MikeM
"Why is it any different in your later years than in your younger years
if you have the appropriate risk-reward allocation?"
What is 'the appropriate risk-reward allocation' ?
What is 'later years'?
And, are you familiar with the Sequence of Returns?
Of course, someone who sold everything at the market bottom and
never returned missed the grinding years of recovery.
But perhaps being in their 'later years', they may have already earned enough
to be satisfied.

BIP owns 27% of Vale's infrastructure. From Q2:. "We also continue to work toward the completion of the previously discussed acquisition of 27% of Vale’s Brazilian rail and port business, VLI. This business consists of approximately 4,000 km of rail integrated with five inland terminals and three ports. VLI to deploy over R$6.0 billion to upgrade and expand operations over the next seven years, allowing it to capture volume growth from increased activity in the agriculture, steel and other industrial sectors in Brazil. We are working through a number of customary closing conditions and expect to close this investment early in the third quarter."
Q3: "In mid-August, we expect to close on our investment in VLI, a Brazilian rail and port business, as we have satisfied all consents required for closing this transaction. This investment will provide us with approximately $300 million of organic growth projects, as the business has a substantial capital program to expand operations."
I'd rather own that than Vale, but otherwise, BHP is something that I've thought about a whole lot but continue to stick with Glencore due to Glencore's diversity, legendary trading operation and exemplary assets.

@Junkster That's kind of what I'm thinking. Not aware of tons of emerging market funds. DBLEX and FNMIX I'm familiar with, looks like there are 5 other Great Owl options in the category.
Edit: I'd guess MAINX counts to this idea too.

jlev, were I not in junk munis would be in DBLEX (and actually was in it a time this year)
Great fund. MAINX a good fund but too stodgy for my tastes and not in the emerging markets bond category. Over the past 3 and 5 years junk corporates have outperformed their emerging markets counterparts but the later shined over the past 20 years. I always worry though and one fear is the great bond rally in so many sectors that has been running for decades may someday come to an abrupt end. But then we have been hearing that for awhile now and demographics may provide more of a tailwind than some of the bond bears suspect. Good luck and enjoy the long years of life you have ahead of you. I lead hikes in my local area over the winter and have lots of 20 and 30 somethings in my group. Real refreshing people to hang around.

http://seekingalpha.com/news/1977095-end-of-the-iron-age-as-iron-ore-prices-slide-to-five-year-lows

Thanks for the article...some comment quotes:
"strong companies that control metal deposits are a good place to be. Strong means with manageable debt they can survive and enough commodity to use as currency, if necessary."
"This is not overcapacity, it is misallocated usage by China. They have cut there own throats and worse they created a shadow banking system based on that crummy Chinese ore, causing prices over the last four years to skyrocket. But that has no bearing on the real price of ore, the long term price of ore which has been commodity equivalent of 80 a ton for sixty years. The actual prices paid were lower but in comparison to buying power and other commodities, 80 is an agreeably number."
"The point is VALE and company are priced to BUY...not sell. They have spent gazillions of dollars improving their efficiency and are RAISING [not lowering] production to squeeze out higher cost producers. I personally like VALE for my own reasons, am long, am down and will continue to buy more...likely here. Vale's big advantages are it's ore which is high in quality and low in impurities such as alumina. The low levels of alumina necessitate LESS coke consumption by blast furnaces thus raising productivity. So while one can make the very valid argument that BHP and RIO have closer proximity to Asian customers, which is true, VALE has better quality ore. VALE has also built a massive logistics and energy infrastructure around their ore systems to increase reliability and lower costs and to the one poster who said or hinted that BHP is getting into the energy business...I'm not exactly sure that's the right way to look at it. VALE and BHP are massive companies and the energy and infrastructure businesses they run are really there to lower the costs of delivering their iron ore products. One company that I would say is probably moving MORE towards energy is Canadian Metals Producer Sherritt International. "

I also try to chart a fund's NAV. With daily price changes an investor can monitored the trending of the price (calculated with dividends) and determine whether their investment is either making "new higher lows" (trending upward) or making "new lower lows" (trending downward).
Here's an example of both conditions in a fund I own, BUFOX.

