Hi Guys,
I want to thank you all for your thought provoking and pithy replies. Yes John Chisum, I did intend to say pithy. Sorry about my defective spelling. I hope that’s not an early signal of defective investment thinking.
Scott, I have made a practice of purposely not discussing my portfolio holdings or of recommending specific funds because I do not believe in a one-size-fits-all-purposes philosophy. I even abstain from making specific recommendations to my immediate family members. Decisions like this are a very personal matter. Everyone is more likely to stay the course when rough patches are encountered if he alone owns the decisions.
For what its worth, I initially invested in individual stocks in the mid-1950s. I was not particularly successful, but continued to do so until the mid-1980s. I suspect I played a small role in a wealth transfer operation. A large part of my savings ended in the pockets of stock brokers.
In the mid-1980s, my first mutual fund adventure was with Peter Lynches’ Magellan fund. Before investing with him, I naively telephoned and actually spoke with George Soros. He politely informed me that I was not a qualified candidate client. I sold Magellan after Jeff Vinik was released for making an untimely and uncharacteristic losing bond wager.
From that time until about one year ago, I held mostly actively managed mutual funds. For example, I was an original investor in the Masters Select Equity fund. I believed in the concept of a concentrated portfolio to make a meaningful wealth impact, and in a carefully designed and executed manager selection and monitoring process. Results were marginally acceptable until my recent epiphany. Any marginal benefits from active fund management are accidental (with a few noteworthy exceptions) and are not worth the effort.
I am in the process of converting my portfolio into one with a passive-to-active mix of about 80-to-20. I have held positions in balanced fund stalwarts DODBX, VWINX, and VWELX since the mid-1990s and plan to retain them. When I sold Magellan, I transferred my holdings equally into FCNTX and FLPSX. I plan to retain a reduced percentage in these positions. I am expanding my Index positions in an incremental manner.
That’s as far as I’m willing to go. I consider myself a very pedestrian investor. I do NOT recommend that anyone duplicate my portfolio. My comfort zone or needs are surely not anyone else’s comfort zone or needs.
As far as I can remember, I have never made fund recommendations in any of my MFO postings. If pressed on this issue, I have consistently punted and recommended other (like Scott) MFO members to carry the ball. You guys are surely more prescient and more up to date on this matter than I am.
Basically, I’m slowly retiring from the investment world.
I really want great success for you guys in achieving whatever investment goals you define.
Thanks again for contributing to this spirited discussion.
Best Wishes.

As to the first law noted above: "First Law of Financial Conferences"....hell, from my expericences and observations, this is how human beings function in many cases....period.
I can only confirm that after my 60 plus years on this planet, that I am fully assured that my intuition (the summation of all my experiences combined with my original DNA) provides for reasonal investment returns that in most cases, year after year outperforms at least 5 percent of the active fund managers and the majority of hedge funds.
And of course, I am much ahead of the 99% of folks who don't care or don't know about investing.
What more could a person ask for; in spite of the original expression of this thread.
What a lucky fellow I am.
End of story.
Signed: Smart Ass
NOTE: perhaps an equity buying chance coming our way near term; after some of the selloff smoke clears.........well, at least if the machines don't jump back into the game too soon.
Regards,
Catch

@davidrmoran I find myself skeptical, but by taking some time to investigate alternate/opposing viewpoints I learn of questions I hadn't even thought to ask. Often they are not worth a lot, but it helps my understand my position and its consequences better. I also would suggest that there are a bunch of people here who have made decisions and stick to them. Even those making changes are often doing it around the edges. Myself I came here to get a sense of what questions to ask and how to monitor. I don't expect to make many changes in the next 5-10 years except maybe some minor allocation adjustments, and possibly adding real estate or adjusting at a 10 month sma signal. But otherwise I learn.

If you had been in smallcaps since say 1980 despite the warnings and conference talks about how they were going to something or other, you would have done well. If you had been in largecaps, the same, ignoring those who disagreed and told you to go to smallcaps, you woulda done fine. Indeed if you had stuck with high-yield, or invest-grade bond, or growth, SP500, value, or balanced --- any one of those and only that --- you woulda done just fine.
If you are looking for certainty before 1980, well, sticktoitiveness is no worse than anything else.

