-Morningstar Reply referenced above
" I do really apologize for the inconvenience and that I do not have a resolution at this time, but I can assure you the problem is being worked on, and I will reach out as soon as I have some more information.
Thank you for your patience and understanding."
Best regards,
Lizzie
-------------------------------------------------------------------
SAME OLD - SAME OLD --- I have heard this tired old refrain from M* reps.
------FOR YEARS !!!!!!!!!
ralph

FYI: U.S. stocks closed higher on Tuesday as investors welcomed stronger-than-expected construction spending figures for October as well as robust car sales data. November car and light truck sales were second-highest in eight years, according to figures from Autodata.
Regards,
Ted
http://www.marketwatch.com/story/us-stocks-rise-dow-closes-at-record-2014-12-02/print
Bloomberg Slant: http://www.bloomberg.com/news/print/2014-12-02/u-s-stock-index-futures-are-little-changed-after-s-p-500-slips.html
Markets At A Glance: http://markets.wsj.com/us

Hi Davidrmoran,
Thank you for your reply. I originally thought that you indeed dropped a “not” in your opening statement.
Apparently that was not the case, and you provided 3 references that purportedly support your memory of their writings. As President Ronald Reagan said: “trust, but verify”. As a matter of personal policy, in most instances I do try to verify, even my own flawed memory.
In the financial universe, almost nothing is totally black or white, but rather varying shades of gray that change over time. Diversification mostly works well, but does suffer from shortfalls and application limitations. The market experts mostly rate it a net plus when scoring the advantages and the disadvantages.
The three articles that you referenced do discuss both the merits and the hazards of diversifying, especially in the International marketplace. But your choices were somewhat puzzling. Their bottom-lines strongly agree with the position that I presented; most recently, correlations, particularly International ones, have collapsed towards the perfect correlation One level. That tends to neutralize the benefits of holding international elements in a portfolio, but does not completely eliminate their advantages.
In the Michael Schmidt article, he concludes that: “There has, however, been a trend of increased correlation between the U.S. and non-U.S. markets.” That’s precisely the thrust of my comments.
In the first John Waggoner article, he says: In “The past five years, Lipper's large-cap core international and large-cap domestic core indexes have a 94% correlation.” The Vanguard study shows that was not the situation 10 and 20 years ago.
In the second John Waggoner article he asks and answers as follows: “Is it time to re-think diversification strategies? No. But it's a good time to make sure you're really diversifying your portfolio.” In another section, he says: “And diversification is a good strategy.” Still further in the reference: “Foreign stocks tend to move in lockstep with U.S. stocks these days — particularly when the markets are down.” Again, this column really reinforces the arguments that I offered.
Enough! Your references added depth to the Harry Markowitz academic findings that diversification is important when assembling an efficient and effective portfolio. Any correlation coefficient between two components below “One” helps to lower the portfolio’s overall volatility (standard deviation).
That’s goodness to enhancing compound returns over the years, dampening negative market swings, lowering the odds for a losing annual return, and influencing an investor to control emotions to stay the course. Diversification does not eliminate risk from the marketplace; it does help to manage it.
Time to move ahead now. This is a minor matter that has likely wasted too much of both your valuable time and mine. Memory should never be fully trusted.
Have a great Holiday season. Best Wishes.