Here's a 5 year chart of USBLX and PONDX that speaks for itself:

Or, one of Ted's favorites, PRHSX, in a three year chart (this fund's chart is "pretty" all the way out to 20 years):

Hi Guys,
Our recent MFO discussions that center more on the originality of the market commentary and observations tend to detract from the main themes of the subject works. That’s a wasteful distraction.
Original thinking on any subject is rare. If the communication requirement is originality, a room filled with clients would be mostly silent; a written report to clients would be mostly a blank sheet of paper.
Originality is nice and in some instances is necessary, but it surely is not a prerequisite when communicating for informational or even for persuasive purposes. Sure things change, but not that rapidly. What has happened in the past (history), and what has worked in the past provide a firm basis for what is likely to happen in the future. At a minimum, it is an excellent point of departure for planning purposes.
The key point here is that the referenced James Saft article emphasizes the shortfall of return’s volatility as a total measure of investment risk. That shortfall has been recognized within the investment community ever since it was proposed as a partial risk measurement back in the 1960s (Harry Markowitz and others). It definitely is not original stuff.
Note that no expert suggests a total discarding of volatility as a risk component; they merely argue that it is incomplete in that it does not capture all the interactive elements of it. Risk is a complex, multilayered phenomena, and is likely dissimilar for different folks.
The Saft article was okay; it did draw heavily from an Oaktree clients report written by Howard Marks very recently. The Marks report is excellent and develops a risk assessment concept much more completely than does Saft. If you enjoyed an/or learned from the Saft piece, I suggest you access the Marks document at:
http://www.oaktreecapital.com/memo.aspx
The arguments assembled by Marks are not new or even novel. These things evolve over time. However, in the Marks paper, they are cobbled together in a way that just might provide an improved risk guidance for your portfolio investment goals.
In the middle of the report, the graph that depicts the risk/reward tradeoffs yields a particularly useful picture at how the statistical distribution of expected returns more correctly overlays the reality of that tradeoff. Please take especial note of it.
The more careful collection of the data, the interpretations of that data, and the extrapolation (the most dangerous aspect of the entire process) of these interpretations (dare I say a model?) make revisiting the data and some recent analyses worthwhile. Since our recall is imperfect, and since our needs change over time, this revisiting is necessary and sometimes even profitable for investment decision-making. None of this probably qualifies as highly original thinking. That doesn’t trouble me whatsoever.
Care and precision must always be exercised when presenting data or an argument based on that data. Definitions are critical. The risk debate effectively illustrates the requirement for meticulous definitions. Along those lines, Morgan Housel recently published a list of “Things You Should Know the Difference Between”; these items do make a difference. Here is a Link to it:
http://www.fool.com/investing/general/2014/09/09/things-you-should-know-the-difference-between.aspx?source=iaasitlnk0000003
These days, it seems we are all fretting over the next looming market decline. The known unknowable is that it will surely happen; the unknown unknowable is its magnitude and when that will happen. Market decline history provides guidance in this arena. There is certainly no originality buried in these data, but they do directly bear on the downturn frequency. From a statistical perspective, these data establish a base-rate.
The data I quote come from the American Funds and includes the timeframe from 1900 to 2013.
A 5% downturn blip has occurred about 3 times a year; a 10% correction about once a year; a 15% downdraft about once every two years, a 20% Bear market approximately once every 3.5 years; and a 30% panic about once per decade.
These are all merely averages so beware the distribution element. These negative outcome stats do yield an overall context. Over short periods, the spacing and durations are somewhat haphazard, so money reserves are needed. That too is not original advice since it dates back to the Talmud as I reported in an earlier post.
I hope you guys enjoy and profit from the references. It’s far less important that you enjoyed my submittal which contains no original thoughts. I offer no apologizes for my lack of originality. Good luck to all.
Best Regards.

