@dryflower thanks for posting this. This distribution is crazy. FAIRX was supposed to be tax-efficient, at least that's what M* said when I bought it 9 years ago. And it was, for a while. What the hell?
I did notice recently that it's performance is no longer so correlated with AIG. Wonder what he's buying?
Well, I will sell, then decide whether to put some of it back into FAIRX, or FAAFX, or finally fulfull the vows I keep making and postponing, and put money into index funds. But I have a feeling that after striking out so much recently, he's going to start hitting home runs again.

While this game is usually played with funds having large distributions, it can also prove useful for a fund with slow, virtually inexorable declines in NAV, viz. RPHYX. Not to mention other cash-substitute funds. For example, ZEOIX has spent nearly its whole life except its first year above $10. It's now at $9.90.
It turns out that because this year has been somewhat flat, many funds (even with more reasonable size distributions) have shares whose NAVs will drop below purchase price after distribution. This is where specific share identification becomes so handy. You can sell just those shares that you purchased (or got via reinvestment) in the last couple of years, and recognize their losses without also recognizing gains on the other shares.

Fairholme has declared an upcoming distribution equaling over 1/3 of the share value. It appears to me that for those who have purchased FAIRX over the past 5 years or so in a taxable account, they would save on taxes by selling the shares now and paying taxes on their capital gains which would be less, possibly significantly less than paying taxes on the $12 distribution. This is true especially because their tax basis includes distributions from prior years. (Then they can just buy the shares right back after the distribution if that's what they want to do.)
It seems a real possibility that just about everybody is going to realize this same thing and the assets of FAIRX are going to be significantly depleted. Meeting redemptions could possibly even put pressure on the market price of the fund's holdings, specifically SHLD.
Of course when the investor sees that pile of real cash money in his account, he may or may not decide to follow through on the original plan of investing all of it back into the Fairholme Fund.

For me, it was the Augie bunnies. When I interviewed here in '84, I stayed in an on-campus guest room. I came out in the morning to find three rabbits playing on the lawn and three different colors of squirrels - reddish, gray and black - in the tree.
I thought something like, "this is just freakishly pleasant" and subsequently accepted a job offer here, intent on staying just three years (the time I would take me to rebuild their debate program and qualify a team to Nationals). And my plan has never changed: I'm outta here ... in three years.
Cheers,
David

Chinfist, what is the goal of owning 4 Alternative funds in a portfolio. Just curious on the thinking behind this. In asking that question I do have a bias. I myself wouldn't own 4 of any type kind similar fund category where all funds had the same goal. These "alternative" funds just do not out perform a typical balanced fund over time. And 4 of them? What is the goal?

These funds might not outperform a balanced fund over time (particularly if you are looking at performance during a decreasing interest rate environment as we have had). These funds are not meant to replace the performance of a balanced fund. If comparing to a balanced fund, they would mostly be meant to replace the bond portion of a balanced fund. My portfolio mostly consists of dedicated stock funds, with alternative funds thrown in.
I own a lot of mutual funds, as I like to diminish manager risk. I understand some would disagree with that strategy, but that is what I do. I have owned a bunch of alternative funds over the years, some of them bad or useless, and have whittled them down to the few I have left, as 3 of them are doing what I want them to do (providing low relatively consistent returns with low volatility…these take the place of the bond portion of a balanced fund, as I was concerned with interest rate risk when I had purchased them. I wanted investments that would not be impacted by interest rates).
The 4 alternative investments I have are not the same. Only 3 of these have similar goals of absolute returns with low volatility, which are QVOPX, HFXIX and AZIIX, and these 3 use different strategies to get there. MCXIX, tries to generate returns any way it can while taking on more risk compared to the other funds through macro/commodity bets and alternative type strategies. The outsized gain of 53% YTD return shows this. When delving into the alternative type funds, because many of these funds have been unsuccessful, I find it even more important to spread my bets among these funds. So far I have liked all of these funds for the role they play in my portfolio.

Thank you Everyone!
I will be retiring within the next 3 to 4 years and need to change allocation to "living off my money" rather than accumulating it. I am searching for things to begin to trade into for the future.
I do listen to Gundlach's webcasts and always find them interesting. I am looking forward to his always informative January forecast.

I still maintain taxable and non-taxable positions in BRUSX. Sure, the fund has some of bad years, but WSCVX also had some good years in the beginning;however, the last several years have not been so fantastic in comparison as value has not been doing well compared to growth as well as the overall market dropping. Currently adding a monthly ACH to my BRUSX taxable account while the fund is in the doldrums.

Gotta love these self-promoting articles from Barrons. Concur with Edmond assessment. Through the market's ups and downs, Vanguard Wellesley is a solid and consistent fund with an expense ratio unmatched by any ALT funds. In the past 10 years the annual total return is over 7.1% while charging 0.16% fee.

Of course. They are all peddlers. However, generally speaking everyone writes "I told you so articles" after the fact. Only individual investor knows what his/her situation is.

Gotta love these self-promoting articles from Barrons. Concur with Edmond assessment. Through the market's ups and downs, Vanguard Wellesley is a solid and consistent fund with an expense ratio unmatched by any ALT funds. In the past 10 years the annual total return is over 7.1% while charging 0.16% fee.