As I said: “If It Works Don't Screw With It!”

If you are going to invest in stocks now the place to be is International and not domestic stock. Great time to dollar cost average into all areas of international.Despite bonds being in a bad place keep them. I still follow John Bogle's advice of having your age in bonds. Follow his advice has serve me well in all markets. I am 59 years old and have a healthy growing portfolio despite ups and downs. And I sleep at night.

>> “If you want to become less stupid at investing, one of the best things to do is surround yourself with people who disagree with you….”.
Well, jeez, within limits. See below.
>> goal to diminish investment innumeracy, especially in the statistical domain.
oh, hear, hear!
>> People think they go to conferences to learn something, but most often they go to have their beliefs confirmed and reinforced by others.” Unfortunately, I suspect more than a few MFO members populate and interact on this fine website for the same dubious purpose. To steal a famous Charles Ellis quote and book title, that’s a “loser’s game”. That’s a primary contributor as to why individual investors consistently don’t realize marketlike returns.
I dunno; I think it's chiefly cuz they don't stick with their plan ('investor returns'), and research bears this out. In other words the kind of people who have stuck with it over the years do not poke around the web and do not post here or anywhere. They enjoy life and do not obsess over investments. We are a forum it seems of aggressive changers and surely frequent traders in some percentage or other. How many times do you read here 'I am going to give it another few months ...' and 'I am thinking of swapping X for Y' and the like?
>> There is a common human tendency to summarily reject new data or new findings that contradict a previously established position. In the academic community, this tendency has a name; it’s called the “Semmelweis Reflex”. In the end, this Reflex erodes investment performance.
This is an extremely hot new journalism meme for sure, without question, esp in politics and finance. Knowing a fair amount about psychology, I call bullshit on it in a great many instances. Confirmation bias, please. I and most others do need to immerse ourselves in creationism, climate-change denial, audio tweakism, supply-side / constant government-denigrating rightwingism, gold advocacy or any other contrary views just to, what, realign or make a good dent in our friggin bias?
If you had been in smallcaps since say 1980 despite the warnings and conference talks about how they were going to something or other, you would have done well. If you had been in largecaps, the same, ignoring those who disagreed and told you to go to smallcaps, you woulda done fine. Indeed if you had stuck with high-yield, or invest-grade bond, or growth, SP500, value, or balanced --- any one of those and only that --- you woulda done just fine.
If you are looking for certainty before 1980, well, sticktoitiveness is no worse than anything else.
>> I suppose one of the lessons from this body of research is that we should all seek and be tolerant of divergent market perspectives and investment opportunities. I believe most MFO participants are in this cohort.
depends
>> Recent academic studies once again conclude that about 75% of active fund managers have long term performance records that roughly hover near the zero Alpha benchmark. Of the residual 25%, about 24% produce negative Alpha. That means that only 1% generate measurable positive Alpha over an extended timeframe. That’s the sad odds when establishing an actively managed portfolio.
Right, concur, roger --- except when it is not. They say, oh how they say, how they repeat, how they admonish, that past performance does not etc etc etc.
Jeez, then what good IS it?
If you had picked long ago (35y) a category above, within a fund family, much less a given manager or group, that was highly regarded back then by some metric or other, guess what? You woulda done fine. That's what my backtesting shows me, cuz I did it --- or failed to. I chased outperformance, stupidly. From 1982 reading I coulda stuck with Fulkerson (CENSX), Fidelity Trend (my father), Janus, much less LOMMX, PENNX, DODBX, Contrafund .... but I woulda second-guessed when they slumped or changed managers or whatever, and woulda bailed. I am positive that this is what most do.
If the triumph of passive investing is that people stick with it, then that's a real and indeed revolutionary triumph. It is NOT a reason not to actively invest or seek superior managers. SPX performance is the least of all of those above, btw. So, I say, make a few seemingly sound decisions based on past performance (go ahead) and leave it the hell alone for a decade.
Easy to preach about this.
I don't know where to turn to find disagreeing viewpoints that are worth spit. I guess that sounds awfully vain. But I am kind of tired of hearing about confirmation bias and its ills, for anyone who is the least bit self-skeptical, investigative but not OCD about it, and tries to monitor his or her own prejudices.

