Updated MFO ratings and fund risk/performance metrics through July 2016 have just been posted on our Premium site.

Hi @MikeW,
Thanks for the question.
For me, I am thinking of again rebalancing my portfolio and trimming back my allocation in equities. According to last Friday edition (July ending) of the WSJ the S&P 500 Index is selling at a TTM P/E Ratio of 25.0. For me, most equities are too richly priced for me to even think of adding to current positions (much less opening new positions) as I am in the trim mode keeping equities at about 45% of my asset allocation.
Now, if we should get a good pullback (10% range) in the near term I most likely will become a buyer in equities and add to some current positions; and, then perhaps after the rebound lighten up in some other positions. With this, a rebalance within my equity allocation itself.
Thus far, PMDAX has been a great fund for me; and, one that I have owned for about five years. It makes up about 60% of my small/mid cap sleeve found in the growth area of my portfolio. The other two small/mid cap funds that I own in this sleeve are ABSAX and PCVAX.

@Ted,That would be 2333 @ a 7% rise from 1:00 PM C D T SP 500. Your Cubs have you dreaming of a once every 100 year event !! That would approximate 3 deviations in Jeremy Grantham's view of reversion to the mean. Mr Grantham agrees with you on your optimism towards a continued rise in U S market.
Last World Series title.108 long years ago.
1908 Chicago Cubs Won World Series (4-1)over Detroit Tigers
Cubs Franchise History
http://www.baseball-reference.com/teams/CHC/

Immigration and Brexit
Jeremy GranthamJuly 2016
[On the investment front the equation remains the same: pushing stock prices higher are the twin forces of the Fed’s policy and corporate buybacks. Trying to push prices down is an impressive array of everything else: disappointing productivity, growth, and profit margins together with all
our domestic and international political uncertainties. And now Brexit! It is a testimonial to the strength of those two bullish forces that they can steady the US market near its high, regardless, apparently, of what is thrown at it. I therefore remain, on the basis of those two remarkable pillars of support, for at least one more quarter where I have been for the last two years; despite brutal and
widespread asset overpricing, there are still no signs of an equity bubble about to break, indeed
cash reserves and other signs of bearishness are weirdly high. In my opinion, the economy still has
some spare capacity to grow moderately for a while. All the great market declines of modern times
– 1972, 2000, and 2007 – that went down at least 50% were preceded by great optimism as well as
high prices. We can have an ordinary bear market of 10% or 20% but a serious decline still seems unlikely in my opinion. Now if we could just have a breakout rally to over 2300 on the S&P 500 and a bit of towel throwing by the bears, things could change. (2300 is our statistical definition of a bubble
threshold.) But for now I believe the best bet is still that the US market will hang in or better, at least through the election.
P.S.: Having admitted my error in commodities, I would like to clock in the
seventh anniversary of my “7 Lean Years” prediction for the economy back in 2009. The speed of the
recovery, and particularly productivity gains, has been very lean indeed.]
https://www.gmo.com/docs/default-source/research-and-commentary/strategies/asset-allocation/immigration-and-brexit.pdf?sfvrsn=11

Old_Skeet
11:33AM edited 11:35AM Flag
One of my small/mid cap funds, PMDAX, is indeed on a year-to-date roll ... up 16.6% ... plus, it sports a nice dividend!

MikeW
11:44AM Flag
thanks for the heads up Ted and Skeet. Is there a way to get the load waived on PMDAX? Any thoughts on Wasatch Core Growth? curious if you are adding funds to this asset class...

PMDAX.lw NTF at Schwab: $100 basic, same for IRA. But PMDIX with .86 ER at Scottrade for same amounts but $17 TF. Haven't looked at other third parties.

@MFO Members: In afternoon trading the S&P SmallCap 600 is up 1.40% , and the Russell 2000 1.50%. The trend is your friend !
Regards,
Ted

One of my small/mid cap funds, PMDAX, is indeed on a year-to-date roll ... up 16.6% ... plus, it sports a nice dividend!

