FYI: Charles Schwab’s (SCHW) automated investment service is adding “hundreds of new accounts every day,” the brokerage’s chief executive said this week.
Schwab’s chief executive officer, Walter Bettinger, unveiled some details about Schwab Intelligent Portfolios in a call with analysts on Thursday. The brokerage rolled out its so-called robo-advisor service in early March, or about six weeks ago.
Regards,
Ted
http://blogs.barrons.com/focusonfunds/2015/04/24/schwabs-robo-service-nets-1-5-billion-in-six-weeks/tab/print/

Yes, since at least the 1970s, surely. The slow erosion of the social contract between management and labor. My own aunt worked as a secretary at Monsanto for 800 years. You NEVER see that kind of loyalty from either management nor labor, today. Labor jumps to get what it can, because labor is increasingly desperate. In so many places, benefits are simply not there, not offered. Globalization has depressed wages, too. All quite deliberate.

Speaking of emerging market debt, here's a recent article that doesn't exactly make you want to run out and buy them. But as one of the reader comments stated, maybe just the opposite. Meaning, when prices are rising amid these type of doom and gloom articles, it's the time to buy.
http://www.wsj.com/articles/investors-grow-wary-of-emerging-market-debt-1429473506

@Tampabay

Tampabay
10:18AM Flag
I think its more of a matter of having too much Cash on hand for profitable companies, and innovative ways to make money with the cash, Why not find ways to give back to Company Owners, the share holders, Bay backs are one (easy) way to do this...

One of my takeaways from the paper's arguments is that the corporate mentality that has driven a significant portion of the buybacks has been too short term in its nature. Investments in labor (including additional technical training and other education for existing workers) and capital may take many years to fully provide a payback....particularly when the economy is struggling. But, if that part of the equation gets short changed in order to goose the stock price in the current quarter, the overall economy including the wages of its workers suffers in the long run. I am inclined to think some of that has been going on in recent years.

Another thought, How many Middle Class people buy Stocks (invest).... last I read it was less than 10%, How many Care or want to?
In fact how many well educated Americans even Know how to go about buying stocks?
Guarantee, myself as a well educated, young successful businessman with plenty of disposal money didn't have a clue....finally after years of fooling around with mutual fund companies and buying IRAs out of tax necessity.. I educated myself....
Middle Class Doesn't do that....buying stocks....so I guess they don't benefit....
all my guessing

"In terms of types of financial wealth, the top one percent of households have 35% of all privately held stock, 64.4% of financial securities, and 62.4% of business equity. The top ten percent have 81% to 94% of stocks, bonds, trust funds, and business equity, and almost 80% of non-home real estate."
http://www2.ucsc.edu/whorulesamerica/power/wealth.html
Also:
http://www.cnbc.com/id/100780163
http://www.salon.com/2013/09/19/stock_ownership_who_benefits_partner/

Another thought, How many Middle Class people buy Stocks (invest).... last I read it was less than 10%, How many Care or want to?
In fact how many well educated Americans even Know how to go about buying stocks?
Guarantee, myself as a well educated, young successful businessman with plenty of disposal money didn't have a clue....finally after years of fooling around with mutual fund companies and buying IRAs out of tax necessity.. I educated myself....
Middle Class Doesn't do that....buying stocks....so I guess they don't benefit....
all my guessing

Jaffe has set-up six-straw men which he refutes.
1. ‘It can’t go up forever,’ or ‘We are overdue for a downturn or a correction.’ - The first part of this straw-man is true. The second part does not necessarily follow.
2. ‘Because the bull run has been long, any decline is going to be big, too.’ - This is a patently false premise. Duration of a bull market is not the determining factor in the severity of corrections. Valuations and economic conditions are the primary drivers.
3. ‘The Federal Reserve is serious about raising rates now, and that’s going to end the rally.’ - The first part of his statement is probably true. The second part does not necessarily follow.
4. ‘The government will screw this up.’ - This is a silly argument. Governments come and go depending on the outcome of elections.
5. ‘The market is overpriced.’ - This is probably true in general. However, it's a straw-man so "all-inclusive" that it's easy to knock down.
6. ‘You can’t lose money in cash, so I will wait until the next downturn passes.’ - True and false. The validity of the argument hinges on the meaning of "money." Cash won't lose "nominal" value. As Jaffe points out, it will lose purchasing power.
My conclusion? Jaffe has managed to shed little light on the question of whether or not you should make changes to your portfolio. Setting up a list of largely bogus assumptions ("straw-men") and than refuting them, serves little purpose IMHO.

