"Jeez, nothing like sarcastic preemption to cloud the facts. "
How about the religious zealot-level of devotion to theory, to the point where anyone who doesn't agree with you is insulted and given a reading list so you can make sure they are properly indoctrinated? I would be fascinated the response on this board if Krugman came out tomorrow and said he was becoming a Republican. It would be like telling kids there is no Santa.
And at least perhaps my light post gave a couple of people a chuckle. Ultimately, the decision that I have made is to do the only thing I can do: figure where I believe things are going and invest in a manner that expresses those beliefs. I will be light, I will occasionally be sarcastic, because honestly, we can sit here and argue about economic theory, but ultimately I don't believe that I have one iota of say (or do the people on this board, unless one of you is an FOMC member that the rest of us are unaware of) as to the ultimate direction this economy is being taken in. Beyond that, we live in an economy where there have been more than a few examples of "if the numbers don't confirm the narrative, change the numbers." We don't like GDP? Lets change how it's calculated. Ah, all better. Or, the goalposts are endlessly moved.
Given my lack of control, all I can do is attempt to try and think ahead and play futurist and invest accordingly. That's all I can do and coming to terms with that fact is ultimately freeing from the standpoint of, I don't care what one FOMC member does today and that another will ultimately probably contradict them a day or two later. I may not agree with monetary policy, but you know what, I really just don't care as much. I know that this period will end badly -and I say that with the utmost certainty - but I've invested in the manner that I think is appropriate. And that's all I can do. Maybe I'll crack jokes on here on occasion, I just think it's a better use of time than becoming stressed when someone says something I don't agree with.
All of this arguing on the internet does nothing, it fixes nothing and it's ultimately a waste of time. I love productive conversation - any sort of discussion of monetary policy or politics is ultimately futile because people have grown so deeply fixated on their beliefs that anyone else is often largely either shouted down or ignored. So, why do it? Or why not crack a few jokes. If I get someone to smile when I post a joke post with a "The More You Know" PSA at the end, that's worthwhile to me. I'm happy to talk about investments for hours on end, but the divisiveness of people in regards to certain topics does often lead to a joke because ultimately, I'd rather laugh than be upset over the internet about views of someone else's that I know with great certainty they have no interest whatsoever in changing. When I do crack a joke or make light, it's the almost religious devotion to political parties that shows itself. As I've said before on this board, it's the internet, don't get stressed by someone who doesn't agree with you - you'll never get everyone to agree with you. If you can have a constructive conversation on the internet - an increasing rarity - be happy.
As for Krugman, I find Krugman's delight over destruction (to the point where he went on cable news and suggested that creating a real life sequel to "Independence Day" would be a great idea) as "GDP positive!" to be disturbing, among other issues. This is not exactly something that one has to search for examples of, either - there are more than a few, to the point where Krugman has been parodied for this on multiple occasions.
His wild-eyed rant on CNN about how a "fake alien invasion would help GDP" - where to begin, aside from the fact that the man looked out of his mind. As far as I'm concerned, if someone can look at this video (http://hotair.com/archives/2011/08/15/krugman-you-know-what-this-economy-needs-a-space-alien-invasion/) and say, "Gee, he sounds like someone who I want to follow", then please, go right ahead.
"No one says enormous sustained financed spending (on anything, not just infrastructure, it could be on unneeded weapons) at multiples larger than productive economic activity is a good idea. Meaning sure, heedless debt can pose a threat to financial stability. But it's not like that now"
Well, I'm very glad that you are trusting of this government to spend money so wisely and regulate spending so well. The complete faith in the system and the small group tasked with regulating it is really quite remarkable.
"It's not like that now." Nor will it ever get out of hand, right? Nor have there ever been any examples in history, right? But we're different, right?
It's the attitude that the increasingly complex and interconnected global economy can be dialed up and down like an air conditioner that irks me. "It's fine now, right?" "Want it a little warmer, a little cooler? Easy peasy."
How much confidence do you have that you can control this? "100%?" I'm sure Bernanke wouldn't have said "Ehhhh, 50/50", but can you really have 100% confidence in controlling a system that has grown increasingly complex, even since 2008? In a system that is interconnected and relies heavily upon confidence - something that's difficult to control, especially once it is lost? Where are we, several years of ZIRP and multiple QE's later? The world isn't ending, but the ROI for what has been the easiest monetary policy in history seems rather lackluster and now we're here with weak GDP growth and little in the way to stop the Winter that we've been trying to put off and buy our way out of for so long.
I have a significant fascination with how things work. However, I tend to focus it on learning more about science, industry, other cultures and other such things. I can have my views on economic theory and monetary policy, but as I get a little older I suppose I want to devote time to topics that are ultimately more enjoyable and perhaps a tad more positive.
People lack respect for the potential volatility, complexity and fragility of the global economy - 2008 was a delightful example, but it's clear that we haven't learned anything.
Ultimately, going back to the topic at hand, as I noted above, there have been enough studies that I don't doubt that the graphs are likely "in the general vicinity" of being correct.

