As a shareholder of BB's FAIRX, I feel he has done a poor job of communicating his value vision to his shareholders. I understand a desire to keep your cards close to your chest, but an occasional confident wink would do wonders for my morale as I sit wondering what cards he holds and may play.

He has offered up thesis papers for things like SHLD but I've found they don't make much of a case/offer some broad positive points while neglecting to discuss some obvious concerns regarding specific details. They're basically happy talk papers.
I think what Fairholme hasn't done is provide some realistic views on how the Sears journey has gone and what the destination even vaguely looks like.
Fairholme was buying Sears well North of $100. You can say he was early, but years later and a significant % lower (although there have admittedly been some spin-offs, albeit crappy ones), I think there needs to be some honesty and insights as to what the next steps may look like for SHLD.

My experience was the same as Art's. You can not roll over any part of a 401k if you are still with that same employer, plan options change or not. You are stuck with the options they offer and those options can and do change from time to time. My plan's options have changed numerous times over the years.

Nicely stated description of mean reversion. The key, as you pointed out, is what mean one is talking about. Just because a fund/manager has performed above the industry average does not mean that the fund will "revert" to the industry average. Without more information, one doesn't even know whether the fund is underperforming its own mean, and that it might even do better going forward (like a good pitcher having a winning but lackluster 10-8 season).
Here's a formal mathematical definition of mean reversion:
http://mathworld.wolfram.com/ReversiontotheMean.html
In plain English, it's just stating what you did - that if a mediocre pitcher had a hot night, that was toward the high end of his performance range. So on his next outing, he's more likely than not to do worse than his sterling performance - not because he did well the previous game, but just because he's a mediocre pitcher who tends to give up 10 hits or so a night.

Hi Guys,
Please note that the referenced Bill Bernstein article was written in 2001. There has been a lot of water both through and over the dam since that time.
To make a quick visual update to the data sets that Bernstein referenced, being lazy, I defaulted to the Periodic Table of Asset Returns format. That’s a much easier task than plowing through a complex set of numerical tables and statistical analyses. Here is a Link to a Prudential presentation that covers the last 20 years:
https://investment.prudential.com/util/common/get?file=1D065355D2CC360385257B7D00536F8A
These charts are terrific for a general overview of the marketplace’s random walk character.
If you perceive a pattern in this data, “you’re a better man than I Gunga Din”. I don’t see patterns, I see complete chaos. The situation is normal. Sometimes the Value groups outdistance the Growth holding strategy. Sometimes the reverse is true.
During the last 20 years the annual inflation rate, on a decade by decade perspective, has dropped from about 3.1% to roughly 1.9%. Since 1913, the long-term average annual inflation rate has been 3.2%. We’ve learned to somewhat control its variability.
Given the chaotic character of the various asset classes over the last two decades, I choose to ignore the Bernstein study, and will remain invested in both Value and Growth oriented mutual funds. Good luck on trying to project a winner based upon inflation rate change subtleties.
Best Wishes.

What about BBALX which @David_Snowball profiled here ?

My experience has been the plan eliminates a fund and sends out notice to which fund the monies will be transferred to. I cannot leave/transfer my 401 until my employment terminates.

Changing jobs qualifies...I moved from one school district to another (different employers) over a summer break and as a result I had the ability to rollover my 403b(7) from the grips of the plan sponsors annuity sucking vampire squids directly to Vanguard where I had access to all of Vanguard's low fee funds and brokerage options.

My experience has been the plan eliminates a fund and sends out notice to which fund the monies will be transferred to. I cannot leave/transfer my 401 until my employment terminates.

