Howdy folks,
Mark is spot on. Goes back to Peter Lynch - play what you know. Everybody has some area of knowledge superior to most and if played . . . I've collected coins for some 60 years so I should know pm's. I've watched Mark play MLPs for years and tried, but I have NEVER been able to figure them out. Indeed, over the years, most of my investment losses have been from playing somewhere I had no business being.
That said, when you play within your circle of competence, as Mark put it, you are able to bear greater risks with a larger percentage of your portfolio.
As for investing differently because I have a pension is really beside the point of financing a retirement.
I've always thought of retirement as a footstool with one or more legs. Social security is a leg, as is a DB pension, and a 401(k), an IRA, savings, home equity, rental income, other streams of income, a child who is a physician with a granny flat, etc. Each of these represents a leg under your stool. The game is to get as many legs and make each of them as strong as you can.
and so it goes,
peace,
rono

Junkster said: "... Stock indexes on the other hand trading huge multiples above their 70s levels."
Yes - And most of us here are probably overweight equities today for that very reason.
But here's what makes some of us age 70+ and retired shudder when contemplating where to invest. It's an excerpt from a purportedly independent study of PRPFX - the fund many love to hate.
(Excerpt): ... Turn the clock back a bit and revisit a time when the sky was falling and “Mr. Market” seemed to have it in for all of us regardless of where you tried to put your money. That was in 2008. ... (Let's) refresh you on the performance of certain asset classes/indexes that year:
S&P 500 -37.00%
Mid Cap -41.46%
Small Cap -33.79%
MSCI EAFE (International) -43.06%
Emerging Markets -53.18%
(Continued) ... If you had any Bond exposure in your portfolio that’s probably all that you had to celebrate as they at least turned in a positive +5.24%. Most people realistically didn’t have enough Bond exposure but flocked to them in 2009. They were rewarded with another positive year with +5.93%. The problem with that, however, is that the areas they just cut bait on (stocks) returned the following:
S&P 500 +26.46%
Mid Cap +40.48%
Small Cap +27.17%
MSCI EAFE (International) +32.45%
Emerging Markets +79.02%
Source: http://www.myportfolioguide.com/blog/168-independent-review-of-the-permanent-portfolio-fund-prpfx-.html
Article doesn't give stats for junk bonds, but my recollection is they lived up to their name in 2008. By contrast, PRPFX lost a bit over 8% that year.
-
How many small investors had the stomach to sit out 2008 passively watching their life savings depreciate by 40% or more? More unlikely still, how many who yanked their $$ out in panic after suffering big losses realized on March 9, 2009 that the bear had ended and it was now time to reinvest?
So Junkster ... That large outperformance of equities since the 70s is only as good as an individual's ability to hold on to those investments through thick and thin. I realize you are a experienced and adapt trader within your specialty. However, the research, work, education and temperament required to execute your approach doesn't fit many of us.
All of the above is why I keep a foothold in PRPFX. Won't make you nearly as much $$ as equities will long term. But it's a fund that allows some of us to sleep a little better. (And yes - you can replicate the fund's mostly static investments on your own for a lower ER if you want to.) At near 10% of my holdings I like it and recently converted to a Roth.
Loved Rono's reference to the teddy bear. I never had one as a kid, but occasionally took a bottle of Johnny Walker Red to bed in my younger years. Probably served a similar purpose. :)

I didn't own or follow FAIRX from the start, but didn't the fund hold a huge chunk of Berkshire Hathaway in it's early years? Could variability have increased and returns decreased since Bruce's decision to go it alone - without Buffets consistant returns? Berkowitz surely isn't the great manager he was thought to be.

I think it all depends on one's investing plan, circle of competence and, if you're a trader, the current investing environment for the issue at hand.
Speaking as one of the bigger fools in the room I don't believe rono would anymore trade his entire portfolio in and out of junk/muni bond OEF's than Junkster would a portfolio of PM's. Circle of competence: rono knows PM's; Junkster knows bonds. I have no doubt that both can successfully trade their chosen vehicles like nobody business. However, I don't see either pounding the table for their way of doing business but rather expressing opinions on what they know and understand. As in all matters, weigh the options for yourself mindful of the risks and rewards in view of your overall endpoint.
PRPFX (which I've never owned) has it's ups and downs like any investment. It's glory environment is during market calamities, recessions/depressions and so on. It pretty much lags during times of market advances as we've seen the last 5 years but kills it when we're falling into the eternal abyss. Again, treat it accordingly if you choose to invest. All things in moderation for most of us.