Hi Davidrmoran,
I too am not now a financial advisor client. I did use one in the early 1960s until I realized he had more incentives to churn my portfolio rather than increasing its value.
I recognize my personal experience is not universal, and the financial advisor industry can and does provide useful services for many customers. They educate and hold hands for those with weak stomachs or itchy trigger fingers. To paraphrase a Charlie Munger observation: As a money manager, he has experienced 50% drops 3 times in 50 years. The market is always 2 steps up and 1 step back. If you can't handle the 1 step back you shouldn't be in the market.
I suspect you suffered a dyslectic moment (it happens to me too) in your opening statement: “If you examine correlation history, and not just recent, global markets very often do not provide much diversification.” I remembered the data with just the opposite impact. So I checked to verify.
I used Vanguard as my primary historical data source, and updated their data summary and analysis with work I completed using Portfolio Visualizer.
Here is the Link to the Vanguard study titled “ Considerations for Investing in non-U.S. Equities”:
https://personal.vanguard.com/pdf/icriecr.pdf
The report was released in March, 2012. It concluded that although correlation coefficients have closed towards a perfect correlation of One value, diversification still mitigates individual investment class volatility and contributes towards end wealth. Vanguard concluded that a 20% to 40% foreign holding equity position had merit. Beyond the 40 % level the law of diminishing returns took hold, and in fact, acted to retard the portfolio.
Correlation coefficients are highly volatile entities. Just observe the noise like signal of the 1-year data and contrast that against the 10-year signal like data, both displayed in the Vanguard 15 page report. The data is given for many foreign Countries. It clearly demonstrates lower correlation coefficients in yesteryear with a definite tendency towards closure recently. In yesteryear, the correlations resided in the 0.4 to 0.6 range; today, those correlations are North of 0.8.
Since the Vanguard data ended a few years ago, I updated it with an analysis I made using the Portfolio Visualizer website source. Here is the Link to the Portfolio Visualizer Asset Correlation toolkit:
http://www.portfoliovisualizer.com/asset-correlations
When I said “global market diversification” I meant it in its most general sense to include all categories of asset class options. I updated the Vanguard study by examining the more recent correlation coefficients among the S&P 500 (VFINX), the total Bond market (BND), the FTSE (VEU), Emerging markets (VWO), and REITs (VNQ) as an incomplete set of primary holdings. I did mix mutual funds and ETFs since they reflect my current positions.
I had the Portfolio Visualizer compute correlation coefficients for 1, 3 and 5 years of the most recent data. Results bounced around, reflecting the unstable nature of correlations. The Bond asset retained a negative correlation against the equity holdings. The equity correlations were in the high range, very similar to the quoted Vanguard data sets with one exception. The 1-year Emerging markets correlation with the S&P 500 reverted backward to a 0.66 value.
Sorry for this detailed examination, but I felt your opening statement needed further clarification. Perhaps we are using different definitions for the short-term and the long-term. Timeframe disparities cause investment misunderstanding and need careful definition. Unfortunately, by selectively choosing timeframe, almost any position can be supported with a prudently screened data set. Statistics must always be fully scrutinized.
We agree that the article could have been more meticulously researched and more comprehensive. The cautionary “reader beware “ is warranted here.
Best Wishes.

@00BY: Here's what Steven Goldberg of Kiplinger has to say about Stephen McKee.
Regards,
Ted
http://www.kiplinger.com/printstory.php?pid=9293

That was 2 years ago. Old stuff and McKee hasn't done well past year. Waste of money.

"There is also another consideration in this as companies like GE have a healthcare component within them but they are classified differently. Toshiba is another company like that as well as Siemens. The latter two are not SP500 companies but I added them for examples. There may be others."
The problem - as you noted - they are classified differently and also, they trade like industrials rather than healthcare companies. I haven't looked at what % of GE's business is healthcare lately.
"The bigger question might be at what point does an investor have too much in healthcare?"
As noted above by Ted, healthcare makes up around 18% of GDP. Not only is that an enormous figure already, but - as noted above - it's predicted to grow faster than the economy for the next several years. With the idea that people have to buy health insurance or effectively pay a tax, certainly a tailwind for healthcare. You're seeing more in the way of organic growth with healthcare, as well, not all buyback/financial engineering a-la IBM.
The other aspect of healthcare is that there are a number of themes at work, including an aging population and unhealthy lifestyles that persist for many reasons (I mean, look at the chart of NVO.
http://finance.yahoo.com/echarts?s=NVO+Interactive#{"range":"max","scale":"linear"}
The question for me is when does government turn around and say, "enough is enough" and try to regulate costs that are spiraling out of control. If they crack down, then things change in a hurry. I just don't think that's going to happen as no actions from the government thus far would lead me to believe that they will. I mean, they're corporations, so for the last decade they're the ones who have increasingly been catered to and looked after by government in this country.
Until then, I think one has to have a good deal devoted to healthcare and preferably specifically healthcare. There is a point where it starts eating away at discretionary spending, as well - does health insurance start moving higher to the point where people skip that latte?
The question of how much do you need in healthcare - I dunno, for me, I think it's a broader focus on "needs" (which certainly includes healthcare) over "wants".

