Nice point in Lewis' article about dispersion.
Many years ago I posted in misc.invest.mutual-funds opining that Fidelity's use of inexperienced managers in its Select funds really didn't matter, because they were effectively buying bunches of similar stocks (i.e. no skill needed). It seems I was half right - correct only for sectors where companies tend to move together, not for all sectors.
A few bits of inconsequential trivia:
- Fidelity Select Funds started in 1981(if there was anything older, it hasn't survived)
- Those funds appear to have been FSENX (Energy), FIDSX (Financials), FSPHX (Health), FSPTX (Technology), FSUSX (Utilities), and Precious Metals and Minerals (merged into Gold in 2000)
- The funds were sold with a 3% load, plus a 0.75% redemption/exchange fee for equity funds held under 30 days, and a flat $7.50 for shares held 30+ days
- Daily pricing started in 1986
- There are still funds priced more than once daily, viz. some Rydex funds are priced at 10:45 and 4PM
- Cell phones were invented before Fido Selects. Bell Labs' Advanced Mobile Phone Service ("advanced" being handoff from cell to cell) was invented in the mid 1970s. There was trial service in 1978, and the first commercial service was in 1982.
https://www.researchgate.net/publication/2377716_Advanced_Mobile_Phone_Service_-_An_Overview
(Years ago I spoke with people from Bell Labs who had worked on AMPS. They felt that but for regulatory issues, cellphones would have been deployed earlier.)

Value investors generally have had a tough go the past couple years.
Here's good post by the folks at AlphaArchitect ...
Update on the Valuation Metric Horserace: 2011-2015
and even better ...
Has the Value Investing Pain Train Ended?
c

@LewisBraham
Your write takes me back to my time machine. :)
In the way back days with Fido in the mid-80's, I used to "trade/swap/move" using Fido's select funds. Fido had established their F.A.S.T. system (Fidelity Automated Service Telephone) which allowed buy/sell/pricing info via the touch tone telephone. At the time, Fido's select funds could also be traded each hour of a trade day with pricing set at the top of each hour. Using Fido's fund numbers and touch tone character codes, one could move money around among the majority of their fund offerings.
I also used the phone system for obtaining closing prices on many funds which were placed onto a paper graph and/or chart. I used this info to establish moving averages via hand graphed charts/tables of funds drawing my attention. The "other" method for we retail investors at the time was to await a paper copy of the WSJ or Barron's for printed pricing of funds.
Some of this "work" was eventually performed on a real pc at the time (1987). This magic pc, a N.E.C built in Japan; had a massive 20 MB hard drive and 640K ram (the upper limit usable by MS at the time). Twas cool at the time, but very expensive with the monitor and printer.
A proper reply to your write is that "yes", money can be made using Fido select funds and/or the many combinations available today. We here are well aware of the many choices via select funds or etf's. Folks who are on the ball with what is going on in the markets may obtain excellent returns with these methods. Lots of folks have traveled this road over the years since the introduction of these select funds.
A Fido time line at the below link:
https://www.fidelity.com/static/dcle/welcome/documents/Timeline_fid_092709fla.swf
Regards,
Catch

I Have Been Watching BTBFX For Years - I Cant Buy It Because Fido Makes You Buy a Minimum Of $100,000.00. Its a Great Fund, Its Up Over 4% ytd

