FYI: Sequoia Fund, which has faltered from its big bet on drugmaker Valeant Pharmaceuticals International Inc., is considering opening to new investors for the first time in more than two years.
Regards,
Ted
http://www.bloomberg.com/news/articles/2016-04-19/sequoia-fund-may-reopen-to-new-investors-after-valeant-losses

The poor state of CT wants a piece of the Yale endowment too:
bloomberg.com/news/articles/2016-03-23/yale-endowment-tax-proposal-eyed-by-cash-strapped-connecticut

Howdy Professor,
Good article.
Note that while silver jumped 4.2% the silver miners went nuts. [aside - haven't we been down this road before?]
http://www.kitcosilver.com/equities.html
In the precious metals space, there are two metrics that can be used to fine tune your approach and holdings. The gold/silver ratio and the gold/XAU ratio.
The first- the gold/silver ratio has historically been around 1/17 with one ounce of gold worth seventeen of silver. In fact, this is what happened in the Hunt bull market in the late 70's. Gold tripled from around $300 to $850 and silver went from below $5 to $50. Note they topped out at 1/17. Also note that silver went up tenfold. During the Big Bonanza bull from 2002 to 2011, gold went from around $300 to $1800 while silver went from around $4 to $45. Note that the leverage is still there but the ratio is about 1/45 or so. Right now the ratio is 1/73. This would point towards overweighting silver relative to gold.
The gold/XAU ratio is an historic metric showing the relationship between the price of bullion and the bullion mining stocks. Now it's easy to understand why bullion and mining stocks would track each others performance, but realize they are traded in different markets and can diverge from each other for various and sundry reasons. This divergence, or convergence is measured by the gold/XAU ratio. Before the advent of ETF's, 5 was the demarcation with under that pointing towards overweighting bullion to miners and over that calling for overweighting the miners to bullion. Whelp, the ETF's have skewered the metric way higher and I'm not sure the wizards have reset the bar, but currently the ratio is over 15. That screams at me to overweight the miners relative to bullion.
This tells me the greatest potential leverage is with the silver miners.
Note that in each of these cases, we're talking about overweighting silver and the miners . . . but only 'overweighting'. This doesn't mean you don't own gold bullion in some form. Just that you own a bit more than you might otherwise, in silver. You own a bit more of the miners, via most every pm mutual fund in existence. I met one guy that actually bought silver and gold at the ratio amounts. But that's being a purist.
Why silver is running right now? Geez, I don't know. Most of it is probably because of the dollar falling relative to gold.
However, and this is what matters. I don't care why silver miners are going nuts. I just watch Captain Price and follow his lead. I own SVM, EXK and AG and it's getting fairly obscene. And I like it.
Take care,
peace,
rono

FYI:
Regards,
Ted
Bloomberg Slant;
http://www.bloomberg.com/news/articles/2016-04-18/asian-stocks-poised-to-extend-u-s-equity-gains-as-oil-rebounds
Reuters Slant:
http://www.reuters.com/article/us-usa-stocks-idUSKCN0XG1NS
MarketWatch Slant:
http://www.marketwatch.com/story/dow-on-pace-to-rise-further-above-18000-as-stock-futures-gain-2016-04-19/print
USA Today Slant:
http://www.usatoday.com/story/money/markets/2016/04/19/wall-street-stocks-dow-sp500-nasdaq-oil/83224532/
IBD Slant:
http://www.investors.com/market-trend/stock-market-today/stocks-mixed-in-afternoon-ibm-plunges-on-weak-sales/
WSJ Markets At A Glance:
http://markets.wsj.com/us
Sector Tracker:
http://www.sectorspdr.com/sectorspdr/tools/sector-tracker
Current Futures:
http://finviz.com/futures.ashx

