FYI: Government savings bonds aren’t meant to be blockbuster investments; they are intended to be safe havens for your cash. But lately, rates on savings bonds are downright anemic.
Regards,
Ted
http://www.nytimes.com/2015/05/28/your-money/appeal-of-savings-bonds-wanes-in-ultralow-interest-environment.html?ref=topics&_r=0

FYI: Four Vanguard international equity index funds will more broadly diversify with the addition of small-cap stocks, and will follow broader FTSE all-cap benchmarks as a result.
Regards,
Ted
https://pressroom.vanguard.com/content/press_release/Four_Vanguard_Funds_to_Broaden_Diversification_6.2.15.html

The inimitable Jeffrey Gundlach will be giving a webcast update for the Total Return Bond Fund (DLTNX) next Tuesday after market close. The title of his presentation will be ... "Summer Insects."
So wear some light-colored clothing, slather on a coating of DEET, and listen in--- it could be more fun than usual. He might even splash some more cold water on our faces, like David and Ed had the temerity to do in the MFO monthly commentary (wow, was that vertigo, or just "a wobble in the hinges?"). :)

Portfolio going nowhere fast, this year. Just following the plan, and plan to ride it out, as with '08-'09. What are the odds of such a near-apocalypse again?
http://www.surfingtheapocalypse.net/forum/images/uploaded/20130415061342516be0e6cf4c7.jpg

"Stock prices have risen rapidly over the past six years or so, but they were also severely depressed during and just after the financial crisis. Arguably, the Fed's actions have not led to permanent increases in stock prices, but instead have returned them to trend. To illustrate: From the end of the 2001 recession (2001:q4) through the pre-crisis business cycle peak (2007:q4), the S&P 500 stock price index grew by about 1.2 percent a quarter. If the index had grown at that same rate from the fourth quarter of 2007 on, it would have averaged about 2123 in the first quarter of this year; its actual value was 2063, a little below that. There are of course many ways to calculate the "normal" level of stock prices, but most would lead to a similar conclusion." - Ben Bernanke

@David_Snowball
Whoa, easy does it, pardner. It is one thing to talk/write about a new fund as having outstanding prospects. It is quite another thing to suggest it is a sure thing, can't miss, definite buy, before it has a single day of performance, let alone before it has even been constituted. Sometimes it doesn't work out. A lot of strange stuff can happen during the first night at the amusement park's Grand Opening. Chose to violate that 3 yr/5 yr rule 'cause it just feels "right", and come in too hard and too fast, and a year later you can find yourself sitting in a pile of goo.

Junkster, we think of trends very differently, evidently.
At the 1987 crash, Dow was up like 18% for the year --- started around 1900, by 16Oct 2250 approx; Aug high (=year high( was 2640, sure. So off its Aug highs, yes. But just look at a graph. I was looking at growth of 10k, but not a lot of difference for that.
2008: by 1 June down (only) 3-4% for the year, starting the decline. This is 10k growth, my favored way to look at things in hindsight. More slow decline to Aug 1. And if your start point is then, decline to the 28th is another 4%. And then the real drop.
(This assumes I am doing the math right.)

Thought this was kind of interesting: "...when T. Rowe announced the closure, that the health sciences fund grabbed $820 million in the first quarter, fully 42% of T. Rowe’s total haul in the first three months of 2015:"

FYI: (This is a follow-up article) (The Linkster has recommended PRHSX over the last several year. Did you follow his recommendation ?) (Up over 33% last five years.)
Investors just lost access to one of the market’s best-performing stockpickers.
Fund company T. Rowe Price (TROW) this week closed its popular Health Sciences Fund (PRHSX) to new investors, a preemptive step taken to prevent the fast-growing fund from becoming unwieldy.
Regards,
Ted
http://blogs.barrons.com/focusonfunds/2015/06/02/t-rowe-closes-health-sciences-mutual-fund-to-new-money/tab/print/
M* PRHSX Performance: http://performance.morningstar.com/fund/performance-return.action?t=PRHSX&region=usa&culture=en_US

>> The markets were already in established downtrends before that time.
Not so much, at least 1987 not at all. Look at SP500 and FCNTX. For 7y ago, yes, this week right now was the very week of turn. Not much of a trend prior, spring 08.
I see zero reason to think we are in for a nasty bear absent some external shock. From what I read, not in the lay or popular press but internal Goldman memoranda and thinktank economists and the like, some already cited here, the worst you can say is that things are on the pricy side, that's all. Not an original thought, but not very apocalyptic. I did like Tillinghast talking about our bad selves. But some sudden plunge soon, don't believe there is reason.

