I rarely read the talking heads because (and you learn this after almost 50 years in the game) they know absolutely nothing more than me, you, or the man in the moon. They just understand the art of articulation combined with a little bit of knowledge. Too bad knowledge isn't a marker for being a successful trader/investor. I could only skim through the verbiage but as John Wayne alluded to before " new bull market in bonds" ????? Has this talking head been on vacation all year??? And a sea change???? Haven't Treasuries this year already been saying a sea change????
Now let's see if those intraday lows in the 10 year hold or now that the talking heads are believers that yields gradually begin to tick up.

Agree with Scott - who understands this stuff better than I do.
Don't know if anybody caught the expert on NBR last evening who thinks Saudi Arabia and other big Middle-East producers are dumping oil on the markets to force the higher cost U.S. fracking operations to become unprofitable and close down. Just one theory, but makes some sense to me.
Oil moves in large multi-year swings. So, I'd caution anyone against trying to make a quick dollar on it. But if you can wait a few years for your payout, I'm of the belief it's one of the better opportunities right now. Unfortunately, as equity prices collapse, energy and everything else will go down as well. (No place to run...No place to hide. Katie bar the door.)
(In terms of funds, most natural resource funds are heavily weighted towards oil and tend to move with it.)

FYI: Did you feel the economic weather change this week? The shift was subtle, like fall tippy-toeing in after a pleasant summer to surprise us, but I think we’ll look back and say this was the moment when that last grain of sand fell onto the sandpile, triggering many profound fingers of instability [1] in a pile that has long been close to collapse. This is the grain of sand that sets off those long chains of volatility that have been gathering for the last five years, waiting to surprise us with the suddenness and violence of the avalanche they unleash.
Regards,
Ted
http://www.ritholtz.com/blog/2014/10/sea-change/print/

Neutral "risk profile" years ( 2014 being one) have tended to be flat to slightly positive in aggregate. http://stockmarketmap.wordpress.com/2013/10/10/market-map-model-1-risk-profiles/
The statistical strength of a 4th qtr. rally unfolding would seem probable. http://stockmarketmap.wordpress.com/2014/09/15/market-map-update-09152014/
As for the "curators of financial content", we have a hard time believing that, from the tri weekly appearances on CNBC (representing expert views on everything from the Palestine conflict to bank bailouts ) to writing content about Ferraris and the music business, that they would be able to put in the time needed for deep quant research and advisory.

Thanks Old_Skeet for posting your moves and not after the fact. What you are doing is fine for an investor and over time will turn out profitable for you as it always has in the past. As a trader though, the first rule I learned as a teenager after "cut your losses and let your profits run" was to "never average down on a losing trade/position". Again, from what I have seen over the years, it's the small time investors that accumulate the wealth and not the small time traders. I just try to be an exception. The small time traders think that I am old fashioned because they foolishly believe trading mutual funds is for their grandfathers or grandmothers. In other words, they believe it's like watching paint dry. Instead they feverishly trade in and out like whirling dervishes be it futures, Forex, or individual equities trying to make a few hundred here or there. In the end though and over time for the vast majority of them it's just like they are spinning their wheels on their way to nowhere.

>>>It's been difficult lately, to take the long-term view. But that's my frame of reference. I've got the world covered, leaving out Latin America, deliberately..... I hate to see the numbers, the last several days. Maybe I should just go fishing and start to think again in terms of YEARS. "I love it when a plan comes together." ---George Peppard. <<<<
Max where have you been most of this year?? Missed your posts. Not sure George Peppard is someone to quote in a topic of taking the long term view as his lifetime was pretty short having passed away at only 66 years old.