FYI: (In the precious metals space the Linkster likes CEF. You hold both gold and silver, and you don't pay the 28% tax)
Futures prices for this “other” precious metal jumped 4.2% on Tuesday to $16.93 an ounce, a rarefied level last touched in March 2015. The iShares Silver Trust (SLV) jumped 4.2%, while the leveraged ProShares Ultra Silver (AGQ) added 8.5
Regards,
Ted
http://www.marketwatch.com/story/silver-jumps-3-to-10-month-high-as-hedge-funds-buy-in-2016-04-19/print
Barron's Slant:
http://blogs.barrons.com/focusonfunds/2016/04/19/hi-yo-silver-the-other-precious-metal-hits-11-month-high/tab/print/
I'm sure you new this was coming !

FYI: DoubleLine Capital and State Street Global Advisors rolled out a pair of new ETFs, one aimed at emerging-market credit and another at short-maturity bonds.
Regards,
Ted
http://blogs.barrons.com/focusonfunds/2016/04/19/doubleline-capital-ssga-partner-for-two-more-bond-etfs/tab/print/

@TSP Transfer: Hold on, not so fast, although Daivd Swenson does a great job running the Yale Endowmentt Fund, over the last ten years a 11.2% return has beaten him. I just proves that David can beat Goliath.
Regards,
Ted
http://www.nytimes.com/2016/02/26/business/in-college-endowment-returns-davids-beat-the-goliaths.html

Yale is routinely the best-performing endowment in the world
Posted on April 15, 2016 by David Ott Acropolis Investment Management LLC
One of my favorite reads of the year is from the Yale Investments Office, which manages their $25.6 billion endowment. You can find the report by clicking here.http://investments.yale.edu/images/documents/Yale_Endowment_15.pdf
Yale is routinely the best-performing endowment in the world and has earned a remarkable 13.9 percent return over the last 30 years – well above the 10.7 percent return for US stocks, 8.7 percent return for foreign stocks and 7.1 percent return for bonds.
I’ve read both books by David Swenson, their pioneering investment manager, and pay close attention to their annual report. I haven’t finished this one yet, but I was surprised by their large increase to foreign stocks in recent years.
http://acrinv.com/yale-bets-big-overseas/
Asset Allocations
as of June 30, 2015
Yale University / Educational Institution Mean
Absolute Return 20.5% / 24.1%
Domestic Equity 3.9 / 19.4
Fixed Income 4.9 / 9.3
Foreign Equity 14.7 / 22.1
Leveraged Buyouts 16.2 / 5.9
Natural Resources 6.7 / 7.3
Real Estate 14.0 / 3.7
Venture Capital 16.3 / 4.6
Cash 2.8 / 3.7
In 1985, 80% of the Endowment
was committed to U.S. stocks and bonds. Today, target allocations call for
12.5% in domestic marketable securities, while the diversifying assets of
foreign equity, natural resources, leveraged buyouts, venture capital,
absolute return, and real estate dominate the Endowment, representing
87.5% of the target portfolio.
The heavy allocation to nontraditional asset classes stems from
their return potential and diversifying power.
Venture capital investments provide compelling option-like returns as
the University’s premier venture managers gain exposure to innovative
start-up companies from an early stage. Yale’s venture capital allocation
of 14.0% exceeds the 4.6% actual allocation of the average educational
institution. The venture capital portfolio is expected to generate real
returns of 16.0% with risk of 37.8%.
Yale’s venture capital program, one of the first of its kind, is
regarded as among the best in the institutional investment community,
and the University is frequently cited as a role model by other investors.
Yale’s venture capital managers are strong, cohesive, and hungry teams
with proven ability to identify opportunities early and support talented
entrepreneurs as they build early-stage businesses. The University’s vast
experience in venture capital provides an unparalleled set of manager
relationships, significant market knowledge, and an extensive network.
Over the past twenty years, the venture capital program has earned an
outstanding 92.7% per annum.
http://investments.yale.edu/images/documents/Yale_Endowment_15.pdf