Also:
Gundlach: Swap Corporate Bonds for Mortgage
J. Gundlach, bond King, Doubline, is suggesting to blow out of your corporate bonds, especially junk, that were purchased at the height of panic when everyone thought the Fed was crazy enough to hike rates four times this year.
Wait, aren’t they still saying that?
Gundlach quote from Tuesday:
“The junk market was scared to death that the Fed was actually going to go forward with their suicide mission to raise rates four times this year, four times next year and four times the year after,” Gundlach said. “It’s not surprising that the same burst of enthusiasm for Treasury bonds, once the Fed seemed to abort their suicide mission, it also helped junk bonds. I don’t think that can continue any longer.”
Government-backed Ginnie Mae mortgage-related securities “are cheap relative to Treasuries,” the fund manager said. “That’s been a good buy point for the past six years.”
http://ibankcoin.com/flyblog/2016/04/12/gundlach-swap-corporate-bonds-for-mortgage/
From Ted's link
"The easy money has been made," Gundlach said.
Seemed to be his general theme not only with "junk" but oil and C E F's.Harder to get to $45 oil than from $30 to $40. Many C E F nav discounts have narrowed .Good way to
participate is RNDLX/RNSIX .Likes the Puerto Rico Municipals for high income individual/family taxpayers.Likes C M B S '( Principal Real Estate Income PGZ up near 2% today ). Continues to stick with his now 2 year old prediction of $1400 gold.Bond investors at least 25% defensive posture which of course would be comparable to his own managed (DFLEX/DLINX).
Also
Try this asset allocator
http://bluerockfunds.com/asset-allocator/
And questions or comments besides WHY?
TI+ is a fund for individual investors that seeks current income, low-volatility, capital preservation and long-term capital appreciation. In the three+ years since its inception through February 29, 2016, TI+ has delivered a total annualized return of 8.93%, including 12 consecutive quarterly distributions at an annualized rate of 5.25%. Significantly, the Fund has achieved risk-adjusted returns of five to seven times higher than leading stock, REIT, and bond market indexes, underscoring the Fund’s low volatility.
As of 4/14/2016 NAV
TIPRX $28.79
TIPPX $28.37
TIPWX $29.00
http://bluerockfunds.com/documents/

I believe those were not actually money market funds, but other MMF-like vehicles including short term investment funds (STIFs) and enhanced cash funds. Extensive quotes from an ICI paper explaining these are below (after --- break).
The ICI also has a two pager: Money Market Funds in 2012, History of Money Market Funds
It says:
- Money market funds were created in the early 1970s ...
- In 1994, the Denver-based Community Banker’s U.S. Government Money Market Fund reported a NAV below $1.00 and ultimately investors recovered approximately 96 cents on the dollar.
The reason why I quoted the second item is that the first MMF to fail was an institutional MMF, not a retail one. That shows that in this paper, the ICI is talking about institutional as well as retail funds when it writes that MMFs were created in the early '70s.
FWIW (can't verify, I don't know anything about the firm other than it makes the same claim on its own webpages):
"Drinker Biddle & Reath's lawyers are nationally recognized as pioneers in the bank-related mutual funds market dating back to the mid-70s. The firm developed the country's first institutional taxable and tax-exempt money market funds"
http://www.thefreelibrary.com/Drinker+Biddle+&+Reath+ranked+No.+1+mutual+fund+counsel+in+the...-a016805468
---------------
From the 2009 Report of the Money Market Working Group:
(Section 3.1) "Money market funds were developed in the early 1970s as a way to allow retail and other investors with modest amounts of assets to participate in the money market. ... Previously, market rates of return had been available only to wealthy individuals and large institutions with sizeable amounts to invest.
[Note "market rates of return", not "money market funds"]
It goes on to describe STIFs in Section 5.1.2:
"Bank trust departments offered a short-term investment product (STIF) several years before the first money market fund appeared. These cash pools amortized cost to meet client and fiduciary demands for low-risk investments that function much like money market funds."
The only mention of an investment vehicle available to wealthy individuals in the paper is the enhanced cash fund (Section 3.1):
"These funds seek to provide a slightly higher yield than money market funds by investing in a wider array of securities that tend to have longer maturities and lower credit quality. ... Enhanced cash funds target a $1.00 NAV, but have much greater exposure to fluctuations in their portfolio valuations. Enhanced cash funds are privately offered to institutions, wealthy clients, and certain types of trusts."