FYI: Can you name any mutual funds that have beat the S&P 500 Index over the past 10 years? I’m sure you wouldn’t need to think long to find one that has accomplished this feat.
Regards,
Ted
http://investorplace.com/2014/09/top-3-low-risk-mutual-funds-high-returns/print

Why is it any different in your later years than in your younger years if you have the appropriate risk-reward allocation? There are a ton of retired investors who pulled their money out of the market during the great recession and never went back in. Those are the losers. Those are the ones with poor investor returns. To which I'll add, IMHO.

@AKAFlack, Agree, someone in their latter years should not forget their account. The author of this drivel assumed everyone is young.
The absolutely terrible investment decisions that journalists make are something that just can't be emphasized enough.

Hank said:
Commodities are getting absolutely crushed.As evidenced in today's news blips!
"iron ore prices slide to five-year lows"
http://seekingalpha.com/news/1977095-end-of-the-iron-age-as-iron-ore-prices-slide-to-five-year-lows
Crude closes below $92 on demand woes, energy shares hit
Sep 10 2014, 15:28 ET | By: Carl Surran,
http://seekingalpha.com/news/1976565-crude-closes-below-92-on-demand-woes-energy-shares-hit
OPEC's latest monthly report adds to the bearish outlook for crude oil, as it cuts forecasts for the amount of crude it will need to supply as surging North American shale output reduces reliance on its supplies.
http://seekingalpha.com/news/1976075-opec-sees-slower-demand-for-its-oil-thanks-to-u-s-shale-surge
OPEC reduced forecasts for the amount of crude it will need to supply by the most in at least three years as surging North American shale output reduces reliance on the group’s supplies.
http://www.bloomberg.com/news/2014-09-10/opec-cuts-demand-outlook-by-most-in-three-years-on-shale.html
Raw-sugar prices fell to the lowest in more than four years amid signs of an expanding global surplus as output accelerated in Brazil, the largest supplier.
“It’s basic economics -- more supply available than demand,” George Kopp, a senior market analyst at International Futures Group in Greenville, South Carolina, said in a telephone interview. “It’s hard to get excited about a market that’s been in a downtrend for so long.”
By Luzi Ann Javier Sep 10, 2014 2:12 PM CT
http://www.bloomberg.com/news/2014-09-10/sugar-declines-to-lowest-since-2010-on-global-surplus.html

hank, if even the market optimists are turning wary that is bullish if you are into market sentiment. As for the 60s, pretty good market years as I recall, especially the early 60s.
John, so right are those obscene valuations in the late 90s.

OSTIX is a no-brainer for folks looking for decent yield but very low volatility. Current duration is less than 2.0 years. Manager Carl Kaufman's track record is one of the best. With only150 holdings and only one-fifth the size of DLTNX, this is a core hold for most client accounts.

@BobC: I think a fundamental question about junk bonds and OSTIX is:
Does it properly diversify an equities heavy portfolio? Do these bonds play the typical role that people want bonds to play, that is, to diversify equities? Articles I read written by Larry Swedroe and William Bernstein strongly favor only very high quality bonds, saying that below investment grade bonds do not provide proper diversification and risk reduction for equities.
Perhaps what they are saying is that someone with a 100% bond portfolio might gain valuable diversification from junk bonds. But someone using bonds for what John Bogle calls "ballast" and "an anchor to windward" might need only investment grade bonds for this purpose.
If junk bonds tend to perform somewhat similarly to equities, how are they providing the diversification? Yes, I know these are short term junk bonds, but the general principle is still there.
Appreciate your comments on this Bob.
thanks.

