Difficult to find individual bonds that the Average Joe can buy retail, directly---without a middleman. I had a zero-coupon 10-year thing that did me very well. But the rates from that source are down a bit, now, too. And I don't any longer feel like tying up money for 10 years. It was a good move for me, back in 2003.

With respect to the WSJ links, I have to tell you that even though we have been print subscribers for some 30 years, the bastards won't give us access to the website. That sucks! I guess Murdoch needs the pocket change.

OJ, I've subscribed using air miles that I'll never use, otherwise. I can indeed view the website. There's a stupid user-name and password thing, though. Then I told it to remember me.
http://online.wsj.com/home-page?_wsjregion=na,us&_homepage=/home/us

Hi Guys,
I want to start by thanking Ted for the Callan Periodic Table update. The investment Periodic Tables have been a staple at MFO and at FundAlarm for years. The Callan version is the most famous and most widely quoted.
However, a legion of alternate Periodic Tables are published, and each offers a slightly different data set over differing timeframes. Which is most applicable for your purposes depends on your specific portfolio construction and your representative time span.
For example, here are two Links to alternate Periodic Tables featuring 20 years and 10 years of market data respectively:
http://www.blackrock.com/investing/literature/investor-education/asset-class-returns-one-pager-va-us.pdf
https://ipro.americancentury.com/content/dam/americancentury/ipro/pdfs/flyer/Periodic_Table.pdf
The 20-year data set is from BlackRock; the 10-year data set is from American Century.
The checkerboard pattern that all Periodic Tables exhibit demonstrate the complete randomness of annual investment class returns. What works one year is not commonly repeated the next.
A few years ago, I examined the long term portfolio outcome of using a strategy based on changing the portfolio holdings to the winner of the previous year. That simple strategy fails to capture average market rewards. It is a real world illustration of the maxim “a regression to the mean”.
Although the first reference contains more historical data (20 versus 10 years), I prefer the American Century shorter term format for several reasons. It includes separate tables for both Equity and Bond components, and it summarizes the reward/risk tradeoffs by providing a convenient list of average 10-year annualized returns to compare against the component 10-year standard deviations.
If you want a Periodic Table for Commodities, it too exists (from U.S. Global Investors) . Here is a Link:
http://www.usfunds.com/interactive/the-periodic-table-of-commodities-returns-2013/#.U_Uw-kYvwQE
When assembling a portfolio, these data (annual returns, standard deviation) provide baseline rates. You are encouraged to adjust these dependent upon the current economic and political environment, but also dependent upon your particular preferences, goals, and timeframe.
To design a portfolio with specific percentage asset allocations, you will also need some information concerning the correlation coefficients of these investment classes against one another. That critical set of inputs can be generated at the Portfolio Visualizer website. Here is the Link to that useful site:
http://portfoliovisualizer.com/asset-correlations
The inputs are simple and the correlations can be calculated between input dates or for a prescribed number of days.
I hope this is helpful. Enjoy and prosper.
Best Wishes.

With respect to the WSJ links, I have to tell you that even though we have been print subscribers for some 30 years, the bastards won't give us access to the website. That sucks! I guess Murdoch needs the pocket change.

FYI: Today is Brendan Conway's last day as a Barron’s columnist and blogger. He's leaving to take up a position at Goldman Sachs Asset Management. Serving this readership day in and day out, in a lucky two-plus years of being paid to learn, ask questions and report it all back to you, has been an honor
Regards,
Ted
http://blogs.barrons.com/focusonfunds/2014/08/20/twelve-lessons-what-ive-learned-about-fund-investing/tab/print/

Its a nice chart and informative but if I had 30 secs I would say that the difference between holding 100% stocks and 80% combined with bonds and money market funds will be very little over time and you will have fewer really bad years which could/would discourage you from investing.

