@slick: You've learned the lesson that I was taught some 40 years ago, that is, dividends are the mother's milk of investing !
Regards,
Ted
P.S. I dumped FBTCX yesterday, but still holding PRHSX.

I happen to be looking at my holdings in my roth today at ML, and I saw something that seemed to make no sense to me at all until I broke it down. My utility fund FRUAX had a higher return than my biotech fund FBTIX , both bought in February 2013. I thought to myself, there is got to be something wrong here. I know biotechs have been in the dumper the last year, and especially the last 6 months, but how could a utility fund beat it? I went back and added up the dividends and cap gains over the three year period and Voila it was plain and simple. Quarterly dividends and regular cap gains reinvested turned a 20% three year gain on original shares bought into a 43% total return over three years. Then I remembered that over time 40% of the S + P gains are due to reinvested dividends and cap gains. Duuuhhhhhh. It may have been wise to sell my biotech fund when it peaked in July 2015, but who knew it would drop like a ton of bricks in less than one year? Its long term money, so just hope it finds its way back after the geo political issues become clearer. After all, we are all getting older and doubt if demand for new drugs will go down over time.

Seems to me some were sitting 100% in cash a month ago. Lousy start to the year startled many.
Umm ... Don't know about bull markets. I can't see the future. But, there have been many positive trends over the past month or so. Oil bottomed near $26 in January/February and is around $41 today. Gold started the year around $1100 and is above $1250. The Dow (if memory serves) dipped to around 15,000 in January and is now at 17,500, close to year-ago levels. The wild daily swings have softened.
European, and now U.S., central bankers have softened their stance or even added stimulus. Dollar has been softening for a while (judging by the performance of international bonds this year). But this week's Fed statement added impetus to that softening. EM bonds have been strong this year. Home prices are rising and REITS have been good investments since September. The U.S. oil patch is still a mess. Time and higher prices should help. This should in turn help the junk bond sector - though my exposure there is very limited (only through broader allocation funds).
As I've noted before, Brazil - which comprises most of PRLAX - has been on a tear since mid January. This is a dicey one however, as Brazil is undergoing political trauma reminiscent of our Nixon years and their market is liable to go in any direction day to day as that drama unfolds. However, overall, those EMs with nice reserves of oil or metals should do relatively well as long as prices stay up.
Bull markets? I dunno. But they say the trend is your friend. I think both Junkster and I would agree on that point.

