FYI: A downturn would give investors sitting on big tax gains an excuse to get out, possibly taking some $1 trillion with them.
Regards,
Ted
https://www.bloomberg.com/news/articles/2018-05-03/a-bear-market-would-be-a-death-knell-for-active-funds

Hi @hawkmountain
A more personal question about the 529's. Are there 529's in the name of the parent(s) or only in your name. This is somewhat related to your original question about 529 monies affecting FAFSA. @bee added excellent info/links.
I added a few things below; past your original question.
Regards,
Catch
---Original 529 plan monies uses: the qualified education expenses of the designated beneficiary, such as tuition, fees, books, as well as room and board at an eligible education institution.
---Also, contributions to a 529 do not have to be stopped once the beneficiary starts undergrad school. Post graduate school is eligible, too. A consideration with continuing to add monies is whether all of the money will be used (not hard to use all of the money today, eh?). However, if more money appears to be needed and one has the ability to add to the 529; the distributions from the investments continue to be tax exempt. The 529 remains a tax free investment, yes?
---A few notes (IRS) about new adds to "what" 529 monies may now be used:
Q. Can I make withdrawals from my 529 plan for the costs of computer technology or equipment?
A. A qualified, nontaxable distribution from a 529 plan includes the cost of the purchase of any computer technology, related equipment and/or related services such as Internet access. The technology, equipment or services qualify if they are used by the beneficiary of the plan and the beneficiary's family during any of the years the beneficiary is enrolled at an eligible educational institution.
Q. What does “computer technology or equipment” mean?
A. This means any computer and related peripheral equipment. Related peripheral equipment is defined as any auxiliary machine (whether on-line or off-line) which is designed to be placed under the control of the central processing unit of a computer, such as a printer. This does not include equipment of a kind used primarily for amusement or entertainment. “Computer technology” also includes computer software used for educational purposes.
Q. Is this “cost of the purchase of any computer technology or equipment or Internet access and related services” available for any other education benefit under the tax laws?
A. No, it is only for 529 plan withdrawals. Such costs are generally not qualifying expenses for the American opportunity credit, Hope credit, lifetime learning credit or the tuition and fees deduction.

I'm having a hard time remembering any time I've had problems with Vanguard service. That could be because I'm a model Vanguard client - invest, make tweaks every couple of years, do ACH transfers online, and not much else.
Same sort of pattern with my use of internet banks. Set up an account, move money in and out, and watch the interest pile up. (Yes, really, over 1.5% at many internet banks these days.)
On the other hand, I use Fidelity for more frequent transactions. Their latest miscue is failing to provide me an image of a check that cleared a month ago. Called twice, each time was promised that it would show up online. Still hasn't.
Walked into an office today. Useless. Unlike the phone reps, they couldn't even see the image on their system. So no way to get a printout.
CMA accounts have been around since Merrill Lynch invented them in 1977. You'd think that after forty years, Fidelity could get it right.
Sure it's nice to be able to call 24x7. But if all they do is talk, what good is calling?

@MFO Members: The Linkster's cash holding is 1.19%. The S&P 500 will close out the year above 3,000.
Regards,
Ted

If the S&P closes out above 3000 or even touches that mark during 2018 I will bow down at your feet from afar. My cash holding is now 0 but I am not in risk on assets.
Edit: Actually bank loan and non agency rmbs funds could be considered risk on positions.

@Hank - yes you can BUT in fairness I was not retired then AND I had more in mutual funds than I do now. If memory serves me I was down roughly 32% probably tempered by a 55-45 allocation to domestic-foreign funds. I also had no bond funds then unlike now where I hold a healthy bunch of bond CEF's. Ironically it was that market slump which kick started my dividend growth investment portfolio.

