The elevator discussion in David's Jan. commentary caught my attention. If I understand it correctly, the strategy of SDRIX is to stay fully invested at all times in a generally large cap value manner while hedging against a bear market using puts that only come into the money when the market is down 10%. Unlike most long-short strategies, it's not hedging against individual securities nor is it trying to time moves in and out of the market (as does Hussman, I believe?). So the fund can have good success either in a big up year or in a big down year. Its worst case scenario seems to be a year with the market down 9% (so the hedge isn't quite triggered) while the market is led by growth stocks (so the value tilt causes under-performance). This year, a flat market led overwhelmingly by a couple of big growth stocks, SDRIX was down less than 5%, so I'm guessing that down 15% really would be a rock-bottom scenario for it. It's a nice thought that your fund would do okay in a roaring bull market while thriving in a devastating bear.
FWIW, this is the first vehicle I've seen that pretty much implements the investing ideas that Mark Spitznagel puts forth in his very interesting book, The Dao of Capital. The main difference so far as I can recall is that Spitznagel suggests a breakpoint of 20% or 30% for your hedge instead of 10%, I presume because of cost.
Any comments?

Last year: -8.4%
5-year average: -8.33%
http://funds.us.reuters.com/US/funds/overview.asp?symbol=HSGFX.O

This is pretty much the way I see 2016 too. This is why I have been moving towards raising my equity alocation in my foreign dividend paying equity and hybrid funds and reducing my allocation in my domestic equity and hybrid funds with the exception being FDSAX. However, I have been keeping my allocation in the overall growth & income area at its target of 35% for the overall portfolio.

FYI: Investing is becoming more of a grind. Expect it to stay that way.
Analysts, mutual-fund managers and other forecasters are telling investors to expect lower returns from stocks and bonds in 2016 than in past years. They're also predicting more severe swings in prices. Remember that 10 percent drop for stocks that freaked investors out in August? It likely won't take another four years for the next one.
Regards,
Ted
http://bigstory.ap.org/article/52194e6899d24c6db2484be02aaea2e1/expect-less-and-buy-antacid-2016-investment-forecasts

FYI: Tactical asset-allocation funds enjoyed a burst of popularity after the financial crisis. Proponents argued that tactical allocation can be valuable in bear markets or amid heavy volatility given their flexibility. Tactical managers typically eschew investing in a static mix of investments like a manager of a traditional balanced fund would. Instead, they rapidly shift between asset classes, often in following macroeconomic or trend-following strategies.
Regards,
Ted
http://news.morningstar.com/articlenet/article.aspx?id=734857

@BenWP GPEOX beat its benchmark by more than 300 bps for the year... That's a bad idea? GPGOX beat its benchmark by nearly 300 bps as well. And GPIOX finished 2015 more than 150 bps ahead... What exactly makes these bad investments?

@MFO Members: If I'm not mistaken, I link the news on 12/23/15.
Regards,
Ted
http://www.mutualfundobserver.com/discuss/discussion/24935/manning-napier-buys-a-3b-shop-on-the-west-coast-rainier-investments#latest

