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Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
  • Just noticed re: MAFSX holdings
    4.38% of fund is in Yum! Brands. That not Asia--- though surely, there are a bazillion fast-food joints in Asia that come under the Yum! bumbershoot.
    I dumped MJFOX for this one: MAFSX. Since the change-over, it's up exactly 2.6% for me. No great shakes. Overall, with respect to the switch, I'm still down from my original amount by -2.95%.
  • NAESX portf. .....M* article.
    http://news.morningstar.com/articlenet/SubmissionsArticle.aspx?submissionid=191455.xml
    It's not so full of small-caps, presuming you went to this fund for small-caps. Currently: 46% MID-cap. And 54% SMALL-cap.
  • A Character Assassination (closed)
    I remember a poster on FundAlarm a few years ago. He was obviously a commissioned salesman, and he ranted continually on how wonderful equity indexed annuities were and how they were the be-all and end-all for everyone of all ages, no matter what their situation in life. He had nasty responses for those of us who questioned his 'knowledge', let alone his ethics. For a while, I and some other posters stepped aside. But eventually he crept away, although he did surface now and then only to be put back in his deserved place. My point is that people like this fellow are all around us. Some of them are less confrontational than him, some simply think they are too smart to be bothered by the discussions on this board but still want everyone to know that.
    Over the years I have made a point to comment on things where I can contribute to ongoing education or try to keep someone from making a mistake, based on my 30 years of advising clients. Occasionally I say something dumb, and I always try to own up to it. And goodness knows if we could go back 3, 5 years and get a re-do on things, we surely would. So my tendency is to ignore the folks who become disagreeable. David can police this board and act accordingly. When I get attacked, and it happens very rarely, I usually take a respite and give myself some time to cool off. Most folks on this board are good people who are more than surface learners. We should all keep that in mind.
  • Driehaus Mid Cap Growth Fund to liquidate
    http://www.sec.gov/Archives/edgar/data/1016073/000119312514229977/d741039d497.htm
    497 1 d741039d497.htm 497
    DRIEHAUS MUTUAL FUNDS
    (The “Trust”)
    Driehaus Mid Cap Growth Fund
    SUPPLEMENT DATED JUNE 9, 2014
    TO PROSPECTUS, SUMMARY PROSPECTUS AND
    STATEMENT OF ADDITIONAL INFORMATION DATED APRIL 30, 2014
    IMPORTANT NOTICE
    The Board of Trustees of the Trust (the “Board”) has determined to terminate and liquidate the Driehaus Mid Cap Growth Fund (the “Fund”). Effective as of the close of business on July 11, 2014, the Fund is closed and will not accept any purchase orders. As of July 31, 2014, the Fund will begin the process of liquidating its portfolio securities and shareholders should be aware that the Fund will not be pursuing its stated investment objective or engaging in any business activities except for the purpose of winding up its affairs. Shareholders who do not sell their shares of the Fund before the effective date under the Plan of Termination and Liquidation, currently expected to be July 31, 2014, will receive a liquidating distribution in cash equal to the amount of the net asset value of their shares. Thereafter, the Fund will be liquidated and dissolved, and all references to the Fund herein shall be removed.
    PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
    For more information, please call the Driehaus Mutual Funds at (800) 560-6111.
  • Jeremy Grantham's Stock-Picking Battering Average
    Baseball fan here. "Battering average" makes me giggle. So, Grantham is not a dumb shit after all, eh?
    Grantham is certainly a very smart guy. And well worth reading.
    But based on my read of his most recent articles [all available for free on the GMO website, and you can subscribe to get notified of them by email], if I were going to act based on his current beliefs, I'd be out of equities entirely.
    IIRC, he thinks US stocks are 65% overvalued, and going to have a negative return over the next 7 years.
    So if the 7-year return on US Stocks is going to be negative, why would I invest in them?
    Of course, he may be right.
    Some of the best stock market minds believed that the US stock market was significantly overvalued starting in January of 1996, but the market kept moving upwards for more than 4 years afterwards. A number of the best value stock mutual fund managers had or almost had their careers uprooted because they refused to buy the overvalued names from 1996-March 2000. Even Donald Yacktman almost lost his job. His own fund board tried to kick him off the Yacktman fund!
  • The Fidelity-Vanguard Face Off
    Hi Guys,
    I’ll be investing in a mutual fund or ETF in the next few weeks so I’m currently doing a little fund specific research. Since I have accounts at both Fidelity and Vanguard, funds/ETFs from those houses are on my candidates list.
