Interesting Read using a three fund portfolio (VFINX, VUSTX, VSGBX or VFITX) and a 200 mda filter.
From the link:
"The popular 60/40 Stocks/Bond portfolio performs well over the past 24 years, but adding a simple moving average to this portfolio has increased returns, reduced the duration of draw downs, and substantially reduced portfolio draw down. Adding in an intermediate term bond fund as the cash fund accomplished even more, it increased annual returns more than 10% over the buy and hold portfolio, while having close to 1/3 of the daily draw down numbers. Avoiding draw down and still being involved in market upswings was the goal of this strategy, and it worked well in this instance. There were a few concerns, namely being involved in the cash filter fund for too much duration, not being diverse enough to capitalize on gains across different markets, and the potential of missing out on some of the market upsides. However, these concerns did not prevent us from accomplishing the goals of reducing draw down and risk along with increasing return in this particular example."
iema-blog.com/2016/02/6040-stockbonds-portfolio-with-market.html

In a stripped down form, I believe this is what one gets out of Buffett's advice for his future widow - 10% short term government bonds (effectively a cash substitute) and 90% in an equity index fund.
https://blogs.cfainstitute.org/investor/2014/03/04/warren-buffetts-90-10-rule-of-thumb-for-retirement-investing/
That's 2.5-3 years of buffer. As you noted, the length of the overvaluation period (do you mean undervaluation when a retiree is disinvesting?) is unknown, but that is likely enough to insulate one from the worst of it. If that period extends further, one does not need to replenish the buffer, merely sell off enough equity to meet cash flow needs. Once stocks return to a reasonable valuation level, the buffer can be refilled.
Personally, I'm more comfortable with a 4-5 year buffer and a more diversified equity portfolio, but generally find this a good approach.

Newer academic thinking about investment glide path allocations and withdrawal rates in retirement years ( Weigand and Iron / Sptizer and Singh *) has shown that an investor / retiree spend from bonds first and stocks last ( and build a "safe money" fund or bucket of approx. 2 years of expenses which can be used if needed or spent before bonds ). Under this thinking, a misconception about conventional 60 / 40 "glide path" schemes is, that a "bond" allocation be recommended "early" in the investment lifecycle. Yet, the young investor demographic ( age 20's to 50 ) has "time" compounding / "time" to ride out volatility advantages on their side and they aren't so invested in knowing the quarter to quarter fluctuations of their 401K portfolios. So it is logical to assume that a "maximizing" of asset growth by having a much higher portion of assets in equities is warranted and, consequently, should extend into an investors "final years".
Being a late 50's retiree with a somewhat limited but reasonable Roth IRA accumulation and with an extensive expertise in quantitative tactical allocation, I operate under the framework of "preservation of capital" model with an appreciation of what the Weigand and Iron study conveys. As the forward 15 year equity market returns, as measured by CAPE ** and price to book measures are extrapolated to be sub par, preserving capital and asset growth within alternating strategic periods of equity ( small cap value, mid cap growth ), money market, and occasional bond investment through the use of quantitative tactical methods, is my preferred choice. Many "equities heavy" buy and hold investors / retirees may have to ride out the overvaluation period, perhaps spending down their safe money portion and/or retirement asset stake, as is implied by "sequence of return risk". The unknown is how deep and how long the overvaluation period is; this accompanied by varying inflation / disinflation .
Historically, a simple, mechanical, low transaction price / moving average cross strategy has produced decent risk mitigation / capital preservation during these periods of CAPE overvaluation ***.
Some favorite quotes from retirement planner literature are: "Hope for the best, plan for the worst", "You can't predict, but you can prepare ".
* "Market Signals for When to Employ a Bonds-First Withdrawal Sequence to Extend the Longevity of Retirees’ Portfolios" R. Weigand
"Is Rebalancing a Portfolio During Retirement Necessary?" John Spitzer Sandeep Singh
** https://docs.google.com/document/d/1I4sH5UV6fS6UfCNiPl1AsB2SOMF1an1PRt8YH0dgOeQ/edit?usp=sharing
*** https://docs.google.com/presentation/d/1mdon_cto48rvs2_lKWyMWrfqSIh8K0phfe7tThle8qQ/edit?usp=sharing
https://docs.google.com/presentation/d/1Sn6BKRCKRU5tensBDFTkJXI3v2wRQ4M1bt8VoIM2Zmc/edit?usp=sharing