Hi @BenWP,
From time-to-time funds falter (sometimes even the best). This is one reason that I use a sleeve system which holds multiple funds (usually three to six); and, in this way, when one of the funds falters within the sleeve then there are the other funds that can offer production and move the sleeve forward.
For those interested, I am providing the details on my sleeve system below.
Sleeve Management System (12/18/2015)
Here is a brief description of my sleeve system which I organized to help better manage the investments that were held in five accounts. The accounts consist of a taxable account, a self directed ira account, a 401k account, a profit sharing account and a health savings account plus two bank accounts. With this I came up with four investment areas. They are a cash area which consist of two sleeves … an investment cash sleeve and a demand cash sleeve. The next area is the income area which consists of two sleeves. … a fixed income sleeve and a hybrid income sleeve. Then there is the growth & income area which has more risk associated with it than the income area and it consist of four sleeves … a global equity sleeve, a global hybrid sleeve, a domestic equity sleeve and a domestic hybrid sleeve. An finally there is the growth area, where the most risk in the portfolio is found and it consist of five sleeves … a global sleeve, a large/mid cap sleeve, a small/mid cap sleeve, a specialty fund sleeve and a ballast/special investment sleeve. Each sleeve consists of three to six funds (in most cases) with the size and the weight of each sleeve can easily be adjusted, from time-to-time, by adjusting the number of funds and amounts held. By using the sleeve system one can get a better picture of their overall investment picture and weightings by sleeve and area. In addition, I have found it beneficial to xray each fund, each sleeve, each investment area, and the portfolio as a whole quarterly. Again, weightings can be adjusted form time-to-time as to how I might be reading the markets and wish to weight accordingly. All funds pay their distributions to the cash area of the portfolio with the exception being those in my 401k, profit sharing, and health savings accounts where reinvestment occurs. With the other accounts paying to the cash area builds the cash area of the portfolio to meet the portfolio’s monthly cash disbursement amount with the residual being left for new investment opportunity. In addition, most all buy/sell trades settle from or to the cash area with some nav exchanges between funds taking place.
Here is how I have my asset allocation broken out in percent ranges, by area. My current target allocations are cash 20%, income 30%, growth & income 35%, and growth 15%. I do an Instant Xray analysis on the portfolio quarterly (sometimes monthly) and make asset weighting adjustments as I feel warranted based upon my assessment of the market, my risk tolerance, cash needs, etc. Currently, going into 2016, I am bubbling on my target allocations noted below.
Cash Area (Weighting Range 15% to 25% with target being 20%)
Demand Cash Sleeve… (Cash Distribution Accrual & Future Investment Accrual)
Investment Cash Sleeve … (Savings & Time Deposits)
Income Area (Weighting Range 25% to 35% with target being 30%)
Fixed Income Sleeve: GIFAX, LALDX, THIFX, LBNDX, NEFZX & TSIAX
Hybrid Income Sleeve: CAPAX, CTFAX, FISCX, FKINX, ISFAX, JNBAX & PGBAX
Growth & Income Area (Weighting Range 30% to 40% with target being 35%)
Global Equity Sleeve: CWGIX, DEQAX & EADIX
Global Hybrid Sleeve: BAICX, CAIBX & TIBAX
Domestic Equity Sleeve: ANCFX, FDSAX, INUTX, NBHAX, SPQAX & SVAAX
Domestic Hybrid Sleeve: ABALX, AMECX, DDIAX, FRINX, HWIAX & LABFX
Growth Area (Weighting Range 10% to 20% with target being 15%)
Global Sleeve: AJVAX, ANWPX, NEWFX, PGROX, THOAX & THDAX
Large/Mid Cap Sleeve: AGTHX, IACLX, SPECX & VADAX
Small/Mid Cap Sleeve: PCVAX, PMDAX & VNVAX
Specialty Fund Sleeve: LPEFX, PGUAX & TOLLX
Ballast/Special Investment Sleeve: None
Total Number of Mutual Fund Positions = 47

Yeah, thanks; I saw the list as of a month ago (M*), and was wondering if it still obtained. Meaning how much of it changes / changed given a 45% turnover?
Regardless, the list made it sound a little like a sort of tech gogo fund.
Outdoing FLGEX, no less, not just SP500 and RPG (doubling the latter). Whoda thunk? Maybe he is still some sort of contrarian.
Danoff and Tillinghast are the same elderly age :), ~56 and ~58 this year, if I did the math right. I imagine Fido will let them be.

Josh wrote me (and presumably everyone else on the list) on December 30th, and asked us to complete the sentence, "In 2015, I learned that ..." Seized by uncontrollable whimsy, I sent him a rather longer answer than was publishable.

Hi, Josh.
In 2015 I learned that ...
... in the battle between a sensible strategy and a senseless market, the market wins (for now).
Other things we learned that probably wouldn't fit in your column:
Sometimes when they say dry-clean only they really mean it. Who knew?
The longest 3 seconds in sports is when your kid is circling under a fly ball.
When they describe a ghost pepper as insanely hot, they're telling the truth.
And, that I can't see Trump without thinking Mussolini (Duce! Duce! Duce!).
In 2016, I'm hoping to learn whether what they say about Irish milk chocolate is true.
Cheers for a joyful new year.

David

Hi, David.
Almost all of the winners in my retirement portfolio were Fidelity large growth funds (and Fido Japan Smaller Companies, bought some while ago at Ed's recommendation).
In Mr. Danoff's case, his major winners were Facebook (up 34%), Amazon (up 120%), various flavors of Google (up about 45% depending a bit on share class), and Netflix (up 135%). Decent gains on smaller positions in Visa and MasterCard, services important to your use of all of the above.
Berkshire Hathaway and Apple were negative and Chipotle was negative in oh so many ways.
For what that's worth,
David

Reading the opening annus subsection, I wonder what explains Danoff's 6.5% w/ 45% turnover in a heeyuge fund.

I stumbled across this press release (http://rainierfunds.com/Documents/Rainier - Manning-Napier-press release.pdf) when looking into Rainier International Discovery. I had heard nothing of this proposed transaction. FWIIW, RISAX had a great year in 2015 and I was curious as to how they clocked my Grandeur Peak holdings. The big difference is in market caps; the Rainier fund, despite being classified as Sm-Mid Intl, holds 91% in lg-caps and mid-caps, and only 8% in sm-caps. GPIOX has no large caps and has almost all its holdings in small and micro caps. Apples and oranges, as the sage said. Grandeur Peak over-all has done very little since mid 2014, so GPEOX, GPGOX, and GPIOX are among my several bad ideas for 2015.