Nice chart. It does go out to 5 years. I found it hard to see numbers in brownish squares.
have a nice day, Derf

Hi Guys,
Recently, Farnam Street’s Shane Parrish has been revisiting interviews that Warren Buffett and Charlie Munger granted over the last few years. Each review offers financial wisdom and investing gems.
Here is a Link to a current release that addresses the question “What makes Warren Buffett a great investor? Is it the intelligence or the discipline?”:
http://www.farnamstreetblog.com/2014/08/what-makes-warren-buffett-a-great-investor/?utm_source=feedburner&utm_medium=feed
As always, Buffett is very succinct in his assessments. For example, here is a brief but pithy excerpt: “But to win at this game, and most people can’t, you need discipline to form your own opinions and the right temperament, which is more important than IQ.”
It’s heartening that Buffett downgrades the importance of IQ in the investment process. You need not be brilliant to succeed.
But take note of the qualifier that the Wizard of Omaha slipped into his statement: “…..to win at this game, and most people can’t……”. He doesn’t have confidence in the investment abilities of the average investor. That’s sad, but consistent with his recent quotes.
I suspect that Mr. Buffett is not very conversant with IQ scores. Note in his opening statements how he introduced trading off an IQ score of 160 as follows: “If you’ve got 160 IQ, sell 30 points to somebody else because you won’t need it in investing. What you do need is the right temperament.” Not many of us have IQs in the elevated and rare atmosphere.
For most IQ tests, the average score is set at the 100 level. The actual scores are typically Bell shaped so a Normal statistical distribution adequately models the data. The standard deviation for the IQ scores is 15.
This means that 68% of the scores fall between 85 and 115 (one standard deviation), and that 95% of the scores register between 70 and 130 (two standard deviations). A score of 160 (four standard deviations) is reserved for a select few in our population (much less than 0.1%). Any person scoring over 160 is considered by experts in the field to be a genius, exceptionally gifted individual. Approximately 1 out of 30,000 folks have IQs above 160. I’m definitely not in that group.
Since the Bell curve is symmetrical, even a relatively low IQ rating of 130, according to the Buffett comparison measure, is achieved by only about 2.5% of the overall population. I really do not believe that Warren Buffett was restricting his comments to that elite cadre. Investing is not that demanding. Buffett just doesn’t understand the IQ stats or how they’re computed. That’s unlike him, but rare exceptions always exist.
Please enjoy the interview. It is rich in investment guidance.
Best Regards.

From Boglehead.org:
"The fund was created in 1985. In 1987 the New York Times noted: [2]
In the past two years, a number of firms have revived the 1960's fund-of-funds approach, in which a money manager invests in a variety of mutual funds, rather than directly in stocks or bonds... The Vanguard Group was one of the first organizations to revive the fund-of-funds concept when it offered its STAR Fund, which invests in shares of Vanguard's other mutual funds.
According to posters in the Bogleheads forum, STAR is an acronym for "Special Tax-Advantaged Retirement," although it was never limited to retirement accounts; it is one of a group of seven Vanguard funds each of which is formally a "portfolio" within a single "trust," an arcane fact of no practical importance"
Another unimportant fact...

@rjb112:(Because It's Closed To New Investors): "One of the first funds in Vanguard’s lineup, Vanguard Wellington (VWELX[6]), also is among the best. Not surprisingly, the investment community agrees — this outstanding and consistent performance has attracted more than $26 billion in assets.
However, that’s a size large enough to force the management team, in place for 12 years, to close the fund to new investors."
Regards,
Ted

Old_Joe, your kind words mean a lot to me. Thanks for being around all these years with the rest of us senior citizens! :)

It's all about marketing. What is the next hot investing idea, and how quickly can we get it to market? It is much easier for companies to roll out an ETF than a mutual fund. Both have a lot of regulation, but logistically I have been told on many occasions by ETF sponsors that ETFs are pretty simple to put together once an index has been created for the investment theme. I am fearful that many of the ETFs that are created for such small niche categories will be gone within 2-4 years of creation, and we have already seen that happen many times. Having the most ETFs does not mean they are all worth of consideration.

I would be VERY cautious about buying any individual preferred stock. While the company might look very secure now, things could change quickly. We had a client who loaded up on GM preferred stock years ago. Why not, after all GM was America's company! When things turned sour, the client initially held on because the dividend was so good, but eventually bailed and took a huge loss, when the current administration screwed GM bond and preferred holders. Ally might be the greatest thing since rolled toilet paper, but I would rather diversify this kind of investment. We have used PFF with a number of clients and been pleased. Do not hold it right now. We are currently using KIFYX in our income-oriented portfolios and have been pleased with it. It owns mostly preferred REIT securities and has a 4.39% current yield. The fund recently reduced its yield, which is a sign of good management.