FYI: If the direction of asset flows out of stock funds and into bond funds this year is any kind of guide, investors are seeking shelter and yield in fixed income. But they could be getting neither.
Through the end of June, U.S. equity mutual funds experienced $56.2 billion worth of net outflows, while U.S. bond funds added $73.5 billion in net inflows.
Regards,
Ted
http://www.investmentnews.com/article/20160804/FREE/160809953?template=printart

FYI: Risk has been in style recently. And that’s been good for companies with small market values.
Regards,
Ted
http://blogs.wsj.com/moneybeat/2016/08/04/small-cap-stocks-are-on-a-roll/
The S&P 600 is up 4.01% YTD
Counterpoint: "Stop Carrying The Torch For Small Caps — No Matter What Payrolls Tell Us":
http://www.marketwatch.com/story/stop-carrying-the-torch-for-small-caps-no-matter-what-payrolls-tell-us-2016-08-05/print

Based on my initial investment of 7000 shares at $7/sh = $49k I would be getting $9800 each year in dividends. My cost basis would never change and my dividends would never change. The interest earned is not reinvested in shares. All income is held in cash in money market yielding zero.
I think the area we are ignoring that would have the biggest impact is that if I sold at $17, I would be able to buy more shares (deriving more income) from the new fund purchased although at lower yields, but all of that would be at risk of loss if the share price dropped below my newly established cost basis. The chance of a capital loss at cost basis of $7 is near zero so from a portfolio management standpoint risk is greatly reduced and makes the decision not to sell my $7 investment much more attractive regardless of any compounding calculation. Theoretically, my portfolio value always goes higher although risks always abound.

Yes, but it's built on a dubious assumption - that returns continue at 20%/year.
The 20% yield was based on a price of $7/share and a dividend of $1.40/year (20%). As stated above, the price now never drops below $10/share, and the dividends (dollar amount) remains fixed "for the foreseeable future".
That means that the best yield one can achieve on the earnings is 14% (reinvesting dividends at a min of $10/share, getting $1.40/share). So while the initial shares continue to yield 20% (based on initial purchase price, disregarding appreciation), compounding occurs at a much lower (blended) rate.
Rule of 72 assumes that returns can be reinvested at the same rate of return. By hypothesis that's not the case here.