FYI: (Click On Article Title At Top Of Google Search)
There are still plenty of places to find decent income in stock and bond markets, even with many key interest rates at or near historically low levels. Investors can get yields of 4% to 9% on a range of investments, including junk bonds, utility stocks, telecom shares, and real estate investment trusts. These look appealing in an environment of sub-2% inflation, 1%-to-3% Treasury yields, and minuscule yields on bank deposits and money-market funds.
Regards,
Ted
https://www.google.com/#q=get+yield+up+to+9%+Barron's

This sure seems more reasonable and plausible to do than most such advice articles:
http://www.marketwatch.com/story/one-way-to-try-to-beat-the-sp-in-2016-2015-12-31
It would be to track going forward, and/or back-test, with a dummy portfolio.

Hi Guys,
Prolific Melody Beattie wrote: “The new year stands before us like a chapter in a book, waiting to be written. We can help write that story by setting goals”.
In the investing world we can certainly set those goals, but we are powerless with regard to controlling the final outcomes. I have been investing for over 6 decades and I still do not find any consistent rhyme or any repeatable reasons why the marketplace does what it does.
An excellent visual summary of the non-predictability of both the equity and the fixed income segments is available in the market’s periodic returns tables that are often referenced in these MFO exchanges. Here is a Link to an American Century version of these illustrative tables:
https://www.americancentury.com/content/dam/americancentury/ipro/pdfs/flyer/Periodic_Table.pdf
There is no rhyme, no reason to the steep yearly reversals in these category returns. Economies don’t change that rapidly; only investor sentiments are that volatile. If you can ferret some respectable pattern from these chaotic data, than” you’re a better man than I am Gunga Din” !
Sensible market actions are mostly an illusion. Our market experts are still trying to explain the Great Depression and coupled market meltdown. Some folks place blame on the Smott-Hawley tariff tax bill; others take exception. However, we’re all very inventive at generating seemingly plausible, but mostly wrong, causes.
Some folks believe that we were just due for a market correction after a rather long run of positive outcomes. That’s a fallacy; it is more superstition than factually based. Just because a coin toss has come up heads ten times in succession doesn’t alter the base rate odds that the next toss has a 50/50 chance of yet another head.
Historically, equities have returned positive results about 70% of the time annually. Although that didn’t happen this year, I expected that outcome and am disappointed. Next year, I expect that the positive return odds remain at the 70% likelihood.
I don’t change my portfolio construction based on forecasters. In 1933 Alfred Cowles published a paper with a questioning title, “Can Stock Market Forecasters Forecast?”. He answered in the negative. Not much has changed in the intervening decades. In that spirit, I agree with the comments submitted by MFOer vkt.
My contribution to a lessons learned list would not be new for 2015, but it surely would be persistent: Forecasters can’t forecast.
Best Wishes for a healthy and profitable New Year.

Thanks Ted...a nice start to the new year...and little5bee with that go blue nonsense is probably happy as well as that team up north destroyed Florida.
Happy New Year to you as well Ted.

Also posted on M*.
I'm a long-time investor in MAPIX and have gotten in and out a couple of times; I am "in" right now. BUT, I'm not sure I'm getting the most bang-for-the-buck (pardon the cliche').
Absolute returns are good, not great, the downside has been okay, but not what I'd hoped, so I have been exploring other options in the Divers. Asia Pacific category.
I find myself looking closely at FIDO's Pac. Basin fund,FPBFX (my wife owns it in her 401K). It has a new manager since late 2013, so his track-record is very short and difficult to evaluate. When I compare it's returns and metrics to other funds (3 years and less), in particluar, MAPIX, FPBFX comes out mostly on top.
Returns favor FPBFX significantly; slight nod to MAPIX for M* "risk"/SD; Alpha, Treynor, upside/downside capture ratio favor FPBFX.
Furthermore, when I look at the "downside" Quarterly returns for 2013-2015, I find no real difference, if anything, it may favor FPBFX a bit.
Bottom line, what thoughts, suggestions and opinions do you have? Am i being too impatient and possibly "performace chasing"?
Thank you for any and all comments!!
Matt

Can't let it go, can you?
You asked how many of the 162 funds M* calculated this year. I'd say all of them. The vast majority of current bond quality averages were calculated for the past quarter (9/30/15). Though you're right, some fund families are more helpful than others.
Fidelity seems to have provided data ahead of what's legally required. M* was able to compute the average quality of Fidelity's conservative allocation funds as of 10/31/15, a month more recent than most.
There's a reason why you wander over to the reference section of your library. You put in time and effort assimilating information because you find value in the M* subscription material. Let's just leave it at that.

If anyone can DEFINE what a sensible (or senseless) market is in a sensible way, I would love to hear it. Predictable? Amenable to simple explanations? Always goes up? Follows some simple metrics or thumb rules? Behaves as I expect it to? Then only does it make sense to opine if it was a sensible market or not. :)
Perhaps we can have our own "In 2015 I learned that..." list here. Serious or silly just to entertain.
To start, here is what I learnt in 2015...
Not only are most predictions wrong but most explanations of why something happened in the markets are also wrong (or non-falsifiable).