I am a long term share holder in this fund but last 10 years have been miserable if you look at 1, 3, 5, 10 years performance. Has this fund lost its charm ? (bottom 10% of smallest). I have been unable to decide if to hold this fund or trim it enough for now to stay in the fund? It is missing consistency and inception to today performance still looks excellent but not last 10 years.
Clueless. :-)

Actually, for anyone looking for a global bond fund, I'd suggest they look at a not-so-obvious choice which is right in front of us... Pimco's BOND ETF.
Ostensibly, its an intermediate/core bond ETF. However it seems to be able to deploy allocations anywhere, within certain limits: Its prospectus allows up to 30% to be deployed to non-USD denominated foreign debt (with no apparent limit on USD-denominated foreign debt). It currently has a net-short allocation to developed foreign, and a ~ 17% allocation to EM. The EM position has probably hurt them a bit here. But EM looks cheap to me, relative to other bond-market sectors. It is certainly unloved. BOND will probably never have a measurable chunk of assets in Ukraine (a la Hassenstab). But that may be a good thing.
Gross' departure in late 2014 struck me as a positive for management of the PIMCO funds --- he struck me as erratic in the 2-4 years before he left. (Very bizarre that M* seems 'conflicted' about that event.) The current troika running the ETF strike me as among the strongest in the bond-management industry. AUM in BOND and its much bigger, but similarly-managed OEF cousins (PTTRX etc.) has shrunk dramatically. -- Frankly, I never thought the large AUM was an issue, but for those who did, that issue should now be off the table.
Anyway, for someone wanting a global bond, one probably tamer than most, and with a strong management pedigree, BOND might be one to consider.
JMO.

matt, actually, those 2 funds are both superior funds IMO.
MWTRX is general intermediate bond fund which holds corp, govt, and mortgage debt.
DBLTX is strictly mortgages. As for figuring it out -- the manager "barbells" the portfolio - holding agency mortgages, and non-agency mortgages. (the former are generally guaranteed by Uncle; the latter are not -- so THOSE will have credit risk). The former (agencies), typical of quality bonds move inversely in price to interest rates. The latter (NON-agencies) tend to respond positively to an improving economy (which reduces likelihood of defaults). By owning both, the manager offsets the risks of one vs. the other. He also "tilts" the allocation to where he finds relative value. Meanwhile, he collects coupons from both sides of the barbell along the way.
As for the average rating, I'm no expert, but seem to recall hearing several years ago, that while the mortgage bundler pays S&P and Moodys for an INITIAL rating, no one is paying the rating-agencies for a "current" opinion/rating. So a bundle of mortgages rated BB at time of issuance (say a year 2006 vintage) would still carry the original rating, even if mortgages within the particular security are still paying. This is in contrast to corporate-issuances, which generally continue to pay S&P/Moody's for ongoing coverage/opinions.
Basically, for MWTRX and DBTLX both, you are relying on the expertise of active managers. My own personal opinion: those are good bets to make.

@Edmond said
OTOH, 2025 is 10 years away. The odds of a nice, smooth 5.3% each year are so infinitesimal as to not even to be considered a possibility. Wherever we wind up 10 years hence, it won't be a smooth ride.Observation: we are now in the midst of the 7th year of the current Bull. We are overdue for a Bear. And Bear events tend to correlate at/near Presidential handoffs.
And History "BEARS" This Out With All It's Volatility
2000
-9.03%
2001
-11.85%
2002
-21.97%
2008
-36.55%
Overview of Markets 1928-2014
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

If we take 2092 as "a little below 2100" and divide it into 3500, we get 1.673, or a 67.3% increase. If we divide 67.3% by 10 years, we get 6.73% per year, as stated above. However, this is the wrong way to do it. Approximately 5.3% per year, as Edmond calculated, is correct because 1.053 raised to the 10th power is 1.676, close enough to 1.673.

HSCSX and HDSVX, a recent offering from Hodges, with the same management team as the above-mentioned HDPSX, but much smaller. WSVIX, of which I have a lot, has under-whelmed for a couple of years.

My 2 cents. Hodges is a "boom bust" shop. I will never buy after market has run up, but all their funds are excellent 3 year trades after a slump.
Walthausen - I passed because I think manager is like 80 years old?

DODLX -- enough of a track record ?
D&C had it in pre launch six years prior to the 2012 launch. Doesn't seem like the Royce kind of shop which develops offerings just to garner AUM.

>>>3.57% over 5 years for a bond fund is nothing to sneeze at in these ZIRP days.<<<
We could debate that statement. The average junk muni is over 6% annualized for the same time period with a few twice that 3.57%. But still in an ugly bond category PRSNX is a standout.

Thanks rabockma, that helps. There are 2 ways to look at performance such as we have here:
1. The 10 years numbers aren't so hot, but the fund has been doing excellently lately. Its performance has gotten lots better, and we expect the "better" to continue. A promising fund!
2. The 1 year is simply part of the 3 year which is part of the 5 year, which is subsumed by the 10 year number, which....is not so hot. A not so promising fund.
I tend towards the latter philosophy.

Got that base covered with TRP global multi-asset bonds PRSNX. The only negative performance number is for 1 year back, other time-measurements are positive. 3.57% over 5 years for a bond fund is nothing to sneeze at in these ZIRP days. Monthly div. is consistently over .03 cents. Ya, I know the Fed will raise rates soon. Unbelievable, the negative German rates. Why on earth would anyone put their money into those instruments?
PRSNX: half portf. is in US. Germany, Mexico, Brazil, Indonesia round out the top 5.
http://www.morningstar.com/funds/XNAS/PRSNX/quote.html

Attention Charles!
Thank you for your time and information. Check is in the mail
as of 11/25/2015 PM please allow for snail mail. I have been
retired from post office for 27 years as a letter carrier in
Scotts Valley Ca.95066. Idaho is less expensive place to
own a home "etc" Again thank you
regards
circa33