This column does not do a good job of making its point - I'm even sure what its point is.
As it notes, aside from continuing to prohibit demand deposit (traditional checking) accounts to offer interest, Regulation Q had been phased out years before Dodd Frank. Even regarding checking accounts, except for commercial accounts interest bearing checking accounts had been around for decades (think "NOW").
It doesn't explain why, if Reg Q started in 1933, it took until 1972 for the first MMF (the Reserve Fund) to be created. (The answer appears to be that Reg Q was changed in 1966; until then banks offered above market rates.)
For a more extensive and clearer history of Reg Q (through 1986, when it had all but gone the way of the dodo), see the 1986 Fed paper:
Requiem for Regulation Q: What It Did and Why It Passed Away

Response from Sequoia's David Poppe:

For many years Sequoia Fund has clearly disclosed that we can and do pay large redemptions with securities rather than cash, and we have done so thousands of times before this year without incident. So we were puzzled by “Sequoia Clients Get Stock Shock” (Business & Finance, April 9) questioning the practice as a “shock” to investors and trying to tie recent in-kind redemptions to our Valeant stake. This policy isn’t new, is unrelated to the ups and downs of our fund and, specifically, is unrelated to our holding in Valeant.
We redeem with shares to benefit our continuing shareholders, who might otherwise pay capital-gains taxes on the sale of appreciated stock that might be required for redemptions. By redeeming in kind, our 20,000 continuing Sequoia shareholders will pay lower capital-gains taxes in the future. Our goal is always to be tax-efficient and to do what is right for continuing shareholders. For a departing shareholder, there is no tax or other consequence to receiving stock instead of cash, aside from the minor inconvenience of having to sell a security upon receipt. We take care to always deliver stocks that trade in sufficient volume so that the exiting shareholder can sell them immediately without depressing the market for a particular security.
David M. Poppe
President
Sequoia Fund
New York

http://www.wsj.com/articles/sequoias-redemption-with-securities-is-tax-efficient-1460583731

I chose Seafarer (SFGIX), but in my 401(k), Capital Emerging Markets Growth Fund (EMRGX) chose me, as the plan swapped out American's (NEWFX), for Capital's (EMRGX), which has a lower (.80) ER.
On paper, the EMRGX managers look to have more experience than nearly any foreign/emerging markets operation - its partners have in the range of 15-to-40-years. Apparently, they were "chosen by the International Finance Corporation, a World Bank affiliate, to manage the world’s first global emerging-market fund."
But their long-term results (and the emerging markets category) are uninspiring. If those markets ever catch a sustained rally, I would expect EMRGX to be rewarded for the risk - a la GMO's forecast on a mean reversion for the category.
Right or wrong, I consider such exposure a diversifier, without getting crazy with more esoteric, alternative options.

FYI: Faced with a low interest rate environment since the financial crisis of 2008, many investors have begun to seek higher returns than those available from safe fixed-income investments such as Treasuries and FDIC-insured CDs. The ongoing pursuit for higher bond returns has led many investors to investments known as “unconstrained” bond mutual funds (also referred to as multi-sector, absolute return, strategic income and opportunistic fixed income). In 2010, these funds attracted more than $170 billion in assets. In the succeeding four years, assets in unconstrained bond funds rose to $223 million, $275 million, $416 million and $462 million, respectively.
Regards,
Ted
http://mutualfunds.com/news/2016/04/12/unconstrained-bond-funds-not-worth-the-risks/
M*: Mulitsector Bond Fund Returns:
:http://news.morningstar.com/fund-category-returns/multisector-bond/$FOCA$MU.aspx

Well, the Big Banks(ters) begin their walks to the confessional today, and it's not lookin' good.
http://www.reuters.com/article/us-banking-results-idUSKCN0X70VU

Analysts forecast a 20 percent decline on average in earnings from the six biggest U.S. banks, according to Thomson Reuters I/B/E/S data. Some banks, including Goldman Sachs Group Inc (GS.N), are expected to report the worst results in over ten years. [...] Investors will get some insight on Wednesday, when earnings season kicks off with JPMorgan Chase & Co (JPM.N), the country's largest bank. That will be followed by Bank of America Corp (BAC.N) and Wells Fargo & Co (WFC.N) on Thursday, Citigroup Inc (C.N) on Friday, and Morgan Stanley (MS.N) and Goldman Sachs Group Inc (GS.N) on Monday and Tuesday, respectively, in the following week.

