....but I thought we were talking about what we as parents or grandparents can do for Charlotte by contributing $1 each day for 18 years. If I did the math right, if we use the Fed's target rate of 2% inflation, then her $4.2 million at age 65 is worth a little less than $1.2 million in today's terms. Its still not an insignificant sum, but inflation can't simply be dismissed because Charlotte will add to her investments.

LLJB, appreciate if you will go over the math that you did for your calculation......the step by step calculation you performed, with inputs and output. Thanks!

I don't know that much about the other funds but looking at the last 15 years it is only very recently that Sequoia was a large cap growth fund . For most of the period it was considered large cap value and somewhat recently large cap core

What's interesting is that these Intrepid guys are clearly willing to stand by their principles in a big way and it has worked historically. ICMAX and IWM were close to being equal from the fund's inception until mid 2008. ICMAX lost far less than IWM and pretty much everybody else during the crisis and it took years for IWM and any of my small cap favorites to catch up. Eventually they did, but if Intrepid is right about small-cap valuations then they will again significantly outperform during a sizeable downturn. If you believe there's still upside for a while into the future, then they will be way behind when a correction eventually comes and it may be more difficult to regain a long term edge. I normally like these kinds of guys- principled, focused, willing to bet big on what they believe in. Unfortunately, I'm not sure I could hang in there when they're in the 99th percentile for the last 5 years.

This may be a bit misleading because this list is only US focused large-cap growth funds and it doesn't include any sector specific funds. So I looked at large-cap growth funds through today without any restrictions and here's what I found. There were 467 distinct funds in existence for the last 15 years and 16 of them were better than Vanguard's Capital Opportunity fund which tops the linked list. Most of them were emerging markets or sector specific, but apparently Fidelity's Canada fund did marginally better as well. The last fund on the linked list was Fidelity Contrafund, which was ranked 13th on the linked list but came in at number 90 on my screen, or top 20%. Apparently 296 of the funds (or 63%) beat the S&P 500. I'd be a little suspicious of the claim that large cap growth funds on average only earned 4.45% over the last 15 years too. Essentially that's no return on an annual basis, but of the 467 funds on the screen I ran only 6 had negative annual returns for the last 15 years. Maybe the statement includes a bunch of funds that existed, lost money and then liquidated so they don't show up in my screen.
I wouldn't debate whether core funds or value funds did better than growth funds, but the idea that the S&P, core and value funds all grew this much and growth did nothing seems odd.

http://www.intrepidcapitalfunds.com/media/Small_Cap_Fund_2Q14_commentary.pdf
I have a small position in this fund for quite a while. I know some here would point to its
high cash position and lower performance in recent years, but the fund has done well over
its lifetime.

It achieves a most amazing result when the author simply dismisses inflation because Charlotte probably will be able to add to her investments through her adult life. That's great for Charlotte, it means she's earning more than it costs her to live, but I thought we were talking about what we as parents or grandparents can do for Charlotte by contributing $1 each day for 18 years. If I did the math right, if we use the Fed's target rate of 2% inflation, then her $4.2 million at age 65 is worth a little less than $1.2 million in today's terms. Its still not an insignificant sum, but inflation can't simply be dismissed because Charlotte will add to her investments.
My older kids were lucky enough to inherit a bit of money from their great grandmother when they were young and I invested $4000 in PRHSX for my last one on the day she was born. I don't really want my kids to think about those gifts as retirement money, but for whatever they decide I'd hope they've at least had a decent head start.

MJG, going back in time a bit. Over the 10 years ending March 31, 1999 only 2 newsletter timing strategies out of 59 tracked by Mark Hulbert were able to beat the returns of a buy and hold strategy in the Wilshire 5000 Index. Over the previous five years (ending March 31, 1999) just 1 out of 104 timing strategies beat the Wilshire 5000 Index. (source: The Hulbert Financial Digest April 27, 1999 issue p.12)
As for Dalbar, they mapped investor return data from January 1984 to December 1997. Over that period the S&P had an annualized return of 17.1%. But the Dalbar study found that the average equity fund investor had an annualized return of only 6.7%. (source: "1999 Personal Planning Investment Guide" Special Advertising Section, Forbes Magazine, May 3, 1999, p. 12.)

FYI: In the past 15 years, a $10,000 investment in large-cap growth funds would have grown to $10,445, according to Morningstar data. That's much lower than the $21,194 for large-cap core funds, which invest in both growth and value stocks.
Large-cap value funds were close behind with $19,605, as was the S&P 500 with $18,742.
Regards,
Ted
http://news.investors.com/photopopup.aspx?path=WEBlv081314.gif&docId=712998&xmpSource=&width=1000&height=1063&caption=&id=713001

Is that "average investor" dollar weighted? Most likely not. So ... sure it's very possible. Chasing hot trends and selling after they tank will get you to zero sum fast.
Agree with Dex that these "average investor" stories are hard to quantify. Also - A lot of 401k type plans allow the investor to borrow significant sums from the plan during their working years and than "repay" that over time - probably paying a very low rate of interest on the money.

It may be possible but you have to add in a lot of other information not provided by the article.
What is the definition of an average investor?
It is over 20 years - was there a draw down of the investors' money, add money or what?
FYI - HYD reduced it's Puerto Rico exposure to 4.3% - pretty low compared to some others.

http://blogs.marketwatch.com/thetell/2014/08/13/1-chart-shows-just-how-badly-average-investor-lags-even-cash/
I find this chart hard to believe but the average investor over the past 20 years has made an annualized 2% to 3% per annum??? Is this just buy and hold propaganda or can it be true??