FYI:
Regards,
Ted
March 17, 2016
Dear WEALTHTRACK Subscriber,
“Caution is appropriate.” So said Federal Reserve Chairwoman Janet Yellen in a press conference Wednesday after the Fed decided to halve the number of rate hikes planned this year, from four to two. With the Fed Funds’ target remaining between 0.25% and 0.50% another two increases would leave the benchmark rate below 1% by year-end.
There were other significant developments this week. Donald Trump won four of the five Super Tuesday Republican primary races, including Senator Marco Rubio’s home state of Florida, causing Rubio to drop out. Despite a loss in Ohio’s primary to its Governor John Kasich, Trump has a comfortable delegate lead over his major challenger, Senator Ted Cruz. On the Democratic side, Hillary Clinton pulled well ahead of Senator Bernie Sanders.
Also this week, U.S. crude-oil futures closed above $40 a barrel, the highest since December of last year and the Dow Industrials turned positive for the year in Thursday’s trading, after being down more than 10% in early February.
New this week on our website, we’ll have a link to a report on how much workplace diversity affects the bottom line. It will be available to PREMIUM members tonight and to everyone else over the weekend. According to research published by McKinsey & Company, companies in the top quartile of racial and ethnic diversity are 35 percent more likely to have financial returns above their respective national industry medians. And companies in the top quartile for gender diversity are 15 percent more likely. Food for thought for management and investors!
I have always been a big believer in meritocracy. I like to think that in America, people of equal skills, talent and education will be judged on their merits, not by who they are or where they come from, which is why I couldn’t figure out why more women were not advancing in the financial services industry. Women are certainly well represented on air, online and in print in financial journalism. But why are there still so few women in executive and management roles on Wall Street?
Last week I got some surprising answers while emceeing a fascinating and enlightening conference on increasing gender diversity in the financial services industry. “Beyond Talk: Taking Action to Achieve Gender Balance in the Financial World” was co-sponsored by The California State Teachers’ Retirement System, known as CalSTRS and State Street Global Advisors.
Leaders at both organizations have gone “beyond talk” and initiated practices to recruit, promote and mentor women in the industry. They are putting substantial resources into the effort.
SSGA just launched the SSGA Gender Diversity Index ETF, symbol SHE, comprised of more than 140 U.S. companies which have greater numbers of women in leadership positions than other companies in their sectors. CalSTRS invested $250 million in SHE at its launch.
On the television show this week, are you better off with a robot? That is the topic we are revisiting during this final weekend of winter fund-raising on public television. We are interviewing an under the radar value investor who created a robot portfolio to test the theory that statistically cheap stocks will outperform the market over time – and lo and behold they have.
As a long-time financial journalist I have seen investment theories and strategies come and go. Wall Street firms have devoted billions in their quest to find proprietary magic formulas for outperformance.
Michael Lewis’ best-selling book, now a movie, “The Big Short” did a masterful job of describing various mathematical and computer science algorithms that contributed to the financial crisis. They were so complex and arcane that even their creators and certainly their customers had little idea of what was in them and how they would really work in the real world.
This week’s guest has a much simpler approach, which much to his surprise when he first tried it 17 years ago does work, but it comes with a large caveat: it is not appropriate in the vast majority of portfolios. He only applies some of it himself.
He is John Dorfman, Chairman of Dorfman Value Investments, an investment management firm he founded in 1999 that manages money in separate accounts for high net worth individuals, family offices and a few institutions.
He is a deep value investor who runs concentrated stock portfolios that have outperformed the S&P 500 by a wide margin over the years. Dorfman is also a journalist. I knew him at The Wall Street Journal and even though he switched to money management full time in 1997 he still writes financial columns.
One of his most popular, which has been his first column of the year for the last 17 years, is devoted to his 10 stock robot portfolio.
Dorfman starts with all U.S. stocks with a market value of $500 million or more. Then he eliminates those with debt greater than equity. He then picks the ten stocks selling for the lowest price earnings multiples of the past year’s earnings.
The result is the “Robot Portfolio” has had a compound average annual return, with dividends included, of nearly 16%, compared to just over 4% for the S&P 500.
Given the spectacular performance of his robot portfolio why doesn’t Dorfman just use that method for all of his accounts? He will tell us.
If WEALTHTRACK isn’t showing on your local station this week due to local station fund-raising campaigns, you can always watch it on our website. You will also find a link to Dorfman’s 2016’s Robot Portfolio there.
Thank you for watching. Have a great weekend and make the week ahead a profitable and productive one.
Best Regards,
Consuelo
John Dorfman Website:
http://dorfmanvalue.com/

I think the Health and Fitness is flexible allocation (very flexible), rebalanced at least once a year as a New Years' Resolution kind of thing, and thereafter "as needed."

M* now gives RPHYX 4 stars, up from 1 star. Total return about the same as years past so I'm guessing hi yield was prolly not a good overall sector last year.

Getting back to the question as to "where" should retirement withdrawals come from this study researched a number of options and I liked this quote enough to pass it along:
In virtually all the scenarios, "it pays to eat your bonds first, equities later."
Withdrawal scenarios studied:
1. Withdraw money from either stocks or bonds and then rebalance the portfolio annually to the initial stock/bond proportion. This harvesting rule will be referred to as “Rebalance.”
2. Withdraw money from the asset that had the highest return during the year and do not rebalance. This will be referred to as “High First.”
3. Withdraw money from the asset that had the lowest return during the year and do not rebalance. This will be referred to as “Low First.” To the extent that historical rates of return on bonds tend to be lower than historical rates of return on stocks, the following two additional methods of harvesting withdrawals will be referred to as “Bonds First” and “Stocks First.”
4. Take withdrawals from bonds first and do not rebalance.
5. Take withdrawals from stocks first and do not rebalance.

Study:
time-diversification-vs-rebalancing-in-retirement-portfolios/

Yes, that was the Spitzer and Singh study cited ...