@davidrmoran, like I said I was joking, but I think your view of the national debt is overly simplistic. The government can certainly print the money necessary to pay those debts but to think that will have no economic impact on our children or their children or their children is sadly mistaken. It's an enormous Ponzi scheme that won't end well someday.

Oh boy, here we go...
1. If you say what you said above three times, Paul Krugman will appear. To lecture you. If you get to hear about how a faked alien invasion would be a great thing for the economy, told in wild-eyed fashion, bonus, because that's just amusing on so many levels.
2. The government can print a million bajillion dollars and it will have no negative effect. We have had so many great discoveries and advancements over the years, silly us overlooked the idea that we can print our way to prosperity. Your children and their children will thank this generation for figuring this out while they sit on the beach watching funny cat videos on Youtube and texting each other while the robots (built with printed money) do everything.
3. No, the idea that we can print and print and print does not sound like porn to politicians and their cronies. No waste or malinvestment will happen, either. Government will print and print and print and not spend it on things like infrastructure or improving education in this country, because that would be just silly. By the way, no such thing as malinvestment. Solyndra was a "valuable learning experience".
For all of this incredibly, deeply sarcastic information.... you're welcome.

My thanks to all the MFO people who kindly helped (and succeeded) I am sending this string to my adviser and telling him to shape up or ship out.The quality of the information I have gotten over the years ranks head and shoulders above other newsletters (and it's FREE) I suspect that there are some brilliant money managers hiding behind those aliases. Muchos gracias, Alejandro

The Fed published these results in 2015 for the year 2013:
On Home Equity:
"Another measure is to compare net worth to the median sale price of an existing home in the last several years--- about $200,000. Do that and you find that the net worth of the median household is no more than the value of a median priced home. Even among the top 25 percent, net worth is never more than about 3 times the value of the median home. This suggests that our collective wealth is pretty thin. Most people have the bulk of their wealth in home equity. (Talk about scary notions.)"
chasing_the_big_dogs

Note: Fidelity's study covered the 23 year time-span, 1992-2014 (limited by availability of the data they sought).
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Excerpt #1 - "The average actively run U.S. small-company and foreign large-company stock fund beat their prospectus benchmarks over those 23 years after all ongoing fund expenses. The average margin was about 100 basis points. Active U.S. large-cap funds trailed their prospectus benchmarks but by a moderate 67 basis points, meaning that they did outperform before paying their expenses."
Reaction: I'm not surprised. The advantage of indexing appears most pronounced for large-cap domestic stocks. If you own a diversified managed fund (like PRSGX), diversified across global markets and holding smaller as well as larger companies, the performance difference between that type of fund, on average, and the appropriate indexes is likely negligible. (*The latest annual report for PRSGX shows the fund invested 33% in international assets with an ER of .78%.)
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Excerpt #2 - "Funds that feed in big, highly liquid markets and which follow buy-and-hold strategies may benefit from heft. A giant asset base gives them giant revenue streams, which may be used to staff large research teams, hire expensive talent, and receive [glances furtively] better access to company managements. Scale also leads to lower expense ratios, which of course most directly aid fund returns."
Reaction: I agree. I also think there's a popular misconception regarding the term "manager." It can refer to a single "hands-on" individual like the well known Peter Lynch and Garrett Van Wagoner - as critics of managed funds like to point out. However, more to the article's point, "manager" can also reference a team of highly capable individuals able to synthesize a variety of research-based insights into markets, revenue streams, management, market capitalization/value, and technological and geopolitical trends in ways a solo manager cannot. (The style is notable at Dodge and Cox.) As the author suggests, such companies tend to buy and hold for very long periods.
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Excerpt #3 - "There’s nothing in there to indicate that indexing is suboptimal. On the other hand, it does indicate that active investors aren’t dupes, as commonly portrayed. After all, most of them have been investing in the largest fund companies, and most of them have gravitated toward the cheaper funds."
Reaction: None. He says it very well.
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Excerpt #4 - "Clearly, funds that invest in niche, illiquid markets and that trade frequently will quickly struggle with incoming assets. So, too, will many funds that hold concentrated portfolios."
Reaction - This is outside the purview of most of the article, but reinforces something I've long suspected. Many funds with exotic strategies (long-short, market-neutral, hedged, multi-asset, etc.) outperform for brief periods only to disappoint investors later. As the author suggests, much of this erratic performance is related to "hot" money moving around. Initial inflows propel the funds upward, but (predictable) outflows later work to their detriment.