Hi rjb112,
I rarely, if ever, post on Bond and fixed income issues because I consider myself rather naïve on these matters. I plead an embarrassing level of ignorance. Many MFO members are far better informed on this subject than I am, so I suggest you address your income questions to these fine folks.
Since you asked, and since I have been investing in various forms of the fixed income universe for decades, I will submit a few incomplete thoughts on bond/fixed income investing. As usual, I will document my thoughts with a couple of references.
Using a ship as an analogy, equities are the power-plant that drive the ship towards a target safe harbor. Fixed income and bond components serve as a rudder to more closely align the ship on the desired compass heading. The rudder does slow the ship a little.
Volatility is very acceptable when you are young and accumulating wealth, but losses its attractiveness when approaching retirement. Hence, I morphed from a heavily weighted equity portfolio a few years ago to a more neutral portfolio (50/50 mix) today.
When wisely assembled, a balanced portfolio can almost maintain the annual returns of an all equity portfolio while reducing volatility (standard deviation) by half. Volatility always functions to attenuate compound returns below annual return levels.
Bond diversification helps to reduce overall portfolio volatility just like equity category diversification does. The bond market offers about as many subcategories as does the equity marketplace. Just like equities, these bond subcategories deliver a random checkerboard of annual returns; so the bond segment of my portfolio has many components to smooth the journey. Here is a Link to a Vanguard Bond Table of Periodic Returns:
http://www.vanguard.com/jumppage/international/web/pdfs/INTLCCRD.pdf
Just like the famous Callan Periodic Table of Investment Returns, the annual fixed income rewards bounce all over the space. Predicting future winners is an impossible task, so diversification is a reasonable strategy.
Likewise, forecasting future inflation rates and interest rates is also hazardous business. History suggests that the best guess for interest rates 10 years from now is what the current value is.
I do believe that just like market professionals have improved their skill sets, so has the Federal Reserve. I don’t expect wild inflation rate changes like those recorded in the late 1970s. The Fed actions can not guarantee a “soft” landing, but I do believe that they have sufficient control and data to pilot the economy to a “softer” landing.
However, I do not fully trust my projection of a more stable interest rate environment. Therefore, the bond portion of my portfolio emphasizes short duration elements as well as TIP components. Once again, uncertainty pushes me in diversification’s direction.
Costs always matter. That’s especially the case when investing in bonds. Very, very few actively managed bond funds outdistance their passive rivals. Given today’s low interest rate environment, costs are extraordinarily critical. I control costs by doing most of my bond business with passive Vanguard products (exceptions included later). They have served me well.
Even given the present low interest rate levels, bonds are still an important segment of an individual’s portfolio. Vanguard has a nice recent report that illustrates this point. Here is its Link:
https://personal.vanguard.com/pdf/s704.pdf
When my portfolio was rather thin, I decided to diversify into the bond market by using Balanced mutual funds. I was lucky and selected some winners. After decades, I still own these funds. They are the exceptions I noted earlier. These are Dodge and Cox, Wellington, and Wellesley mutual funds. I report these merely for the record, and do not necessarily recommend them for anyone.
I hope this is a little helpful. Sorry for this unorganized post; it is a series of random, real-time thoughts on your question. I’m lazy and commit little time to the bond marketplace. Please consult with better informed MFOers on this topic.
Best Wishes.

Quoting: "But you can’t plan on a stock market crash every single time stocks fall. Sometimes stocks go down without an enormous crash. Were it not for the occasional correction or bear market, stocks wouldn’t offer a risk premium over bonds and cash.
Plan on seeing stocks fall plenty of times over your lifetime, including the occasional crash."
It's been difficult lately, to take the long-term view. But that's my frame of reference. I've got the world covered, leaving out Latin America, deliberately..... I hate to see the numbers, the last several days. Maybe I should just go fishing and start to think again in terms of YEARS. "I love it when a plan comes together." ---George Peppard.
Fishing results: https://scontent-a-ord.xx.fbcdn.net/hphotos-xap1/v/t1.0-9/s720x720/10628570_10202606813880871_8137407407218187508_n.jpg?oh=8eaad4dbfee36c6483e3f21ffb6c55be&oe=54AE224A

An old quote - "The market teaches you to lose."
It may not be a 'crash' this time. It may begin as a steep decline and then a slow decline over years. Then there have been periods of trading ranges.