Added 8/06/16
PTIAX
Performance Trust Strategic Bond Fund
Symbol: PTIAX
No Transaction Fee No Transaction Fee 1 @ Fidelity 5000/500
1 No Transaction Fee funds are available without paying a transaction fee. No Transaction Fee funds will also be offered without a load or on a load waived basis. However, the fund may charge a short term trading fee or a redemption fee
From PTIAX
What Sets Us Apart JUNE 30, 2016
■ Flexible multisector bond fund designed to shift among a broad
range of fixed income sectors
■ Managed by a team with expertise in complex and niche fixed
income sectors, which has resulted in a distinct portfolio
■ Seeks best risk adjusted opportunities through interest rate
agnostic investment process
Ten Largest Multisector ( Bond ) Funds Holdings in Common with PTIAX
Number Percentage
1. Pimco Income 19 4.63
2. Loomis Sayles Bond 0 0.00
3. Loomis Sayles Strategic Income 0 0.00
4. Lord Abbett Bond-Debenture 0 0.00
5. Fidelity Advisor® Strategic Income 0 0.00
6. Fidelity® Strategic Income 0 0.00
7. Franklin Strategic Income 0 0.00
8. Alliance Bernstein High Income 4 1.58
9. T. Rowe Price Spectrum Income 0 0.00
10. Pioneer Strategic Income 0 0.00
Average 2.3 0.62
http://ptiafunds.com/documents/ptam-difference_ptiax_final.pdf
Bond-fund correlations increase interest-rate risk
August 4, 2016 http://www.investmentnews.com Aug 4, 2016 @ 1:32 pm
By Jeff Benjamin
Financial advisers should diversify into credit-risk strategies.
...K.C. Nelson, who manages $3 billion worth of fixed-income portfolios at Driehaus Capital Management, said bond fund investors who aren't careful could be hit hard by an interest rate hike, or just hit less hard by continued low rates.
“Investors are drawn to bonds because they're afraid of all the macro risks out there, and they also believe interest rates are not going up anytime soon, but they're making a mistake by looking in the rearview mirror at the performance of bonds,” he said.
When interest rates were at more normalized levels, diversification across the fixed-income spectrum was more straight forward, and could be accomplished through a blend of corporate, municipal, government bonds, and mortgage-backed strategies.
But with the Federal Reserve setting its overnight rate at 0.25% and the 10-year Treasury yielding just 1.5%, the bond world has essentially morphed into a singular blob of rate-risk.
Consider, for example, the various correlations to the SPDR Barclays Intermediate Term Treasury ETF (ITE).......
http://www.investmentnews.com/article/20160804/FREE/160809953?template=printart
From one of the story's links from Thornberg
Bond Correlations and Interest Rates,
Not Always a Straight Line
Josh Yafa | Director,Thornberg Client Portfolio Management
JUNE 2016
When discussing investing, a standard rule applies: bring up bond correlations if your audience needs a nap.
That axiom,however, suddenly becomes less tiresome when investors begin to worry about rising interest rates. Not surprisingly, the
thought of losing significant principal from bonds—an inexplicable combination of terms for investors accustomed to fixed
income’s ballast—tends to pique the attention of even the most seasoned and skeptical.
http://www.thornburg.com/pdf/TH3621_BondCorrelation_C.pdf
A look @ the Tax Excempt Market
https://secure.wasmerschroeder.com/UserPages/1038185.pdf
Quarterly Bond Market Overview
June 30, 2016
Wasmer, Schroeder & Company Wasmer Schroeder High Yield Muni Instl WSHYX
“ISMS” & CENTRAL BANKS
As we have pointed out in this publication on numerous occasions, multiple
secular trends are at work across the globe keeping growth low and central bankers active.
Political polarization in this country and others continues to put the burden squarely on central
banks as the ability of lawmakers to make any meaningful contribution is non-existent. Even in
the U.S., where our central bank has slowly begun the process of tightening monetary policy,
the Federal Reserve has seemingly used Brexit as an opportunity to push additional moves
further into an uncertain future. Clearly Europe and the U.K. will be in full accommodation mode
now; and Japan, the unfortunate recipient of the risk-off trade in currency markets, continues
to be in a very bad place on multiple fronts. So, higher asset prices, lower interest rates, and
continued economic malaise are likely to continue.
https://secure.wasmerschroeder.com/UserPages/1037492.pdf
Hercules Capital, Inc. :HTGC
Q2 2016 Earnings Call
Manuel Henriquez – Founder, Chairman and Chief Executive Officer
August 4, 2016 5:00 PM ET
Mark Harris – Chief Financial Officer in final Q & A
..As you know, the yield curve is flatting dramatically when you go further out.
So, I think that the short term of the curve is mispriced. We're hoping that as the market stabilized, that we'll see tightened yield spreads over the five-year rates. And once that occurs, I think that you'll definitely see us actively go out and refinance those 7% bonds you've been referring to which as I'm sure you'll realize in the event of refinancing those 7% bonds, that alone can be a 1 to 3 – sorry, $0.01 to $0.015 in quarterly earnings and prove it by resizing those bonds. But we'll make sure people understand this comment. The five-year treasury rate is acting like an Internet stock. Today alone, the five-year rate dropped nearly 4% to 1.03%. This is a five-year treasury rate. It's not supposed to be that volatile. That tells you what is going on. The 10-year rate is only 47 basis points wider than the five-year rate. That means I can borrow 10-year at 47 basis points higher plus the spread. That tells you that there's no incentive to the short-term borrowing in the capital markets right now.
http://seekingalpha.com/article/3996111-hercules-capitals-htgc-ceo-manuel-henriquez-q2-2016-results-earnings-call-transcript?part=single

Hi @willmatt72
What % of your total portfolio include the above funds? Are all of these funds tax deferred (IRA, 401K, etc.)
Lastly, one has to consider that active managed funds may not always hold the bond types currently in place, eh?
Regards,
Catch

Source of that info was email from Vanguard.
Interesting that Vanguard is not moving the cash from the prime account to the new Federal MMF settlement account.
Does Vanguard let you make trades in a cash (non-margin) account if you don't have cash in the settlement account at the time of the trade? If it doesn't, and if you keep your cash in VMMXX, you'll need an extra day to trade. You sell VMMXX first (settles in a day), and then make the trade the next business day.
Fidelity operates differently. It will draw from position (non-settlement) MMFs for trades once the cash in the settlement account is depleted. No one day lag. The downside is that if the position MMF has a redemption fee in place, you'll automatically get charged that redemption fee. At least that's the way I understand things. I believe Fidelity is still working through all of this.