I stopped reading anything from MF a couple years ago. That doesn't answer anything here but not too interested in anything from financial writers.

We're talking tomorrow (a/k/a Wednesday) at 9:00 Central. Sorry 'bout the short notice, but he had to reschedule an earlier conversation and this one became available on short notice.
My list:
how have you been training your new co-managers, especially given the scurrilous defection of their predecessors? Might this reasonably be read as a matter of succession planning?
the fund celebrates its fifth year at the end of August. In its first couple years, the fund was classified as a midcap and about 80% of the portfolio was in stocks. That's its a large cap fund (albeit with a large midcap component) and about 90% in stocks. Does that reflect a changing opportunity set, a change necessitated by the fund's $3.3 billion asset base or something else?
what do you estimate the strategy's capacity to be?

A back of the envelope calculation suggests that $2.4 billion is the "right" answer if you want to continuing investing in your smallest names and are looking for 30 equally-weighted stocks; about $8 billion if you want to continue investing in your smallest names but maintain individual small cap positions at 1% of the portfolio.

Anything ticking your brains?
David

When I bought VGHCX over 10 years ago, I thought I was buying something which was a bit boring, not too flashy in regards to returns, and a bit defensive in nature in comparison to the broader equity markets.
Even though I was completely wrong on the first two reasons, I still believe that a broad-based healthcare fund can be a defensive holding.

thanks mrdarcey , that's good
Apparently also in this new book, Rational Expectations, he presents his 'forecast' for future performance by asset class. Would be nice to see that. Something along the lines of what GMO does, although I don't know if he goes out 7 years like GMO does, or has chosen some other time frame.
Also, he recently came out with a booklet called something like "If You Can", where he presents the three fund portfolio [Vanguard Total Stock Market; Vanguard Total International Stock Index, and Vanguard Total Bond Market Index fund] as a simple and effective way to invest for retirement, especially if you are new to the workforce.

Hi John
Yes the wife is about 5 years out from retiring from the US Postal Service. I also like their funds. We have G, C, I, 2020 income funds. Sold S end of last year. She works in Amish country....home of the Amish Mafia (lol!), and we are Lebanon Levi protected!
Party on dude!
the Pudd

yes sir work for govt for 10 yrs now as nurse in healthcare @ Veteran hospital.
Their g fund is the best if you are near retirement. my portfolio [41 years old] divided equally in portion I, C, 2040 funds, and large cap/ 20% split in [10% G funds/10% and Money market, proximately 75-80s% in stocks and 20s% in fixed income.
probably retire in 20s+ yrs so don't mess w/ it until near retirements
their fees for the funds etfs are maginal/good reasonable [barclay] company that manage the funds/
one of my colleague at work just retire last wk, he is 70s yr old, he was very greedy and put all his 650sk in china and i fund in 2007 prior the crash. now his portfolio is about 760s after the the rise and more distrubutions, he has learnt his lesson and he is 100% G funds now prior to retirement which is the best thing he did few months prior to retirement...
their 2030s or 2040 or 2050 funds are also very good if your wifey want to play 'couch potato to investment game' and don't have to do much - stay passive and active at same time

@ron,
SPLV seems to perform very similarly to VDIGX. Here are the two over your holding period (actually three years):

The nice thing about VDIGX is it can be backtested over 21 years. Here's a chart comparing 100% VDIGX (SPLV) vs. a 60/40 blend of (VDIGX & BTTRX) staying fully invested over the 21 years. BTTRX is a LT Treaury fund offered by American Century.

The backtesting tool (link in previous comment box) allows investors to input specific mutual funds which enabled me to create the above chart.

I am the least aggressive investor and a long term holder of many positions. SPLV is one of shorter term holdings just over 2 1/2 years and I look at as having about a 50% increase not your recent 5% decline.

Hey, rjb.
I get where you're coming from, but Bernstein was attempting to write a popular statistical model of a portfolio that would approach the Efficient Frontier, while claiming that, since you can't know future asset class performance, you can't know where the Efficient Frontier will lie. In order to do that, he looked at historical asset class performance and correlation. For foreign, since he's writing in the late 90s, the only thing he has long term data for is the EAFE. For small he uses the CRSP 9-10, which gets much farther into microcap territory than VTSMX.
When he starts talking about asset allocation in Chapter 5, he admits up front he is "an asset class junkie," and is willing to own "20 or 30" different asset classes. But the rub is that he wants everything to be a separate asset class. We have 15 years of hindsight and recency bias showing an across the board increase in correlations. For instance, Bernstein approaches bonds as a risk control tool, and assumes correlations of .777 between SC and the S&P 500, and .483 between the EAFE and the S&P 500. It's not so much that Bernstein doesn't want to use total market indices, but that doing so doesn't allow him to really make his broader point re: diversification because there is a lack of data. He ends up using the European stocks as a proxy for the EAFE because there wasn't a Vanguard DM fund yet.
The portfolio Ted points to, he calls the "Level-One Asset Palette," and he designs it for those who find "reading this book ... the equivalent of root canal work." Quickly after he presented it as his Lazy Portfolio. In the book he presents second level and third level "palettes," which include EM, Foreign smallcap, REITs, Natural Resource stocks, short term bonds, TIPS, foreign bonds, and valuation factors.
Not sure if that helps or not, but that's what I gather his reasoning is. Personally, if you're going for as much growth and diversification across 4 asset classes as you could easily get, I would think something like CRSP 9-10 (VB or VBR), foreign small (VSS), Real Assets (VNQ, RWO, VDE, or ALPS), and either an intermediate or hedged foreign bond fund (BND or BNDX) would be better. But some of those funds didn't exist 15 years ago.