Hi Old Joe and rjb112,
Thank you guys for your pity observations.
It doesn’t get too much older then this, but Publilius Syrus in the 1st century BC said: “It is a bad plan that admits of no modifications”. That ancient wisdom applies today and everyday, especially in spades, for investment matters. All investment decisions, both bad and good, are transient and require constant monitoring and hopefully infrequent changes.
I took the mutual fund Alpha performance data from a 2010 report that I failed to reference. Sorry about that. The title of the study is “False Discoveries in Mutual Fund Performance: Measuring Luck in Estimated Alphas”. The three authors are Barras, Scaillet, and Wermers. For completeness, here is a Link to that study:
http://www.rhsmith.umd.edu/faculty/rwermers/FDR_published.pdf
The paper is rather dense. I only reviewed the Introduction and Conclusions sections.
For brevity in my initial post, I omitted some other findings and observations by these researchers that might interest you. For example, the authors discovered that the overall positive Alphas generated by active fund managers have significantly eroded over time. They report that positive Alpha funds have decreased from a roughly 15% level to the present 1% level in the last 20 years.
Are fund managers getting dumber? My answer is NO. My interpretation is that active fund managers have proliferated and the field had gotten stronger with increased competition that lowers opportunities to outperform.
Another intriguing aspect of the study is the rather long-term survival of the underperforming funds. The authors included the following statement in their Conclusions section: “Still, it is puzzling why investors seem to increasingly tolerate the existence of a large minority of funds that produce negative alphas, when an increasing array of passively managed funds have become available (such as ETFs).”
I suppose, many of us are slow learners and/or are reluctant to omit a mistake. Another dimension to this misguided loyalty is that we often fail to make relevant benchmark comparisons. I attribute this failure, at least partially, to our limited understanding and trust in statistics.
As Zig Ziglar said:” The first step in solving a problem is to recognize that it does exist”. I believe successful investing requires testing outcomes against some pertinent (designed for your specific purposes) benchmark standard. I suspect that some (perhaps most) individual investors don’t do this simple task to their end financial detriment.
Thanks again guys for keeping this discussion fresh.
Best Wishes.

Hi Guys,
Well I’ll risk jumping from the frying pan into the fire with this reference, but it does address a serious shortcoming in many investor's behavior.
I’m referring to a recent Motley Fool article cobbled together by Morgan Housel titled “How to Get Less Stupid at Investing”. The article touts the benefits of seeking a divergent set of market opinions, especially those that directly conflict with your special preferences and biases. Here is the Link:
http://www.fool.com/investing/general/2014/07/08/how-to-get-less-stupid-at-investing.aspx?source=iaasitlnk0000003
Housel’s bottom-line observation is: “If you want to become less stupid at investing, one of the best things to do is surround yourself with people who disagree with you….”.
That’s one of two primary reasons why I have been a constant visitor and occasional contributor to MFO. My other reason harbors a goal to diminish investment innumeracy, especially in the statistical domain. Individual investors better understand and appreciate that historically, equities offer a 7 out of 10 likelihood of positive annual returns over quoting the same statistic as a 70% probability. That’s surprising, but is true.
Near the end of the article, Housel formulates a Law: “This made me realize the First Law of Financial Conferences: People think they go to conferences to learn something, but most often they go to have their beliefs confirmed and reinforced by others.”
Unfortunately, I suspect more than a few MFO members populate and interact on this fine website for the same dubious purpose. To steal a famous Charles Ellis quote and book title, that’s a “loser’s game”. That’s a primary contributor as to why individual investors consistently don’t realize market-like returns.
There is a common human tendency to summarily reject new data or new findings that contradict a previously established position. In the academic community, this tendency has a name; it’s called the “Semmelweis Reflex”. In the end, this Reflex erodes investment performance.
I suppose one of the lessons from this body of research is that we should all seek and be tolerant of divergent market perspectives and investment opportunities. I believe most MFO participants are in this cohort.
So, permit me to conclude with yet another frying pan exposure which will test your active fund manager appetite.
Recent academic studies once again conclude that about 75% of active fund managers have long term performance records that roughly hover near the zero Alpha benchmark. Of the residual 25%, about 24% produce negative Alpha. That means that only 1% generate measurable positive Alpha over an extended timeframe. That’s the sad odds when establishing an actively managed portfolio.
Good luck to all you guys who pursue the active strategy, and I really mean it. Most importantly, I want everyone to succeed. Almost equally importantly, it is the pursuit of active management that keeps the market pricing discovery mechanism functioning well. Thank you for accepting that necessary and costly task. In a sense, the passive Index fund investor is indeed getting a free lunch.
Best Regards.