David, before the Monday crash on October 19, 1987, the Dow was already down some 17% from its August highs. Same with October 2008, entering that month the Dow was already down some 17% YTD. I would say a 17% decline is a pretty established downtrend or what am I missing here.

Yes, I was around back then. The market peaked in August, sort of meandered around until the week before the crash (which came on a Monday). The three days before the crash saw brutal losses. I don't know if you'd call that a trend or not, but people were definitely worried on Louis Ruckeyser on the Friday before the crash (there was a famous prediction that night). I lost around 40% of my money in a week. Good lesson for me.

>> The markets were already in established downtrends before that time.
Not so much, at least 1987 not at all. Look at SP500 and FCNTX. For 7y ago, yes, this week right now was the very week of turn. Not much of a trend prior, spring 08.
I see zero reason to think we are in for a nasty bear absent some external shock. From what I read, not in the lay or popular press but internal Goldman memoranda and thinktank economists and the like, some already cited here, the worst you can say is that things are on the pricy side, that's all. Not an original thought, but not very apocalyptic. I did like Tillinghast talking about our bad selves. But some sudden plunge soon, don't believe there is reason.

David, before the Monday crash on October 19, 1987, the Dow was already down some 17% from its August highs. Same with October 2008, entering that month the Dow was already down some 17% YTD. I would say a 17% decline is a pretty established downtrend or what am I missing here.

I just want to thank @Ted for making it clear where the US Stock Market is headed for the rest of the year! And @Junkster for suggesting its probably wise to be positioned so that a big downturn can be welcomed as a buying opportunity. I sit here in neutral with 50% in Stocks and 15 to 20% in "near cash" investments thinking we are probably more than 1/2 way done with the current bull market in US Stocks....but wondering where the money will go if it exits quickly. I think @Old_Joe commented recently about the lack of appealing alternative investments in a post when he wrote about his current allocation mix. Perhaps as long as the herd continues to feel entitled to a "good return" from "somewhere" the US stock market will continue to climb....at least until it doesn't!

@MFO Members: Trees don't grow to the sky, and at some point the market will reverse course, but it won't be this year. The S&P 500 will finish higher in 2015, about 13% higher. than it closed in 2014.
Regards,
Ted

>> The markets were already in established downtrends before that time.
Not so much, at least 1987 not at all. Look at SP500 and FCNTX. For 7y ago, yes, this week right now was the very week of turn. Not much of a trend prior, spring 08.
I see zero reason to think we are in for a nasty bear absent some external shock. From what I read, not in the lay or popular press but internal Goldman memoranda and thinktank economists and the like, some already cited here, the worst you can say is that things are on the pricy side, that's all. Not an original thought, but not very apocalyptic. I did like Tillinghast talking about our bad selves. But some sudden plunge soon, don't believe there is reason.