I'm still 100% in HY Muni bonds paying me about 5.1% - only state tax. Munis haven't seen capital appreciation this year. My guess it is the possible Fed increase later in the year holding them back.
My current plan is to stop the re-investment of dividends in Jan of 2016 and put that $ into other places, maybe high yield international bonds. Time will tell.

I am 100% in open end corporate junk. Many of the corporate junk funds are up around 4% YTD. But a friend of mine recently made a move into where the real action has been the past many weeks and that is emerging market debt. May move some there. Bank loan funds have also showed some life in 2015.

The middle class has been getting smaller since the late 1960s and stock buy backs had nothing to do with it.
It began with US factories not modernizing after WWII, while new fuel efficient plants were built in the re-building countries. Also, those countries had lower legacy costs and wages.
Then in the 80s China opened up. Middle class jobs fled the country and continue to do so.
First came the above, then fewer people had money to buy stocks so the people who had money (evil rich) by default had a larger percentage of stocks.
The shrinking middle class will continue because wages have stagnated, benefits have been eliminated and costs have increased from education to funerals.

William Lazonick writes that "Stock buybacks are an important explanation for both the concentration of income among the richest households and the disappearance of middle-class employment opportunities in the United States over the past three decades. Over this period, corporate resource-allocation at many, if not most, major U.S. business corporations has transitioned from “retain-and-reinvest” to “downsize-and-distribute” ". Toward the end of the paper, Lazonick further states "Senior executives who are willing to waste hundreds of millions or billions of dollars annually on buybacks are likely to lose the judgmental capacity to comprehend the types of investments in organization and technology that are required to remain innovative in their industries."
Rex Nutting comments on the paper at this link where he says "Share buybacks encourage executives to loot companies, stall innovation and depress wages":
marketwatch.com/story/how-the-stock-market-destroyed-the-middle-class-2015-04-24?dist=beforebell
Here is a link to a summary of the paper and to its full pdf version ("Stock buybacks: From retain-and reinvest to downsize-and-distribute"):
brookings.edu/research/papers/2015/04/17-stock-buybacks-lazonick
It is my impression share buybacks have been a key driver of US equity market performance in recent years. I am not sure that trend can be sustained in a positive way over the next several years. This may be worth thinking about since it impacts our portfolios.

I'm still 100% in HY Muni bonds paying me about 5.1% - only state tax. Munis haven't seen capital appreciation this year. My guess it is the possible Fed increase later in the year holding them back.
My current plan is to stop the re-investment of dividends in Jan of 2016 and put that $ into other places, maybe high yield international bonds. Time will tell.

@msf I agree. The Moment of Truth for corp junk, circa 2010-2011, was supposed to be a big crunch in 2013-14; given the ultra-low interest rates, demand, and lowered barriers to obtaining credit, corporations with low ratings were able to refinance that away and even do so with weak covenants. Being junk, they could only extend that so far, apparently to circa 2018 (I didn't know that; thanks, JG!). Recent sharp rise in corp credit application denials--- doesn't look like they're gonna get to do that again. [I'm hoping we won't have to wait that long for corp junk to give it up; geez, I was thinking we could get a buying op later this year; maybe not]
Under present circumstances, that doesn't make a small position in PR a poor decision. It's that "at the right price..." risk/reward with positive skew kinda thing. Just how discounted are those "state" bonds, anyway? 70%? That would be a great yield while it lasts, and if they were to default, well, negotiate a settlement, etc. and at worst you'd get your fund investment back and move on.
Been awhile since I looked at DSL's SAI, when many of DL's principal fund managers and several of the co. execs had significant investment in DSL. Is that still the case?