I agree with Bee. If this has been your main small value fund, you've missed out on one of the great bull markets in SV, and unless we get another 2008 style crash (which Cinnamond, in the above article, makes clear he is expecting), you'll never make up for that lost opportunity.
But as a cash alternative, 5% a year is pretty amazing. Plus you get the potential for big gains if the market does crash. Not bad at all.
Yet Cinnamond failed to take advantage of what was, in retrospect, a great buying opportunity -- the 20% corection in SV in 2011. He is, I'll say it again, betting on another 2008 crash. In fact, with his top holdings all precious metals, I'd say he's betting on apocalypse. (Perhaps he should consider renaming his fund teapx, since this is investing the tea party might like.)
Of course, with 1.4% E.R. on 700 mln in assets, that's a cool 10 million a year Mr. Cinnamond is getting paid to wait for apocalypse, so if I were him I'd be patient too.

For investors who are thinking of going to cash (timing "out of the market"), but don't like the idea of (timing "back into the market") you might consider using these contrarian fund managers as an alternative to "holding cash". "Hold Cinnamonds"..."hold Yacktmans"..."hold Rommicks" verses going to cash and "holding Yellens".
The opportunity cost of holding these contrarian funds (cash heavy funds periodically anchored at sea) might be better than the opprotunity costs of pure cash. These managers are experienced at putting money back to work. Most individual investor are talented at pulling money out of funds (cash that sits drydocked on the shore) and never getting their cash back into the water (market). Individuals are not usually well disciplined or skilled at buying back into a corrected market.
If it is your strong suit keep posting here for the rest of our benefit.
Related Article:
bloomberg.com/news/2013-10-25/weitz-to-yacktman-hold-cash-as-managers-find-few-bargains.html

FYI: Investors with diversified mutual-fund portfolios would have been hard pressed to lose money in 2014's first half, but that doesn't mean it's time to go all-in on stocks or bonds.
Regards,
Ted
http://online.wsj.com/articles/diversified-investors-dont-lose-your-balance-1404605470#printMode

FYI: There is a reason why companies with big insider purchases tend to beat Wall Street expectations and it is not luck, said David Miller, portfolio manager for the Catalyst Insider Buying Fund. Miller's fund has outperformed the S&P 500 by more than 5 percentage points over the past year.
Regards,
Ted
http://www.thestreet.com/video/12766272/catalyst-fund-manager-following-insiders-into-energy-stocks.html
M* Snapshot Of INSAX: http://quotes.morningstar.com/fund/f?t=INSAX&region=usa&culture=en-US

Vereinigte Mexikanische 7.75%
Among its top 5 positions. Mexican something(?) Seems like a German designation, no? What gives?