Interesting Read using a three fund portfolio (VFINX, VUSTX, VSGBX or VFITX) and a 200 mda filter.
From the link:
"The popular 60/40 Stocks/Bond portfolio performs well over the past 24 years, but adding a simple moving average to this portfolio has increased returns, reduced the duration of draw downs, and substantially reduced portfolio draw down. Adding in an intermediate term bond fund as the cash fund accomplished even more, it increased annual returns more than 10% over the buy and hold portfolio, while having close to 1/3 of the daily draw down numbers. Avoiding draw down and still being involved in market upswings was the goal of this strategy, and it worked well in this instance. There were a few concerns, namely being involved in the cash filter fund for too much duration, not being diverse enough to capitalize on gains across different markets, and the potential of missing out on some of the market upsides. However, these concerns did not prevent us from accomplishing the goals of reducing draw down and risk along with increasing return in this particular example."
iema-blog.com/2016/02/6040-stockbonds-portfolio-with-market.html

They could probably run a 10 period monthly moving average on the prices of the assets as to reduce daily generated "whipsaws" ( as many "needless" whipsaws occurring in the past have been contained "within" the monthly data ) and reduce the amount of "management" time, ie. looking at the calculations daily / subjecting oneself too frequently to market data - leading to possible cognitive investing biases ...
Also, using healthcare for the 60% allocation has produced alpha ( appreciably ) above VFINX ( 13% CAGR, Sharpe 1.0 -21% max DD with non MA strategy / rebalance annually 1986 - 2015 )

Thanks @David_Snowball. Disaster was probably too strong a term; "surprisingly poor" sounds about right. So: a bit of bad luck, a couple of honest mistakes, and a big dose of waiting for the market to catch up with his estimates of value. Sounds plausible enough, though we won't know for sure for a few years yet. I am holding.

Interesting Read using a three fund portfolio (VFINX, VUSTX, VSGBX or VFITX) and a 200 mda filter.
From the link:
"The popular 60/40 Stocks/Bond portfolio performs well over the past 24 years, but adding a simple moving average to this portfolio has increased returns, reduced the duration of draw downs, and substantially reduced portfolio draw down. Adding in an intermediate term bond fund as the cash fund accomplished even more, it increased annual returns more than 10% over the buy and hold portfolio, while having close to 1/3 of the daily draw down numbers. Avoiding draw down and still being involved in market upswings was the goal of this strategy, and it worked well in this instance. There were a few concerns, namely being involved in the cash filter fund for too much duration, not being diverse enough to capitalize on gains across different markets, and the potential of missing out on some of the market upsides. However, these concerns did not prevent us from accomplishing the goals of reducing draw down and risk along with increasing return in this particular example."
iema-blog.com/2016/02/6040-stockbonds-portfolio-with-market.html

In a stripped down form, I believe this is what one gets out of Buffett's advice for his future widow - 10% short term government bonds (effectively a cash substitute) and 90% in an equity index fund.
https://blogs.cfainstitute.org/investor/2014/03/04/warren-buffetts-90-10-rule-of-thumb-for-retirement-investing/
That's 2.5-3 years of buffer. As you noted, the length of the overvaluation period (do you mean undervaluation when a retiree is disinvesting?) is unknown, but that is likely enough to insulate one from the worst of it. If that period extends further, one does not need to replenish the buffer, merely sell off enough equity to meet cash flow needs. Once stocks return to a reasonable valuation level, the buffer can be refilled.
Personally, I'm more comfortable with a 4-5 year buffer and a more diversified equity portfolio, but generally find this a good approach.