FYI: When Baron Funds unveiled an emerging-market fund at the end of 2010, it seemed like a departure for a boutique firm best known for its intense focus on growing entrepreneurial companies.
Baron Emerging Markets manager Michael Kass focuses on the rise of the emerging market entrepreneur. Photograph: Ken Schles for Barron’s
Yet that’s exactly the premise behind the four-year-old, $1.6 billion Baron Emerging Markets (ticker: BEXFX). “The next stage of emerging-market growth is all about the rise of the entrepreneur,” says Michael Kass, whose all-cap fund is up 10.5% a year over the past three years, better than 97% of emerging-market funds. “I refer to it as EM 2.0.”
Regards,
Ted
http://online.barrons.com/articles/betting-on-the-emerging-market-entrepreneur-1431743945#printMode
M* Snapshot BEXFX: http://www.morningstar.com/funds/XNAS/BEXFX/quote.html
Lipper Snapshot BEXFX: http://www.marketwatch.com/investing/Fund/BEXFX?countrycode=US
BEXFX Is Unranked In The (EM) Fund Category By U.S. News & World Report:
http://money.usnews.com/funds/mutual-funds/diversified-emerging-mkts/baron-emerging-markets-fund/bexfx

Since I think most company officers vote for measures that increase their income, I routinely vote against them with my proxies. I also presume that the independent directors, usually selected by other directors, are beholden to the board and the company, and are not truly independent, so I vote against them also. I can't imagine any company administration would select board members who would restrict management income.
If it is true that the independent PIMCO director, who voted against Gross' $200+ bonus when he ranked in the bottom 10-20% return for bond funds, was forced off the board of directors, it only solidifies my POV.
Seems to me, that index funds have an obligation to their shareholders to enhance their performance against the index, when it can be done cheaply. Therefore, they should vote against boards when companies underperform their peers, especially if the underperformance exceeds a pre-determined number of years. This allows activist investors, who usually enhance share-holder value, to have a greater impact.
The Wharton study is a bit disappointing; I would have hoped for a greater impact.

Scott, your own research and DD is good from what I've seen. Ignore the media, it's a time waster.

Thanks. It's not that the media usually bothers me and it's not that there aren't biotech companies that aren't overvalued based on the hopes of potential pipeline product. It's just that it's a little irritating that companies trying to solve considerable health issues are repeatedly lumped together as a bubble whereas all manner of ridiculous tech/social media nonsense is fawned over and no one questions that it could be a bubble until all of the sudden the major names (Twitter, Yelp, Linkedin) are down 30% all of the sudden and then they go, "Gee, was that a bubble?".
I do think that there is an aspect of financial media that does "sell" companies that are easily grasped by even the most uneducated retail investor. Jim Rogers called CNBC a "PR firm for stocks" - I do think it is sort of a marketing agency for stocks in a way and it becomes what's the easiest and most marketable sector that they think is "sexy" and will get retail interested. This often leads to eventual bagholders, as rather than getting people into quality companies with consistent performance, it's hyping whatever name or names have momentum. Financial media does little in the way of financial education, it's - and I think it's gotten worse in recent years in terms of hype over substance. Perhaps if CNBC went further in creating longer-term investors, its ratings would be better.
Yeah, there's some focus at times on the dull and boring, but the majority of time is spent fawning over the Ubers of the world, at least until reality sets in.