@catch22, and others;
I previously commented that the healthcare component comprised 12% of the S&P500 index. That is confirmed here, http://www.bespokeinvest.com/thinkbig/2013/3/11/historical-sp-500-sector-weightings.html although the data is two years old. I don't think there has been that much of a change.
As for returns, the healthcare sector within the index has returned 25% YTD. This from the Yardeni research. http://www.yardeni.com/pub/PEACOCKPERF.pdf
So anyone holding the SP500 index has a 12% exposure to healthcare already. The missing part of that is biotech. There might be a bit of that in the index but I think it is mostly comprised of big pharma etc. Is it still a good idea to throw an additional 5% of the portfolio into healthcare exclusively? I think so and with that you get the biotech components which are the big returners this year and I think for the future. As I have said before, I like "future stocks". There is also another consideration in this as companies like GE have a healthcare component within them but they are classified differently. Toshiba is another company like that as well as Siemens. The latter two are not SP500 companies but I added them for examples. There may be others.
Edit: Look at Fig.10 of the Yardeni link that breaks down the healthcare sector further into subsections and biotech is the leader at 35% return YTD. The others are not chopped liver either.
The bigger question might be at what point does an investor have too much in healthcare?

Hi @LLJB
You noted: "I have a question for you related to your points here and in another post about not investing less than 5% in "whatever" because it takes that to make any difference in your portfolio. I agree with you but I also realize it can depend on how you define your "whatevers". For instance, my position in PRHSX is 1% of my portfolio but I could count it as healthcare or I could count it as large cap growth or both. Either way it doesn't make or break the 5% rule in this case, but when you think about your 5% threshold, do you double count? And if not, how do you decide which "whatever" things get allocated to?"
>>>What I posted in another thread: Our house remains U.S. centric in the equity area, gathering whatever international exposure from the fund holdings. The only direct exception being, GPROX; at this time.
A serious consideration going forward is to maintain VTI / ITOT or similar holding for 40% U.S. equity exposure and PIMIX (our largest bond holding) for bond exposure, also at 40%.
The remaining 20% would be allocated to "other", as determined by market observations. Currently, this would be the healthcare sector. Any of these holdings would be subject to change, not unlike June of 2008, as previously noted. None of the 20% floater money would hold less than 5% in any one area; as too little forward appreciation could likely be the result. This could mean, however; that more than one fund could result in a given market sector.....i.e.; energy; to provide the 5%.
Regarding the 5% consideration for the "whatever" money.
The 5% minimum I personally use is for investments I consider favorable for my risk/reward tolerance; and that present what appears to have a decent capital appreciation potential.
This is relative to what I noted above; with maintaining 40% in each for VTI and PIMIX. Healthcare holdings are about 14% of VTI. This would meet my needs, if I wanted at least 5% in healthcare (14% of 40% of the total portfolio).
Obviously, 40% each to VTI and PIMIX indicates a major part of a preference for an overall portfolio, and is U.S. centered with the exception of non-U.S. companies within VTI, or more so, the earnings of U.S. companies generated outside of the country. So, one could weakly argue some foreign exposure.
Now, what to do with the other 20%? Cash at this house has been some form of bond holding. If we want to buy something else, we always have to sell some of a bond fund for the transaction (at least as of today :) ).
This is the part that generally has the consideration for the 5% to make any difference; for the investment to be worthwhile to the overall portfolio. Usually the 5% is purchased at one time. Although, I think it is fine to average into a holding, too. But, I if averaged into a particular holding; it would likely be within a one month time frame.
Today, with 80% of a portfolio in the above two holdings; this would be the mix for the remaining 20% if split 4 ways: GPROX (although now closed), FRIFX (conservative, decent performing real estate), GASFX (utiliy/energy) and FSPHX. Or the whole 20% into FRIFX , GASFX or FSPHX.
This is obviously a lot of fiddling around with a portfolio. With enough choices, one may also consider 20% into 5 balanced/conservative allocation/moderate allocation funds or etfs to spread manager risk. I note this as one balanced fund with a very nice return record for several years is in the tank this year....... VILLX is running a negative return YTD. Lots of folks with this fund who are not happy. We do not hold this fund, thankfully.
>>>You also noted: "For instance, my position in PRHSX is 1% of my portfolio but I could count it as healthcare or I could count it as large cap growth or both. Either way it doesn't make or break the 5% rule in this case, but when you think about your 5% threshold, do you double count?"
PRHSX is a sector fund and that is the only way I view such a holding. It is a special consideration; separate from a LC, MC, SC, growth or value equity. Such a fund could be a combination with tight restrictions from managers; such as a small cap healthcare fund, but it is still a dedicated sector.
>>>Also noted: " but when you think about your 5% threshold, do you double count?"
I will presume you mean overlap within holdings to form the 5% threshold. Yes.
I write singular here; but the portfolio is a household portfolio. At one time we both had several 401k/403b from investment vendor changes over the years. Early in 2009 we wanted a high percentage exposure to the HY bond area. We had about 45% of our portfolio invested in this area at one time, split among several investment houses within the retirement accounts. The same would apply to 1% from here and another 2% from somewhere else to meet the 5%.
I have not checked, but I suspect many broadbased equity funds have fairly high percentages of healthcare holdings. Depending upon your funds, you may have a fairly high overall percentage of healthcare.
In theory for some, is that diversification helps ease the pain when the markets are "mad". One could suppose finding 20 investment areas and givng 5% to each. I'm not convinced this method is of value.
I probably missed something with this long write; which was not intended to be this chatty.
Like me know about clarity; as it is too late at night for me, today.
Regards,
Catch

