The persistent lagging performance in last few years was self-inflicted with poor stock selection I my humble opinion. If you have lost confidence with the management, it is time to move on. There is nothing wrong with cash until better opportunities come along.

Not a bad idea buying BRK.B Maurice. If you can find a list of holdings preceding the last few years of drama and craziness in this fund then you might symbolically recreate the fund as you once knew it. FWIW, We did discuss this about a year ago and I did sell FAIRX for BRK.B

New year, new assessment of FAIRX. Makes up a sizable percentage of my mutual fund investments. There would not be any tax implications to selling the fund. Years back FAIRX was just as concentrated. But the majority holdings were in Berkshire Hathaway. Today the make up is far different, and perhaps is too risky for the return.
Can you suggest one fund that is focused, as an alternative? Maybe I should just buy BRK-A. Well I can't really do that. But I could buy BRK-B. Sorry to long time readers who tire of my asking this every year.

Some options for your consideration might include Akre Focus fund.........Smead Value fund...........Oakmark Global Select fund..........I'm quite happy with those three
Or to avoid disappointments from concentrating in one fund like FAIRX, one could go the passive indexed route, with:
Vanguard Total Stock Market Index fund and Vanguard Total International Stock Market Index fund.
You certainly won't underperform the market that way, and have those types of disappointments.....

I've been looking at this fund for a couple years, but just felt it was getting too big even back then. That doesn't seem to effect growth funds investing in FANG apparently.

Hi Alex,
I constructed my initial reply to your investment desires without challenging or questioning your stated objectives. Your goals and preferences are yours alone. Given your age and the steeply progressive RMD requirement, your bottomline objective is extremely bushytailed.
I agree with the several MFO contributors who suggested the difficulty, perhaps impossibility, of satisfying them. It is a tough nut to say the least.
Given the progressive character of the government RMD schedule, I believe the task is almost impossible using the historical returns of any major market investment categories.
Today, your RMD is 7.1%; 5 years from now that RMD grows to 9.3%; 10 years from now the RMD has escaladed to 12.3%. The number of investors who achieve this level of returns approaches zero. It might be a good idea to reconsider your objectives.
If you disliked my earlier post that recommended deployment of Monte Carlo codes, you’ll hate my following suggestion that statistically backstops the futility of your tentative plan. The tool that I used to reinforce my assessment uses market average return and standard deviation data. It is the Bell (Gaussian) curve.
Market rewards do not exactly follow a Gaussian distribution, especially because of fat-tails, but are close enough for modeling purposes. The fat-tails make the Bell curve too optimistic in terms of real as opposed to projected returns. By the way, some Monte Carlo codes adjust for the fat-tail effect.
Your problem is much more demanding than a simple negative market year. Your portfolio must not only accommodate that probability, but it must also generate a return that exceeds your escalading RMD. Market volatility (standard deviation) kills. Diversification can help here by reducing portfolio standard deviation, thus dropping the likelihood of not meeting your high target.
How much does reducing standard deviation help? The Bell curve tables yield an approximate answer. The good news is that these tables have been graphically programmed on the Internet. You can determine the cumulative likelihood (the probability) of any event by simply knowing its projected standard deviation. Here is a Link to one useful graphic presentation prepared by the Math is Fun website:
https://www.mathsisfun.com/data/standard-normal-distribution-table.html
Please give this site a test run. Since your main interest is the likely cumulative failure rate to satisfy your RMD target, please click on the “Up to Z” button on the graph. Now simply move the standard deviation marker to determine the cumulative probability of the event to the desired level of volatility.
For example, suppose your portfolio has a projected return of 8.5% with an anticipated standard deviation of 12%. That’s a realistic projection for a diversified portfolio that is heavy into equities. Now assume that your RMD is at the 7.1% level. That’s 0.12((8.5-7.1)/12) standard deviations below the expected annual return.
What is the likelihood of that happening? Place the moveable marker at the -0.12 level. The probability of that happening is about 45%. Not good news.
Alex, this type of analyses strongly suggests that a cash reserve is warranted if you do not want to sell funds from your proposed equity portfolio. You have many options. A low cost short term government bond fund is one such option. As suggested by other MFOers, you might want to reformulate your objectives. As always, the choice is yours.
Edit: I was too hasty in my initial posting here and made an error in my example problem. I've corrected it. Sorry about that.
Best Wishes.