Hi Guys,
The search for mutual fund performance persistence has long been a long standing investor’s goal. It is illusive. In his seminal 1997 study titled “On Persistence in Mutual Fund Performance”, Mark Carhart summarized his findings as follows:
“The only significant persistence not explained is concentrated in strong underperformance by the worst-return mutual funds. The results do not support the existence of skilled or informed mutual fund portfolio managers.”
So, on average, Carhart had a strongly negative opinion on active fund management. Other studies demonstrated that managers who generated positive Alpha for one 5-year period, generated negative Alpha in the next 5-year period.
This is yet another illustration of a very persistent Iron Law in the investment world, the ubiquitous Regression-to-the-Mean. According to Carhart, poor fund management is consistent (and likely to disappear from the scene}, but better fund managers have difficulties maintaining their edge. Change happens.
Many researchers find the seeds of those difficulties embedded in the success of those better managers. Fund size explodes, but the better investment opportunities are more fixed. Performance erodes.
Remember when in the 1970s, Burton Malkiel claimed that a blindfolded monkey tossing darts at a listing of stocks to assemble a portfolio would do as well as a purported expert money manager making careful selections for his portfolio. Well, more recent studies find that judgment was too harsh.
Fund mangers do have skill. The problem is that almost all fund managers have substantially the same skill level. The skills tend to neutralize each other. That puts the outcomes back into the luck segment of the skill plus luck equation. Hence managerial outperformance is again in the chancy realm and persistency suffers.
Still another persistency study examines the Morningstar Star rating system for a clue. These researchers conclude that the lifetime of superior performance as measured by stars is very transient. Again on average, these researchers find that a star rating persists for only 5 months before another different star surfaces. The ratings go both up and down, so relative performance is variable. That’s no great surprise, but the short 5-month period is.
So, if established superior fund managers have recently fallen on hard times, the Regression-to-the-Mean Iron Law suggests that an investor should be patient, should keep his resolve, and should keep the faith and stay the course with these managers. These managers do exist and will recover. Some will fail, but the odds are encouraging.
How do you find these superior managers? A Stanford professor, Jonathan Berk, has a novel theory that is tied to the manager’s pay scale and assets under management. Here is a Link to a short YouTube video by him:

I’m not convinced, but Berk’s hypothesis adds another dimension to the debate. Enjoy.
Best Wishes.

My synopsis of Bill's argument: growth outperforms during periods of decelerating inflation (e.g., the Great Depression), value outperforms during periods of accelerating inflation (e.g., the 1970s) and the latter has been historically more common than the former. Of more relevance to us, the latter condition is more likely in our near-term value than is deflation, so "value investing is slowing rising from its coffin."
Or not. Numbers confuse me but delight Bill (and many of you).
David

Wonder if this decision by the plan administrator provides the employee with a qualifying event to rollover these shares "in kind" to another IRA. Seems as if an employee should have other options besides, "sell and buy something else."
Would this plan change be classified as a termination (we no longer offer this option) as a:
Plan Termination
If your employer has decided to terminate the 401(k) plan and doesn't offer a new defined contribution plan in its place, you can roll over your assets into an IRA. For example, if your employer is getting rid of the 401(k) plan and switching to a defined benefits plan instead, such as a traditional pension plan, the event qualifies for a rollover to an IRA. You can't put your 401(k) assets into the pension plan since you can't contribute to it. However, if the employer is switching to a SIMPLE IRA plan instead, you can roll over your 401(k) assets, as those have a place in the new plan.
from link:
qualifying-event-401k-asset-rollovers-ira
Also, 403b(7) account holders had an option called a 1035 exchange whereby assets could be moved from a fund family that was part of the plan sponsor's options to another institution of the employee's choice (that might not be part of the plan sponsor's list of options or even part of the plan).
I did this while still employed enabling me to obtain access to TRP funds which where not offered by my employee plan.
Wonder if an exchange is available for 401K plans similar to the 1035 exchange?

FYI: Pity the poor value investors. Nurtured on the elegant prose of Benjamin Graham, the folksy humor of Warren Buffett, and the daunting statistical elegance of Fama and French, they’ve languished in the wilderness with fifteen years of excruciating underperformance. What went wrong?
Regards,
Ted
http://www.efficientfrontier.com/ef/701/value.htm

You should look at Leuthold Core (LCORX), in many ways one of the progenitors of the category. Nominally "tactical allocation," it has a 20 year track record. Top 2% over the past decade, top 5% in 2008. It's a purely quant-driven fund. Leuthold monitors 130 market and valuation indicators and shifts assets accordingly. A bit more downside protection and noticeably more upside than its peers, since inception.
Leuthold Global (GLBLX) is more global but uses the same discipline. LCORX looks better just now, but that's because domestic has been stronger than international of late. Since inception, Global has a hearty lead.
These are very disciplined folks with a long record as manager and a longer record as institutional researchers, which is where the business started.
David

FYI: The stock market has done a whole lot of nothing this year, yet strategists are still calling for a strong rally into year end.
Regards,
Ted
http://blogs.wsj.com/moneybeat/2015/08/18/morning-moneybeat-are-mid-to-high-single-digit-returns-realistic/tab/print/
Current Futures: (Negative)
http://finviz.com/futures.ashx