American Funds offers 59 funds (not 57). One of these funds never charges a load. It's a MMF, but MMFs in load families used to charge loads (e.g. I believe Fidelity Select MMF used to charge the same 3% load that Fidelity charged for its Select Funds).
As others pointed out, the min load on these A shares is 0%, since there are breakpoints. (Your "min" in the earlier post above referred rather to the lowest maximum load charged by any of these funds.)
"Nominal" roughly means stated as opposed to actual. For example, one's nominal tax bracket may be 25%, but the actual percentage paid on an incremental dollar may be more or less than a quarter, depending on phaseouts, credits, surtaxes, etc. Likewise, the actual front end load (as a percentage of amount going into the investment) for a 5.75% load fund is 1/(1-5.75%) = 6.1%. The "nominal" is 5.75% (or lower for bond funds, etc.)
M* uses not only front load, but all loads in their star ratings (other loads are assessed on a daily basis as part of the ER - though I wonder if M* correctly adjusts 10 year ratings for share classes that convert after 8 years).
Investors pay for advertising, regardless of whether the expense is broken out as a separate line item (12b-1). Where do people think the money comes to pay for all those Vanguard ads I keep seeing? Or as Vanguard itself writes: "In the words of one client - 'Why spend some of my money to attract some other investor?'"
So I regard 12b-1 fees as just a distraction. Though in contrast, when's the last time you saw a D&C ad?
Speaking of Vanguard, investors there pay different fees and commissions depending on their association of some kind. If they have enough invested in a Vanguard fund, their ER drops (Admiral share conversion). If they use VBS, they can buy ETFs without paying the broker. And if they have a lot invested with the family (like OJ and American), they can get into closed Vanguard funds and buy non-Vanguard TF funds without a commission. I for one am not complaining about their fees, even if I don't get all the perks there.
Thank you for taking note of PIMCO's loads. Below is a bit more on this that I'd drafted prior to your latest responses. The data and observations are, I think, still relevant.
American Funds' oldest share classes do carry loads; they've since been adding share classes without loads. In contrast, PIMCO's original funds from 1987, PTLDX, PTTRX, and PTSHX all added load shares (PTLAX, PTTAX, PSHAX, respectively) in January 1997.
While PIMCO's original share classes don't have 12b-1 fees, the new ones do. (Not a concern of mine, as I explained above, but it is nevertheless a nominal fee :-))
Which family is moving in the right direction? There are indeed dinosaurs, but they may come from different "prehistoric" (last century) eras. Several fund families in the 90s tried to grow their market share by adding load classes and using salesman (um, "advisers") to gather assets. American Century, for example. Some families like AC moved on, returning to the NTF marketplace without adding 12b-1 fees as PIMCO did. Other families seem to be stuck in the tarpit of the 90s.

OSTIX is a no-brainer for folks looking for decent yield but very low volatility. Current duration is less than 2.0 years. Manager Carl Kaufman's track record is one of the best. With only150 holdings and only one-fifth the size of DLTNX, this is a core hold for most client accounts. The fund stays under most radars, and Mr. Kaufman prefers to stay out of the limelight.

OJ - thanks for the memories. While there's a lot more information available now than back then, I'm not convinced that investing is any easier. For example, in the past few years, the thinking on designing 401K plans has shifted from "offer everything" to "offer a well chosen, limited set of options", because people become paralyzed with too many choices and not enough understanding.
When I first started working, my employer (one of the largest in the country at the time) offered just four options - guaranteed interest, diversified equity portfolio, government obligations, and company stock. I just took a glance at my old records - it seems like I started with a 50/50 split - company stock/diversified equity. But then the stock market took a dive, and for the next several years it seems I put everything new into the guaranteed interest option.
Not the most insightful move, but understandable. In hindsight, I probably would have benefited as you did from an adviser. Some people may benefit when they're starting out. Some people have an aversion to dealing with financial details, and for them it is worth paying someone for that service for many years. (Aversion is not the same as inability.)
Just curious - the original IRAs (enacted in 1974, allowing for contributions starting in 1975) only allowed contributions if one was not covered by a pension plan at work. It wasn't until 1982 that the max went up to $2K, and you were allowed to contribute even with a pension. So when exactly were you first able to contribute to your IRA?

Good post O_J, I feel much the same way as A/F's has done good by me too. In addition, I have been married to my wife for forty years, not quite as long as you to yours ... but, long enough to know that I think I'll keep on keeping on with both.