The muni trade seems to be getting a little hot now. I'm still heavy there, just hope it doesn't reverse too, um, energetically.

Agreed! Yesterday on Barron's Daily all I saw was to beware of 2016 in most markets but not so in munis. An article about Blackrock's love of them and another of David Kotock's. This run is now two years old! Where was everyone in January 2014? I don't like crowded trades but will give my usual mumbo jumbo of enjoy the ride while letting price be your guide and have an exit point.

Agree with Old Joe. The actual RMD factor of more than 7% is not something I would want to attempt, since that would involve tactics that are probably too risky for you. And volatility could well be problematic, too. If you target just the tax rate, staggered CDs starting with 6 months and going out 2 years, would start to get more interesting as the Fed raises rates more. The possibility to acquire new-issue municipal bonds to invest the after-tax RMD dollars is not unattractive, unless you are using this for cash flow.

Hi Alex,
Based on your advanced age, you impose a high target returns requirement, a high hurdle that gets higher each year as your RMD increases annually, on your portfolio.
I completely agree with MFOer msf with regard to scoping the problem by consulting the government RMD tables which are tied to life expectancy.
Numerous academic and industry retirement studies have concluded that a withdrawal rate of about one-half your RMD goal is a doable target that results in high portfolio survival odds over extended timeframes. The usual outcome from Monte Carlo simulations is that a 4% drawdown over a 30 year retirement period generates portfolio survival odds that are in the 95% and higher range.
Given your age, the anticipated portfolio survival timeframe is more like 15 years. This shortened period changes the calculus considerably. Some additional calculations are needed.
Nowadays, these calculations are easily and rapidly done with some simplifications that should not significantly impact any conclusions from the analyses. Since learning to fish is more useful than being gifted a fish, I suggest you do the analyses yourself.
One tool to do a respectable Monte Carlo analysis can be found on the MoneyChimp website. Here is a direct Link to the Monte Carlo calculator on the helpful site:
http://www.moneychimp.com/articles/volatility/montecarlo.htm
Please exercise it to get an informed feeling for the likelihood of a successful accomplishment of your goals.
For a representative portfolio with an 8.5% annual average return and a standard deviation of 12%, a survival likelihood of 98% is anticipated for a 15 year period. If that period is extended to 20 years, the portfolio survival likelihood decreases to 86%. If the portfolio volatility is increased from 12% to 15% annually, the portfolio survival probability is deceased from 98% to 93% for the 15 year timeframe.
Parametric analyses like these help an investor to get a feel for the soundness of his plan. These general cases seem like attractive potential outcomes from a portfolio survival perspective. However, note that MoneyChimp does not provide the end value of the portfolio. If a single dollar remains in the portfolio after the designated period, MoneyChimp scores that as a portfolio survival instance.
If you want more detail, please give the Portfolio Visualizer version of Monte Carlo a test run. Here is a Link to that site:
https://www.portfoliovisualizer.com/
This excellent website will allow you to back-test generic and specific portfolio asset allocations, and also to do a Monte Carlo simulation that outputs portfolio survival odds and average portfolio end wealth values.
For one test run, Portfolio Visualizer yields a 96% survival likelihood for the 15 year period with a 50% US Stocks, 25% Large Cap Value, and 25% International Stock portfolio allocation. A 37,000 dollar average annual drawdown rate was assumed.
The median portfolio end balance was 1.1 million dollars, and both the 25 percentile and 75 percentile end values were provided. Since these are Monte Carlo simulations, results will change a little with each running of the code.
These estimates were done using historical base rate returns. Given the current investment environment, you might want to do the simulations using slightly more muted market return projections. You can input your own predictions and do some sensitivity scenarios.
If you don’t like the specific outcomes, these Monte Carlo tools allow you to play endless what-if options to explore allocations that might improve the projected results. The work is easy and even fun. Enjoy.
I edited to convert my original post from MRD to RMD. Sorry for the nomenclature error.
Best Wishes.