With apologies to OJ, Jerry and the others, Ted was the first to note that David's June Commentary was posted. I'm afraid my initial tongue-in-cheek remark may have been inappropriate or misinterpreted. It was intended to induce others to read this excellent commentary.
I'm a bit surprised at the seeming surprise David's cautionary market outlook seems to have generated. Regular readers of his monthly commentaries know that he has long voiced skepticism (I think well founded) ) about the durability of the bull market and valuations in general. If you also read Ed Studzinski's regular comments, he makes David look like a lotus eating optimist. (As most here know, Ed co-managed the Oakmark Equity and Income Fund for many years, turning out impressive results.)
I don't think MFO participants have been completely "in the dark" on the valuation issue or to the fact that stock markets can and sometimes do drop precipitously (25+% overnight) or flounder for incredibly long periods, as measured in years or decades. That's the risk you take for being in equities. If you read JohnChism's thread about "Bullish or Bearish" you'll find some of the same concerns David has recently raised - though certainly not as thoroughly explored or eloquently stated as only David can do.
To refresh readers' memories, I've clipped a few morsels from some of David's Commentaries dating back to November, 2013. Please read the commentaries in full, as they are easily retrievable on the MFO website. Apologies to David if, in pulling these out of context, I altered the meaning, omitted pertinent context, or changed the emphasis of any. There was no intent to do so.
Regards
-
November 1, 2013: "... a market that tacks on 29% in a year makes it easy to think of investing as fun and funny again. Now if only that popular sentiment could be reconciled with the fact that a bunch of very disciplined, very successful managers are quietly selling down their stocks and building their cash reserves again."
December 1, 2013: "Small investors and great institutions alike are partaking in one of the market’s perennial ceremonies: placing your investments atop an ever-taller pile of dried kindling and split logs. All of the folks who hated stocks when they were cheap are desperate to buy them now that they’re expensive...We have one word for you: Don’t."
January 1, 2014: If you’re looking for a shortcut to finding absolute value investors today, it’s a safe bet you’ll find them atop the “%age portfolio (invested in) cash” list ...They are, in short, the guys you’re now railing against"
February 1, 2014: "It makes you wonder how ready we are for the inevitable sharp correction that many are predicting and few are expecting."
March 1, 2014: "It’s not a question of whether it’s coming. It’s just a question of whether you’ve been preparing intelligently."
April 1, 2014: "Some (money managers) ... are calling the alarm; others stoically endure that leaden feeling in the pit of their stomachs that comes from knowing they’ve seen this show before and it never ends well."
June 1, 2014: ... all of this risk-chasing means that it’s Time to Worry About Stock Market Bubbles."
September 1, 2014: "Somewhere in the background, Putin threatens war, the market threatens a swoon, horrible diseases spread, politicians debate who among them is the most dysfunctional ..."
February 1, 2015: "The good folks at Leuthold foresee a market decline of 30%, likely some time in 2015 or 2016 and likely sooner rather than later. Professor Studzinski suspects that they’re starry-eyed optimists."
April 1, 2015: "(Sooner) ... Or later. That is, the stock market is going to crash. I don’t really know when. Okay, fine: I haven’t got an earthly clue. Then again, neither does anyone else."
May 1, 2015: "For investors too summer holds promise, for days away and for markets unhinged. Perhaps thinking a bit ahead while the hinges remain intact might be a prudent course ..."

Thanks Hank, not because I don't respect him, but I rarely have read any of David's monthly commentaries. So are you saying he is a persistent prophet of pessimism???
I sure would have hated to have missed 2014 as that year pretty much sealed my retirement.

