roy! Has it been more than ten years already? Merry Christmas.

Hi Ted,
Yes, I really appreciate it -- please say hello and season's greetings to everyone who might remember. I can't believe how much time and energy we spent on FundAlarm -- where did it all go (the energy in particular!) Things are well. Retirement is in the offing, perhaps a couple of years or so, and who knows: there might even be another Web site in me. Maybe something that combines cars, personal finance, and retirement planning? That would be fun.
Thanks again, and all the very best to you and yours in 2017, and beyond.
Regards,
Roy

Of course Vanguard plays games. They all do, the question is which games and how well they play them. For example, Vanguard lends securities. A few, not all. And I believe that Vanguard plows all the earnings from that practice back into the funds, as opposed to some other managers who take a cut.
https://advisors.vanguard.com/iwe/pdf/Sec_lending.pdf (Vanguard practices)
https://personal.vanguard.com/pdf/icrsl.pdf (variations with risks and benefits)
Then there's sampling. Usually full replication is used for S&P 500, but sampling is often used for funds that include smaller cap stocks. Both POMIX and VTSMX use sampling. Different managers, different samples.
Then there's the question of which index they track. Even if over time two indexes for the same market segment do about the same, there can be a fair amount of difference from year to year. POMIX and VTSMX track different indexes.
Then there's the question of timing. Some families have rigid rules about when they must add/drop securities from their portfolios. Others are a bit more flexible, which allows for slightly better (or worse, if poorly executed) performance, but at the expense of slightly greater tracking errors. (This is a feature I checked years ago; I don't know if some funds still allow greater leeway.)
Then there are quirky attributes. Most funds immediately put the cash they receive from portfolio dividends to work. But SPY is prohibited from doing this because it is a unit investment trust. The fund must hold the cash; it's only when the cash dividends are distributed and you buy more shares through your broker's reinvestment program that this money gets put to work (quarterly).
I vaguely recall an S&P 500 fund many years ago (Safeco? Transamerica? X??) that said it tracked 499 stocks, excluding its own. Index funds are not necessarily the simple vehicles people expect.
Lots of reasons why the performance of index funds diverge - from each other and from their theoretical returns (index return less expenses).

Dow 20,000
Posted on December 12, 2016 by Bob Fleming
Acropolis Investment Management Insights
...part of the reason that it’s doing so well this year (16.4 percent, vs. 12.9 percent for the S&P 500) is that it is heavy in industrial and financial stocks, and underweight in technology stocks – a near perfect combination for the Trump bump.
I’m not making a prediction, but if the DJIA grows by 7.7 percent over the next ten years (which is how much it grew over the last 10 years), we’ll be looking at Dow 43,000.
http://acrinv.com/dow-20000/

FYI: (For those who think a health-care sector fund is to risky, and don't want to hunt with the big dogs) !
Healthcare funds were down 13.4% for the year through Oct. 31, following a big rally in prior years. Morningstar's stock analysts see opportunities here: They expect pricing power for drug and biotech companies to remain strong, research and development to remain productive, and mergers and acquisitions to continue at a steady pace.
Regards,
Ted
http://news.morningstar.com/articlenet/article.aspx?id=781320

I do about the same thing as Shadow, reading 497's and 485's each evening. Haven't needed a sip of NyQuil in over 15 years.
As an aside, I suspected that he'd made up the name of this particular fund when I glanced at the subject line, in part because "kimberlite" is the name of an odd igneous rock. Why, I thought to myself, would anyone name their fund after a weird igneous rock? Surely he jests.
But no.
Cheers,
David

We aim to please. Here's Google's cached copy.
You can click on the "view as one page" at the bottom of the text, it seems to work fine - fetching more cached content - even with an ad blocker engaged.
As to the content, that's another matter. Kiplinger notes that it just changed Primecap from a hold to a buy. Seems like the usual stating of the obvious mixed with performance chasing. A year ago, Primecap's 5 year performance was mediocre - 2011 and 2012 almost exactly median, good years for 2013 and 2014, but a below average 2015. That meant its one year performance was poor also.
Now that the fund is back to top decile performance, Kiplinger says "buy". Never mind that after a decade of growth outperforming value, we're beginning to see a reversal.
http://money.usnews.com/investing/articles/2016-11-07/growth-stocks-or-value-stocks-which-are-winning
It's a great long term fund for retirement. Now, last year, next year. The idea of rating it one way one year and another way another year runs counter to both the idea of long term investing for retirement, and the nature of this fund. It tends to runs in unpredictable streaks.