Newer academic thinking about investment glide path allocations and withdrawal rates in retirement years ( Weigand and Iron / Sptizer and Singh *) has shown that an investor / retiree spend from bonds first and stocks last ( and build a "safe money" fund or bucket of approx. 2 years of expenses which can be used if needed or spent before bonds ). Under this thinking, a misconception about conventional 60 / 40 "glide path" schemes is, that a "bond" allocation be recommended "early" in the investment lifecycle. Yet, the young investor demographic ( age 20's to 50 ) has "time" compounding / "time" to ride out volatility advantages on their side and they aren't so invested in knowing the quarter to quarter fluctuations of their 401K portfolios. So it is logical to assume that a "maximizing" of asset growth by having a much higher portion of assets in equities is warranted and, consequently, should extend into an investors "final years".
Being a late 50's retiree with a somewhat limited but reasonable Roth IRA accumulation and with an extensive expertise in quantitative tactical allocation, I operate under the framework of "preservation of capital" model with an appreciation of what the Weigand and Iron study conveys. As the forward 15 year equity market returns, as measured by CAPE ** and price to book measures are extrapolated to be sub par, preserving capital and asset growth within alternating strategic periods of equity ( small cap value, mid cap growth ), money market, and occasional bond investment through the use of quantitative tactical methods, is my preferred choice. Many "equities heavy" buy and hold investors / retirees may have to ride out the overvaluation period, perhaps spending down their safe money portion and/or retirement asset stake, as is implied by "sequence of return risk". The unknown is how deep and how long the overvaluation period is; this accompanied by varying inflation / disinflation .
Historically, a simple, mechanical, low transaction price / moving average cross strategy has produced decent risk mitigation / capital preservation during these periods of CAPE overvaluation ***.
Some favorite quotes from retirement planner literature are: "Hope for the best, plan for the worst", "You can't predict, but you can prepare ".
* "Market Signals for When to Employ a Bonds-First Withdrawal Sequence to Extend the Longevity of Retirees’ Portfolios" R. Weigand
"Is Rebalancing a Portfolio During Retirement Necessary?" John Spitzer Sandeep Singh
** https://docs.google.com/document/d/1I4sH5UV6fS6UfCNiPl1AsB2SOMF1an1PRt8YH0dgOeQ/edit?usp=sharing
*** https://docs.google.com/presentation/d/1mdon_cto48rvs2_lKWyMWrfqSIh8K0phfe7tThle8qQ/edit?usp=sharing
https://docs.google.com/presentation/d/1Sn6BKRCKRU5tensBDFTkJXI3v2wRQ4M1bt8VoIM2Zmc/edit?usp=sharing

My experience with hundreds of clients over the years (no matter how many projections we run prior to retirement, MonteCarlo or not) is that those with public pensions (after working 30+ years) seldom have spending problems. The public pension system is very generous, and it allows folks to retire with most of their pre-retirement income continuing. If they also have no mortgage and other heavy debt, they are even in better shape. If the spouse has good social security benefits, even better. With these folks, the withdrawal rate on their other savings is not much of an issue.
For other clients, our experience has been that folks tend to spend less following down years for the markets, then discover that some of the "necessary" spending they did previously is not so necessary any more. The first 4-5 years of real retirement are when folks do the most traveling and other unusual expenses. But even then, with the exception of those who have always lived beyond their means, in the last 2-3 years folks have been more aware of their spending. As I have noted previously, those with no mortgage and other debts always seem to worry less than those with debts. And for good reason...their expenses without those things are almost always 30-60% lower.

A remarkably unremarkable fund (albeit concentrated). But terminating C shares (and converting to A shares) is a new one on me.
The closest situation I know of is American Funds class C shares that automatically convert after 10 years to class F-1 (not quite A) shares. That's also a one-off (I know of no other family that does this either).

As of February 29, the fund's holdings accounted for just over 90% of its assets. That implies a cash position just under 10%. With its focus on called bonds and other ultra-short duration securities, it generates a lot of reinvestable cash every week. My recollection is that Mr. Sherman has to find $4 worth of securities each year for every $1 in the portfolio.
The fund is up 0.89% YTD and might find the first quarter up 1%. Given its risk profile, it continues to hold the highest five-year Sharpe ratio of any fixed-income fund and second-highest over the past three years. The Sharpe remains positive over the past year, but far lower than the Sharpe ratios for other sorts of fixed-income funds.
David

I have personally known 4 people who chose a lump sum option from their employer in retirement vs annuity option. All 4 are in serious trouble now.

Ya I know someone who did the same thing when he retired 5 years ago at 62 and is in trouble now.
Spent every dime. Really sad to see someone work 30+ years at a tough job and end up with so little in retirement.
Maybe our schools need to teach the kids a jingle (to the tune of a Dinsey song I remember as a kid):
"D-I-S-C-I-P-L ... I-N-E spells Discipline." (dumb - I know)
Gets back to BobC's comment too about avoiding credit card debt.

