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

That's fair enough Ted. FAIRX had one of the best performances out there, right out of the gate, upon inception. Bruce was Morningstar's manager of the Decade in January 2010.
Ted, I'm guessing that perhaps you used to watch Louis Rukeyser's show, Wall St. Week With Louis Rukeyser.
He used to say, "What have you done for me lately"?
Looking at the past 5 years as of 8/15/2014, a bull market the whole time:
FAIRX: 12.48%
SEQUX: 16.40%
And SEQUX has historically outperformed in down markets and underperformed in bull markets. As you know, the past 5 years has been bull market, so SEQUX was not at its best
Let's look at the $10,000 invested for those 5 years:
FAIRX: $18,004
SEQUX: $21,368
I calculated that using an excel spreadsheet. If someone wants to confirm the data, please do.
Of course, YTD, FAIRX is trouncing SEQUX.
the future returns of each: unpredictable

FYI: (Click On Article Title At Top Of Google)
For some five years now, bank accounts and money-market funds have been yielding an amount that rounds to zero percent.
But if dismal interest rates have you frustrated, you may be looking at cash all wrong. It could actually be one of the best investments you own.
Regards,
Ted
https://www.google.com/#q=why+your+cash+isn't+trash+wsj

"
So you have a fund going long and short based on what brilliant people think should work and they would have been better off just going long (and the more heavily shorted companies, the better) for the last 5 years or so.

Remember the Long Term Capital Management hedge fund?

Yeah, Jim Rickards - who I like quite a bit and follow (he's written two books and has an active Twitter) - was the principal negotiator in the bailout of LTCM. It's sort of like that - very intelligent people doing very complex things who are married (to at least some degree) to their economic theories.

"
So you have a fund going long and short based on what brilliant people think should work and they would have been better off just going long (and the more heavily shorted companies, the better) for the last 5 years or so.

Remember the Long Term Capital Management hedge fund?
If ever there were brilliant people, that was it. IIRC, possibly two Nobel Prize winners in that group of geniuses. It failed, and required a bail out from our government to prevent a wider spread financial crisis.
There was a book written about it [I haven't read it though]:

SEQUX has been great in recent years (from late 2009) until this year. As far as I know the problem is Valeant which is the largest position I think(till a few years ago the largest position was Berkshire)Since Feb. Valeant ,which has been in the news alot, is down about 20%
By the way can you get into the fund? They closed it late last year to most people.
As of December 10th, 2013, we have adopted a harder close for Sequoia. The Fund is closed to new investors, except for new accounts opened with us directly by existing shareholders of the Fund or existing clients of our firm, or members of their families. The Fund remains open to contributions from existing shareholders, though we reserve the right to reject any order to purchase Fund shares.

I've been in SEQUX for very many years, so regarding "can you get into the fund", I read what you posted below, on their website, and assume someone not in the fund cannot get in, unless they meet the very narrow criteria above.
Yes, regarding Berkshire, I remember that for a long time, Berkshire had a weighting of about 30% in SEQUX! I'm sure you know the historical ties between SEQUX and Warren Buffett......when Buffett closed his partnership, he told all his partners that if they were still interested in being in the stock market, he recommends Bill Ruane as the manager to go with. Bill Ruane established SEQUX for that express purpose.
Yes, Valeant is the largest position, and has a larger weighting than I feel comfortable with, at 18%. It never bothered me to have 30% in Berkshire Hathaway, but 18% in Valeant does bother me. Of course, Valeant went up 96% last year, and it sure wasn't bothering me then! But actually, I wasn't tracking the portfolio and wasn't even aware of it at the time.
Here's Valeant's amazing performance on a calendar year basis:

The Sequoia team is very aware of valuations, so it's interesting that their largest holding has had such a performance run up. Normally I wouldn't think SEQUX would hold a stock with such a run up, but Morningstar lists Valeant's forward P/E as only 10.5