Is it time for the adventurous to climb into the FAZmobile and burn some rubber? :)
http://howardlindzon.com/the-banks-are-crashing-everyone-to-the-fazmobile/
http://www.morningstar.com/etfs/ARCX/FAZ/quote.html
On a more serious note, in addition to possibly the worst bank reports since the Great Recession started, just what in the world is going on this week with the other bank-related intrigue? Emergency closed-door meetings, bail-in for European bank, Italy at edge of NPL cliff (is jig finally up?), etc.
http://thegreatrecession.info/blog/what-is-happening-to-banks/

Just about every major banker and finance minister in the world is meeting in Washington, DC, this week, following two rushed, secretive meetings of the Federal Reserve and another instantaneous and rare meeting between the Fed Chair and the president of the United States. These and other emergency bank meetings around the world cause one to wonder what is going down. Let’s start with a bullet list of the week’s big-bank events:
* The Federal Reserve Board of Governors just held an “expedited special meeting” on Monday in closed-door session.
* The White House made an immediate announcement that the president was going to meet with Fed Chair Janet Yellen right after Monday’s special meeting and that Vice President Biden would be joining them.
* The Federal Reserve very shortly posted an announcement of another expedited closed-door meeting for Tuesday for the specific purpose of “bank supervision.”
* A G-20 meeting of finance ministers and central-bank heads starts in Washington, DC, on Tuesday, too, and continues through Wednesday.
* Then on Thursday the World Bank and the International Monetary Fund meet in Washington.
* The Federal Reserve Bank of Atlanta just revised US GDP growth for the first quarter to the precipice of recession at 0.1%.
* US banks are widely expected this week to report their worst quarter financially since the start of the Great Recession.
* The European Union’s new “bail-in” procedures for failing banks were employed for the first time with Austrian bank Heta Asset Resolution AG.
* Italy’s minister of finance called an emergency meeting of Italian bankers to engage “last resort” measures for dealing with 360-billion euros of bad loans in banks that have only 50 billion in capital.

@prinx:
SFGIX is currently the most attractive actively managed EM equity fund. But to avoid manager risk over the next 10-20 years with the additional kicker of a significant cost advantage, I would favor the inexpensive EEMV (0.25% ER vs. 1.15% net ER for SFGIX). FWIW, the index for this ETF has backtested very well:
Backtest Data EEMV
Also, even though SFGIX has outperformed EEMV since its inception on 2/15/2012, I have more confidence in the much longer backtested data since 2002 for the underlying index of EEMV.
As always, I agree with Ted that investors need only one EM equity fund. If, by chance, you are a fiddler or optimizer, as I am, I would consider adding one country-specific EM ETF which is particularly undervalued to either SFGIX or EEMV. That ETF would be RSX according to this site that I monitor regularly:
http://www.gurufocus.com/global-market-valuation.php
Kevin

@DanHardy OK, I got it--- supply of new issue munis increases in the Spring and tends to be a negative on muni prices (thereby possibly presenting a better buying opportunity on the pullback). Also, munis have their own yield curve; and with things the way they are now, if interest rates were to rise, the long end and not the short end is the area less likely to be affected (the opposite of Treasuries).
http://blogs.barrons.com/incomeinvesting/2016/04/11/tactical-opportunities-in-muni-etfs-this-spring/

