FYI: I make investment changes at a glacial speed. The last change was about five years ago when I combined micro-cap stocks with small-cap value stocks to reduce the number of funds in the portfolio. Before that, I eliminated a preferred stock allocation, which was fortunately done right before the financial crisis. Over the coming year, I believe the opportunity may present itself for another change.
Currently, 70% of my stock allocation is in US equity and 100% of my bond allocation is in US bonds. Sometime in 2015, I may shift my portfolio to a more global stock and bond allocation
Regards,
Ted
http://www.rickferri.com/blog/investments/my-expected-investment-changes-in-2015/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+RickFerri+(Rick+Ferri+Blog)

Hi Guys,
http://awealthofcommonsense.com/
I too consider this chart one of my favorites. It presents extremely broad asset class returns over a 10-year period.
The chart once again illustrates the random nature, the patternless character, the ramblings of the various major asset classes over the last decade. Good luck on consistently picking these winners ahead of time.
This is a big reason why active mutual fund managers have such a challenging task to outdistance an appropriate benchmark. It adds another dimension to investment risk. Forecasters can’t forecast with any reliability. It’s that reason plus the additional handicap of higher expenses in several directions that dampen active mutual fund returns. There’s an easy lesson here.
Please give the chart a little time. It’s worth the effort, and just might contribute to a more profitable 2015. I hope so. Good luck and good health to all.
Best Regards.

Great chart. Now that sets up a challenge for everyone. Rearrange the blocks for 2015. Commodities are down 45% last 4 years, but I am loathe to pick them above water. I like aggregate bonds over 5%.

Hi Tanpabay, Hi Mrdarcy,
Thank you for reading and reacting to my posts. I really appreciate feedback since that implies that I reached both your minds and your emotions.
But I didn’t expect the harsh nature of your highly charged replies. I suppose football does cause such sharp reactions from some loyal fans; football touches many emotions and nerves. I’m not one who is so influenced by football.
I didn’t comment or forecast the outcome of the Rose Bowl game because I simply did not care one way or the other. I had no skin in the game although I have a close relative who has both her undergraduate and graduate degrees from Florida State. I try to never forecast since that is a Loser’s game.
My primary purpose in referencing the Oregon-Florida State game was to introduce the investment reversion-to-the-mean concept in a manner that would attract MFO readership.
From your replies, I succeeded, but not in the way I wanted. You focused on the peripheral introductory football analogy, and not on the main investment regression topic. I’m disappointed.
You guys misinterpreted the extent and the thrust of my football analogy. I was surely not writing about the Florida State 2012 and 2013 seasons. They were superb and honestly earned by a superior football squad directed by a Heisman quality quarterback in 2013.
My comments centered only on Florida State’s 2014 season. The 2014 team did not dominate opponents like in previous years. They fell behind in a majority of their 2014 games by huge negative margins, and were very fortunate (lucky) to pull these games out of the fire. Their escapes baffled handicappers. Professional odds makers estimate that the team had something like a 1 in 10,000 chance of winning all those games. I wanted to illustrate how quickly luck can evaporate.
Also, the Florida State quarterback in 2014 did not play to the high performance standards he established in his Heisman trophy year. Statistically, the Oregon quarterback possessed a much more impressive 2014 record. That’s why he won the trophy this year. In the future, he too will likely suffer a regression-to-the-mean.
I’m sorry that you fellows are so sensitive to the Rose Bowl outcome. It neither pleased me or displeased me whatsoever. My posting was designed to direct attention to the random, checkerboard character of major investment classes, their non-predictability, and their reversion-to-the-mean tendency. The football commentary was meant to be merely ancillary.
By the way, I do Las Vegas about three times a year, and sometimes (rarely) leave with a fatter wallet. I also ran a small consulting firm after retiring as the head of a major research operation. The lesson here is to not make wild guesses or false assumptions. You never know who is on the other end of the exchanges.
I really take no umbrage from your comments. Once again, thanks for reading my posts.
Best Wishes.

Thanks @MJG for that comment. Charlie Munger believes in efficient spending of money not matter the purpose or the entity whether you and I or the government. Waste is waste.
While my views of Buffet have gone south in recent years, I alway enjoy reading anything by Charlie Munger. I will have to check out your recommendation above.
All the best.

Thanks @MJG. I appreciate your linking to those charts.
Oregon is a football machine. The big boys of old had better take notice. Oregon has been good for some years now but this years the stars aligned for them. It must be those cattle rancher's sons from the east side of the state. Bucking bales of hay before they go to grade school in the morning makes them strong. I don't know what they buck there in Florida?

Thanks @bee. There does seem to be a general thinking that this market will have a good 2015. I think that's true for the first part. The usual tendency when we come off a good year are expectations of another one as the circumstances have not changed. Human optimism I suppose. We shall know in a years time.

I don't pay to read his newsletter, but here's a few excerpts from linked article:
"Veteran stock forecaster Richard Russell, editor of the Dow Theory Letters, predicts the U.S. market is about to enter the third — and possibly the most profitable — phase of an epic bull market.
Russell says his 60 years of experience in financial markets tells him his optimistic outlook is on the mark for 2015.
"Is it too late to enter the market? Investors should remember that stocks often advance as much in their third phase as they did in the first and second phases combined. Like a giant magnet, the US stock market is in the process of attracting money from all over the world," he writes.
Russell-stock-market-bull

I had only 2 that beat the S&P500 this year:
Janus Contrarian JSVAX +17.32%
Bridgeway Aggressive Growth + 14.99%
Now, having dutifully answered the question at hand, I have 2 related questions:
1. Why did the big Vanilla Indexes do so well in 2014?
2. Why have they done so badly over the past 15 years? ( e.g. VOO +4.24% annualized)

Looks like PRBLX (14.48 per Parnassus, 14.49 per M*) beat the S&P but not DSENX (17.70 per M*), but the other Parnassus large cap U.S. fund, PARWX, beat both (18.50 M*, 18.51 Parnassus).
Also, VFTSX, Vanguard's SRI index fund based on the S&P, beat Vanguard's version of the full standard index (15.75 vs. 13.64 per M*), and leads it for 3 and 5 years now too. Lower fossil fuel % and a higher health care % probably account for most of the difference.
I own PARWX but not PRBLX, VFTSX, or DSENX (yet ...).