According to Morningstar's page on the Bruce Fund, the distribution date last year was the 18th. In previous years it has been as late as December 21. Hope that helps. Dave

Alrighty then. Maybe just do every month for 10 months beginning at Christmas.

According to Morningstar's page on the Bruce Fund, the distribution date last year was the 18th. In previous years it has been as late as December 21. Hope that helps. Dave

I have owned FDSAX for a good number of years and it is my second largest holding, behind SVAAX, in my domestic equity sleeve, consisting of six funds, found in the growth & income area of my portfolio.
This is a fund that I have been increasing my position in through the years during market pull backs along with most Decembers after it makes it's year ending distributions as it re-positions about a third of it's holdings annually. With this, it usually produces a good capital gain payout each year along with good dividends paid quarterly. You can reference it's capital gain and dividend payout detail through the Morningstar fund report link provided by Ted.
For me, this fund has been a good steady, value seeking, growth and income producer.
Old_Skeet

@Ted, Feeling a little giddy are we? (You need to stop watching CNBC.)
"Consider that had you been prescient enough to buy shares of a low-cost stock index fund on Mr. Obama’s first inauguration day, on Jan. 20, 2009, you would now have tripled your money. Stock market performance of this level has rarely been surpassed. (Article from August, 2016) " http://www.nytimes.com/2016/08/21/your-money/the-obama-years-the-best-of-times-to-be-a-stock-investor.html?_r=0

@openice, thanks again! I missed the discussion about her experience at Wasatch so thanks for filling in those blanks.
Isn't it a bit strange though. I know she was investing in some of the smaller emerging markets but the entire frontier markets universe, according to MSCI, has a market cap of $137 billion and the largest single company is $5.7 billion. Of course the strong dollar has made those numbers smaller in the last few years but its not exactly easy to be "all-cap" unless you consider it relative to frontier markets specifically rather than globally.
The idea of go anywhere, do anything has been tried a few times before and not many that I'm aware of have succeeded particularly well. It will be interesting to see how she does and I hope it works well because she'll almost certainly have some of my money.

Two years might be exaggerating a little bit. More like one year to 18 months. Any chart of the major US indexes shows a flat to down trend.

>> Two years of paralysis has for now ended in stocks
Huh? Sort of fake lede.

They are a mere 9.67% behind the S&P per year for the past five years. Time to jump aboard!

Don't know beans about this fund, but that's how I tend to view the world too.
Jump on when she's 90% submerged. Jump off onto something else when she surfaces.
(Sometimes called Buy low. Sell high.) :)
PS: Sometimes you get wet.

They are a mere 9.67% behind the S&P per year for the past five years. Time to jump aboard!

FYI: Can Trump's Policies Match Investor Expectations?
Donald Trump is doing to U.S. equity bears what seven years of economic stimulus rarely could: shut them up.
Two years of paralysis has for now ended in stocks, with more than $1 trillion added to shares values since Election Day and the Dow Jones Industrial Average looking bound for 20,000. Both the Dow and S&P 500 Index jumped to fresh records Wednesday, joined by transportation companies and small caps, while banks traded at eight-year highs.
Regards,
Ted
https://www.bloomberg.com/news/articles/2016-12-07/trump-bull-market-bounty-tops-1-trillion-as-bear-cases-go-quiet

The other factor that makes utterly no sense to Hennessy's argument is that in the 1980s interest rates were very high and falling, which causes stocks to rise each time there's a rate cut. Today rates are very low and if not rising certainly have not much room to fall. In other words, the market environment today is completely different from the 1980s. I could see stocks potentially rising in 2017, but the idea that we're in the beginning or just the middle of some grand bull market after eight pretty strong years seems absurd.