Seems to me some were sitting 100% in cash a month ago. Lousy start to the year startled many.
Umm ... Don't know about bull markets. I can't see the future. But, there have been many positive trends over the past month or so. Oil bottomed near $26 in January/February and is around $41 today. Gold started the year around $1100 and is above $1250. The Dow (if memory serves) dipped to around 15,000 in January and is now at 17,500, close to year-ago levels. The wild daily swings have softened.
European, and now U.S., central bankers have softened their stance or even added stimulus. Dollar has been softening for a while (judging by the performance of international bonds this year). But this week's Fed statement added impetus to that softening. EM bonds have been strong this year. Home prices are rising and REITS have been good investments since September. The U.S. oil patch is still a mess. Time and higher prices should help. This should in turn help the junk bond sector - though my exposure there is very limited (only through broader allocation funds).
As I've noted before, Brazil - which comprises most of PRLAX - has been on a tear since mid January. This is a dicey one however, as Brazil is undergoing political trauma reminiscent of our Nixon years and their market is liable to go in any direction day to day as that drama unfolds. However, overall, those EMs with nice reserves of oil or metals should do relatively well as long as prices stay up.
Bull markets? I dunno. But they say the trend is your friend. I think both Junkster and I would agree on that point.

FYI:
Regards,
Ted
March 17, 2016
Dear WEALTHTRACK Subscriber,
“Caution is appropriate.” So said Federal Reserve Chairwoman Janet Yellen in a press conference Wednesday after the Fed decided to halve the number of rate hikes planned this year, from four to two. With the Fed Funds’ target remaining between 0.25% and 0.50% another two increases would leave the benchmark rate below 1% by year-end.
There were other significant developments this week. Donald Trump won four of the five Super Tuesday Republican primary races, including Senator Marco Rubio’s home state of Florida, causing Rubio to drop out. Despite a loss in Ohio’s primary to its Governor John Kasich, Trump has a comfortable delegate lead over his major challenger, Senator Ted Cruz. On the Democratic side, Hillary Clinton pulled well ahead of Senator Bernie Sanders.
Also this week, U.S. crude-oil futures closed above $40 a barrel, the highest since December of last year and the Dow Industrials turned positive for the year in Thursday’s trading, after being down more than 10% in early February.
New this week on our website, we’ll have a link to a report on how much workplace diversity affects the bottom line. It will be available to PREMIUM members tonight and to everyone else over the weekend. According to research published by McKinsey & Company, companies in the top quartile of racial and ethnic diversity are 35 percent more likely to have financial returns above their respective national industry medians. And companies in the top quartile for gender diversity are 15 percent more likely. Food for thought for management and investors!
I have always been a big believer in meritocracy. I like to think that in America, people of equal skills, talent and education will be judged on their merits, not by who they are or where they come from, which is why I couldn’t figure out why more women were not advancing in the financial services industry. Women are certainly well represented on air, online and in print in financial journalism. But why are there still so few women in executive and management roles on Wall Street?
Last week I got some surprising answers while emceeing a fascinating and enlightening conference on increasing gender diversity in the financial services industry. “Beyond Talk: Taking Action to Achieve Gender Balance in the Financial World” was co-sponsored by The California State Teachers’ Retirement System, known as CalSTRS and State Street Global Advisors.
Leaders at both organizations have gone “beyond talk” and initiated practices to recruit, promote and mentor women in the industry. They are putting substantial resources into the effort.
SSGA just launched the SSGA Gender Diversity Index ETF, symbol SHE, comprised of more than 140 U.S. companies which have greater numbers of women in leadership positions than other companies in their sectors. CalSTRS invested $250 million in SHE at its launch.
On the television show this week, are you better off with a robot? That is the topic we are revisiting during this final weekend of winter fund-raising on public television. We are interviewing an under the radar value investor who created a robot portfolio to test the theory that statistically cheap stocks will outperform the market over time – and lo and behold they have.
As a long-time financial journalist I have seen investment theories and strategies come and go. Wall Street firms have devoted billions in their quest to find proprietary magic formulas for outperformance.
Michael Lewis’ best-selling book, now a movie, “The Big Short” did a masterful job of describing various mathematical and computer science algorithms that contributed to the financial crisis. They were so complex and arcane that even their creators and certainly their customers had little idea of what was in them and how they would really work in the real world.
This week’s guest has a much simpler approach, which much to his surprise when he first tried it 17 years ago does work, but it comes with a large caveat: it is not appropriate in the vast majority of portfolios. He only applies some of it himself.
He is John Dorfman, Chairman of Dorfman Value Investments, an investment management firm he founded in 1999 that manages money in separate accounts for high net worth individuals, family offices and a few institutions.
He is a deep value investor who runs concentrated stock portfolios that have outperformed the S&P 500 by a wide margin over the years. Dorfman is also a journalist. I knew him at The Wall Street Journal and even though he switched to money management full time in 1997 he still writes financial columns.
One of his most popular, which has been his first column of the year for the last 17 years, is devoted to his 10 stock robot portfolio.
Dorfman starts with all U.S. stocks with a market value of $500 million or more. Then he eliminates those with debt greater than equity. He then picks the ten stocks selling for the lowest price earnings multiples of the past year’s earnings.
The result is the “Robot Portfolio” has had a compound average annual return, with dividends included, of nearly 16%, compared to just over 4% for the S&P 500.
Given the spectacular performance of his robot portfolio why doesn’t Dorfman just use that method for all of his accounts? He will tell us.
If WEALTHTRACK isn’t showing on your local station this week due to local station fund-raising campaigns, you can always watch it on our website. You will also find a link to Dorfman’s 2016’s Robot Portfolio there.
Thank you for watching. Have a great weekend and make the week ahead a profitable and productive one.
Best Regards,
Consuelo
John Dorfman Website:
http://dorfmanvalue.com/