Thanks Mark, a most excellent 5 star post!

I think it all depends on one's investing plan, circle of competence and, if you're a trader, the current investing environment for the issue at hand.
Speaking as one of the bigger fools in the room I don't believe rono would anymore trade his entire portfolio in and out of junk/muni bond OEF's than Junkster would a portfolio of PM's. Circle of competence: rono knows PM's; Junkster knows bonds. I have no doubt that both can successfully trade their chosen vehicles like nobody's business. However, I don't see either pounding the table for their way of doing business but rather expressing opinions on what they know and understand. As in all matters, weigh the options for yourself mindful of the risks and rewards in view of your overall endpoint.
PRPFX (which I've never owned) has it's ups and downs like any investment. It's glory environment is during market calamities, recessions/depressions and so on. It pretty much lags during times of market advances as we've seen the last 5 years but kills it when we're falling into the eternal abyss. Again, treat it accordingly if you choose to invest. All things in moderation for most of us.

The difference in FAIRX volatility between its first 7 years of existence (Cycle 4) versus the last 9 years (Cycle 5) is astounding ...

Hard times lately for our hero Bruce Berkowitz ...
massive drawdowns and substantial under-performance these past 12 months for all his funds:

Flagship FAIRX is in fact an MFO Three Alarm fund, which means bottom quintile absolute return in its category for the past 1, 3, and 5 years.

@davidmoran, you are measuring a different thing. This is explained in my earlier thread/post on the results and in the discussion above. That difference is exactly the thesis for this study. Simply put, what you have measured is the relative performance for a specific start or end date for the various periods. If you were to vary the start or end dates for measuring it, you will find a different value for the over or under performance. If you were to do it for all possible start or end dates, you would get a distribution of values. The RARE grades are based on that distribution to see how sensitive the over or under performance is to when you start or end your investment for a fixed length of investment.
In the case of PRBLX, the 5yr expected alpha (over performance) across all possible 5 yr periods was 1.36% (cumulative not annualized). This is in the index hugger region. But the median was -0.94%. In other words, if investors invested uniformly in that period, half the people would have seen slight underperformance relative to index. Hence the C-. Or if you were hypothetically adding to it every day, half of your lots would be worse off than an index after 5 years from their purchase. Not intuitive from looking at a snapshot at any one time but this is what happens.
What that means is that PRBLX overperformed in some period over the last 8 years and if your investment period happened to coincide with sufficient part of it, you would benefit otherwise you would see the same as or worse than an index fund. The current available metrics/tools do not expose this aspect of the performance. RARE does.
PS: I am using the category index returns to benchmark that being the S&P 500 for large blend. The category average that M* uses is not very useful since it is a simple average over the funds in that category and subject to distortions by outliers. Besides, you cannot buy a fund that gives you category averages as the alternative. You can buy an index fund instead of the fund being studied, hence the comparison more useful.

Thanks Rono, I was wondering if you'd chime in or not!
Ramble away, I'm soaking it all in. I remember your pounding the table for pm's 5 or 6 years ago, which led to my buying GLD, CEF and GDX back then. I owe you a beer or 4, thanks!
Momentum seems to have switched in favor of GDX for the moment. Thanks also for your comments on momentum investing. Don't think I'll do so, but the temptation is there. I don't have the time during the day to watch the ticker, plus I have a wife and 2 kids to think about. I've enjoyed everyone's input though!