    In the research process, I stumbled onto a nice direct comparison chart generated by Advisor Investments that just might service both my and your needs. Here is a Link to this Fidelity versus Vanguard tradeoff:
    http://www.adviserinvestments.com/reports/FidVVanP2.pdf
    The comparative analysis chart that closes the document is especially instructive. It offers 24 head-to-head face offs between these two behemoth fund organizations in many fund categories.
    Not unexpectedly, results are a mixed bag. From that time stamped table, Vanguard has the highest percentage of winners for both the 10-year and 5-year time horizons.
    Intrigued by this temporal result, I visited a local Fidelity outlet. A representative was familiar with the comparative table. She was anxious to show me an updated Advisor Investments release. It still had Vanguard slightly ahead in the winner number count over the 10-year period, but Fidelity was ahead in outperformers over the 5-year period.
    The comparative results have tightened considerably. It’s a moving target. My interpretation is that both the company investment philosophy and its style join together with the current market cycle to produce these time dependent and constantly changing outcomes.
    I believe fund managers and their staff are the dominant factor in determining performance. Fidelity and Vanguard use very different methods when selecting fund managers. Simply put, Fidelity emphasizes an inside approach while Vanguard exploits an outside approach. Fidelity fundamentally trains managers internally; Vanguard basically hires outside managers of institutional quality.
    The history of Advisor Investments itself is quite interesting. It’s a union of two principle newsletter writers who competed against one another in earlier days: Dan Wiener who founded the Independent Adviser for Vanguard Investors newsletter, and Jim Lowell who publishes the Fidelity Investor newsletter.
    These newsletters still monitor their respective target fund families. Although Fidelity and Vanguard practice fund management in a totally distinctive way, Wiener and Lowell have managed to merge their individual styles into a mostly friendly cooperative enterprise. They also recognized that they make more profits giving advice than writing newsletters.
    Both Wiener and Lowell have toiled for decades to service Vanguard and Fidelity clients. I consider them fair, honest, and trustworthy public researchers. Neither gentleman is a tool for the fund giants they cover.
    Both have prompted changes to be made at the organizations they monitor. They have successfully promoted the firing of several fund managers who cost customers their savings with badly informed decisions. Here is a Link to an interview of the dynamic pair conducted by Barron’s:
    http://online.barrons.com/news/articles/SB50001424052970203594904576237053101928820?tesla=y
    It’s great to have so many fine fund choices at a respectable annual cost.
    Best Regards.
  • A Random Way To Get Rich
    @jerry: Rob Arnott of Research Associates [Research Associates was referenced in the linked article] supports what you are saying to some extent. He has done a lot of research in this area, and he concludes that almost any way to construct an index has outperformed a capitalization weighted index. Part of it is what you said, the fact that you get an average lower cap of the stocks. Rob Arnott says that a big part of it is that a cap weighting overweights the most expensive stocks, the most overvalued ones [cap weighting=price X shares outstanding]. He also says that market cap weighting does not capture the economic footprint of a company. For example, although Apple is weighted the most heavily in a cap weighted index, iirc, Walmart has the most sales of any company in the U.S., which relates more to economic footprint. So he believes in weighting on more fundamental factors, such as [again, iirc] cash flow, dividends, etc, to weight by economic footprint rather than by market cap.
    For Rob Arnott, the key thing is to NOT weight the portfolio by price, which is essentially what a market cap weighting is doing, as price x #shares. He says that by market weighting, you are pushing away value, and loading up on growth......favoring stocks that have higher valuations.
    Here's an interview [with transcript if you prefer that] that adds to the discussion above:
    http://www.morningstar.com/cover/videocenter.aspx?id=613699
    By the way, I don't own any of the fundamental index funds. My index funds are the standard ones, which are cap weighted, mostly Vanguard. I haven't made up my mind wrt the best indexes to invest in, e.g., fundamental index methodology, different forms of factor weighting/"smart beta", etc. A while back I took a look at the performance of the Schwab Fundamental Weighted indexes, and I was not overwhelmed.....certainly not enough to want to sell my traditional index funds, pay the capital gains taxes, and purchase other index funds with a different weighting methodology.
    What is being talked about a lot these days is weighting an index by size (smaller), value, profitability, and more recently, momentum. The DFA 'index' funds are now factoring these into their weighting methodology.
    @mjg: from the trivia department......correct me if I am wrong, but the S&P 500 Index currently has 501 stocks.
    It's the Vanguard S&P 500 Index Fund that has 504 stocks, but that is different than the Standard & Poor's 500 Index. Note that the Schwab and Fidelity index fund versions also contain 501 stocks.