VRX went down another 11.54% on Thursday. But SEQUX was actually *up* 0.20%
I don't think Sequoia has sold any shares. Rather, VRX's stock price has apparently dropped so low that it's probably now only represents 10% or so of Sequoia's portfolio, which would make it a smaller holding than Berkshire Hathaway (if you add up BRK.A and BRK.B shares).
So Sequoia's shareholders can now rest assured that VRX is no longer the fund's biggest holding! Of course, they might have preferred that it happened in another way.

New bull market in Dow Transports. If that is how they define a bull (see link below) then a new bull market in oil which is up over 60% off its lows.
http://www.marketwatch.com/story/dow-transports-index-enters-bull-market-after-thursday-rally-2016-03-17?siteid=bigcharts&dist=bigcharts
Many junk bond funds are on track for double digit 2016 gains. Who would have thought? And under the radar many bank loan funds ala RSFYX and SAMBX are steadily rising. I have no opinion on any of this. I will let the countertrend rally/relief rally/suckers rally/bear market rally crowd chime in. But would also like to see some true believers chime in.

RiverPark Short Term High Yield Fund.
"(a) high yield bonds are a sliver of the portfolio". Does this mean that the fund is in violation of Rule 35d-1, requiring 80% of a fund's portfolio (at time of purchase) to reflect its name?
M* reports the average credit rating to be B. (Note that M* computes average rating based on overall portfolio credit risk behavior; it does not compute a dollar weighted average of the securities' ratings).
The holdings breakdown by M* are almost all (90%) junk.
So it seems the benchmarking problem arises primarily from the second attribute you describe:
"(b) it has a short to ultra-short average maturity while the group tends to intermediate term."
See SEC Rule 35d-1 FAQ, Question 7
https://www.sec.gov/divisions/investment/guidance/rule35d-1faq.htm
"Q: How does rule 35d-1 apply to a fund that uses the term "high-yield" in its name?
"A: The term "high-yield" is generally understood in the financial and investment community to describe corporate bonds that are below investment grade, commonly defined as bonds receiving a Standard & Poor's rating below BBB or a Moody's rating below Baa. Therefore, a fund using the term "high-yield" in its name generally must have a policy to invest at least 80% of its assets in bonds that are below investment grade. [The exception being tax-exempt or muni funds.]"
FYI - "short term" is more fuzzy for the purpose of this rule. See
http://www.mondaq.com/unitedstates/x/10770/Antitrust+Competition/SEC+Adopts+Rule+Prohibiting+Misleading+Mutual+Fund+Names

M* now gives RPHYX 4 stars, up from 1 star. Total return about the same as years past so I'm guessing hi yield was prolly not a good overall sector last year.