Hmmm ... I blew a job interview once with a particularly weak answer to the request to "describe a hard decision you've made and how you went about making it." I'd spent much of my professional life making really consequential decisions about people's careers, the direction of my college and so on. After a while, it struck me that I was tripped up by the word "hard." In my mind, "hard" decisions are consequential decisions you're forced to make without having enough understanding to make them well. Because I tend to obsess about advance planning, very few of my decisions felt hard though many of them were profoundly painful.
That's where I am now on the market. I'm not particularly concerned with corrections or bears because, though I can't predict them, I understand them and can plan around them: Adjust your savings and withdrawal rates, shift asset allocations at least at the margin, ignore your portfolio whenever you feel the urge to do something brilliant, and be very comfortable with your managers. Meh, no biggie.
The thing that has me worried is the argument that I've heard now from several managers that the system itself might be broken. That's manifested in the liquidity arguments that I've been writing about. "Highly liquid" assets are, by definition, easily valued and easily traded; Treasuries are the paradigm case. We buy investments with the assumption that we can also sell them. Those sales happen through the good offices of intermediaries, sometimes called "market makers." Those folks maintain pools of tens, perhaps hundreds, of billions of capital. They buy your shares, using their money, at a fraction of a penny per share below the last price. Sometime later, maybe minutes, maybe hours, they sell it someone else for a fraction of a penny markup.
So, three parties to the trade: seller, market maker, buyer. We traditionally worry that high valuations will eventually make buyers scarce. That is, no "greater fool" is available and you have to sell your holdings at a discount. Buyer/seller mismatch. "Correction" occurs.
But what happens if the problem isn't between buyer and seller but between seller and market maker? That is, what if the conveyor belt that normally, quietly, profitably, invisibly moves shares between sellers and buyers isn't working? I'd like to sell $100 million in a bond and you'd like to buy them for $95 million but there's nobody capable of coming up with the initial capital to move them from me to you? At base, my bond would become unsellable, illiquid. That's the liquidity crunch.
Why might that occur? There have been a bunch of shifts in the financial services industry, some occasioned by good-spirited reforms imposed after the last two crises (two of the three worst market crises in a century occurred within eight years of one another, wonder if that's significant?), which have fundamentally impaired the number and size of intermediaries.
David Sherman and others have pointed out that that's already happening in some corners of the market: people are finding it almost impossible to sell very large blocks of bonds, people are finding it hard to sell stocks at mid-day and so on. And that's occurring in the good times. What happens if large, highly-leverage investors get spooked and try to unwind, say, a half trillion at the same time and find that they simply can't? Do you get an October '87 repricing (down 23% in an afternoon)? Do you get a fundamental change in the willingness of international capital to underwrite us because we're no longer "safe"? Do you get an October '08 freeze (where even the shortest term, most liquid paper couldn't be traded and volumes dropped 75%)? Do you get employers who can't honor their payroll obligations because they can't tap the paper markets? How might you react if your employer that they were hoping to be able to pay you sometime in the next week or so, at least part of your normal pay, but they weren't able to give a time or amount?
And is the fact that the smartest of the smart money people - that top 1% of institutional and private investors - are worrying about their own ability to "get out the door" independently significant? When guys who manage money for the really rich tell me that they're "standing outside the theater, shouting 'fire,' but nobody's listening," should I write them off as simply alarmist?
Here's what I got for answers: dunno, dunno, dunno, dunno, dunno, dunno, dunno and dunno.
Which I really dislike.
So, yeah, I think the markets are pricey but that's not really the thing that's nibbling the most at my brain.
For what that's worth,
David

The problem is most of us are still twitchy from the 2008 crash. Our commitment to buy quality funds and hold them for the long-term was severely tested.
I think David’s philosophy of holding 50% of his investments in stocks (funds) through thick and thin is the sound approach. But whatever your approach, don’t deviate from it because of predictions of doom.
The most money I’ve “lost” over the years was from selling because I was certain the market was about to take a dive. Even in this bear market I’ve been scared out of holdings (I bought Disney, for example, from $18 to $28, and then started selling, for what seemed like good reasons at the time, from $35 to $65, when the last shares were sold. Now I cringe when I see it cross the ticker.)
The only time I didn’t run for the exits in total fear, was 1987 crash. And the only reason I didn’t bail was that I couldn’t get through on the jammed phones lines to sell. In 1988, my holdings of Mutual Series went up about 30% (thank you Michael Price).
Look at a long-term chart of the market (like 100 years) and hold your best funds for dear life. After all, isn’t it the job of our chosen fund managers to do the worrying for us?