Hi Guys,
I couldn’t agree more. Whether its gambling, stock speculation, or long-term investing, its always a necessary policy to know the odds and the likely payoff matrix.
That’s an easy assignment when tossing a pair of fair dice. All that is needed is to count the number of combinations that produce a desired outcome. The probability of throwing a “7” is exactly 6 out of 36 possible outcomes, or 16.667 %, with complete certainty.
Complete certainty is never possible given the complex interactions, the vicissitudes of unknowable events, and the emotional responses to the markets from both professional and amateur investors. Since calculation of precise odds are an impossibility, defaulting to an examination of historical records offer an appealing compromise. These data are especially practical when estimating the likelihood of severe market meltdowns to gauge portfolio risk and recovery times.
I’ve identified two references that provide this requisite frequency data. The data comes from two respected sources and considers two long periods to allow timeframe comparisons.
The first data set covers 50 years and was generated by the Ned Davis organization. It records the DJIA returns. Here is the Link:
http://www.americansuperior.com/bear.htm
The second data set covers a far more extended timeframe, and is an American funds product. It too shows DJIA past market declines dating from 1900 to 2013. Here is the Link:
https://www.americanfunds.com/resources/basics/risk-and-volatility/living-with-a-market-decline.html
Both references provide useful market downturn frequency tables that are subdivided by decline magnitudes. Please visit these resources. Both include some limited discussion of lessons learned and offer guidelines on how to soften the blows.
Good luck and good investing decisions to everyone. Being familiar with the hard statistical market meltdown data will improve your likelihood for good decision-making.
Best Regards.

@rjb112, I agree. It's possible he is right but this might be one of those statements based on years of statistics. The bad years that saw huge declines might throw off the end results as would big up years. The purpose of the article is to tell the buy and hold faithful to hang in there. It's not as bleak as you might think.

" "Fairholme's 13.2% annualized return has outperformed 99% of peers over 10 years. " (FAIRX's performance over the past five years since is at the 98th percentile.) "
The question for us Fairholme investors is, were the last 5 years mean reversion and Berkowitz has no particular talent, or were the first ten years the "mean" for him, and we'll soon revert back to that?
As far am I'm concerned, if the answer is the former, I may give up on active management except for very low-cost, group managed funds such as Vanguard's non-index offerings.

FYI: Fixed income gurus, financial media talking heads and asset managers have been forecasting rising interest rates for at least two years. They were (and still are) wrong.
Even as recently as one week ago, bond prices took a hit on news of a jobs report that showed a pickup in hiring last month, but prices picked back up this week after Fed minutes revealed that some participants wanted to err on the side of patience to keep supporting the world’s largest economy for longer than expected.
This type of mixed news and uncertainty is likely to continue as the fear of a weaker economy outweighs the fear of inflation. But even if rates start rising in 2015, as is currently expected, it doesn’t mean panic and mass exodus from bonds.
Needless to say, investors in bond funds have been challenged to do a good job of managing the fixed income portion of their portfolios. With that in mind, here are 3 bond funds to buy now for uncertain economic and market conditions.
Regards,
Ted
http://investorplace.com/2014/10/3-bond-funds-unpredictable-market/print

@Tampabay: I've never been a believer in the so called 'eating your own cooking' theory. I could care less if a fund manager has any money in the fund he/she manages. The proof in the pudding is what kind of returns do they get. There is no evidence that funds who's managers invest in them perform any better.
Regards,
Ted

Businessweek, Jan 14, 2010: "According to a July 2009 study by fund tracker Morningstar (MORN), managers with more than a $1 million stake in their own funds beat 58% of peers, on average, over the past five years. Funds with no manager investment beat 46% of peers."
Whether this is credible evidence is debatable, but there is evidence.
Now the next sentence in this article from almost five years ago reads: "Fairholme's 13.2% annualized return has outperformed 99% of peers over 10 years. " (FAIRX's performance over the past five years since is at the 98th percentile.)

The author writes that the Trinity Study was updated in 2009 (it was updated in 2011 using data through 2009), says he conducted his own "research" over a 23 year period covering the years 1988-2011 (that's 24 years, from Jan 1 1988 to Dec 31 2011), and uses a single 23 24 year period (a curiously odd number) rather than rolling 30 year periods as Trinity did.
If one is going to use a single time period, then instead of his choice of 1988-2011, one might look at 1973-2002 (a true 30 year period). Eyeballing suggests this is the worst postwar 30 year span - starting with the dreadful 1973-1974 bear market (-48%), 1980-82, 1987 (a quick 3 mo. loss of 33.5%), and ending with the 2000-2002 loss of 49.1%.
(I really don't know how bad this would come out; it is left as an exercise for the reader.)
Bear market data: http://www.nbcnews.com/id/37740147/ns/business-stocks_and_economy/t/historic-bear-markets/
Annual Returns on Stock, T.Bonds and T.Bills: 1928 - Current
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