David,
Wasatch Funds, which provides granular detial were the first that came to mind, I have their WAGTX fund, here is a quote from their latest quarterly summary:
"We’re glad that despite a rough final quarter of the fiscal year, we were able to do a little better than preserve the exceptional returns that the Fund achieved over the prior several years. Today, while it could be argued that we’re winning based on the entirety of our performance, it clearly feels like we’re losing—mostly because we just finished a quarter and fiscal year in which the Fund underperformed the benchmark."
It certainly is no surprise Grandeur Park also provides detail, as they came from Wasatch.
For the rest of It:
https://secure.wasatchfunds.com/Our-Funds/Commentary.aspx?fund=WAGTX

@mcmarasco: Here's what Nellie Huany at Kiplinger had to say about health care funds back in September.
A revolution is under way in health care, and it’s not too late to cash in. Scientific advances are changing the way drugs are developed and creating a torrent of new treatments. By making insurance available to millions who previously couldn’t buy it, Obamacare is fueling demand for health care products and services. And, oh, by the way, we’re not getting any younger.
Put it all together, and this colossal sector is likely to keep growing faster than the overall economy. Health care spending in the U.S.—some $3 trillion a year—accounts for 18% of gross domestic product. The government predicts that the figure will rise by an average of 5.8% annually over the next eight years, slightly faster than the growth of the overall economy. That’s reason enough to make a long-term commitment to health stocks, but it’s not the only one. Three trends are dramatically changing the health care system, creating plenty of opportunities for investors.
Regards,
Ted

Howdy @mcmarasco
The below linked chart lets you look at about 3 years of numbers. You may move the days slider to the left or right for a different day span.
Review will likely find that most of the broadbased healthcare funds tend to move/track the biotech area. 'Course, all funds will have some variation as to the percentage of exposure to any of the health care sectors within that fund.
We added to the healthcare area in October when the market moved down a bit.
Others have noted, and I agree that it is an investment area that should sustain itself. Of course, this sector could cycle downward somewhat with a stronger selloff of broad equity areas.
Which decent funds your have access to, may be of some consequence; be they active managed or etfs.
M* health funds category list
bio etf & 3 active managed funds chart
Regards,
Catch