1. What is your understanding of the term “captured earnings growth”?
2. "International Stalwarts already has about 127 million in AUM per M*, so I'm not sure how long this one will stay open. 2-3 years"
I think it is going to stay open for longer than 2-3 years......
Since this is more of a midcap fund, they will let the assets run up much more than their other funds

Right, it looks like they're not going to double down on value, even though that could pay off in the long run, but the growth oriented international funds have been strong- OBIOX, OSMAX.
International Stalwarts already has about 127 million in AUM per M*, so I'm not sure how long this one will stay open. 2-3 years? They're sure doing a lot of hiring and then no more offerings planned for the next 6?

Not really "changing" anything. Just sticking with what has worked for decades.
Allocation into QQQ 12/31/2015 as per variable #1 from model https://stockmarketmap.wordpress.com/2015/12/31/market-map-model-allocates-to-equity-etf/ ( 2015 return = "underperforming" year ( cash allocation ) after 2013, 2014 were "overperforming years )
Model may instruct back to cash allocation on Feb 1 as determined by variable #2 risk profile
https://stockmarketmap.wordpress.com/2015/11/14/market-map-model-tactical-asset-allocation-using-low-expense-index-etfs-2015/
Looking for entry into Biotech and then switch for Energy in Feb
https://docs.google.com/spreadsheets/d/1zlgOYdATSzC7YrUE9yE_uY03sHBRTcLUVyKusqqv2tI/edit#gid=113856734
Still allocated to Small Cap value as of Nov 2015.
Model may indicate cash position May 1 2016, as again determined by variable #2
https://stockmarketmap.wordpress.com/2015/11/03/model-with-sell-in-may-component-allocated-to-small-cap-value/
One may only need to have exposure in 3 - 4 different domestic market stock universes / sectors and strategies.
1) Small cap value universe has been academically proven to produce the highest alpha premium over 90 years marketwatch.com/story/8-lessons-from-80-years-of-market-history-2014-11-19.
2) The Nasdaq100 has been a superior growth index managed to constitute some of the the best growth companies in the world for 30 + years, and the QQQ is one of the lowest expense ETFs with exposure to it. No need to "pick" and manage individual stocks. They do it for me.
3) The biotech and energy spaces have 30 years of solid performance history. Using utilities as a risk ballast during the "rocky part of the year" fills out this portion.
As for "diversifying" with international, emerging, commodities, REITs, MLPs, etc. I think it is a ploy by the fund company industry to spread out assets to as many fund company managers as possible.

Being a trader can't offer investment advice. But I commend you for making it to 86! You may just be the eldest on this site. May you have many more good years ahead of you.

Hi Alex!
One question: well really more than one.....more like four.....have you ever done investing before? Why would you not want any bonds (individual)? Not funds.....they're steady. And, why do you need so much return? And, at 86, why do you want the volatility? You come to market at a bad time JMO. What time frame will you be putting this money into the market (weeks, months, years)? Do you have other money to live on (Social Security, pension)? Have you talked to another advisor or Fidelity? They can help. For me, I need to know more to give an opinion.
God bless
the Pudd

If I understand you correctly you would like to achieve a return of 7.1% for this year, and increasing in subsequent years. That's based on Table III in IRS Pub 590B, which says an 86 year old's RMD is 1/14.1 years.
That's a bit ambitious, according to market expectations over the next few years.
You've suggesting fine, broad based ETFs, but they'll be as volatile as the stock market (e.g. see today), which can create difficulties in taking RMDs. Specifically, the RMD is based on your Dec 31st balance. A down or volatile year can have you withdrawing a higher percentage (since your portfolio may be below that mark when you decide to take your RMD). You can mitigate that by keeping some assets (at least a year's worth of RMD) in something less volatile - cash or short duration bonds.

I have been sitting on $500K in a money market fund for a year after firing my ineffectual financial advisor. I am 86 years old and unmarried with financially independant heirs. I would like to at least gain an amount equivalent to my RMD.
The following is my tentative selection of ETF funds that I am considering investing 25% each: VOO,VIG,PFF,VEA.
I am inviting any carefully considered suggestions or comments. Thank you and a Happy and prosperous New Year to all.