The $20M is in DSL - all a single position.
As Junkster pointed out, this is a muni bond, not a corporate. Aside from that, there are other differences from what Gundlach was talking about. He specifically mentioned a flood of maturities in the 2018 time frame. He felt that this would create a problem both in price (lots of new bonds coming on the market to replace the old ones) and defaults (not having the cash flow to deal with higher coupon bonds?).
PR bonds, in contrast, are generally (still) long term maturing in the 2030s and now 2040s. In particular, the series in DSL mature in 2035. PR is having problems servicing its current debt, but it won't have to deal with rolling over its bonds for many years.
PR bonds are unique in another way. They were recently downgraded to junk (the only "state" bonds to be so graded, so they're in a class by themselves). As a result, funds dumped them (as did many other investors), and they have already been badly punished in the market. As Junkster's link pointed out, they're trading at all-time lows. I have a small portfolio of individual munis, and I watch the PR bond prices drop even as all other muni prices (from BBB to AA) rise.
Not wishing to sound like a Pollyanna, I nevertheless offer a (possibly rare) contrarian view for your consideration: https://www.fmsbonds.com/News/bond_article.asp?id=488

@Dex Saw on a blog last week that "over 30%" of all outstanding HY municipal bonds were PR debt. (sigh) Given your note that HYD municipal index has PR debt at 3.4%, the dude obviously has a problem with zee decimal points.
Quite a stretch this is newsworthy. I mean, 20/2260 x 100= 0.885% .... so?

@hank So, with a solid 50% score, does that mean you're a good guesser, a bad guesser, or just average at guessing? :) And since Ted got a perfect 100%, does that mean he is twice as good at guessing as you are? I dunno, quite the outlier.... almost super-human.

On the inaugural show of the new Wall Street Week, Mr. Gundlach mentioned that a crisis in junk bonds was coming. I guess he knows the day and the hour when it will begin.
http://m.wyff4.com/money/junk-bonds-the-next-financial-crisis/32465346

Gundlach was referring to a crisis in corporate junk bonds not munis. This year the junk corporates are outperforming the junk munis, the reverse of last year. The link below indicates there could be big problems ahead for Puerto Rico munis
http://blogs.barrons.com/incomeinvesting/2015/04/23/puerto-ricos-government-could-shut-down/?mod=BOL_hp_blog_ii

Hi Guys,
Thank you all for your enthusiastic replies. I appreciate all of them for their prospective and for their civility.
I believe we all invest with constraints; with some self-imposed set of rules that act as speed governors to control potentially disastrous behavioral biases.
As Dirty Harry remarked in that film series: “A Good Man Always Has to Know His Limitations”. Here is a Link to that terrific scene:

I think good investors do either formally or informally generate a set of operational rules. These rules guide them in making investment decisions.
The rules need not be inflexible and forever cast in stone. Strong adherence to the rules is mostly necessary since frequent violations defeat their purpose. But market circumstances and personal circumstances change, and the final rule should be that change is permissible under evolving conditions. There is much art and just a little science that should dictate when these changes are warranted.
The constraints suggested in the referenced article are not a bad point of departure. Personally, I follow many of them, but definitely not all. Each of you guys likely follow a different subset that more closely defines your own investment philosophy, style, time horizon, financial know-how, and special proclivities.
All of us see investing from differing perspectives. What’s significant to you might be trivial to me. Professional firms follow their own shining guidelines. As a grand illustration, allow me to reference a seminal position paper by Oaktree’s Howard Marks. The paper is titled “The Most Important Thing”. Here is the Link:
http://www.oaktreecapital.com/MemoTree/Most Important Thing (070103).pdf
I hope you find his summary as informative as I did. I love adding some extra value to these exchanges. Enjoy the Marks philosophy.
Marks simply could not consolidate his “most important thing” to a single item. He lists quite a few. When investing there is almost never a single best approach, and any best approach will surely morph over time. Like Marks said: “There are a lot of moving parts in this machine, and many of them are beyond our control.” So both control elements and open-mindedness are essential ingredients for success.
Best Regards.
ADDED COMMENT: The Howard Marks Link is not working on this site. Try this address:
http://www.oaktreecapital.com/memo.aspx
And then click on the 2003 memos for access to the referenced article. Sorry about the problem.

FYI:
Regards,
Ted
http://www.ritholtz.com/blog/2015/04/the-market-rhythm-deciphered/print/

FYI: The bull market is in its seventh year and it seems like a lot of investors are just itching to make a change to their portfolio or investing habits.
Regards,
Ted
http://www.marketwatch.com/story/6-bad-reasons-to-make-changes-to-your-portfolio-2015-03-07/print

I was surprised none of the funds were mentioned in the business updates section of their 1Q commentary