I have been contemplating putting about 5% of my portfolio into this arena. But I'm not sure if that is a wise move right now. Would I be "late to the party"?
I have been hearing and reading that this is the place to be but the returns over the last few years (and YTD) have been unbelievable. I don't expect that to continue, but is there still room for Healthcare to prosper going forward?? What about the Biotech arena? I know it is much more volatile than the broader "Healthcare" sector; but is it worth it???
I can take some volatility, so that is not a major concern. Furthermore, this industry also seems to be a nice diversifier, little correlation to the stock market as a whole!
Any and all thoughts, comments, ideas and suggestions welcome!!!
Thank you, Matt

@LewisBraham,
I agree completely and funny enough we were discussing the same about healthcare not too long ago.
mutualfundobserver.com/discuss/discussion/comment/50872/#Comment_50872
Obviously Emerging Global Advisors wasn't able to generate interest in their fund but did they or anyone else offer any reasons why no one is interested? Is it a question of marketing (because I'd never heard of Emerging Global Advisors) or a true lack of interest on the part of investors? You're article seems to suggest the latter but I also don't think there's much of the former. Considering the returns you cited over the past 10 years, both are a surprise to me.

I actually looked for the health care fund the other day to consider investing in, only to realize that the fund company had dropped a lot of their EM funds. Oh well. Long ABT as a boring EM healthcare play.

This 'SLOTH' at Morningstar with their 'Portfolio tool' updates has been going on for ------
YEARS !!!!!!!!!!!!!!!
Ralph

I believe these miners are down around 75-80% from their highs a few years ago. Once year-end tax loss selling is over, I must admit that I'm tempted to play the January Effect with them. A lot of people must be looking for tax losses this year, and these stocks are where they'll find them. The conditions for total capitulation seem ripe.

Turnover ratio is one of those statistics that should be colored coded in my opinion. According to the website Investopedia:
"Mutual fund turnover is calculated as the value of all transactions (buying, selling) divided by two, then divided by a fund's total holdings. In simpler terms, mutual fund turnover typically measures the replacement of holdings in a mutual fund, and is commonly presented to investors as a percentage over a one year period. If a fund has 100% turnover, the fund replaces all of its holdings over a 12-month period."
So turnover isn't just the selling out of holdings, but also the adding of holdings. Is it not plausible that a mutual fund that doubles its size (AUM) and then puts that new money to work by only adding shares (holdings) would have an annual "turnover ratio" of 50%? This scenario seem very positive and I color it green. OAKMX AUM hasn't double in size this year, but has seen almost a 50% increase ($12B to $17B):

Rummaging through OAKMX's M* data (which only list the top 25 stocks of a fund) I noticed that only one stock, (HD (Home Depot), has been held for at least 10 years. HD was first bought by OAKMX in 2002.
OAKMX holds 52 stocks (a fairly concentrated fund... see OAKLX if you want the Ultra - Nygren concentrated fund)
Of OAKMX's top 25 holdings listed on M*:
- Six are new as of this year
- Three more have been held for less than 2 years
- 14 stock have been held less 3 years or less
- 24 have been held less than ten years
- Nygren has increased shares to 23 of his funds top 25 holdings
Of these increases, Nygren made bigger bets on:
- Google by 24%
- Diageo by 20%
- AIG by 18%
- Qualcomm by 16%
- Saniflo, Apache, Mastercard, and Oracle by 12%
I guess my point is that even a fund with a mere 19% turnover can have an entirely different portfolio of stocks in any 5 year period (19% x 5 years). Conversely, mutual fund turnover ratio can be nothing more than a manager attracting more assets and putting that money to work by buying more shares of the same holdings.
I could be wrong, but much of Nygren's turnover this year seems to be attributed more to buying than selling (increasing the number of shares of holdings). His track record speaks for itself, but his recent share increases seems to speak optimistically of the holdings he presently holds. I color this manager's turnover ratio "green".
Another important note from Investopedia:
"The turnover rate in your mutual fund is really a measure of the frequency of transactions in your funds. In general, investors should analyze the turnover rate in conjunction with several considerations in determining whether or not to purchase a particular mutual fund. The fund turnover rate is not a silver bullet for your investment portfolio; it should be used as a complimentary decision-making tool. Other indicators, such as expense ratios, load/no-load, management tenure, investment philosophy and performance are (at least) as important as the turnover rate in helping you make the right investment decisions. "
Here are the holdings Nygren has added to:

Hi Hank. $2.90 not high by NY standards. Lowest I've seen around here is ~$3.05.
I was temped to get back into PRNEX about a month ago. Obviously glad I didn't. I'll just let the oil wars with the Saudis and Russian sanctions and North American oil ventures play out until I see some uptrend. No sense trying to catch a falling knife.
And miners? Haven't touched them in over 3 years and never will gamble like that again. Yeah, some year they'll go up 80%, but maybe 1 out of 100 people can time that right and make money at it... and that isn't me. Actually, fund managers playing the value game with PM miners is the reason I left ARIVX a couple years ago. A loosing game IM<HO.

@LewisBraham,
I agree completely and funny enough we were discussing the same about healthcare not too long ago.
mutualfundobserver.com/discuss/discussion/comment/50872/#Comment_50872
Obviously Emerging Global Advisors wasn't able to generate interest in their fund but did they or anyone else offer any reasons why no one is interested? Is it a question of marketing (because I'd never heard of Emerging Global Advisors) or a true lack of interest on the part of investors? You're article seems to suggest the latter but I also don't think there's much of the former. Considering the returns you cited over the past 10 years, both are a surprise to me.

FYI: (Click On Article Title At Top Of Google Search)
The playbook never changes that much for Bill Nygren, co-manager of the Oakmark fund. Emphasizing fundamental research and patience, he looks for undervalued stocks that can overcome their discounts. (The fund’s annual turnover is 19%, versus an average of 61% for Morningstar’s large-cap blend category.) However, Nygren isn’t afraid to make a few tweaks. Following a big upswing in equity prices since the market bottomed in 2009, the Chicago-based manager is finding few attractive companies that sport a single-digit price-earnings multiple. So he has added some growthier names like Google (ticker: GOOGL), which doesn’t trade at a big premium to the Standard & Poor’s 500 index. Nygren, 56, who has co-managed the $17.8 billion fund with Kevin Grant since 2000, has compiled good long-term performance. Oakmark (OAKMX) has beaten the S&P 500 over three, five, and 10 years, and ranks in the top 10% of its Morningstar peer group over those periods. Barron’s spoke with Nygren recently by phone.
Regards,
Ted
https://www.google.com/search?newwindow=1&amp;q=Oakmark’s+Bill+Nygren+Likes+Financials+and+Techs&amp;oq=Oakmark’s+Bill+Nygren+Likes+Financials+and+Techs&amp;gs_l=serp.3...15215.27183.0.28344.18.11.0.0.0.8.79.700.10.10.0....0...1c.1.58.serp..18.0.0.RUqQCPJVpE8

@JohnChisum, thanks!
It seems to me that Horrocks didn't make the best judgment not only from a return perspective but from a tax perspective as well. The 3 year returns for the fund are now below the category average and although I don't normally pay a lot of attention to 3 years, I've been considering my allocation for next year and MAPIX is going to be reduced.
Interestingly, I wrote a note to Horrocks a few days ago about the article he wrote for Asia Insight on Asia's Deepening Capital Markets. In it he said that Asia Pacific equity markets compose roughly 32% of the world's free-floating market capitalization and that it represents $20 trillion in market capitalization. When I look at MSCI's ACWI + Frontier Markets IMI index, they say 99% of the global investable equity opportunity set is a bit less than $43 trillion, and I calculate Asia's portion of that somewhere around 25%. I wrote to him because I was hoping he could help me understand the $17 trillion of global market cap that I'm missing, more than half of which is apparently in Asia. I don't have any response yet, which isn't that surprising given the holiday and all, but I'm wondering if his mistakes are growing in number.