FYI: The average large-cap growth mutual fund has lagged well behind its midcap and small-cap peers in the past 15 years. But top performing large-cap growth mutual funds have managed to stay ahead of the broad stock market during that span and several are doing so this year.
Regards,
Ted
http://license.icopyright.net/user/viewFreeUse.act?fuid=MTkzMzcwODA=
Enlarged Graphic:
http://news.investors.com/photopopup.aspx?path=WebLVpent051315.jpg&docId=752343&xmpSource=&width=1000&height=1120&caption=&id=752331

I charted an investment in FCNTX on the day Will Danoff became the funds manager (09/17/1990) vs. LEXCX.

I wanted to indulged your chart a bit further. 1990 was about the time when I first invested in Vanguard Healthcare, VGHCX. Here are LEXCX, FCNTX, and VGHCX over the last 25 years:. All three seem to have great market cycle performance (30ish years).

Why do soe people who havw demonstrated they cannot do their jobs gdt hired to do other jobs. Or is it the same job?
It wouldseem the investment managemet, pretending to do it, or writing and talking about it, has been the place to be over the last, almlst forever years. Absolutely no barrier to entry, and the outcome is ake hundreds of hundreds of billions or zoewhere in between.
Blaine Rollins still has a paycheck...great...I keep wondering how my kids will suffer throught their lives

The floating rate funds do look promising.

John, I think they do look promising from the viewpoint of their lack of sensitivity to interest rate increases. For example, the fund below has a duration of 0.40 years.
T. Rowe Price Floating Rate PRFRX
However, look at the credit quality.
So if the economy does well, they probably do well.
If we have negative surprises and the economy does quite poorly.........that's a different matter entirely.

One of the practices that I adopted years back, for better or worse, is to take short term and capital gains distributions (taxable accounts only) in cash. I am already paying taxes on them, so why not simplify things by avoiding reinvesting.

Hi Maurice,
What are you referring to when you say "why not simplify things by avoiding reinvesting"?
Best Regards,
Mona

Hi Junkster,
In a very short space, your comments managed to be vituperous, tasteless, and inaccurate. That’s quite a trifecta for a single entry.
Good health is an essential ingredient to the likelihood of an extensive longevity. I hope you enjoy your hiking and continue to do so for a long time. That exercise program is a major contributor to a positive lifespan outcome. I too hike, but for much shorter distances these days.
I’m surprised that MFO’s own Mini-Me hasn’t joined your diatribe just yet. But I’m patient (that’s a characteristic of old age); that too is likely to happen. On the happenstance that you don’t recall, Mini-Me is a comic nemesis to Austin Powers in the movies of the same name. Here is a short clip:
http://www.google.com/search?q=mini-me+austen+powers+movies+videos&hl=en&gbv=2&oq=mini-me+austen+powers+movies+videos&gs_l=heirloom-serp.3..30i10.25394.28156.0.31414.7.7.0.0.0.0.379.1102.0j6j0j1.7.0.msedr...0...1ac.1.34.heirloom-serp..0.7.1098.CVtdvDNOrfo
It surely is a “hard knock life” if you choose to make it so. I don’t.
I fully understand that Monte Carlo simulations are not everyone’s cup of tea. I merely offer it as one candidate financial planning tool. If it is not attractive from your perspective, the functional solution is simple: just ignore it. I really don’t care if you do or you don’t. You’re always free to choose.
Twenty years ago I developed my own retirement Monte Carlo code because none existed at that time. In that same timeframe, Bill Sharpe was developing his version. It’s now accessible on his Financial Engines website. I called Professor Sharpe to help in a few tricky programming places. He graciously provided guidance. I recognize that you have little interest, but other MFOers might, so I’ll link to his Financial Engines website now:
http://corp.financialengines.com/
Sharpe also offers a Social Security planner on his site. I have not used it.
You do yourself a disservice with your insipid submittal. I’m baffled by the animosity displayed by a few MFO members. Question the message, but don’t disparage the messenger based on pure personality conjecture.
Regardless, I do extend you Best Wishes for a long, a happy, and a prosperous life.
Quick Edit: It happened as anticipated!

"And all a result of a couple years I spent as a futures broker way back in the early 70s."
If you were a futures broker, what do you think of futures exchanges (ICE, CME) as investments?