"there's been a plethora of noload funds for decades"
Certainly no argument on that observation. But let's take a look at the "ignorance factor". We have been saving as much as possible for retirement ever since we were married in 1970. We established IRAs as soon as possible, primarily using savings accounts for that purpose. (Remember them?)
I did attempt to venture into the equity market in a small way, with very mixed and generally poor results. As I've mentioned a few times before, in the late 70's with double-digit inflation roaring, I took a chance on some Munis paying 14/15%, figuring that if inflation couldn't be tamed that money would pretty quickly be worthless anyway. That turned out to be a great bet. For some years we took advantage of the San Francisco real-estate market with a lot of sweat-equity, and that too worked out well.
But mutual funds? Sure, we watched Lou Rukeyser along with lots of other folks, but that really didn't give us the depth of knowledge regarding funds to get our feet wet there. Along came an American Funds "adviser". Sure, they charged a load. Sure, he got his cut. But he sat with us for many an hour explaining the ways of the mutual fund world, and even though I really hated the load I regarded it as the price of entry and education.
American Funds has always treated us fairly. Unlike other load funds at that time, they did not charge any load on reinvested proceeds, and their ERs were (and still are) very reasonable. They allowed consolidation of the two IRAs and our trust fund to minimize the front load. After a few years we had accumulated enough to eliminate the load altogether. In 2008 the economic fiasco caused our American Funds total holdings to drop below the no-load threshold, but they still honored the no-load for us on additional investments.
Perhaps most importantly, our experiences with American have allowed us to have a sound basis for comparison as we have branched out into many other funds and fund types and companies. I don't for one minute regret our experiences with American Funds.

Ouch.
And someone needs to help counterbalance M*'s blind coverage in the case of AF.
On the ER stat. If you ignore load, yes ER is good with AF. But you shouldn't...and neither should M*.
Thanks OJ. Understand. In years long past, most funds had awful loads and folks did not have much choice. Not true anymore, fortunately.

Blind coverage? Ignoring load? What's M*'s most prominent aspect of fund coverage? (Rhetorical question.) I would say its star ratings. Not most useful, but most prominent.
M* adjusts for loads in its star ratings. This is why .lw (load waived) shares often get higher star ratings (and why I specifically suggested to Schwab that they show these latter ratings when displaying OneSource funds).
How does the total cost of ownership for the long term investor compare with American Funds vs. almost any other fund family (outside of Vanguard)? Given American Funds' low ERs, I would guess that it's lower than most. (We're not talking buy and hold here, just staying within the family - once a load is paid, it doesn't have to get paid again when one switches funds.)
I'd give more weight to your complaints about American Funds if you showed the same concern for families like PIMCO, which has more assets in A shares than D shares in funds like: GNMA ($334M vs. $121M), Investment Grade Corp ($1.1B vs. $0.5B), Unconstrained Bond ($1.5B vs. $1.3B) and of course, Total Return ($21B vs $15B).
In years past, people didn't have much choice? Though Vanguard started as a load family, it went noload in 1977. The No-Load Mutual Fund Association was formed in 1971. You had noload funds then from Scudder, from T. Rowe Price, Stein Rowe, even Lehman Bros.
By the mid 80s, as mutual fund sales took off, almost half those sales dollars (45%) went into noload funds. Sure, if one wants to go back to the days when CEFs made up a major part of the market, there weren't too many noload fund choices. But there's been a plethora of noload funds for decades.

Well, I've got a number of American Funds within my portfolio. They have done a pretty good for me over the years and I feel I am better off with them than I would have been without them. I feel much in the same as O_J.

Ouch.
Agreed that I sound like a broken record on this one, but IMHO...it's an important story to tell and keep telling.
Like the Edward Jones tragedy.
And someone needs to help counterbalance M*'s blind coverage in the case of AF.
On the ER stat. If you ignore load, yes ER is good with AF. But you shouldn't...and neither should M*.
Thanks OJ. Understand. In years long past, most funds had awful loads and folks did not have much choice. Not true anymore, fortunately.
c