    Standard & Poor's has a nice fact sheet on their index:
    http://us.spindices.com/indices/equity/sp-500
    Finally, in the article which is the topic of this discussion, the author states that he is using a universe of the top 3000 stocks in the world, based on market value. So not the S&P 500.
  • Q&A Wih Michael Hasenstab, Manager, Templeton Bond Funds: Part 2
    "It is actually a very rich country with an educated population,...."
    Umm, apparently Michael isn't aware that, during the past decade, 50% of the young adult population of Ukraine, between the ages of 18 and 30, has emigrated elsewhere.
    YIKES!
  • Q&A Wih Michael Hasenstab, Manager, Templeton Bond Funds: Part 2
    "It is actually a very rich country with an educated population,...."
    Umm, apparently Michael isn't aware that, during the past decade, 50% of the young adult population of Ukraine, between the ages of 18 and 30, has emigrated elsewhere.
  • A Random Way To Get Rich
    Hi Jerry,
    Thank you for joining the discussion.
    Since each has been formulated with its own disparate weighting functions, I think of the Equal and Cap weighted S&P 500 Indices as entirely different animals. They are likely to react differently under special market circumstances. Some professionals believe that the Cap weighted variety will outperform in a more or less constantly rising Bull market.
    Certainly you are correct that the Equal weighted version has historically outperformed for its entire history. But the relative performances have been marked with a bumpy ride; each has been a leader for brief time periods.
    Regardless of the weighting, the S&P 500 is still a limited target of only 504 large firms at this moment.
    Historically, the Fama-French academic work has concluded that small cap outfits offer a higher return over their larger rivals.
    I suspect that the Blinded Monkey will still randomly toss a portfolio that outdistances either S&P 500 Index given an expanded small company and large company target field. The relative outperformance will be dependent on the Index yardstick selected, and will also be timeframe dependent.
    I am not familiar with any study that specifically addressed your suggestion. So, at best my outcome suspicion is an educated estimate, and at worst it is a pure guesstimate.
    Thanks again for your insightful participation.
    Best Wishes.
  • S&P 500 Nearing The 2K Summit
    FYI: During the first week of 2013 I predicted on this board the S&P 500 would finish the year at 1,826. It turned out to be a little to conservative of a prediction with the S&P 500 finishing 2013 at 1,848. This year during the first week of 2014 I predicted the S&P 500 would end the year at 2,125 up 15%. Set your investment plans accordingly
    Regards,
    Ted
    http://www.reuters.com/assets/print?aid=USKBN0EH2CK20140606
  • A Random Way To Get Rich
    A random selection of S+P 500 stocks will probably result in a collection of stocks with on average lower capitalization. Isn't that an explanation for the outperformance. The equal weight ETF outperformed by about 2% over the last ten years.
  • The Best Places To Stash Your Cash: Part 2
    My regional bank has a program that each time I use my debit card, it transfers $.50 into my savings account and at the end of the year it matches what I have had transferred up to a predetermined amount (can't remember what the limit is ) and last year it was about $45, which I considered interest , so I put it in my savings account. Since interest rates are so pathetically low, every little bit helps. Other banks may havea similar program.
  • A Random Way To Get Rich
    Hi Ted,
    Thank you for referencing the WSJ article by Brett Arends on “A Random Way to Get Rich”.
    Although I subscribe to the Journal, I missed this article. I believe it provides important investment guidance for several reasons.
    It emphasizes the significance of careful benchmark selection. If you don’t measure anything with precision, you are likely to reach a wrong conclusion or design.
    Typically, especially with respect to MFO, benchmarks are discussed in terms of individual mutual fund holdings. It is inappropriate to contrast the performance of a Balanced fund against the S&P 500 Index.
    Extending the benchmark concept to the next level, it is equally inappropriate to contrast the performance of a complex portfolio with many moving parts against the simple S&P 500 Index. Arends article addresses this particular issue, and he offers a flexible alternate benchmark yardstick. Good for him, and good for us.
    In his piece, Arends said: “It is well-established that most active money managers destroy value compared with a traditional stock index. It is less well-known that the traditional stock indexes destroy value when compared with just picking stocks at random.”
    The second part of that quote demonstrates the utility of portfolio diversification and the need for a meaningful construction of a benchmark measurement to better judge performance. Bad measurement precedes faulty actions.
    In the article, Arends reports that in 99% of the random cases explored, the random selection approach outperformed even the Index. The fact that the analysis was repeatedly completed in a random manner strongly suggests that the calculations were made using a Monte Carlo-based tool. Good for them. That’s a perfect application for random, uncertain problems.