Hi Guys,
Whenever a MFO discussion on retirement planning and drawdown schedule is initiated, my contributions are predictable and fairly consistent. Sorry about that, but I’m a firm believer that Monte Carlo methods are especially appropriate tools to provide actionable guidance.
I believe I posted on this subject recently, but I’ve forgotten the Discussion title. So I will repost my comments as follows:
“Simple heuristics (rules-of-thumb) are fine when making common everyday decisions like buying a hamburger or not, but are totally inadequate when making complex, significant decisions like those about retirement.
The retirement when, where, how much do I need, drawdown rate, portfolio size and placements seem hopelessly intertwined to permit a comfortable and confident decision. But a financial tool is readily accessible that significantly attenuates doubt, and it’s not rule-of-thumb based.
I’ve proposed this approach many times on MFO, but I don’t hesitate to do so once again. That tool is Monte Carlo simulation analyses. I do not apologize for being a broken record in this instance.
Many such tools are easily accessible for free on the Internet. Two such codes that I have previously recommended are the PortfolioVisualizer and the MoneyChimp codes. Here are direct Links to these Monte Carlo simulators:
https://www.portfoliovisualizer.com/monte-carlo-simulation
http://www.moneychimp.com/articles/volatility/montecarlo.htm
Please give them a few tries. The inputs are self-explanatory, and the codes are fast. Many scenarios can be explored over a short commitment of time. Endless what-if scenarios can be examined with end portfolio average value and portfolio survival likelihoods as their primary outputs. Thousands of cases are randomly constructed for the projected market returns.
The PortfolioVisualizer tool has more user options, but the MoneyChimp version also does yeomen work. Since these are Monte Carlo-based codes, each time a simulation is made, expect slightly changed predictions. That somewhat captures the fragile nature of the uncertain future.
Retirement decisions will be dramatically improved by application of these simulators. Imperfect analyses (even estimating the range of possible market returns is risky business) almost always beats poorly informed guesstimates. Before making a retirement decision, give the Monte Carlo codes a test ride. They are powerful stuff for everyone.
And for normal circumstances and drawdown rates, a 2 million dollar portfolio is not necessary for a portfolio with some equity holdings. Do the analyses to challenge the robustness of that statement.”
I hope my repost is helpful to some newer MFO members. Portfolio volatility degrades end wealth. That’s why when constructing a portfolio one goal is to minimize its standard deviation (volatility). Low component standard deviations and low component correlation coefficients work to accomplish that goal.
A simple equation demonstrates the need to minimize portfolio standard deviation to achieve a higher cumulative return. Cumulative annual return is roughly equal to average annual return minus one-half times the square of the portfolio’s standard deviation. Note the minus sign. Standard deviation always operates to reduce average annual returns over the years.
Good luck and good planning for your retirement, and for the likelihood of your portfolio’s survival.
Best Wishes.

Bee, I believe the less movable parts the better for a portfolio which is why I like 60/40 to 50/50 funds which balance it for us and make withdrawals easier. I have learned thru the years there are layers and dimensions of risk far beyond the day you buy any other alternative and your post hit on one of those. It seems investors are always confronted with a decision to make of some unpredictable origin if other strategies are adopted and each one of those decisions can be wrong which wipes out all the previous right decisions.

Here are the 2/29 holdings (from RiverPark):
http://www.riverparkfunds.com/Funds/ShortTermHighYield/FullHoldings.aspx
90.06% are securities. There are not sufficient details given to completely identify the securities, but based on M*'s analysis a reasonable guess would be that all but 2% are bonds, and the remainder are convertibles.
From one of M*'s methodology papers: "Morningstar includes securities that mature in less than one year in the definition of cash."
M*'s analysis of the fund portfolio says that its average effective maturity of bonds is 1.83 years. So we can guess that M* is calling about half of the bonds "cash". Possibly a bit less, depending on the distribution of bonds. Let's say it's 40%.
So M* describes 40% of the 90% of bonds as cash. That's 36%. Add in the 10% that Riverpark says is not held as securities, and we've got 46% cash (by M*'s definition).
One can call these short term bonds whatever one wants - cash, ultrashort bonds, securities. Regardless of what one calls them, recognize them for what they are - bonds maturing in under a year, that have better-than-cash yield but also retain credit risk.

Hey, a bumbler! Had a basement full of those little critters a few years ago.

Hi Carefree. If you didn't own SEQUX, would you buy it to fill that space? I always thought I would like to buy that fund if it ever opened up again, but I now feel like it is not the same fund it was 5-10 years ago. Trust in management and stewardship, a term borrowed from M* is not there for me, even though M* still ranks the fund gold for that aspect.
What's your gut say? For me. the best fund in the world is now in question. There are plenty of good funds to choose from.