FYI: The “Dogs of the Dow” crushed it in 2016, but they’ve gotten off to a slow start in 2017. Below is a table of 2017’s Dogs, which are the 10 highest yielding stocks in the Dow 30 at the start of the year. (Read more about the Dogs of the Dow strategy here.) We also include a list of the 20 non-Dogs along with their YTD performance.
As shown, this year’s Dogs are up an average of 2.44% year-to-date. That compares to an average YTD gain of 6.29% for the 20 non-Dogs. Four of the ten Dogs are in the red so far this year, with Exxon Mobil (XOM) down the most at -9.99%. Just three of the twenty non-Dogs are in the red, with General Electric (GE) down the most at -5.43%.
We’ll provide another update on the “Dogs” strategy in a couple of months, so be sure to check back if you’re interested.
Regards,
Ted
https://www.bespokepremium.com/think-big-blog/2017-dogs-of-the-dow/

FYI: While everyone has had their share of losing trades during their careers, the most high profile losing trade over the last year or so has been Pershing Square’s long position in Valeant Pharmaceuticals (VRX). After establishing a position in the stock back in Q1 of 2015, VRX was initially a profitable trade for Pershing as the stock briefly traded above $250 for a short period before coming crashing down in the second half of 2015, into 2016, and then into this year! All along the way, the big question everyone was asking was, “Will Ackman sell now?” For well over a year now, the answer to that question was no, but just today after the close, news hit the tape that Pershing has liquidated its position in VRX at a price of $11, which is more than 9% below Monday’s closing price. With Ackman and Pershing Square now out of the nightmare position in VRX, we’ve heard a number of people ask whether this may mark some sort of short term bottom in the stock as a former large holder finally cries uncle.
Regards,
Ted
https://www.bespokepremium.com/think-big-blog/ackman-ends-the-valeant-nightmare/

FYI The below linked article, (Click Article At Top Of Google Search) was featured in this Week's Barron.s. As often
happens BX is up over 4% today. The Linkster has a position in BX and KKR
Blackstone Group ’s complex operating structure seems almost designed to turn ordinary investors away from its shares—technically, its units. They recently fetched $28.94, down from an initial offering price of $31 nearly 10 years ago. Yet the alternative-asset manager’s cash distributions could soon grow too large to ignore. Wall Street predicts a yield of more than 8% this year, based on a combination of steady, predictable management fees and lumpier performance fees that Blackstone earns when it exits profitable investments. Earnings used to fund those distributions could double in five years, judging by the pace at which Blackstone has been raising new cash and putting it to work.
Regards,
Ted
https://www.google.com/#q=Blackstone+Units+Have+40%+Upside+and+Yield+More+Than+8%+Barron's&*
BX Real Time Quote:
http://www.marketwatch.com/investing/stock/bx

FYI: The Linkster has a position in CSCIX which is down -(3.45%) this month, and in all likelihood will be down again today.
Regards,
Ted
http://blogs.barrons.com/focusonfunds/2017/03/13/reits-its-really-not-as-bad-as-you-think/tab/print/

Good article & ties-in with the WSJ ("Euphoria") article that @Tony cites in the Market Top thread. Martin Conrad mentions Benjamin Graham frequently here, but I found it a bit hard separating out Conrad's own recommendations (or biases) from what Graham taught. That's not to say he distorts Graham. But I have a sense Conrad makes a lot of observations/inferences that go well beyond Graham's teachings.
To learn more, I located an older Martin Conrad article (Barron's December 31, 2011) in which Conrad appears to take a very cautious approach to investing, and also puts an awful lot of weight on investor psychology. I already knew the "average" investor underperforms badly. But I didn't think it was this bad :
"In the 20 years ended 2008, a period that included the best decade of performance ever for stocks, the average stock-fund investor averaged only a 1.9% annual return (due to consistently poor buy and sell decisions) even though the average stock mutual fund returned 8.4% annually over the same period."
http://www.barrons.com/articles/SB50001424052748703522304577086891063798090
Market numbers for December 31, 2011 (date of above article):
- Dow Jones Industrial Average ( DJIA ) Close 12217.56 Down 69.48
- Nasdaq Stock Market Close 2605.15 Down 8.59
- S&P 500 Close 1257.60 Down 5.42
http://daytradingstockblog.blogspot.com/2011/12/dow-jones-close-123111-stock-market.html
Wondering about Conrad's (Graham inspired) recommendation that investors use low cost balanced or allocation funds for their core holding, I dug up an article which attempts to define specific fund recommendations Graham made (or would make today). Not very definitive - but may be of interest. http://www.gurufocus.com/news/164674/are-there-any-good-ben-grahamstyle-mutual-funds
Note - Was able to access the article @Ted linked the first time. When I went back later to read it again, the article wouldn't come up. Clearing your cache might work if you are having a similar issue.)

