Hi Guys,
Maybe yes, maybe not so.
The January effect is a correlation that has not been especially prescient in the last few years. If you search hard enough some correlation will be discovered. This could be a false random success. Buyer beware.
I addressed this issue on MFO a few days ago and added the dimension of biased reporting. You might want to access it here:
http://www.mutualfundobserver.com/discuss/discussion/25326/honesty-trustworthiness-and-the-new-year#latest
We all are a little guilty of seeking conformation data. Enjoy.
Best Wishes.

So, you're expecting a couple of years to go by, before PRSNX produces? I've not been in very long, and it's below the break-even line for a year, but the 5-year result is not terrible, at 3.41%.

The top court in New York is the Court of Appeals. See recent obituary of widely respected Chief Judge Judith Kaye this past week:
"Judith S. Kaye, the first woman named to the highest court in New York and the first to serve as the state's chief judge - a job she held longer than any of her 21 male predecessors - died on Thursday at her home in Manhattan. ... Judge Kaye presided over the seven member Court of Appeals for nearly 16 years and also supervised the $2.5 billioin, 16,000-employee statewide judicial system, which she modernized by making jury service more equitable and convenient and by establishing boutique courts concerned as much with problem solving as with punishment."
Aside from those boutique courts and such, the lowest level trial court in New York State is Supreme Court.
@LewisBraham - that was my first impression, too. I haven't gone back to check whether the prospectus contains the usual verbiage about these conditions being satisfied when security is purchased (as opposed to being continuously satisfied).

@Crash Yes, hasn't DLFNX been a pleasant surprise? I expected more volatility. As for this offering, I've grown a little partial to my PRSNX, too, and just did some rebalancing into it to get my ave. share cost down, so I'm gonna watch and wait. As BobC correctly surmises (IMO), it's gonna take a couple of years to see if it's a winner, anyway.
Frankly, I'm much more interested in the upcoming infrastructure debt fund, although I was disappointed to learn, after reading the entire SEC filing, that it may not be possible to purchase retail shares via a direct investment with DoubleLine. I hope they change their mind about that before the fund launches. Maybe they are anticipating a relatively low demand? I can't explain it.

Gundlach ups currency risk for first time in five years
By Michelle Abrego 11 Jan, 2016
‘As of [last Tuesday], we bought some global, mostly developed, non-dollar bonds taking some currency risk in our bond fund. For nearly five years we’ve had nearly everything dollar denominated. We think the currency risk will turn a profit,’ he said.
http://citywireselector.com/news/gundlach-ups-currency-risk-for-first-time-in-five-years/a871960?ref=citywire_global_latest_news_list

Reminder
Jeffrey Gundlach Webcast tomorrow 1/12/2016
Mr. Gundlach will be discussing the economy, the markets and his outlook for what he believes may be the best investment strategies and sector allocations 2015.
Tuesday, January 12, 2016
1:15 pm PT/4:15 pm ET/3;15 CT
Click Here to Register
https://event.webcasts.com/starthere.jsp?ei=1084870
From citywire:
‘A little more dovish on the minutes is favorable for non-dollar on the margin,’ Gundlach told Citywire Americas in New York.
And today from a Fed Member
Markets | Mon Jan 11, 2016 9:55pm EST
Fed's Kaplan: four hikes not a sure thing in 2016
Dallas | By Ann Saphir
"This is an unusual start to the year, obviously," Robert Kaplan, the Dallas Fed's new president, told reporters after a talk here.
Concern about slowing growth in China roiled world markets in August and forced the Fed to hold off raising interest rates in September. This year has started off with global markets again rocked by plunges in Chinese stock markets, a fall in the yuan and subsequent heavy intervention by the Chinese authorities to push the yuan back up.
"We went through this in August and September, we paused, we watched, we let events unfold, which is the right way to handle it, and we saw ultimately that underlying economic conditions remained intact and solvent," Kaplan said.
"There's no substitute for time in assessing economic data as it unfolds," Kaplan told reporters.
Kaplan said he is not sure there will be enough economic data before the Fed's next policy meeting in late January to justify raising rates then, but "between now and March I think there will be."
Kaplan's comments differ somewhat from those earlier in the day from Atlanta Fed President Dennis Lockhart, who said there may not be enough data even by March to make a call for raising rates.
http://www.reuters.com/article/us-usa-fed-kaplan-rates-idUSKCN0UQ06N20160112?feedType=RSS&feedName=businessNews

Thanks for sharing David.
Good stuff msf!
I actually think the folks at Whitebox did all they could to articulate their strategies. I never got the impression they wanted their investors to "Just trust us...," like the article suggests. Their conference calls and quarterly letters were straight-forward and insightful, often compelling, seemingly well intended.
Nor were their fees high. They eliminated their loaded share class. Certainly, room to do more, but still, pretty good, relatively.
Their strategies simply did not play out in the last two years, after they decided to "exit the Mr. Market bus."
As we discussed last March, they are in pretty good company.
Keep thinking maybe they were too clever for their own good, something David alluded to in his profile.
Yes, gonna need to get access to principals to better understand how it ultimately unraveled. We did try to get a phone interview for David with Mr. Redleaf, but Whitebox declined.
I'm honestly disappointing they were not more successful.