FYI: Another financial services company has been targeted for costly proprietary investments in its 401(k) plan, leading to allegations of self-dealing at the expense of employees.
Regards,
Ted
http://www.investmentnews.com/article/20160804/FREE/160809954?template=printart

@Bobpa: Suggest you look at Central Fund Of Canada (CEF), you get a twofer, gold and silver bullion, and a 15% tax rate. For you information I'm linking the fund's website for a straight foward look at what you getting. The funds is up 45% YTD
Regards,
Ted
http://www.centralfund.com/

Another writer who can't communicate the new rules:
" The new rules are focusing on so-called prime funds that invest in short-term corporate debt, typically with maturities of a few days to a year. Other types of funds invest in short-term municipal and government debt."
No. The new rules have two foci:
- "institutional prime money market funds (including institutional municipal money market funds)" (quote is from SEC)
- retail non-government funds (including muni funds)
There's no material distinction in the rules between corporate and muni.
One dividing line is between government and everything else. Government MMFs can be owned by institutions, have fixed NAV, and no new redemption rules. (Minor tweaking in what defines a government MMF, as I recall.)
The other dividing line is between retail and institutional. Retail MMFs can have fixed NAV so long as they may impose redemption fees/waiting periods in times of stress. (Apparently these fees are "too arcane delve into".) Institutional non-government funds must have floating NAVs.

I think you prove my point that you are included in the "people don't understand". It was Bretton Woods in 1944, not Brenton. And you evidently fail to note that I'm not talking about 1944, or 1971, but 1929. You may not understand, but the United States most definitely was on the gold standard in 1929.
Read and learn: Gold standard, From Wikipedia
Save your snotty remarks for someone else, Dex.

OK, Don, if you say so, so it is.

* Note: Vanguard's target date funds only invest in the "Investor" class of Vanguard's index funds. The "Investor" class is the most expensive class available; this is price Vanguard charges for the convenience of the target date funds. Otherwise, an investor can get even closer to the benchmark by managing their own allocation and using a cheaper share class ("Admiral" or "Institutional"). But for most folks the difference will be trivial -- we're talking a difference of maybe $1 for every $10,000 you invest, depending on what share classes are available to you.

That's one basis point (1% of 1%). Admiral (or ETF) shares save investors more than that, though still peanuts.
The underlying funds currently used (per prospectus) are:

• Total Bond Market II Index (VTBIX, ER 0.09%) - vs. VBTLX or BND (0.06%)*
  
• Total Stock Market Index (VTSMX, ER 0.16%) - vs. VTSAX or VTI (0.05%)
  
• STerm Inf Prot Securities Index (VTIPX, ER 0.17%) - vs. VTAPX or VTIP (0.08%)
  
• Total Int'l Bond Index (VTIBX, ER 0.17%) - vs. VTABX (0.14%) or BNDX (0.15%, sic)**
  
• Total Int'l Stock Market Index (VGTSX, ER 0.19%) - vs. VTIAX (0.12%) or VXUS (0.13%, sic)**

* Total Bond Market II Index fund is "Available only as an underlying investment in Vanguard funds of funds or similar products." (Vanguard fund page). The closest equivalent is Total Bond Market Index.
This illustrates a common problem in reproducing funds of funds - some underlying funds may not be available to retail investors. Here at least there is a virtually identical substitute. For other funds of funds, such as VPGDX (which makes extensive use of VASFX) there may not be reasonable facsimiles.
** The ERs for Admiral and ETF shares come from Vanguard's pages. These are funds where the ETF shares cost more than the Admiral shares.

I think you prove my point that you are included in the "people don't understand". It was Bretton Woods in 1944, not Brenton. And you evidently fail to note that I'm not talking about 1944, or 1971, but 1929. You may not understand, but the United States most definitely was on the gold standard in 1929.
Read and learn: Gold standard, From Wikipedia
Save your snotty remarks for someone else, Dex.

"the monetary and fiscal tools used in that system"
Yes, those worked particularly well in 1929.

I think you prove my point that people don't understand - the 1944 Brenton Woods agreement was what the USA ended in '71.
Read and learn
https://en.wikipedia.org/wiki/Bretton_Woods_system
PS - I hope that spanking won't leave a mark.