First, given the steepness of the municipal bond yield curve, he thinks Market Vectors AMT-Free Interm Muni (ITM) makes sense since investors will benefit from higher yields in this steep part of the yield curve. But if the Federal Reserve starts to seem like it will raise interest rates again soon, the municipal yield curve is likely to flatten. At that point, he thinks it will make sense for investors to move out to a longer duration ETF like Market Vectors AMT-Free Long Muni (MLN).

http://www.vaneck.com/blogs/muni-nation/utility-and-sensibility-april-2016/

It is important to understand that seasonal shifts in supply and changes in the yield curve can impact a municipal bond’s total return and present investors with tactical opportunities. For the first quarter, according to Barclay’s, their Municipal Bond Index returned a positive 1.67%. Taking into consideration the seasonal supply/demand trends that have prevailed during the second quarter for the last 15 years suggest that favorable entry points may potentially become available.

Hi, Mona.
Because risk moderation is generally tax-inefficient and for some of the asset classes that interest me (Asia income, for example) there aren't any tax-efficient vehicles. You could try to invest in low-beta stocks and a low-turnover fund, but that's sort of working at the edges of risk reduction.
So I keep good records, absorb the tax hit now and might book a taxable loss (as in the case of Artisan Small Cap Value) when I eventually sell.
Cheers,
David

Hi David,
Thanks for the explanation and I understand the choices.
I too have been hurt by the likes of Artisan (ARTMX) in the past few years with a poor returns and a big tax bill (on the way for the same in 2016), so I have mostly gravitated to Index and muni bond funds in my non-retirement account.
I certainly am not saying ARTMX offers any risk moderation (just the opposite high SD) like SFGIX and MACSX, but I have become very shy about putting any more actively managed funds in my non-retirement account. And the dilemma is, my non-retirement account is larger than my retirement account. I fill up my retirement account with other tax-inefficient funds (PIMIX, DBLTX, MACSX, PTIAX, VWEAX and one or two others), but the point is I have less room and have become conscious of asset location.
So now in some ways I let the tax tail wag the dog, but I sleep better if I continue to build my non-retirement account with funds that are tax-efficient, with a low ER and give me market returns.
I have owned ARTMX since 2006 in my non-retirement account, reinvested dividends each year (except last year), and like you did with ARTVX, I just need to bring myself to cutting the cord and before the November capital gain distribution.
Best Regards,
Mona

@bee - Interesting graphic
Can't help wondering ...
How many investors sold BRUFX around 2002 and bought OAKBX based on OAKBX's preceding 5 years' outperformance?
Than moved back into BRUFX around '07 based on its preceding 5 years' outperformance?
Than dumped BRUFX again in early '09 in favor of OAKBX, after sensing that their fund's drawdown over the preceding 1-2 years (a period of financial panic) had been much greater peak to trough than that of OAKBX?

Totally disgusted with Sequoia, a core holding in my kids' Roth IRAs for 9 years. I pulled them out several weeks ago. Alas, the kids do not qualify for O'Reilly or VRX, or whatever else SEQUX wants to get rid of for their affluent customers. I shall look for a box of used auto parts on my doorstep.

Happen to own a very old pickup that's always is in need of repair. Wondering if I should buy some of this fund? Maybe receive a box of those parts on the cheap? :)
There may also be some similarities with this fund ...
broken down clunker
unsafe at any speed
buyer beware