"It's good to start hearing BobC's reflections as he closes a chapter that he'd been writing for 50 years and begins another."
Thanks Bob, I enjoyed your comments !
Derf

Looks like the devil is in the details:

529 account penalty and financial aid
Families, however, can encounter problems when grandparents withdraw the money to pay for college expenses. The 529 withdrawals must be reported on financial aid applications as the student's income. The financial aidformula assesses student income at a stiff 50 percent.
Here's an example: If the grandmother withdrew $20,000 from a 529, that money would be assessed at 50 percent. ($20,000 X 50 percent = $10,000.) The grandmother's withdrawal would reduce the grandchild's chances for need-based financial aid by up to $10,000.
Disabling a 529 financial aid time bomb
One way to disable this financial aid time bomb is for the grandparent to transfer the ownership of a 529 to a parent. Assets in a 529 account owned by the parent are only assessed at 5.64 percent for financial aid purposes. In the case of a $20,000 withdrawal, a potential financial aid award would only shrink by a maximum of $1,128.
Grandparents can avoid any hit to financial aid awards by timing their 529 withdrawals. Ideally a grandparent will wait until after the parents have filed for financial aid for the last time -- in the winter or early spring of the college student's junior year. This would be the last financial aid form the parents file (covering the child's senior year), so the parents and child's finances after that filing would be irrelevant.

https://cbsnews.com/news/time-bomb-grandparents-529-college-contributions/
Similar Take with more details:
https://wsj.com/articles/when-grandparents-and-529-plans-for-college-savings-clash-1408747176
and,
https://money.usnews.com/money/personal-finance/mutual-funds/articles/2015/09/08/grandparents-dont-make-a-529-plan-mistake

I think your information is not correct. Actually, grand parents owned 529 account never shows up on FAFSA form. You just put the grand kid name as a beneficiary but not the owner. Even you are not suppose to tell to your grand kid until you are ready to pay their education expenses. This is my understanding the latest 529 account.

I took a quick look at the M* info on POPFX. One question that I have is how large a cash position did the fund have from inception in 2007 and through 2008, the period for which performance appears so good compared to peers? While it may be stating the obvious, only long-term investors have been rewarded for the risk-averse investing of the managers. Finally, I was struck by the high percentage (53%) of holdings in Financial Services (including a position in TRP and in White Mountains, both companies where managers previously worked) and by the low allocation (10%) to Technology. Mid-Cap Blend is the inevitable bogey, but this fund also has both Giant and Micro stocks. The fund itself uses both the Russell 2000 Total Return and the Russell Mid-Cap Total Return indices for comparison. I grew up not far from the fund's headquarters, so I hear these managers' New-England accents and I am very familiar with the Connecticut scenes depicted on their web site. They are quite apologetic in the annual report about missing out on 2017's rally.

Vanguards biggest active bond fund manager suddenly resigned on April 13.
He had managed or co-managed 7 active bond funds, totaling 135 billion dollars.
He was sole manager of the Vanguard Short Term Investment Grade Fund VFSUX the forth largest actively managed bond fund in the U.S.
Whats strange is it has been over 2 weeks and not a word on this on the Vanguard web site.
Was he forced to resign or be fired, or what. Vanguard is definitely trying to keep this very quiet.
Samuel Martinez and Daniel Shaykevich have taken his place as co-managers of the Short Term Investment Grade Fund.

@Mark - Can we assume then that you went into October 2007 nearly fully invested in equities? Must have been some ride. S&P was off 56.4% over 17 months. Global markets worse.
If you’ve got the stomach to stay the course that’s fine. That type of commitment isn’t for everyone - especelly someone near 75 with a 10-year life expectancy.
October 2007 to March 2009
S&P 500 high: 1565.15, Oct. 9, 2007
Low: 682.55, March 5, 2009
S&P 500 loss: 56.4 percent
Duration: 17 months
@Ted - Thanks for clearing up my question on gold. Wonder if it would be too much trouble on those hyped up sector promotions to insert a word of caution that you do not agree with the hype? And, I’ll assume your prophesitorical skills pertain mostly to equity valuations and do not extend to other matters like alien life? :)

Hi, Ben.
It's the nature of that particular metric that pretty much all stock funds have a risk of four or five. Here's why. Charles starts by defining the S&P 500 as "the market." The question is whether you're substantially more or less volatile than that.
From the definitions page: Funds with volatility between 75 and 125% of market are assigned MFO Risk of 4 and deemed "Aggressive."
So, by definition, the S&P 500 is a 4. Funds with as little as 75% of its volatility are also 4 as are funds with as much as 125% of its volatility.
If you look at the entire Fidelity line-up, nearly 450 funds, only one equity fund has an MFO risk below 4 and even many multi-asset class funds earn 4 or 5 on risk.
The idea is to allow you to see where your fund lies within the entire universe of possibilities, not just where it lies within a narrow peer set. Happily, the "narrow peer set" data is available in the screener. It's just not the MFO Risk metric.
Hope that helps,
David