Old Skeet said: "I am a big sinner by holding such a sizeable cash position within my portfolio."
I don't think you're a sinner. There are many benefits to cash. In some instances higher cash levels allow you to take on greater risk in selected areas you consider good value. And in down markets it allows you to stay the course while others are bailing at a loss.
Discussing cash is the problem. Everybody has a slightly different way of quantifying their actual level. Heck, there's one (unnamed) junk bond fund that some here are using as "cash." Others include funds like RPSIX - which is anything but cash. I'm not passing judgment here, but rather showing how perceptions vary.
I could say I'm currently at 7.5% cash, having raised that from under 4% in January. But that doesn't tell the entire story. A half dozen or more of my balanced and allocation funds hold cash. That amount's not included in the figure I sometimes fling around. Especially noteworthy are large holdings in RPSIX and TRRIX, two very conservative funds with modest holdings of cash or short-term bonds. Realistically, my cash position is likely in the 15-20% range when the cash held by these funds are included.
Having said all that, my nominal 7.5% (plain unadulterated cash) reflects a slightly positive outlook for the types of funds I hold, which tend to be a bit overweighted in the raw materials and precious metals sectors. A 10% weighting would represent more of a neutral outlook. I'll get there eventually. And, of course, as always, I could be wrong.
Skeet, your posts are awesome IMHO. You have a clearly thought out plan and consistently adhere to it. Thanks for sharing.

FYI: (This is a follow-up article with more details on Sequoia's involvement with VRX.)
Sequoia Fund fell to bottom of peer group after Tuesday's loss
Elected Tim Medley to its board following two departures
The Sequoia Fund, a famed mutual fund that slumped about 30 percent in the past seven months, was the biggest loser Tuesday among U.S. stock funds as its largest holding, beleaguered drugmaker Valeant Pharmaceuticals International Inc., suffered its worst day on record.
Regards,
Ted
http://www.bloomberg.com/news/articles/2016-03-16/sequoia-vexed-anew-by-valeant-as-fund-plunges-7-7-in-single-day

Allow me to question a few assumptions (or not quite precise statements) to refine some thoughts.
@MJG: "Market returns will never repeat that precise order. All evidence points to a purely random series of returns."
Never? If results are purely random then there is a nonzero probability of repeating any given pattern (at least over a finite space of possible outcomes).
I think you're suggesting that there is no persistence, there are no market cycles. In the fixed income market, we have had a 35 year bull market (give or take). All expectations are for an ensuing bear market. Not to mention basic arithmetic - yields rising from virtually zero entail falling security prices.
How does one square this (both past market and future expectation) with pure randomness? While Y2Y returns may be random, there appears to be a longer term trend that would belie "pure" randomness.
@BobC - you write about people with public pensions. While private pensions are much rarer these days, they do exist. Is there some difference between public and private sector (all else being equal) or is it that you just don't run across clients with significant private pensions?
Regarding lump sum vs. annuity (pension) option: I question cause and effect. Do people who take lump sums fare worse because they take lump sums, or is it that people who do not manage money well are more inclined to take lump sums and spend?
@bee IMHO RMDs, if properly managed, should not be a factor. People tend to look at pretax portfolios and think that they have $X. But what they really have is $X * (1 - tax). Taking RMDs doesn't change this.
I say "properly managed" because letting pretax accounts pile up can ultimately push one into higher tax brackets. This reduces the after tax value more than necessary. By spreading the withdrawals over time one can reduce the tax impact and maximize the aftertax value of the account.
If one doesn't need the full amount of the withdrawals, one can put the excess into Roth IRAs and prolong the tax sheltering.

Has anyone explored the tax considerations with respect to Safe Withdrawal Rate?
I'm gonna assume that a Roth withdrawal could potentially be 15-40% smaller due to the fact that these withdrawal don't get a "income tax haircut" prior to fulfilling their primary need (spending).
Also, if I am required at 70.5 to take a Required Minimum Distribution, than a $1,000 RMD will only meet a $600 - $850 of my income need (after taxes).
@MJG: Do you know if RMD is part of a Monte Carlo Simulator? If a retiree is required to take a distribution, pay taxes on that distribution and then either spend or save that distribution would throw a small wrench into MCS.

http://www.sec.gov/Archives/edgar/data/1500604/000119312516506663/d160093d485apos.htm
The Health and Fitness ETF
The Long Term Care ETF
The Obesity ETF
The Organics ETF

The "largest ten holders" of VRX is probably not that interesting -- as msf pointed out, many of these funds are huge and VRX is only a tiny fraction of the portfolio, in relative terms.
A more interesting statistic is the list of the most "concentrated shareholders," which can be found on Morningstar: http://investors.morningstar.com/ownership/shareholders-concentrated.html?t=VRX&region=can&culture=en-US&ownerCountry=USA
Portfolio dates differ for different funds, but at least of the most recent data available, Sequoia had 19.31% of its portfolio invested in VRX. The decrease in portfolio percentage is almost certainly because of the fall in VRX's stock price, since Sequoia actually added more shares during this period.
After Sequoia, the next most concentrated holders of VRX are a couple of Diamond Hill funds, First Eagle, and the Nicholas fund, all with 4-5% of their portfolio in VRX.