Chip posted our updated ratings on the Search Tools pages last night, thank you.
Quick look shows ...
All three CGM funds are on the Three Alarm list. As are both Fairholme's equity funds (FAIRX and FAAFX). Sequoia (SEQUX) is not yet ... it has two alarm bells.
bee's fav Bruce (BRUFX) is on the Honor Roll. As is Matthews Asia Dividend Inv (MAPIX), T Rowe Price's Capital Appreciation (PRWCX), and Vanguard's Balanced Index Inv (VBINX), Value Index Inv (VIVAX), Wellesley Income Inv (VWINX), and Vanguard/Wellington I (VWELX).
Remind me again why we should not just invest in VBINX and forget about it?
A little more here ... ignoring survivorship bias, there are 4,856 US funds and ETFs that have been around since the start of current full market cycle in November 2007. Across these 8 plus years, the absolute worst performer is iPath Exchange Traded Notes Bloomberg Natural Gas Subindex Total Return ETN Series A (GAZ) at -47.6% return annually ... down 99% or so from peak. Wretched! The best is Biotechnology UltraSector ProFund Inv (BIPIX) at +18.1% annually.
VBINX is at +5.6% annually, which is better than 80% of all other choices. Hmmm ... I'll offer shipwreckedandalone's post VBINX.
FWIW, Vanguard 500 Index Inv VFINX also returned +5.6% over this period. As has PIMCO Total Return III Inst (PTSAX), Voya Corporate Leaders Trust (LEXCX), and James Balanced: Golden Rainbow Retail (GLRBX).
The just over four year old Seafarer Overseas Growth and Income Inst (SIGIX) remains a Great Owl fund, besting its peers by 8.2% since inception. Also on the GO list are Gavekal KL Allocation Inst (GAVIX), Grandeur Peak Global Opportunities Inst (GPGIX), RiverPark Short Term High Yield Inst (RPHIX), FMI International (FMIJX), Pear Tree Polaris Foreign Value Small Cap Inst (QUSIX), Oberweis International Opportunities (OBIOX), Lifestyle Conservative Inst (TCSIX), TrimTabs Float Shrink ETF (TTFS), Akre Focus Inst (AKRIX), Zeo Strategic Income I (ZEOIX), Scout Low Duration Bond (SCLDX), Queens Road Small Cap Value (QRSVX), PIMCO Short Asset Investment Inst (PAIDX). All these funds have been profiled by David and can be found on the MFO Dashboard.

Ron is an "expert" and very articulate and knowledgeable. So how could he have possibly lost money for you over the past 10 years. 99.5% of investors would be best served in a domestic index fund from Vanguard.

( Ron is working hard for you ! Right !)
(From Muhlenkamp Website)
We are professional investment managers. We are not accountants, auditors, brokers, custodians, financial planners, or tax experts. We do not file tax returns, prepare legal documents, or churn out black box financial plans. We seek to maximize total returns, after taxes and inflation, to our clients by taking advantage of the opportunities provided when markets periodically misprice assets.
Our motto is “intelligent investment management” to emphasize that we remove the emotion from investing. We might also be described as “no BS” or “common sense” investment managers—you get the idea. Investing other peoples’ money is a rational profession and we apply ourselves to it on a continuous basis.
We invest money for people who want their money to work as hard for them as they’ve had to work for it—and who want their money to grow over periods of time best measured in years and generations. Our clients and shareholders hire us to help protect what they have, help make it grow, and help ease their minds.
Regards,
Ted
Let's See How Hard Ron Is Working For You: MUHLX Performance:
15 Years 92 Percentile, 10 Years 100 Percentile, 5 Years 99 Percentile, 3 Years 99 Percentile, 1 Year 98 Percentile, YTD 99 Percentile. At least Ron your consistent.
M* Snapshot MUHLX:
http://www.morningstar.com/funds/xnas/muhlx/quote.html
Lipper Snapshot MUHLX:
http://www.marketwatch.com/investing/Fund/MUHLX
MUHLX Is Ranked #226 out of #483 (LCB) Funds By U.S. News & World Report)
http://money.usnews.com/funds/mutual-funds/large-blend/muhlenkamp-fund/muhlx
Larry Swedroe 2011 Article:
http://www.cbsnews.com/news/does-muhlenkamp-add-value/

A few years ago I questioned here my large position in OAKBX and my dissatisfaction with the sudden departure of Mr. Studzinski. I sold out and put the dough into BRUFX and have not regretted the decision.