Howdy PopTart,
I too have been watching the space very closely and actually added to my VERY small positions with junior silver miners just yesterday.
First of all I am still of the mind that everyone should have a wee bit of precious metals in their portfolio. By wee, I'm talking 3-10%. I consider this to be a security blanket type of investment (something for that EOTWAWKI moment). My grandkids have their bed buddies and my pm holding is my bed buddy.
More pm than this core holding is speculation. Speculation is fine and fun so long as you realize the risks. Is now a good time to speculate? What do I know? When I play with investments, speculate, if you will, I lean towards momentum investing. In this I look for trends and when they appear, gradually scale in to my target amount - as long as the trend (momentum) is with me. Let's say you think this nascent trend in the pm's is going to last, and you figure you have $10K to play. Invest $2500 and see if you make money. If you do, add another $2500 and again, see if you make money. If you do, go with the remaining $5K. If at any time it doesn't make money - do not add any more. If it loses, or starts to, have a mental stop loss of say 5-10% at which point, you start scaling out of the play. If it drops some more - exit. This momentum style investing and my penchant for this particular arena, is why I added to my junior silver miners yesterday.
Now as for investing in pms. Funds and ETFs are of two types - bullion and mining stocks. Bullion ETFs will tax your gains at the Collectible rate of 28%. My favorite fund is still TGLDX which does have a little bullion but is taxed at normal cap gain rates. Or, you can go with CEF, a closed end bullion fund that is about 55/45 gold to silver. Or you can go with mining stock funds, ETFs or individual stocks. Lastly, and this is important to many people. For you core holding in pm's, the 'hard corps' recommend holding the physical metal. Although some peeps like safe deposit boxes and such, cripes, a roll of American Gold Eagles comes in a tube 2" tall and the size of a quarter. You can hide it in the oatmeal box and it's worth ~$25,000.
All this said, at this point in time, based upon the metrics of the gold/XAU and gold/silver ratios, miners are undervalued vs. bullion and silver is undervalued vs. gold. Note that this is on the margin. The great leverage is with the junior miners but this is also nose bleed territory. My only homerun in about 40 years of investing was with Silver Wheaton that I bought around 2002-3 for under 3 that I sold in the 40's. Cha-ching!
Right now there are several geopolitical factors at play. China's economy has slowed and they have been fairly steady gold buyers both by the CB and by individuals. The threat of terrorist attacks has really spooked the traveling public and this fear translates in to bullion demand. We also have the zika virus shutting down travel to central and south American and I am far from convinced that Rio is going to be able to even have the Olympics. Oh, and did I forget the Saud family's gas war to end all gas wars? And with Iran coming online, I don't see oil much higher than today for quite a while.
Now all this stuff is what Fear and Loathing are made of (where's Hunter?).
BUT when all is said and done, the POG is dependent upon the price of the U.S. Dollar. Because gold is priced in terms of the dollar and the dollar is the world's reserve currency, they normally are indirectly proportional and this has greatly contributed in the pull back in bullion prices from it's high of ~$1900 in 2011. Recall that the great bull market ran from 2002-3 until this time and commodity bull markets normally last in the 12-15 range. This is due to the complexity of bringing additional supply online in response to higher demand and prices (e.g. you have to find it).
As for the dollar, I've said it was trash since they started QE-nth but compared to any alternative currency, it is still the cleanest pair of dirty socks in the hamper. Lately, it's been showing some weakness but due to ???? Although, I'm starting to sense a negative impact on the dollar caused by the anger of the general public directed at Washington is the support for Trump and Sanders.
Sorry to ramble on,
and so it goes,
peace,
rono

@vkt
With what you noted, and the words just before and after in that paragraph:
"CEO goes to his executive team and says this year's bonus plan will be tied to the share price at the end of the period"
Ya......reminder of one of a company(s) mantra......"increase shareholder" value.
So many established companies lose their vision of what got them to where they may have arrived, and it wasn't through share buybacks.
A sadly sad state of affairs for too many organizations and their worker bees.
I could scream and rant and tell stories of things gone wrong for companies, but it is too early on a Saturday morning; as I would have to strap a blood pressure device onto my arm.
Wishing that I had the desire and/or skills to do a complete review of changes in the accepted and apparently legal changes in accounting standards from 20 years ago and currently used by corporations.
The best that may be obtained for this house is to "play" around the edges with being an "investor" attempting to continue to dodge the bullets arriving from any direction. Too many days find we small folk are way out of our league against the large, fast, the machines and other, eh?
Take care,
Catch

Yes, I remember drinking the cool-aid after this fund was so highly praised on this board 3 or 4 years ago. Luckily I didn't stay in long. I still remember Ted saying no one needs this fund or funds like it - they're losers. Good old Ted is right more times then not. I think it is still true about most of these 'alternative/market neutral/long short' funds out there today. They aren't going to beat a good balanced fund over time.