With apologies to OJ, Jerry and the others, Ted was the first to note that David's June Commentary was posted. I'm afraid my initial tongue-in-cheek remark may have been inappropriate or misinterpreted. It was intended to induce others to read this excellent commentary.
I'm a bit surprised at the seeming surprise David's cautionary market outlook seems to have generated. Regular readers of his monthly commentaries know that he has long voiced skepticism (I think well founded) ) about the durability of the bull market and valuations in general. If you also read Ed Studzinski's regular comments, he makes David look like a lotus eating optimist. (As most here know, Ed co-managed the Oakmark Equity and Income Fund for many years, turning out impressive results.)
I don't think MFO participants have been completely "in the dark" on the valuation issue or to the fact that stock markets can and sometimes do drop precipitously (25+% overnight) or flounder for incredibly long periods, as measured in years or decades. That's the risk you take for being in equities. If you read JohnChism's thread about "Bullish or Bearish" you'll find some of the same concerns David has recently raised - though certainly not as thoroughly explored or eloquently stated as only David can do.
To refresh readers' memories, I've clipped a few morsels from some of David's Commentaries dating back to November, 2013. Please read the commentaries in full, as they are easily retrievable on the MFO website. Apologies to David if, in pulling these out of context, I altered the meaning, omitted pertinent context, or changed the emphasis of any. There was no intent to do so.
Regards
-
November 1, 2013: "... a market that tacks on 29% in a year makes it easy to think of investing as fun and funny again. Now if only that popular sentiment could be reconciled with the fact that a bunch of very disciplined, very successful managers are quietly selling down their stocks and building their cash reserves again."
December 1, 2013: "Small investors and great institutions alike are partaking in one of the market’s perennial ceremonies: placing your investments atop an ever-taller pile of dried kindling and split logs. All of the folks who hated stocks when they were cheap are desperate to buy them now that they’re expensive...We have one word for you: Don’t."
January 1, 2014: If you’re looking for a shortcut to finding absolute value investors today, it’s a safe bet you’ll find them atop the “%age portfolio (invested in) cash” list ...They are, in short, the guys you’re now railing against"
February 1, 2014: "It makes you wonder how ready we are for the inevitable sharp correction that many are predicting and few are expecting."
March 1, 2014: "It’s not a question of whether it’s coming. It’s just a question of whether you’ve been preparing intelligently."
April 1, 2014: "Some (money managers) ... are calling the alarm; others stoically endure that leaden feeling in the pit of their stomachs that comes from knowing they’ve seen this show before and it never ends well."
June 1, 2014: ... all of this risk-chasing means that it’s Time to Worry About Stock Market Bubbles."
September 1, 2014: "Somewhere in the background, Putin threatens war, the market threatens a swoon, horrible diseases spread, politicians debate who among them is the most dysfunctional ..."
February 1, 2015: "The good folks at Leuthold foresee a market decline of 30%, likely some time in 2015 or 2016 and likely sooner rather than later. Professor Studzinski suspects that they’re starry-eyed optimists."
April 1, 2015: "(Sooner) ... Or later. That is, the stock market is going to crash. I don’t really know when. Okay, fine: I haven’t got an earthly clue. Then again, neither does anyone else."
May 1, 2015: "For investors too summer holds promise, for days away and for markets unhinged. Perhaps thinking a bit ahead while the hinges remain intact might be a prudent course ..."

Don't bear markets usually start either when the economy peaks and begins to tip into recession, or when interest rates rise either sharply or extensively? A 10% correction or so can happen any time, but a full-fledged bear market? I don't see it. And these hedge fund guys David cites haven't been great market-timers on average, many of them have been calling for hyperinflation for years now.
FWIW, Warren Buffett's equity allocation has been creeping higher: http://charlessizemore.com/warren-buffetts-asset-allocation/
And here's Jeffrey Saut, who I've found pretty good over the last 8-9 years, also calling for this bull to continue a while longer:
http://www.raymondjames.com/inv_strat.htm
That said, I do have more cash (about 10% vs my normal 5%) than I usually do, but obviously that's not much and I'll get hammered if the market indeed crashes.
And none of this detracts from my respect and gratitude for David! He may convince me yet.

Nice summary above and agree Jeff Saut has always seemed to have his act together. This is the sickest market I have seen in quite a while from all the divergences between the major averages to the new highs/lows index. It's almost too obvious and that is making this bear suspicious. Everyone sees the same thing and it's unusual to see so many wary with many of the markets still near historic highs. Even the Wall Street strategists are bearish per one of Ted links as evidenced by their lighter than normal allocation to stocks. They are normally a good contrarian indicator. Treasury bonds though do appear to be in a bear market. However, I never found cash to be a very prudent way to compound your wealth so as long as the bull continues (junk bonds have made historic highs the past few days per the H0A0) will continue to be 100% invested (with of course my usual tight mental stop) Right now in bondland RIMOX and OSTIX have my attention and may move some there.

I've been a fan of Cam Hui's analysis (Humble Student of the Markets) for a while, and he has a good piece up on OJ's question. Short version: a 10-20% equity downdraft is likely in the near to intermediate term, but it needs a trigger to get going, and a real bear isn't very likely right away.