Currently holding 14 funds - about normal for me. Everything green yesterday - very unusual.
Best was PRNEX +1%. Worst RPSIX with slight gain.
The commodity/NR sectors have been coming back for a few months now. Two steps forward & one step back, but gaining ground. Overlooked by most is nat gas which is rebounding from severely depressed prices. Not sure if that trend can persist, but interesting if you follow the energy markets.
Sold both of my spec investments in recent weeks (OPGSX, PRLAX) so a lot of the fun has gone out. Just watching paint dry nowadays, Nice post by Rono, who accurately called the hot silver market months ago. Both gold and most pm's on fire today.
(Sorry this is outside the thread - but I really don't do bonds. Just a tad in EM & international which are having a decent year.)

Some big winners at this house ytd are BLV (long gov & IG corp bonds, up 9%), JENSX (a lower volatility, "quality" stock fund), up 7.7%, and a small pack of muni bond cef's (up 6-10%, not steadily up anymore, but still strong).
The ride's been fun, but when normally less correlated stuff is headed in more or less the same direction, much of it on the expensive side, the yellow light starts flashing - especially with negative average seasonality for risk coming up.

@Junkster I see you trade MF rather frequently, trying to time the market. Do you ignore all fees for selling mutual funds prematurely or keep some discipline in doing that?

DavidV big difference between a timer and a trader. Timers predict and forecast while traders react. Never met a successful timer or at least a successful Mom and Pop timer. Hear about a lot of their claims but whenever I ask if they care to back them up by multi years of real time trading statements or 1040s (and I would reciprocate) they always back down. Everyone seems to trade stocks, options or futures. If they only knew about the trading opportunities in open end mutual funds. But to them it is akin to watching paint dry. Yes, I ignore the fees associated with selling funds within 90 days (Scottrade) It's part of doing business albeit getting harder to ignore. In the old days at INVESCO and Strong you could buy and sell their in house funds at will with no fees whatsoever. Then came the $17 fees and now as of a month or so it's has risen steeply to $49.99 at Scottrade. Even more if it is a transaction fee fund. That may force me to change my style or at the very least be more of a diversifier and not be so quick to cut and run.

It is turning out to be a good year for bond traders. 12/2015 and 1/2016 were a couple of down months, but I kept the discipline and finally caught a nice rally. It is nice to see all the bond sectors are in rally mode simultaneously. It is a rare treat. I have been 64% high yield muni funds and 36% bank loan funds for the past couple of weeks. I like the risk/return in bank loan funds, although corp junk is coming on very strong.

David I was reading the article in Market Watch where you were quoted on 14 April. How does one find out what the ownership participation is of the fund manager in a mutual fund?
prinx

Interesting link, Ted, thanks for it. I'm curious what some of the many saavy bond investors here think about current junk valuations, @junkster and @dex maybe?

@expatsp I think Dex was driven away by trolls on this site. I haven't seen a post of his in a while.
Junk bonds have a high correlation with stocks. And that makes sense negative news about the health of company puts in doubt the ability of that company to pay interest and pay off the debt. My thoughts that are not all mine (some are from Dex) are that the environment for bonds will be positive for longer time then most would consider.
Inflation fear have not materialized - not with all the FEDs actions and not with oil over $100. The classical causes of inflation - low unemployment, high factory utilization, high material costs - have been blunted by job offshoring and easy capitol movement. Workers wages are flat and benefits are down, that causes poorer workers who are afraid. Not an environment for inflation. The retiring baby boomers will be looking for interest and high yield bonds of any type to fulfill their needs. And I think as others here have said that there will be a VAT in this country. That will put another damper on economic activity and keep inflation low. GDP growth is in the 2% range. There is nothing on the horizon that will change that. Then consider automation/robotics and artificial intelligence and workers wages and the number of workers will be negatively impacted. Nothing is telling me that high yield bonds are in jeopardy.