Notes on grading for US Large Cap Value funds
While noting that the funds being selected for this grading are what would be considered highly rated funds and so they should all have done reasonably well, I found many more funds to have realized consistently high alpha in the LCV category than in the blend/core.
There was also a problem in that the funds follow similar but different indexes to benchmark.
I chose the ETF IWD and the mutual fund VIVAX following two different indices for benchmarking alpha against. The tracking difference between these two is the margin for error.
There are very few great owls in this category and even fewer with the required 8 years of history. So most of the selected funds come from the top 30 at US News & World Report Money guide.
This list has a number of DFA funds at the top but since they were all managed by the same team with very similar portfolio, I just picked one of them.
The only stinker was the Fidelity Blue Chip Value in this analysis.

Woulda, coulda, shoulda. It's fun grinding someone's face in the dirt isn't it.
So really, folks waited a half hour after the news to start selling a stock that just dumped on them. Really!?
I agree. Entry and exit plans should be laid out ahead of time for any investment. There was, and still is, plenty of handwriting on the wall with respect toward deterioration in the energy sector. However news events work in both directions. Not everyone can be glued to their electronic devices throughout the day in order to react to every wire snippet. We also have no idea other than digital fog clouds about an investor or their portfolio or their positions in same or any of the reasons why they invest in what they do. For all any of us know those recently bought shares could be add-ons to legacy shares handed down from great, great grandma who lived out her golden years on the capital gains and dividends they produced. Who knows!?
Yeah, I love I told you so's.
Edited to correct some typo's, increase clarity and also to add the following. Conoco' executives made a point of coming out nationally and making repeated statements about how safe the dividend would be. Either they were lying or incredibly incompetent plus too stupid to have a grip on reality. For cripes sake the company RAISED the dividend last year. Since they didn't foresee this being a problem one might postulate that managing a company of this nature and in this environment is not their strong suit.

I left his fund about two years ago, thankfully.

MikeM - I don't know about COP but in the case of another energy company, KMI, shareholder reports were for maintenance of the dividend at it's then current level with growth of that dividend increasing at a 10-16% clip for the next 1-2 years. A month later the dividend was cut by 75% with muted at best growth of that dividend projected. Lie. Lie. lie.

Hi @MJG,
Thanks for posting your thoughts on the January effect on the markets (S&P 500 Index) along with explaining your reasoning.
If investors have invested based upon their risk tolerance, goals, time horizon, etc. then this past January is a good opportunity for them to review how they are invested and make adjustments if this volatility brings them pause and makes them uneasy. Things have indeed changed over the past ten years. Thinking back my portfolio now generates about half the income of what it did ten years ago. After all, back then, I was getting about 4% to 5% interest on my cash area investments alone. Today, zilch.
Perhaps some have taken on more risk than they realize, in an attempt, to maintain income levels.
Old_Skeet

Fidelity used to offer Active Trader Pro as a courtesy to Private Client customers (though not level 2 quotes). They stopped doing that years ago, though.

@vkt This is interesting. Thanks for sharing. Could looking at the correlations between your RARE ratings and current 3 and 5 year measures for common statistics such as the Martin and Sortino ratios help to clarify what new information the RARE rating is providing? I took a quick look in MultiSearch using 3 and 5 years for a sample of the funds you ranked. Just quickly eyeballing things there appeared to be somewhat positive correlations except perhaps with YAFFX. Anyway, an evaluation tool like RARE seems like it could provide a useful additional metric to consider when evaluating a fund.......

Howdy @msf and @vkt
Overview of Fidelity's Active Trader Pro in link below.
At least 36 trades per 12 month rolling period, and more tools available for 120 trades and above. I do agree with @vkt regarding what is available with this program has value with helping to establish a better buy/sell.
I queried Fidelity about this a few years ago and attempted to download the program to a laptop. I/we didn't qualify for the program due to low trading volume. It didn't matter whether one could present a fact of having enough money within Fidelity account(s) to more than satisfy any other conditions and circumstances, including longevity as a customer. We still do not perform more than 36 trades/12 months.
I do understand their position.
I/we are very pleased with Fidelity over a 35+ year period.
Lastly, a few years ago I mistakenly purchased and then sold (to remove the mistake) a mutual fund within a two day period. This fund did have a short term trading period monetary fee ($fine). I called Fidelity and explained the "boo-boo" and the fee was never debited against the account.
https://www.fidelity.com/trading/advanced-trading-tools/active-trader-pro/overview
Regards,
Catch