Hi Davidrmoran,
Using a set of rolling market returns is a step in the right direction over the original Trinity study approach, but it is a very small step. It still only reflects the exact sequence of returns that were historically registered by the marketplace.
Market returns will never repeat that precise order. All evidence points to a purely random series of returns. Monte Carlo methods capture that random characteristic. By running 1000 randomly selected return sequences, a user gets a better feeling for the spread in possible outcomes by an order of magnitude or so.
Given a withdrawal schedule, Monte Carlo projects the likelihood of portfolio survival for elapsed time and projected market return stats. Alternate scenarios and drawdowns are easily explored if the survival prospects are not attractive. I used Monte Carlo as one tool in making my retirement decision.
Thank you for asking.
Best Wishes.

>> "flawless execution" ... and the "opportunities [that] exist for Valeant long term"
Huh. Well, this fine deep piece of reporting appeared mid-January:
http://nymag.com/daily/intelligencer/2016/01/valeant-wall-st-darling-to-pariah.html
See if you can follow all the twists and turns. What a story, and what sketchy types.
Wonder which Fido funds owned it and how much.

@ Old Joe .. If you were a kid today you would just write a little script telling your computer to print it out 1499 times and watch it spill paper on the floor.......

I can do that. I had to write "I will not be an intractable clown" 1499 times!

And then there is the matter of debt paydown (probably NOT), which really unsettled creditors after what must have seemed like a freakshow of a conference call for them:
http://www.bloomberg.com/news/articles/2016-03-15/valeant-shatters-calm-among-lenders-as-debt-casts-bigger-shadow

Creditors are starting to lose faith that Chief Executive Officer Michael Pearson will be able to execute on his promise of rapidly cutting Valeant’s debt load. A delay in filing its annual report with regulators is also complicating the company’s standing in debt markets. Failing to file its so-called 10-K before Wednesday will trigger a technical default under its credit agreement, restricting it from using its credit line, the company said.

All you stockholders, remember, if it all blows up, we bondholders will be in the line ahead of you. :)
Artisan High Income Fund (ARTFX)
Top 10 Holdings (% of total portfolio as of 29 February 2016)
USI Inc 5.4
VEREIT Inc 5.1
Valeant Pharmaceuticals Intl 4.2
First Data Corp 3.8
Opal Acquisition Inc 3.3
Renaissance Learning Inc 3.2
York Risk Services Holding Corp 3.0
Gardner Denver Inc 2.9
Altice SA 2.8
Infinity Acquisition LLC 2.8
Total 36.5%
Not sure/can't imagine what Bryan Krug was thinking, when he was amassing this large position in Valeant debt.
update: apparently, Valeant didn't meet the Wed. deadline re. 10-K filing:
http://www.bloomberg.com/news/articles/2016-03-17/valeant-declines-on-report-that-drugmaker-faces-lender-pressure

Harmonizing Ted's post with David's:
PRGFX: $41.6B
TRBCX: $28.9B
PRHSX: $11.7B
TRLGX: $12.4B
TRVLX: 21.6B
Total TRP: $116.2B
Sequoia: $5.7B, or about 1/20th the size, i.e. 20x as committed as these T. Rowe Price funds.
David wrote that after Sequoia, the next most committed funds had 4%. These T. Rowe Price funds collectively have about 1.5% (1/20th of 30%). For funds that hold around 100 positions that's more a run-of-the-mill position than an infatuation.
Big families buy big positions in lots of stocks.

Interesting Ted, but I wonder if TRP sold out of VRX already. PRGFX was down only -0.7% yesterday, not much different then the S&P500. SEQUX was down -7.7% with the VRX drop.
And actually, SEQUX's drop of -7.7% with VRX's drop of 52% says that the Sequoia percentage in VRX is "only" about 15% (all other investments being flat).