Government, emerging markets, and long term bond funds up over 7%. World and corporate bond funds up over 4%. Junk corps up 3.62% with some of the larger ones up over 5%. Even some of the stodgy bank loan funds are up in the 3% to 4% range and some of the steady eddie funds in this category have had but one or two down days in the past two months. The junk munis are trailing at 2.62% albeit some of the better ones are near 4%. Munis in general seem to be overloved. Never a good thing from a contrarian point of view. Entering today I was 41% bank loans, 29% junk corp, 26% junk munis, and 4% emerging markets. That could be subject to change (as it is almost everyday) as may exchange more out of my Nuveen junk muni (NHMRX) into more of my Nuveen junk corporate (NCOIX) This scattered and diversified approach is normally not my thing but it sure has been less stressful. Hopefully can incorporate more of that strategy as I continue to age. Up around 4.35% YTD (edit: 4.99% through 4/22) and would be thrilled to get 10% for the year - or whatever the market has to offer. I am always more concerned with a smooth ride upward in my account with as least volatility as possible than I am hitting it out of the ballpark Harper style.

Interesting link, Ted, thanks for it. I'm curious what some of the many saavy bond investors here think about current junk valuations, @junkster and @dex maybe?

Not an investor but the "experts" are all over the ball park when it comes to the prospects of the junk bond market. In Ted's linked and bullish article we see this comment Payson Swaffield, chief income investment officer at Eaton Vance, thinks we are at the beginning of a new cycle of positive junk returns that could last a few years. Yet, in this week's Barrons we see an interview with Michael Weilheimer, head of Eaton Vance's Income Fund who is cautious and thinks we will be rangebound and are anywhere from the 6th to 9th inning of the credit cycle. Same firm yet two entirely different opinions on junk bonds. Marty Fridson the junk bond guru says ex oil we are an extreme valuations in the junk bond market. And of course we all know the Bond King's (Gundlach) constant and continual bearishness on the junk bond market.
The market though, who never listens to the experts has been very bullish and the average open end junk fund is up 3.62% YTD with many up over 5%. So unless oil goes back to $30 it is looking more and more like double digits gains for 2016 will be achieved.
Edit Ted's linked article was a good one as it highlighted the dampened volatility of junk bonds.

If you own the fund in a taxable account and have a large, unrealized gain, maybe best to hold but watch. If in a retirement account, at least move to watch status with no additional purchases, or sell if you are so inclined. Keep in mind FPACX has underperformed its category in 2015 and 2016 YTD, not a long period. Performance itself is not problematic for me. The fund should not be compared to an S&P Index. Yeah, it was convenient for management to do this when their numbers looked good by comparison, but we never compared it to the index. The sudden change of comparable index by management, however, is troubling, especially when the selected index does not resemble the fund in any way.

@kevindow, I want to ensure you that I am sincere. Over 10 years ago I was seeking an all-weather fund and seriously considered FPACX, but picked T. Rowe Price Capital Appreciation, PRWCX instead. Even though the smaller AUM, Steve Romick' track record, and flexible mandates were attractive attributes, Richard Howard, the former manager of PRWCX also have consistently good record despite having bigger AUM.
I understand that back-testing is not possible when the ETFs that don't exist in the period of question. Perhaps VWIAX in combination with VDIGX would work since both go back to 2000. With respect all active managed funds, the AUM is always an issue. Many tend to close to new investors too late in my opinion. That is one of the reason we are increasing our allocation to index funds.

Though not quite as "pure" regarding currency hedging as Vanguard, PIMIX is supposed to limit its exposure to 10% of its portfolio.

@willmatt72: I agree with the article linked by Ted. For a core fund which may and currently does venture into foreign and emerging markets FI, I would take a look at PIMIX. As of 3/31/2016, this fund has about 41% of the porfolio allocated to developed foreign and EM FI as shown HERE. I would be comfortable with 100% of my FI allocation being invested in PIMIX.
Kevin