POAGX is the biggest position in my portfolio and I hold HQL, PRHSX and MEASX as well. Unfortunately, and I think Charles got it right, it was a tough year for the other 80% of my funds, even in the few cases when they were large cap funds.
All in all it was a tough year compared to the S&P, but I'll take some comfort in the fact that I was overweight most of the bad places to be this year, small caps especially, but I beat the category average 75% of the time and was in the top 20% of peer funds 55% of the time. Its the consolation prize that hopefully pays some dividends when we look back a few years from now :)

>> obviously an intelligent, forward thinking, realistic investor ...that wants earnings and PLANS for taxes as every American Should
You are much too kind. I may have a little bit of the first qualities listed, but I have never planned for taxes in my life (okay, maybe I once read an article about December selling against losses, or against gains, or something), and I have seldom or never taken conscious and methodical steps toward reducing them significantly. Usually I have had enough losses not to worry about gain impacts, except for the years of Roth conversions.
In that lesson from my father about actively aiming/desiring to pay a ton of cg tax, I think he also added, for the first time I had heard, the phrase about never letting the tax tail wag the investment dog.

"What if I spend 4% and make 8%, what should I do with the extra money.....
Dumb stuff...Those Guidelines...Forget about it..."
Save it for the years your portfolio goes negative.

Mike said: "It's based on earnings return of 4% plus inflation."
The inflation rate is key here. Whose numbers? We all know the government's are highly suspect. The Social Security Administration put the inflation rate at around 1.4% in determining benefits for retirees in 2015. It's been in that very low area several years now and may be accurate for some.
It's also very situation dependent. If you own a home or make fixed mortgage payments you'll probably experience lower inflation than renters. If you drive an electric car or subcompact or live in a warmer climate, the drop in oil isn't having the same inflation lowering effect as for others. If you've become more health aware in recent years, your food expenses are much higher. Lower cost starches and red meats are out. More expensive veggies , fruits, nuts and fish are in.
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We've been fortunate to only have to pull maybe 4-5% annually to supplement our pension for many years. But, I wouldn't be adverse to taking up to 7% if the need arose.

Most financial experts are predicting lower total returns moving forward. If that is the case, and I believe it is, the 4% rule can not hold up. It's based on earnings return of 4% plus inflation. That is suppose to keep the retiree solvent for 30+ years.

FYI: For the last 20 years there has been a steadily consistent rule of thumb by America's financial planners when it comes to retirement — the 4% rule.
Regards,
Ted
http://www.usatoday.com/story/money/columnist/brooks/2014/12/30/retirement-401k-pension/20774021/

Okay, we understand you are in a higher tax bracket than some; you have pointed it out now more than once. I think a general question some are wondering is, What do you care really? Perhaps I should speak for myself. Make as much as you prudently can and then pay the taxes. That's what some of us do anyway. Dog and tail and wagging; you have heard that phrase. No fence-swinging, sure. But no fretting taxes for the most part.
Tb is a businessman with staff, I believe, so was simply analogizing about priorities. (Tb, apologies if misrepresenting you!)
More concretely, have you talked with a savvy cpa or cfp about max funding of Roths and moving all possible non-Roth moneys into Roths and the like? (Yes, tax hits there for sure.) That is what I did many years ago, bit the April bite, and am glad of it.
Maybe none of this sort of thing applies to your situation. Some of us also have 'large' (in some sense) portfolios. Just not seeing how 'tax-adjusted returns do mean something', ultimately.

BIRMX lost 21.54% for the 2014 (as of 12/30/14) based on the transfer agents' records on their web site:
http://www.mutualss.com/currentprices.aspx
Also, the fund has been closed for years to new investors. So if the fund is closed to new investors, where is the new money suppose to come from to grow its asset base?

I am one of those that also likes red and green (if you live in New Mexico it is a must. Has to do with chile.) I have a wide range of holdings that include utilities, reits, health care and biotech, plus the usual suspects of dividend growth and large value, etc. etc. If I had not been diversified this year, would have missed out on the 25% gain in utilities and reits which I normally do not expect to excel in good years. Of course, I am in the red on intl and emerging market, but you never know when they will take off, thats why I leave them alone.
Good conversations, thanks

"John, you're not putting new money into the fund with a reinvestment of a cg distribution. You have exactly the same investment you had before, except that you've picked up early tax liability for some of the fund's gains. "
Agree, but I am talking about after the fact. Money wise, it's a wash but you end up with more shares. As time goes on those added shares help to grow the investment. Granted, you need to hold the fund or investment for a period of time.
A mythical example; Say If you bought 100 shares of a fund and never bought another share, and that fund declares distributions regularly. After 10-15 or so years you end up with 120 shares. While you did not make money on those distributions, those extra 20 shares are working for you, hopefully in your favor.

I worked for 50 years, I guess "interesting' is one way you could describe it!