Getting back to the question as to "where" should retirement withdrawals come from this study researched a number of options and I liked this quote enough to pass it along:
In virtually all the scenarios, "it pays to eat your bonds first, equities later."
Withdrawal scenarios studied:
1. Withdraw money from either stocks or bonds and then rebalance the portfolio annually to the initial stock/bond proportion. This harvesting rule will be referred to as “Rebalance.”
2. Withdraw money from the asset that had the highest return during the year and do not rebalance. This will be referred to as “High First.”
3. Withdraw money from the asset that had the lowest return during the year and do not rebalance. This will be referred to as “Low First.” To the extent that historical rates of return on bonds tend to be lower than historical rates of return on stocks, the following two additional methods of harvesting withdrawals will be referred to as “Bonds First” and “Stocks First.”
4. Take withdrawals from bonds first and do not rebalance.
5. Take withdrawals from stocks first and do not rebalance.

Study:
time-diversification-vs-rebalancing-in-retirement-portfolios/

Yes, that was the Spitzer and Singh study cited ...

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

They could probably run a 10 period monthly moving average on the prices of the assets as to reduce daily generated "whipsaws" ( as many "needless" whipsaws occurring in the past have been contained "within" the monthly data ) and reduce the amount of "management" time, ie. looking at the calculations daily / subjecting oneself too frequently to market data - leading to possible cognitive investing biases ...
Also, using healthcare for the 60% allocation has produced alpha ( appreciably ) above VFINX ( 13% CAGR, Sharpe 1.0 -21% max DD with non MA strategy / rebalance annually 1986 - 2015 )

Disaster was probably too strong a term; "surprisingly poor" sounds about right.
When the panic passes, he might ease back on the amount of ballast and benefit from a substantial rebound in oversold securities.

Agree, surprising poor sounds better than disaster. Disaster is reserved for the Third Avenue's of the world. If market action is any indication the panic has already passed and the other managers, especially in the high yield sector, beat him to the punch by benefiting from the substantial rebound in oversold securities. His 1.49% over the past month pales to the 5.21% of his high yield counterparts. I have said a couple times here there is no reason to hold this fund.

Getting back to the question as to "where" should retirement withdrawals come from this study researched a number of options and I liked this quote enough to pass it along:
In virtually all the scenarios, "it pays to eat your bonds first, equities later."
Withdrawal scenarios studied:
1. Withdraw money from either stocks or bonds and then rebalance the portfolio annually to the initial stock/bond proportion. This harvesting rule will be referred to as “Rebalance.”
2. Withdraw money from the asset that had the highest return during the year and do not rebalance. This will be referred to as “High First.”
3. Withdraw money from the asset that had the lowest return during the year and do not rebalance. This will be referred to as “Low First.” To the extent that historical rates of return on bonds tend to be lower than historical rates of return on stocks, the following two additional methods of harvesting withdrawals will be referred to as “Bonds First” and “Stocks First.”
4. Take withdrawals from bonds first and do not rebalance.
5. Take withdrawals from stocks first and do not rebalance.

Study:
time-diversification-vs-rebalancing-in-retirement-portfolios/

"disaster"
Hmmm ... it had an 8% drawdown from mid-2015 to mid-February, 2016. That's better than the average high yield fund (-11%), worse than the average multi-sector bond fund (-6.5%). Neither's a particularly great benchmark. Not good and modestly surprising. I'd probably reserve "disaster" for folks who've demonstrated bad faith or really sustained incompetence. Neither's the case here, though I don't disagree that the performance has been surprisingly poor.
To the manager as well, for what interest that holds.
I've spoken to Mr. Sherman a fair number of times. I like him and respect him, but can't always quite keep up with him. As soon as we hit "but when the shape of the derivative curve tightens, the yield-to-worst / yield-to-call ratios become irrational. Right?" my brain blinks. My best understanding is that two factors have been driving results. (1) He screwed up on two or three securities. At base, a couple CEOs used freakishly bad judgment which damaged - terminally in one case, temporarily in another - the value of the fund's investment in them. (2) Fixed-income investors have been acting like the apocalypse is imminent, which has led some portions of the market to be pounded down. There are some short-term bonds yielding over 10% now, a year ago those same bonds paid 6.5%. He's got some very conservative exposure - overlap with RPHYX - to offset some riskier stuff (the aforementioned pounded sectors) that he believes to be "money good," but the dark fantasies involving the collapse of the energy market or of the Chinese economy or of the European Union have kept prices from normalizing. When the panic passes, he might ease back on the amount of ballast and benefit from a substantial rebound in oversold securities.
He might be wrong, either in the thesis or in timing, but, at least in my best judgment, he's neither delusional nor incompetent.
For what that's worth,
David

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.