Yup, stuff/info that some of us have been chewing upon here and (FundAlarm) for the past 5 years.
Wait til the 30 mortgage moves above the 5% rate and watch what happens to everything related to existing and new home sales.
Do continue to believe the "rock and the hard place" for rates will be here for some time to come.
And the longer the clock runs with folks comfortable with low rates, the harder it will become for the central banks to attempt to reverse the direction.
Fun times ahead for all things investments will continue.
Sadly the clock of investment time and inflation will continue to destroy the savings accts of many Americans; especially the senior citizens who want nothing to do with the Wall St. scene.
Hoping everyone's magic 8-ball is in proper working condition.
Regards,
Catch

Corn, Wheat Futures Hit Nearly 4-Year Low
Ted,not so funny as those storms rolled through Chicago Land, but as these lower commodity prices wind through the food and energy consumer cost factors, we may all benefit.
Copy and Paste from Dow Jones W S J
By TONY C. DREIBUS
Updated July 7, 2014 5:24 p.m. ET
CHICAGO—Corn and wheat futures tumbled to their lowest prices in nearly four years as favorable weather over the July Fourth holiday weekend upgraded prospects for U.S. crops.
Soybeans fell, too, closing at their lowest level in more than four months.
In the past week, up to six times the normal amount of precipitation fell in parts of Iowa and Illinois, the biggest U.S. growers of corn and soybeans, further improving growing conditions. About three-fourths of the nation's corn and soybean crops were in good or excellent condition as of Sunday, according to the U.S. Agriculture Department.
Continued balmy, rainy weather will help lift corn and soybean yields that the USDA has estimated will reach record levels this year, analysts said. The USDA has estimated this autumn's corn harvest will total 13.935 billion bushels, surpassing last year's record crop, while soybean output also will set a record.

FYI:
Regards,
Ted
http://online.wsj.com/articles/u-s-stock-futures-edge-lower-after-record-highs-last-week-1404735950#printMode
Markets At A Glance: http://markets.wsj.com/us

FYI:Year after year, analysts who predicted a sustained rebound in interest rates have been foiled.
Savers have almost $10 trillion sitting in bank accounts and money market funds, earning almost nothing
Regards,
Ted
http://www.latimes.com/business/la-fi-interest-rates-20140706-story.html#page=1
Graphic: http://www.trbimg.com/img-53b72a39/turbine/la-fi-g-tnote-rates-20140704/500/16x9

Hello,
One of the ways I have raised cash in a rising bull market when I felt either stocks were over valued or I had reached the upper limits for stocks within my asset allocation was to set up a systematic sell down process as stocks continued to advance.
Essentially, here is what I did. Back when the S&P 500 Index was around 1600 I’d sell about one percent of my equities off for every 25 point of their advancement which equaled, percentage wise, about 1.5% of their upward movement. When my cash reached my targeted level I had the choice to either spend some of it for new purchases, take a cash distribution form the portfolio or just let it ride and stop the systematic stock sell down process. Since my portfolio generates about 1.25% of cash per quarter I stopped the systematic sell down process and started buying around the edges with part of the 1.25% per quarter cash that the portfolio generates.
Since, I have already raised my cash to levels I feel comfortable with in this overvalued stock market (by my thinking) there is nothing left for me to do but wait for the long anticipated pull back. If it comes fine I have been prudent and have plenty of cash to buy the pull back and if stock valuations continue their upward movement well that is fine too as I have plenty of equities at work within my portfolio to enjoy their continued upward march. Year-to-date my portfolio is up about 7.5% through July 3, while the Lipper Balanced Index which is my portfolio's bogey is up about 6.0%. With this, Old_Skeet plans to keep on keeping-on.
I am not saying what I did was the perfect move; but, for me, I felt it was the prudent thing to do.
I wish all … “Good Investing.”
Old_Skeet

Thanks Ted,
Thought I'd include this chart from the last page of your article:

Well, thank you all, a lot. She's shorting-hedging the dollar because it's going to drop in value. Or maybe not. It's all about reducing volatility. OK. The Vanguard video was very helpful! ....But this might explain why the fund is not keeping up with its peers? Morningstar is often unhelpful, it's true. But M* shows MAINX with VERY different performance numbers since just the last few days. (Much better.) Are they using a different peer group now, or different criteria? Who knows. It's not the best source of information, is it??? Anyhow, I'm sticking with MAINX. My stake has done well in that fund. And it's still very young. Inception was 30 Nov, 2011. Still not a lot of AUM. $55M. Thanks again for the responses.