With Ed just back and recovered from his European vacation, we'll publish an update soon. That is, we'll add Ed's essay - on the need by professionals investors to reinvent themselves to maintain their "edge" in a rapidly evolving ecosystem - to the May offering. It strikes me as a thoughtful piece.
I regret offering no memorial words for Marty Whitman; he surely deserves them but surely deserves them from people who knew and trusted him. I was afraid I had little more than platitudes to offer.
The Prospector fund looks interesting. I began following them when Ron Howard, the long-time manager of Price Capital Appreciation - the equity fund that had the longest-ever streak of years without a loss - left to co-found Prospector. They feel like T Rowe in a compact package.
It's good to start hearing BobC's reflections as he closes a chapter that he'd been writing for 50 years and begins another.
And I really do appreciate your input on the active share piece. I hope it was worth your time.
Take care,
David

Hi all. I've always been around...just lurking for a while. Some very nice posts here as always. Greetings to everyone!
Right now I am the owner of three 529 accounts for grandchildren. The FAFSA issue has come up, and seems to indicate that the amount of scholarship money available might be reduced far more if the grandparent owns the 529 than if the parent owns it. I swore my brains worked better than this, but it seems like a big muddy mess.
Has anyone deciphered the FAFSA/529 conundrum? TIA
Best, hawk
p.s. I might have posted along these lines a couple years ago. If so apologies for the redundancy

The S&P 500 will close out the year above 3,000.

@Ted - Hell, it might close the year at 5,000. Who knows? Unlike you, I don’t pretend to be able to predict the future. I think what some of us are talking about here is our own comfort levels and needs. Anyone who was 100% invested in March, 2009 is in a pretty sweet spot right now.
While you’re making predictions,
- Who will win the 2018 World Series?
- Will gold first hit $1200 or $1400? (The exact date this will occur would also be apprecisted.)
- On what date will NASA confirm the existence of life beyond Earth?
BTW: You posted a Barrons article last week that predicted a “rosy” future for gold. I haven’t heard back from you on that one. Specifically the extent to which you agree / disagree with Barron’s and what amount of gold, if any, you hold? - https://www.mutualfundobserver.com/discuss/discussion/40620/commodities-now-all-roads-lead-to-gold
Thanks

@MFO Members: The Linkster's cash holding is 1.19%. The S&P 500 will close out the year above 3,000.
Regards,
Ted

Having cash allows for small buying this year - early Feb (9% down), March and April (5-6% down). Several funds I use have over 10% cash position. Only until recently, TRP Capital Appreciation reduced the cash to high single digit.
With treasury yielding near 3%, bond funds are struggling this year. Two or more rate hikes this year pose considerable headwind for bond funds. Actively managed funds are doing better than the bond index.

Our house is now at about 50% cash, being money markets at Fidelity

I thought I was being conservative with 20% cash and 20% bond.

All depends on your overall approach - especially what the “other” money is invested in. And let’s assume this discussion pertains only to folks in the “distribution” stage (rather than the “accumulation” stage).
I use “nominal” cash level (including short-term bonds) to gage relative risk exposure at any given time That doesn’t include the additional cash held indirectly thru balanced/allocation funds. 15% would be normal. 20% is high end. Prior to the mid-March meltdown I was at 22%. Did a little buying after that and now just above 20%.
For those who deride cash, I offer this 30-second video clip from a beloved investor of the past. His closing words extol the “beauty” of cash. :)

FYI: Welcome to the “Wait! Is it already May???” edition of the Mutual Fund Observer.
Regards,
Ted
https://www.mutualfundobserver.com/2018/05/may-1-2018/

@catch22, I thought I was being conservative with 20% cash and 20% bond.

Our house is now at about 50% cash, being money markets at Fidelity at about 1.3% yield/blockquote>
No major move sofar but just watching.