Scott, stocks are not my bailiwick. Plus, based on the wide disparity in our ages, we would have different time horizons. I do note CME is still far below its 2007 highs, a rarity in this market. Albeit it had a spectacular run prior to its 2007 highs. You would know this more than me, but aren't there bears saying that exchanges like CME and ICE will become obsolete at some point in the future because of technological advances? Speaking of the CME, one of the biggest personalities I ever met and had a long conservation with was Leo Malamed. Probably one of the few times I was ever intimated with anyone in the financial industry.

@bee: This is a recent format change for M*. The fund family page at one time was accessed by clicking a box in which you scrolled in alphabetical order. Its a great tool tha the Linkster has used for years.
Regards,
Ted

"And all a result of a couple years I spent as a futures broker way back in the early 70s."
If you were a futures broker, what do you think of futures exchanges (ICE, CME) as investments?

Franks Holmes loves to talk. His free e-newsletter is one example of excessive "word-smithing". Most of his funds have been destroyed by commodity deflation.
Here's a link to all of his funds and their performance...nothing but poor performance and high fees.
usfunds.com/our-funds/fund-performance/month-end-returns/

Amen!!! But then I am heavily biased against commodity/precious metals funds of any stripe or color. And all a result of a couple years I spent as a futures broker way back in the early 70s.

What's all the hellavalo over?
The snippet is a short, simple, multi-pronged piece presenting one financial advisor's view on the subject we've all been discussing. If you're interpreting it as "heavy" reading, you're probably over-reacting. Yahoo is good at tossing out short and incomplete attention-grabbers like this one. I guess that's how they sell ads. If you read Yahoo's business pages you already know this.
There's a few interesting facts: The number of recipients taking SS early has been growing (although we hardly needed to be informed of that). A Gallup Poll survey showed "... more non-retirees ... than at any point in the last 15 years are planning on Social Security to be a major source of their retirement income ..."
The advisor's main point is, I think, offered a bit tongue-in-cheek in the form of a "paradox". A good paradox often expresses an underlying truth contained within an apparent absurdity. Perhaps that's why the reactions are so divergent.
The underlying truth here is that those at 62 are, health wise, better able to enjoy the extra income from early SS payments by engaging in travel, hobbies, and other life-enriching experiences (and the adviser thinks they should avail themselves of the opportunity.)
The obvious absurdity is that only those who don't need the money can afford to take it early.
Best wishes

Hi Guys,
Probably like most of you, there are financial writers I like and trust, and others I do not. Jaffe falls in the positive category, but not without reservations.
Some skepticism is a practical defensive device whenever accessing any financial opinions. I mostly find Jaffe’s columns informative, but buyer beware since there is a tendency to distort presentations to buttress a position.
Jaffe shows promise as a financial commentator. Proof of that is in this referenced column. He wisely chooses to close his assessment by liberally quoting MFO’s own David Snowball. Jaffe’s choice in this regard is spot on-target.
Congratulations to Professor Snowball. The reference to his perspective on this subject gives him a wider, more diversified audience exposure.
But care must be exercised when reading Jaffe’s documentation. It seems as if he is playing loose with statistics. Instead of measuring a manager’s performance over an integrated timeframe, Jaffe resorts to a far less meaningful measure of 8 consecutive years of outperformance to generate his position. He says: “just four actively managed funds …. have current streaks of eight consecutive calendar years of beating the S&P 500, according to Morningstar.”
So what? The meaningful measure should be the time integrated end portfolio value of active management over the entire selected timeframe; a given bad quarter or a substandard annual return is acceptable if recovery is in evidence. Also, why an 8 year period? That specific a timeframe has the unhealthy likelihood of data mining.
Understanding the reasons for making any investment decision is necessary for success.
Remember the infamous 1720 South Sea bubble when one absurd trading company attempted to sell its shares with the following goal: “For carrying on an undertaking of great advantage; but nobody to know what it is.”
History may not repeat itself, but many times it rhymes. For example, recall Speaker Nancy Pelosi’s quote: “We have to pass the Health Care Bill so you can find out what's in it”.
Even Isaac Newton fell victim to the lure of South Sea profits. He lost a ton of money. A brilliant mind is no guarantee of investment foresight.
So the cautionary lesson here is that financial articles, even those from writers who are mostly respected, must be carefully read and aggressively challenged to recognize nuances in the presentation, and biases in the perspective.
Best Regards.