Think of it this way: You've worked your entire life at a job or a career if you hopped around. Then you're expected to trust your retirement--your golden years--to the stock market--something the best experts on the subject admit is a random walk. If you're lucky you do well as the market is rising when you retire. If you're unlucky and retire during a terrible crash, you're broke or at least struggling. Either way, the situation is largely out of your control. Meanwhile money managers collect their tolls on your assets regardless whether the market rises or falls. It's a heads I win tails you lose scenario.
There is something grotesquely unfair about that for someone who has worked their entire life and just wants now to rest and enjoy their remaining few years. This is why when I hear politicians saying Social Security should be invested in the stock market, I laugh. People are right to distrust Wall Street.
Yet I recognize Sauter has a point in the country we live in. That country is one where there isn't a strong social safety net and interest rates are near 0%. So the stock market is the only game in town. And for most people who don't have the time or ability to find good money managers, index funds are often the best way to go. They are the only way to prevent Wall Street from extracting its pound of flesh from their retirement funds.

FYI: GUS SAUTER: A couple of weeks ago, I went to the barbershop. As he was cutting my hair, my barber said that he believed the stock market was rigged, he didn’t trust it, and he wouldn’t invest in stocks.
Since I spent more than 25 years encouraging people to save and invest, I was disappointed to hear this expression of distrust of investing. More disconcerting is that many people, and perhaps a majority, feel this way. The financial crisis and a number of one-off fraudulent scoundrels have provided fuel for politicians and the media to attack Wall Street and create this feeling of distrust and even anger toward Wall Street.
Regards,
Ted
http://blogs.wsj.com/experts/2016/01/11/why-investors-need-to-stop-distrusting-wall-street/tab/print/

There are both similarities and differences of faults with hedge funds and open end funds. In one sense, you're right about people tending to pile into some funds based on manager past performance.
People piled into Gundlach's funds, even though they use "exotic financial derivatives like total return swaps". (See below.) IMHO use of exotic derivatives has become more commonplace - they're not limited to hedge funds and a few offbeat mutual funds as the article suggested. Though they're still insignificant if not absent from vanilla funds.
People piled into DoubleLine, into Yacktman, and others based on the managers' long term past performance at substantially identical funds. Not on a short term (3 year) record at a fund that was substantially different. RSIVX by design holds longer term, often illiquid bonds, than RPHYX, as opposed short term bonds ("think 30-90 day maturity").
So ISTM there is a qualitative difference between piling into funds like RSIVX (unproven management for that type of fund) or TFCIX or WBMAX (both with untested strategies for open end funds), and piling into proven management and strategies in the hedge fund arena. Another example of a mismatch between strategies and open end funds - stable value funds. There were (as I recall) over a dozen open end stable value funds attempted. They couldn't handle the open end fund daily redemption requirement.
YACKX also floundered for its first couple of years. It was only in 1994, in a relatively flat market, that it began to shine. Yet people stuck with him. Quoting Yacktman: "My only real fear in 1993 was that people who put their money in during 1992 would take it out at a loss. I didn't want this to happen, because I knew my performance would come back. ... As it turned out, more money came in than went out."
With hedge funds, accredited investors have the responsibility (and supposedly the opportunity) of investigating the offering. These "sophisticated" investors don't get the same disclosures as are required of open end funds. If managers have buried past failures, it's up to the investors to discover that.
The mandated disclosures of open end funds are supposed to make it easier for the other 99%. It is their choice to accept or reject a disclosure that discloses little other than: "just trust us".
DoubleLine funds and total return swaps:
Reuters, Nov 16, 2015: RiverNorth/DoubleLine Strategic Income Fund possesses economic exposure to an aggregate of 1,103,373 shares of Common Stock [of FSC] due to certain cash-settled total return swap agreements."

ThinkAdvisor, Nov 22, 2013“It’s [DSEEX] put together using a total-return swap,” Gundlach said of the fixed-income side of the fund.
Probably other funds; this was a quick search.