@MFO Members: From the what its worth department, of the largest ten holders of VRX T. Rowe Price has five funds who's total holdings are almost as great as Sequioa's.
Regards,
Ted
Sequoia 12,803,392
T. Rowe Price Growth Stock 4,878,500
T. Rowe Price Blue Chip Growth 2,722,700
T. Rowe Price Health Sciences 2,319,205
T. Rowe Price Instl Large Cap Growth 1,567,179
T. Rowe Price Value 1,165,000

A remarkably unremarkable fund (albeit concentrated). But terminating C shares (and converting to A shares) is a new one on me.
The closest situation I know of is American Funds class C shares that automatically convert after 10 years to class F-1 (not quite A) shares. That's also a one-off (I know of no other family that does this either).

http://www.sec.gov/Archives/edgar/data/1215880/000141304216000370/neimansupplargecap497.htm
497 1 neimansupplargecap497.htm
Neiman Large Cap Value Fund
Class C Shares (NECMX)
For Investors Seeking Long-Term Capital Appreciation
Supplement dated March 16, 2016 to the
Prospectus and Statement of Additional Information dated August 1, 2015
____________________________________________________________________________________
The Board of Trustees of Neiman Funds (the "Trust") has concluded that it is in the best interests of the Neiman Large Cap Value Fund (the "Fund") and its shareholders that the Fund cease offering Class C shares. Effective immediately, the Fund will not accept any new investments in Class C shares.
Class C shareholders of record as of March 29, 2016, will have their Class C shares exchanged for load-waived Class A shares (NEAMX) effective March 30, 2016. That is, Class A shares will be issued without any sales charge. Exchanges are made at net asset value such that the value of your investment does not change as a result of the exchange. Additionally, Class A shares have lower operating expenses than Class C shares. An exchange of shares is not a taxable event for federal tax purposes.
IF YOU HAVE QUESTIONS, PLEASE CONTACT THE FUND AT 1-877-385-2720.
________________________
This Supplement and the existing Prospectus and Statement of Additional Information ("SAI") each dated August 1, 2015, provide relevant information for all shareholders and should be retained for future reference. The Prospectus and the SAI have been filed with the U.S. Securities and Exchange Commission, are incorporated by reference, and can be obtained without charge by calling toll-free 1-877-385-2720.
____________________________________________________________________________________________________________________
http://www.sec.gov/Archives/edgar/data/1215880/000141304216000371/neimansupptacticalincome497.htm
497 1 neimansupptacticalincome497.htm
Neiman Tactical Income Fund
Class C Shares (NTCFX)
For Investors Seeking Total Return With Capital Preservation as a Secondary Objective
Supplement dated March 16, 2016 to the
Prospectus and Statement of Additional Information dated August 1, 2015
____________________________________________________________________________________
The Board of Trustees of Neiman Funds (the "Trust") has concluded that it is in the best interests of the Neiman Tactical Income Fund (the "Fund") and its shareholders that the Fund cease offering Class C shares. Effective immediately, the Fund will not accept any new investments in Class C shares.
Class C shareholders of record as of March 29, 2016, will have their Class C shares exchanged for load-waived Class A shares (NTAFX) effective March 30, 2016. That is, Class A shares will be issued without any sales charge. Exchanges are made at net asset value such that the value of your investment does not change as a result of the exchange. Additionally, Class A shares have lower operating expenses than Class C shares. An exchange of shares is not a taxable event for federal tax purposes.
IF YOU HAVE QUESTIONS, PLEASE CONTACT THE FUND AT 1-877-385-2720.
________________________
This Supplement and the existing Prospectus and Statement of Additional Information ("SAI") each dated August 1, 2015, provide relevant information for all shareholders and should be retained for future reference. The Prospectus and the SAI have been filed with the U.S. Securities and Exchange Commission, are incorporated by reference, and can be obtained without charge by calling toll-free 1-877-385-2720.

Valeant appeared, at one point, to be printing money. I suspect that "Mike" told a really good story about how beautifully all the pieces of his strategy were coming together, which was true until it wasn't. I suspect that Sequoia's tradition of "a few great stocks" led them to want to believe that they'd found the next Buffett (the only other CEO to whom they'd entrusted such a large fraction of the portfolio). They got into the stock, it paid off, they got in deeper, then deeper, then way deeper ... at which point it had become, psychologically, a "too big to fail" position. It had to work. So when it started to wobble, they bought more.
Valeant is owned by 1226 mutual funds, including Vanguard's Total International Index. You beat the crowd (and the index) only by acting differently than they act. In Sequoia's case, that meant going all-in. They had 30% in Valeant. The second most-committed set of funds are all sitting around 4% in Valeant. And that did promise returns unlike any other.
David