    However, their findings must be interpreted with some skepticism and caution, especially since the details and the assumptions of the analysis procedure were not reported. For example, if the Blinded Monkey had all stocks as their targets (small and large), a comparison against the S&P 500 Index (large only) is not proper and is, consequently, defective.
    As a sidebar, the Blinded Monkey is an overkill to illustrate the point. It is unlikely that a non-blinded monkey would do any better at dart throwing than his blinded compadre. Investment outcomes are a combination of luck, skill, and timeframe.
    I found the article both delightful and informative. Too bad that the MFO readership numbers are so low.
    Best Wishes.
  • Bill Nygren Of Oakmark Funds On His Biggest Mistake
    Scott, you nailed it. Kiplinger's, 2008:
    "But Nygren's largest blunder by far was his heavy investment in Washington Mutual (WM), the country's largest thrift. At one point, WaMu represented a towering 15% position in Select's portfolio. The Seattle-based bank has written off $20 billion of losses on home mortgages and dramatically diluted shareholder value by raising new capital. The stock price has plunged nearly 90% in a year."
    In 2007 the average person on the street in Seattle knew more about WaMu's house of cards than Nygren did.
    Thanks.
    Great managers make sizable mistakes at times. That's fine. I would actually respect a manager more if they admitted it, told me what they learned from it and how it may change the way they approach an investment going forward. It kind of reminds me of the whole story of Bill Miller giving a speech promoting Bear Stearns in the midst of its falling apart:
    "In The Big Short, author Michael Lewis recounts a similar episode. On a Friday morning in March 2008, Miller was invited to present the bullish case for investment bank Bear Stearns, which had traded at $53 the previous day. During a Q&A session after his presentation, an audience member asked Miller a question: "Mr. Miller, from the time you started talking, Bear Stearns stock has fallen more than 20 points. Would you buy more now?" Miller's answer: "Yeah, sure, I'd buy more."
    By the following Monday, Bear Stearns had been sold to J.P. Morgan for $2 a share."
    http://www.cbsnews.com/news/bill-miller-large-cap-stocks-represent-a-once-in-a-lifetime-opportunity/
    You have a manger who manages well over $10B in AUM and when asked about your biggest investing mistake you're going to give some story about some silver coins when you were in college? Additionally, in terms of Nygren, the Wamu incident is what comes to mind - when I saw the title of the thread, that's the only thing I thought it could be.
    I've said this before about people like Gartman, whose issues (like the lousy performance of his etf) has never been questioned.
    Meh.
  • Q&A Wih Michael Hasenstab, Manager, Templeton Bond Funds: Part 2
    Quoting: "Isn't Ukraine a risky bet, even for you?
    This isn't much different than others. During the financial crisis, Lithuania ran into short-term solvency challenges because it couldn't access capital markets. We were the largest investors providing them short-term liquidity. Now, Lithuania is issuing debt with very low yields, and no one even talks about it. That took about four years. Hungary also took about two to three years to pay off. We may need to be patient. It may be three years before some of these factors can move in a positive direction in Ukraine."
    .....I note that my PREMX still holds debt from The Ukraine among its top 5 positions--- but just 1.51% of total AUM. (Fund Manager is Michael Cornelius.) And the last time there was a change to the portfolio reported, PREMX had reduced its Ukrainian position.
    http://portfolios.morningstar.com/fund/holdings?t=PREMX&region=usa&culture=en-US
    (More from the Hassenstab thing:) "Everyone is focused on the shortage of capital globally as the Fed tapers. But they are ignoring what the BOJ is doing, which will more than offset that. They're getting the call wrong by being bearish on all emerging markets.
    What does that extra money mean for emerging markets?
    In 2013, the divergence in performance between the best and worst emerging market was more than 40 percentage points. We have always carefully picked countries with strong fundamentals and where we felt appropriate policy decisions were being made. Even though everyone has turned bullish recently, we would be cautious on more vulnerable places like Turkey."
  • Bill Nygren Of Oakmark Funds On His Biggest Mistake
    Scott, you nailed it. Kiplinger's, 2008:
    "But Nygren's largest blunder by far was his heavy investment in Washington Mutual (WM), the country's largest thrift. At one point, WaMu represented a towering 15% position in Select's portfolio. The Seattle-based bank has written off $20 billion of losses on home mortgages and dramatically diluted shareholder value by raising new capital. The stock price has plunged nearly 90% in a year."
    In 2007 the average person on the street in Seattle knew more about WaMu's house of cards than Nygren did.