Hi Guys,
I agree this is not a new finding.
Superior portfolio performance is a rare commodity for individual investors, for mutual funds, for investment categories, and even for the marketplace itself. At some time, usually now rather than later, the iron law of regression-to-the-mean gets enforced.
The referenced article captures that attribute. As Mark Twain observed: “History may not repeat itself, but it rhymes”. Markets change and often change in a supercharged way. Warren Buffett remarked that “The dumbest reason in the world to buy a stock is because it’s going up”. Yet many of us do exactly that.
We love winners and assume their continued winning ways. The odds against that happening are not all that high. Academic and industry studies demonstrate the regression rule time and time again.
The referenced article cautions against being “suckered”. Yet we are strongly motivated to buy last years winners. That’s a failed strategy that seasoned investors understand. Seasoned investors who populate MFO are familiar with the SPIVA scorecards and the Periodic Table studies that show how fragile persistency really is. For the newbies to the MFO site, here are Links to both a representative and recent SPIVA report and a Periodic Table:
http://www.spindices.com/documents/spiva/spiva-us-year-end-2014.pdf
https://investment.prudential.com/util/common/get?file=1D065355D2CC360385257B7D00536F8A
Indeed we are suckers for the hot hand. When searching for new investment opportunities we are often drawn like flies to honey to those stocks and those funds that occupy the top of the returns list.
What these types of scorecards show is that performance persistence is an illusion. The rotation is amazing; the table entries quickly reverse themselves.
Studies consistently demonstrate that the average active mutual fund underperforms its Index benchmark. Further, the average individual investor underperforms the mutual funds that compose his portfolio. We lose returns on several dimensions because of impatience and poor timing.
That’s the sad side of the story that victimizes the general investment public. Hopefully, MFOers are more disciplined and less momentum driven. I suspect that our portfolios contain a higher fraction of Index products, and that we hold them for longer periods. The general mutual fund data suggests that this is happening among both institutional and private investors. Good for all of us; our sucker quotient is decreasing.
EDIT: It's tough posting while watching the pro football games with a cheering group of fans.
Best Wishes.

How many of us avoided market timing in 2007-8 and did not capitulate eventually?

Capitulation is the classicial way to sell low and lock in the paper loss. For those who stand pat and ride it all the way back in 2009 and more in the following years. Market will go up and down. Key here is to stick to an asset allocation that is within your risk tolerance (BobC pointed this out on his past posts).
2016 did not started well but things will settle down as always. Don't think we are coming close to the situation of 2007.

The major averages are still very high compared to March '09. I'm 70+ and very conservatively positioned. Am also taking out 4-8% a year in annual distributions (varies).
Our distributions so far this year came largely from our most conservative income-oriented funds. So, relatively speaking, our small equity positions have increased a bit recently. And as part of annual rebalancing I ended up throwing a few more dollars at PRNEX which has had a horrible year. But, we're talking small amounts here. (Probably raised that fund's allocation by 1-2%. )
No - I wouldn't back up the truck and start buying at these lofty levels. Although if 25 years old again I'd probably be in invested in 1-3 good global allocation funds and out fishing or something. It's all about risk tolerance and time horizon.

@MJG
Your question to me: "By the way, what did you think about the technical parts my posts? I was trying to be helpful."
Technical suggestions and observations are not a problem or concern, in my opinion or for me. I tend to use a mix of fundamental and technical for investing considerations. Although I favor technical indicators more so for price movements that do not lie; I always try to understand how the price numbers arrived at their current standing.
Energy pricing over the past year or so is an almost perfect mix of fundamental and technical. When fracking methods in the U.S. really started to produce, I used this information as a starting view point as to what was going to become of pricing for the major energy products to be had from this process. This "fundamental" view for watching has produced the expected pricing. At the very least, this should have kept investors away from this broad sector, with the exception of those who use inverse investing products for a potential profit.
And yes, I accept the aspect that we here are "trying to be helpful". I am sure there could be many reports over the years from those we never "know about" here at MFO, who have found a better path to their investing from knowledge and thinking that has been obtained from this forum. Without doubt, the investing styles of those who read and/or write at this forum finds many variables.
Obviously, those here who express opinions and/or offers ideas are not "in it" for the money, eh?
Regards,
Catch

Hi Everyone,
I use Powerfunds Portfolios to guide my investing -- Aggressive Portfolio for IRAs (we're about 15 years from retirement) and Conservative Portfolio for college funds (needed in the next 1 to 6 years). I have found them to be quite prescient about what categories will do well going forward, though sometimes a bit early in switching. Last year, the Aggressive Portfolio had a gain of 3%. (Sadly for me, I didn't do as well, with -1.7%. The recommended double oil short DTO was too volatile for me and I passed on it, but it is up 100% over the last year). In 2008, the Aggressive Portfolio was down about -16%, not too bad. The portfolios change every 12 to 18 months.
New recommendations for the portfolios came out yesterday -- check them out at the link above. Basically, in the Aggressive Portfolio, they are recommending ~ 40% in long term bonds, a switch from growth to value, new investments in utilities and Italy, and some shorts in case of a total market meltdown.
lrwilliams