Haven't posted here in quite awhile. I was 5% cash as of January 1 and have gone to 60% bonds and cash starting around Valentine's Day. Finally sold my railroads (hated to do it) due to valuation concerns (CSX, NSC and TRN), but kept railcar builders/leasors ARII and GBX. Keeping AAPL, but added HII and PFN. Keeping a lot of cash on the sideline in government MMFs. And so it goes...

Hello,
From my most recent Xray my portfolio's bond allocation was 25% of my overall allocation. Within bonds I am 71% limited term, 27% moderate term and 2% not classified. I have no extended term bonds according to Xray.
Skeet

Altogether, my portf. holds 37% bonds right now, of all sorts. No worry here, long term. I just X-Rayed my stuff. In the aggregate, my funds are holding 6% cash. Bonds: 22% short-term, 28% moderate-term, Long-term: 36%. A bit of a surprise re: long-term. "Not classified:" 15%. Some of these bonds are in my 2 balanced funds. PRWCX and MAPOX. The other funds are PREMX and PRSNX and SFGIX. None of these were mistakes. :)

Ted linked an interesting, though mis-titled article this morning..."Beat the Wealth-Effect Trap". It discusses where we are in this business cycle in a manner very much related to this thread.
As summarized in this excerpt, "At high prices, where everything is priced for perfection in a harsh and uncertain world, there is no margin of safety when volatility strikes. Best to remember at such times the wise advice to leave the last 10% for the next guy."

Thanks for that link, @djchappy. Some interesting info about rate hikes in the 1970's and effect on the market. For a raft of reasons (Nixon, Watergate, horrible market, and leisure suits) I sure hope we never have a decade like that one.

That's not quite ANALogous, not unless Gundlach were to rate funds from over 150 companies, over 1000 funds in all, like M*. If all Gundlach did was comment on a competitor's funds, there would wouldn't be two competing interests to conflict. His sole interest would be in promoting his product at the expense of competitors.
But if he were to offer a broad rating service from which he profited, then the two lines of business would have a potential conflict. The interest of the ratings service would be in providing objective ratings. On the other hand, his funds would be interested in seeing the service make his funds look good relative to other families.
He could avoid that conflict by not rating his own funds. Then the service would not be making his funds look better (or worse) than the funds it rated.

Some snippets of interest ... the rest is comments from investors/analysts about staying diversified and knowing that a 'correction' will come sometime.
< - >
Investors have poured money into stocks through mutual funds and exchange-traded funds in 2017, with global equity funds posting record net inflows in the week ended March 1 based on data going back to 2000, according to fund tracker EPFR Global. Inflows continued the following week, even as the rally slowed. The S&P 500 shed 0.4% in the week ended Friday.
The investors’ positioning suggests burgeoning optimism, with TD Ameritrade clients increasing their net exposure to stocks in February, buying bank shares and popular stocks such as Amazon.com Inc. and sending the retail brokerage’s Investor Movement Index to a fresh high in data going back to 2010. The index tracks investors’ exposure to stocks and bonds to gauge their sentiment.
“People went toe in the water, knee in the water and now many are probably above the waist for the first time,” said JJ Kinahan, chief market strategist at TD Ameritrade.
< - >
That brings individual investors increasingly in line with Wall Street professionals. A February survey of fund managers by Bank of America Merrill Lynch found optimism about the global economy improving while investors were holding above-average levels of cash, leaving room for them to drive stocks still higher. Bullishness among Wall Street newsletter writers reached 63.1%—the highest level since 1987—a week ago in a survey by Investors Intelligence, before falling to 57.7% this past week.
< - >
Not sure "being in line" with Wall street professionals is always a good idea. That usually happens late in the game when retail/dumb money climbs on the bandwagon and helps form that proverbial blow-off top. Institutions trim their holdings and lock in gains while selling to the exuberant and retail investors eager to get in on the action --- but at the top, as usual.