To willmatt's original question, which seems like a good discussion topic, here's ~ 2.03 inflation-adjusted cents' worth from this house.
For now, sticking with moderately significant changes made in mid-2015, which consisted of (1) reducing equity by quite a bit, concentrating it mainly in lower volatility funds with a strong tilt toward hedging foreign currency; (2) building up to about a quarter of the port in FI cef's, in munis, preferreds, and non-agency mortgages; (3) weeding out as much in hy corporates and commodity energy equity as possible; and (4) building up BBB/BB-ish muni oef's.
What are others doing?
Cheers, AJ

One area that seems duplicative is my accumulation of balanced funds. Currently, I own VWENX, JABAX and VTMFX. Two out of the three seems adequate to me. I really like VTMFX and its muni bond holdings, which I hold in a taxable account. So, its come down to a decision between VWENX and JABAX. I bought VWENX in a taxable account many years ago and its ballooned to my largest holding. I have a rather large capital gain with it, so its tough to sell without incurring the big cap gain. JABAX is held in a Roth IRA, so no tax issues with it.

FYI: Nasdaq and S&P 500 eye worst start to the year since 2001.
Regards,
Ted
http://www.marketwatch.com/story/dow-industrials-hasnt-started-the-year-this-horribly-in-84-years-2016-01-04/print
Worst Start To The Year:
https://www.bespokepremium.com/think-big-blog/worst-starts-to-the-year/

FYI: Investing is becoming more of a grind. Expect it to stay that way.
Analysts, mutual-fund managers and other forecasters are telling investors to expect lower returns from stocks and bonds in 2016 than in past years. They're also predicting more severe swings in prices. Remember that 10 percent drop for stocks that freaked investors out in August? It likely won't take another four years for the next one.
Regards,
Ted
http://bigstory.ap.org/article/52194e6899d24c6db2484be02aaea2e1/expect-less-and-buy-antacid-2016-investment-forecasts

I'd never taken a close look at those bar charts to see what they actually represent. My current working hypothesis is that they are simply the 10 year risk and reward ratings on the ratings & risk tab. If my theory is correct, funds that have not been around at least 10 years will not have these bar charts on their quote pages.
The three year performance/risk buckets are above average/average. Since the manager has been around for just two years, that would seem to be the better set of ratings to look at in any case.
The next question is how FPBFX could be rated as average performance vs. category over 10 years when it landed in the 7th percentile, with 60% better performance than the category average (6.31% vs. 3.88%).
This suggests either the performance rating is wrong, or "category" is defined differently for "category performance" in the quote page table and for "return vs. category" on the ratings&risk tab. That is, the category comparisons might not be the same for the percentile figure and for the "average" bucket.

Hi Catch22,
Thank you for reading and responding to my post.
I really do believe that forecasting (especially the future according to Yogi Berra) is a terribly uphill slough. But if some error rate is acceptable, it is not an impossible assignment. As Yogi famously said: “When you come to a fork in the road, take it”. And when investing, there are countless uncertain forks in the road.
Study after study have demonstrated the high error rates when making forecasts. The long running CXO Advisory Group study that scored the forecasts of 68 financial professionals just reinforced the high hurdle that most experts stumble against. The CXO guru grades registered only about a 48% accuracy record.
Random successes are often followed by painful failures as the regression-to-the-mean iron law exercises its ultimate influence.
On a much larger scale, Phil Tetlock has organized and measures the accuracy of a large body of carefully selected, screened, and challenged political wiz-kids. These scholarly studies have been conducted over many years and across many iterations. Expert teams have been assembled based on earlier prediction prowess. Forecasting accuracy at the margins has been improved with team effort, but it remains a tough uphill battle. Here is a Link to a relatively recent Tetlock lecture:
https://www.aei.org/events/predicting-the-future-a-lecture-by-philip-tetlock/
Experts can be assembled that tilt the forecasting odds just a little. An informed team of bright folks can make a difference, especially if the team is dedicated and is composed of members with a wide ranging set of experiences and knowledge. The MFO contributors satisfy those criteria.
So, while I surely do not agree with all that is said on this wonderful site, I do learn and profit from the MFO exchanges. After 6 decades of moderately successful investing, I’m not prepared to “leave this game”.
An important lesson that I learned during those many participating years is that setting a satisficing goal is better than shooting for a maximizing goal in terms of anticipated rewards. If you are not familiar with the concept, here is a dictionary definition of 'Satisficing': “A decision-making strategy that aims for a satisfactory or adequate result, rather than the optimal solution”. An optimal portfolio return is a mythical target.
Additionally, I preach and practice portfolio diversification and patience as strong investment tools to embrace. Investing need not be complex.
Stay strong and healthy for 2016. The market challenges are forever present.
Best Wishes.