It is interesting that the manager with the most experience here is Mr. Fuss, who also happens to be least likely to be quoted or appear on camera. I implicitly trust him, while I find Mr. Gross and Mr. Gundlach shills for their companies. The may be smarter, but spending so much time 'on message' and in front of the camera means they are perhaps more interesting in raking in new investor dollars than actually running their funds. Loomis Sayles is a class company and always has been. Mr. Fuss is an example of that class. Investors might want to watch Mr. Eagan's LASYX, which could be a good hold when interest rates do move up. It's actually done ok since its start, averaging 4.28% over the last three years.

I agree that Dan Fuss is a class act. I have tremendous respect for him.
I don't know that much about Gundlach.
Bill Gross I think is extremely knowledgeable, but I don't like the way he writes and find him difficult to understand. I read his monthly Outlook for years, and always felt that he was not that clear or easy to understand. Just come right out and say what you mean so those listening to your interviews and reading your Outlook don't need a PhD in "bond speak" and don't need a special "decoder ring" to understand you.

Ted has a good idea. DODWX. Otherwise, MACSX. First fund I ever bought. Still own it, 11 years later. Loving it. Very good down-side protection. I also own SFGIX. It's been mentioned, above. It had been lackluster, but has started to move recently. SFGIX has a global mandate. But about 60 percent or more is still in Asia, last time I looked under the hood.

FYI: Several target-date fund providers raised the equity components of their glidepaths, saying their research shows participants have a slightly higher risk tolerance than in the years immediately after the economic crisis.
Regards,
Ted
http://www.investmentnews.com/article/20140818/FREE/140819931?template=printart

Hi Bob C. Thanks for your response. It rings very true - years ago when we started our retirement savings we used...gasp...variable annuities. When we finally realized our mistake it took us 8 YEARS to gradually get out.
Anyway I have asked her to read all the responses including of course yours. It is interesting that you mention the equity index and the mid cap as those also caught my eye with particular attention to the ER and the 10 year returns. If she splits equally between the 2, her ER will average out about .5 - could be better but its not horrible.

It is interesting that the manager with the most experience here is Mr. Fuss, who also happens to be least likely to be quoted or appear on camera. I implicitly trust him, while I find Mr. Gross and Mr. Gundlach shills for their companies. The may be smarter, but spending so much time 'on message' and in front of the camera means they are perhaps more interesting in raking in new investor dollars than actually running their funds. Loomis Sayles is a class company and always has been. Mr. Fuss is an example of that class. Investors might want to watch Mr. Eagan's LASYX, which could be a good hold when interest rates do move up. It's actually done ok since its start, averaging 4.28% over the last three years.

Are large funds always doomed? I Looked at the resulting performance of the largest Funds from 15 years ago (asset size based on 8/1999) that had the S&P 500 as their prospectus benchmark. Full post here http://www.wallstreetrant.com/2014/08/how-largest-actively-managed-mutual.html

Thank you all for your comments, ironically I got into Fairholme from a Morningstar post roughly ten years ago that was discussing alternative funds to Sequoia, which was closed for the first time back then, the post discussed Fairholme, which was how I came be one of the earlier investors. I have earned very good returns from Fairholme, it is the Goodhaven/Fernandez personnel changes that I still have some concerns with. Sears and St. Joe with time may still play out, though Sears is getting rather old. AIG does not trouble me, Fannie and Freddie are a bit of a wild card with Congress involved, though BOA has proven to be one of the reasons I invested with Fairholme.
I have also considered Cook & Bynum and Seafarer as possible replacements for Fairholme. I like the fact that Sequoia along with Cook & Bynum are building up cash due to high P/E and not being able to find investments that meet their criteria. Side note, Intrepid Small Cap's website has a very interesting article on why they can't find suitable investments.
Jim Chanos is someone I respect deeply, his analyses over the past years are thorough and notable. His recent concerns with China should give one pause. Jim Rogers has made the point that there will be corrections in China, the U.S. has had many over the last century and a half.
On a longer term perspective, there has to be an emerging Warren Buffett out there specializing in China or any market for that matter, finding him or her to invest with will be the difficult but fun part, which is part of why many of us enjoy doing this. Thanks again for all your comments, David your website is one of the best out there, and your readers have interesting observations and comments, Lukemon