"It seems I delay in taking the profit & or gain. Does anyone care to chime in as to what they would do ?" Derf
On all my profitable holdings(losers are a different question) I set a STOP PROFIT figure:
For example: if I want/need 8% yr from my investments, and I am up 30-40% after 3yrs, I set a figure of 25% profit as a SELL figure, then if the investment goes down I have a good sale, If the investment goes up later, I don't care, I got my 8% a yr., that's what I wanted it the first place...easy peasy
GREAT for current market as we all have Good/great gains for the last few years, WHY give them back? Take your 8% yr (or whatever) and run with what you have or wanted to make...tb

@catch22: The is no need to link Lipper Indexes on a daily bases, once a week as I have done for years is enough.

The article's author failed to point out that Pin Oak Equity (POGSX) drew down 88% in 2002.

Amazing drawdown. Worse than the great depression. Looking at the bio of the manager at the time, it says he has more than 40 years of investment experience. Must have been almost exclusively dot com tech to have a drawdown like that. He stopped managing the fund in 2007

Hi Guys,
“Yet, many clients continue to believe that their managers can and will outperform. (The triumph of hope over experience is clearly not confined to repetitive matrimony.) Even though no major manager has done so, the average US institutional client somehow expects its chosen group of active investment managers to outperform annually, after fees, by a cool 100 bps.”
So too do individual investors although I suspect their outperformance expectations vastly exceed the 100 basis points that institutional agencies seek.
This extended quote is from Charles Ellis’ paper “The Rise and Fall of Performance investing”. That paper was the primary reference that supported the article by Scott Burns that Ted linked earlier today. I always prefer to examine the primary source directly whenever possible. Here is a repost of the Ellis link:
http://www.cfapubs.org/doi/pdf/10.2469/faj.v70.n4.4
Ellis concluded that “ Often blinded by optimism, clients continued to see the fault as somehow theirs and so gamely continued to try to find Mr. Right Manager, presumably believing there were no valid alternatives. ………. And active managers continue to fail to outperform. Table 1 shows the grim reality of how few funds have outperformed their indices after adjusting for survivorship bias over the 15 years to year-end 2011.”
This article motivated me to explore the potential return penalties that might be coupled to our search for superior active fund managers. I used the data reported in various parts of the Ellis paper.
Roughly one-third of active managers outdo their benchmarks by about 1.0 % annually. Two-thirds of active managers underperform their benchmarks by about 1.5% annually. These asymmetric outcomes are based on a recent 10-year summary period. Cost drag is a major factor.
Therefore, simply put, the average net Excess Returns for a single actively managed mutual fund is: (1/3 X 0.010) – (2/3 X 0.015) = -0.00667 or -0.667% annually.
To illustrate the impact of this average negative Excess Return on a portfolio consider a few scenarios like 1 or 3 active fund positions on a totally active portfolio or on a portfolio with a 50/50 split between active and Index holdings.
If an all Index equity portfolio delivers an 8.00% annual reward, the 1 and 3 unit active fund components for an all actively managed portfolio will generate 7.33% and 6.00% annually on average. For the 50/50 mixed active/passive portfolio, the annual returns would be 7.67% and 7.00%, respectively. On average, such is the price for seeking positive Excess Returns from risky actively managed mutual funds.
To overcome this penalty, the investor must seek and find active managers who reliably and persistently generate positive Alpha. That’s a tough task. As Ellis highlights, such winners most often do not repeat.
In doing this analysis, another question surfaced. Picking an average active fund manager is a losing tactic. How much better does the selection screen have to be to secure a positive Excess Return? What are odds? Using the same data and the same net Excess Returns equation, it appears that the screen must eliminate almost two-thirds of all active fund managers (60% by calculation). That seems like a workable task. But again, performance persistency remains a dubious challenge.
Thank you Ted for posting the primary reference. I encourage all MFOers to read the Ellis document. It rings a bell. Active mutual fund investing is an uphill battle.
Best Regards.