Old_Skeet holdings in cash equals about 25% of my asset allocation accorning to Morningstar's Instant Xray. I started raising my allocation to cash a few years ago as I felt stocks were becoming to expensive to keep buying more of them. With this I stopped reinvesting my mutual fund distributions and accrued them in the cash area of my portfolio. I have now reached a full alloction to cash (25%) and above my target of 20%. Now that the S&P 500 Index has entered correction territory and reported earnings (according to S&P) have started to pick up I have started to review my portfolio searching for some equity funds that might need to be rounded up within their respective sleeves. This past Friday, I spent a little cash (less than one percent) and I increased my position in DEQAX raising its percentage within its sleeve weighting to about 15% with a target weighting of 20%. So, I will need to buy again to achieve the weighting balance I am seeking. Currently, CWGIX has a weighting of 60%, EADIX has a weighting of 25% and DEQAX has a weighting of 15%. Looking to be about 55%, 25% & 20% respectively if S&P 500 earnings materailize as anticipated. I am thinking they will.
And, if earnings keep floundering and disapoint and the markets continue to pullback then I have ample cash to help cushion the fall and put some cash to work when I feel market conditions warrant. Some might say this is market timming (perhaps so, perhaps not); but, I think it is just being prudent and investing inside the confines of my established portfolio's overall asset allocation. And, when I become cash heavy, its time to rebalance ... and, I plan to be prudent as to how and when I do this.

FYI: It's tempting to look at which mutual funds did best in 2015 and just invest in those. Winners win, right?
Not in the investing world. It's tough for funds to stay on top, and last year's winners regularly turn into this year's losers.
Regards,
Ted
http://bigstory.ap.org/article/15a9f489710c4b658f22d07e07f198b2/dont-get-suckered-last-years-fund-winners-often-go-bad

If I had a 3-5 year horizon, I might reverse your percentages to 40-60. Three years is a pretty short term window and if things went bad you would not have much time to recover. Therefore, try to make it so things don't go so bad.

Has anyone pondered the obvious question before taking such media articles for granted?
Why would you consider the manager of a sector fund as extra-ordinary in having beaten the S&P 500 when the sector itself has been beating the S&P 500? Even a sector index fund would have outperformed S&P 500. Looking at the performance of ETHSX in M*, it appears to have underperformed the M* Health index over the last 3, 5 and 10 years.
Isaly is a 700-lb gorilla in Health investing (and part of the reason for snowballing growth in healthcare investing that self-sustains the performance). But there are good reasons to be in his hedge fund that hedges against big pharma by also participating in VC funding from early stage to pre-IPO companies so if big pharma were to falter with pipeline issues, his fund would still do Ok. The same wouldn't be true of all the retail health care funds overloaded with big pharma.
Like all fund managers, he talks his book in public. This is not necessarily a bad thing but years of Bill Gross and now Gundlach should have made readers immune to words from fund managers. :)

My problem with "rock star" active managers is that they almost invariably stumble at one point or another, I tend to find them near the end of their cycle of outperformance.
Then, when they begin to underperform, should I bail at the end of one day of underperformance, one week, one month, one year, three years of underperformance?...well you get the idea.
Mr. Danoff may be one of the active managers who never stumble. Let's hope so. But the consistent outperformers are, in my opinion, nearly impossible to identify.
Arnott, Berkowitz, Bill Miller, and Yacktman are just a few of the "rock stars" who fooled me.

Hi Guys,
DavidV is not a very experienced or confident investor, and the market’s shaky start this year has only operated to reinforce his qualms. Given the poor start, it’s probably helpful to review the statistics on market meltdowns. There are plenty of websites that summarize these data in an attractive, easy to understand format. One such nice summary is provided by Scottrade. Here is a Link to it:
https://about.scottrade.com/blog/blogposts/Market-Corrections-and-Rebounds.html
Although the article was published in 2014, it provides the bulk of the necessary data in a graph that incorporates the depth of the downturn, and the times for both the meltdown and its recovery. It’s always a good idea to be familiar with the base rate stats in order to establish an anchor point. Any special insights and/or circumstances that exist now can be used to extrapolate off that departure point.
I especially like the bar chart presentation that graphically illustrates the length of the entire cycle and the extent of both parts of it. The final chart in the article depicts the benefits of a mixed stock/bond portfolio in terms of ameliorating the impact of several market meltdowns.
Knowledge of the odds is always mandatory. Scottrade provided a succinct summary. Here it is: “The Market Downturns and Recoveries image below shows 15 major corrections of 10% or more over the last 88 years; on the right side of the image, you can see how long it took the market to recover. In instances where the market declined by less than 30%, the average length of the downturn was 8 months and average recovery time after the downturn was 9 months.”
On average, these are not long times. Dependent on spending needs, these data, along with a comfortable safety factor, suggest how much cash should be held in reserve for protective purposes.
Enjoy. I hope you find these data both useful and entertaining.
Best Wishes.