@Mark: FYI: LEXCX has had an annual return of 10.59% since inception, 11/18/35.
Regards,
Ted
http://money.cnn.com/quote/mutualfund/mutualfund.html?symb=LEXCX

You might look into the performance history of Lexington Corporate Trust and see where that takes you. All I've been able to find is it's history over the past 10 years.

@MFO: How about VGHCX, inception date 5/23/84, annualized return 16.63%.
Regards,
Ted

A good mention @Tony The WSJ audio clip I received (subscription service) sounds like the same article you're referencing - but I can't read it online either. It's a 6-8 minute clip laying out the bear case which we're all by now familiar with from various sources.
Summary
- Stocks have increased about 250% from the end of '08 when (according to the article) "nobody" wanted them.
- As always, the mom & pop / momentum crowd come late to the party and drive the "euphoric" stage for an indeterminable number of additional years.
- Serious investors face a tough decision whether to hang on to equities longer hoping to reap the big gains that come in the final "blowoff' stages of a market top or to sell now locking in gains before stocks plummet.
I know. "Same Old" - "Same Old" that we've all been hearing for the past few years. I'm not saying the analysis is correct. And I haven't a clue what anyone should do. Just wanted to help clarify the focus of the WSJ piece you appear to be referencing. Thanks again for sharing.
Edit/Additional
Source: WSJ March 9 2017, Author: James Mackintosh, Title: "This Crazy, Expensive Stock Market Is for Speculators, Not Investors" https://www.wsj.com/articles/this-crazy-expensive-stock-market-is-for-speculators-not-investors-1489078334?tesla=y
Excerpt: Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria—Sir John Templeton. Eight years ago today, investors were more pessimistic than they had been in many decades. Stocks had crashed back to where they stood almost 13 years earlier, banks were failing and comparisons to the Great Depression of the 1930s were routine. It was a great time to buy."
Re: James Makintosh http://topics.wsj.com/person/M/james-mackintosh/8338
(I made a couple minor corrections to original summary based on a second listening.)

Those are nice Kiplinger tables (data from M*). Be careful with the top figures though, because funds often have multiple share classes.
For example, it says the top 3 year performer was DSENX, but DSEEX performed about 1/4% better. That's as one would expect since the I class shares have no 12b-1 fee. (I checked to make sure that DSEEX was also around for at least three years as of 2/28/17.)
Online, M* only goes back 15 years, but with that in mind, the top 15 year performers are (as of 3/10/17):
OSMAX 14.71% (foreign small/mid)
PHSZX 14.60% (health)
SHSSX 14.55% (health)
PRMTX 14.53% (communications) - converted from CEF New Age Media 7/28/97 (> 15 years ago)
ESMAX 14.44% (Europe)
CGMRX 14.27% (real estate)
BRUFX 14.21 (allocation 50%-70%)
INPIX 14.14% (trading - leveraged equity)
To address the question about the next 20 years, the most obvious answer is: your guess is as good as mine. FWIW, my guess is a bit south of 8%. Look at Ted's 20 year top LC performers. Domestically, around 11-12%, internationally 7%-8%.
Rate of population growth is declining quickly (might result in slower demand/profit growth). Unlike the first industrial revolution that increased both production capability and demand (hiring workers), the new revolution in machines (both service and manufacturing) seem to improve primarily just the production side of the equation.
Just a couple of random thoughts. Not sure how it will really affect long term profits (which is supposed to be what drives capital gains).

Thanks, Ted. 10 years is too short for what I'm asking about. Looks like the best they have for a 20 year period is Vanguard Capital Opportunity at 12.9%.
@Junkster, what I was intending by using the word diversified was to exclude those funds.

I see all sorts of signs of a market top or at least a 5% to 10% pullback. The problem is too many others do too. And won't we get that infamous 3 steps and a stumble rule come Wednesday (or is that outdated)

@dryflower: Here are some Large Company Stock Fund returns over 1,3,5,10,20 years. Returns as of 2/28/17.
Regards,
Ted
http://www.kiplinger.com/tool/investing/T041-S001-top-performing-mutual-funds/index.php