Similar sentiments have been expressed several times on the MFO Board during the past year, without challenge. The only difference of opinion I can recall was that Junkster wanted a 10-ft pole of separation, whereas I wanted the comfort of a 20-footer.
As noted elsewhere by Gershon Distenfeld, the HY ETFs have a number of hidden costs:

https://blog.abglobal.com/post/en/2015/07/with-high-yield-etfs-costs-can-be-hidden

For those who pine for relatively free and honest markets, where valuations bear some relation to fundamentals, and where there is ample value premium to be captured by managers committed to deep value investing (and the fact we have created special terms to distinguish "deep" from "relative" value is indicative of just how pathetically thin that premium has become, if it can be found at all), I think maybe we should look in the mirror and ask, as we await: if that opportunity should ever come back--- after all the manipulations, levitations, and interventions are over and done with--- is it something we'd really be willing to do well? is it a commitment we'd be able to keep with a good fund manager?
http://www.mutualfundobserver.com/discuss/discussion/19993/woe-betide-the-so-called-value-investor#latest
I think I could, but must admit some slight hesitation in giving a definitive "yes." Call me wimpy, but I still remember (barely) that it wasn't easy to hold firm, in the best of times.

Contrafund has around 113 billion in AUM, so as a percentage 900 million is not that much.

@msf, here's a recent article from Advisor Perspectives that confirms growth has been outperforming value recently but that value eventually has its turn. Over time based on their comparison of the cheapest 20% of stocks on a book value basis compared to the most expensive 20% of stocks on the same basis, value handily beats growth.
advisorperspectives.com/articles/2015/08/11/why-you-should-allocate-to-value-over-growth
I suppose it would be interesting to know how well those cheapest P/B stocks do compared to the other 80% or to "blend" stocks because it could be that the deep value stuff suffers a lot more volatility or a bigger drawdown but doesn't outperform by nearly as much over time.
Thanks for the thoughts about cash! That seems at least as reasonable and how I was thinking about it and I guess it means I'd have to look at the details of those funds before drawing any conclusions about their approach. I do find it interesting, however, that Longleaf is pretty clear about their "deep value" orientation but the style box says large blend and their portfolio statistics don't lead me to the same conclusion. Obviously it hinges on what they determine the intrinsic value to be but it seems they've had a lot of difficulty keeping up with any of their peers for the last 10 years.
The Timothy Plan Emerging Markets fund you mentioned is pretty remarkable. They're really what I would expect to see in "deep value". Lots of Brazil, Russia, basic materials, utilities, industrials and very small P/E, P/B and P/S. The expense ratio is really high considering they have a 5.50% front-end load, but I guess that's what's necessary to earn any money when you only have $7.8 million of AUM.

Just like to mention that TPEMX is managed by Brandes and you could get pretty much the same thing a lot cheaper with BEMIX.

O

@willmatt72: U.S. News & World Report ranking of World Allocation Funds.
Regards,
Ted
http://money.usnews.com/funds/mutual-funds/rankings/world-allocation

I own HCOYX also, which is ranked number 1 on that list. I did not mention it as a recommendation to Willmatt, as it is not a conservative fund. It takes on risky bets, which have made it excel prior to the last half year or so, but have definitely hurt it most of this year.

@bee. Thanks. It's nice to see this kind of list. It would be nice to see more postings like yours and less about biotech. The irony is when I was just starting out as a financial writer I was given the job of writing a weekly dueling portfolios column interviewing Don Yacktman and Jean Marie-Eveillard about their best ideas. This was in the late 1990s and everybody hated their patient value investment styles and readers would complain about how boring the managers I covered for this column were. Of course, when the dot.com bubble burst they both became heroes and celebrities again. If one likes Yacktman's style, now is the time to buy his fund, not when he's a hero. Then again, there is one unique risk factor. Don isn't running the fund anymore. But I believe the style remains fairly consistent.

Hi Guys,
Like Ted, I made some money investing in Peter Lynch and Magellan. Unlike Ted, I only invested small amounts, and only after Lynch had piloted Magellan for a half dozen years. The percentage returns were impressive, the dollar amounts much less so. During that phase of my investment learning cycle, I was still heavily committed to individual stock positions. My bad decision, and also bad timing.
Like Lewis Braham, I question if Lynch would be as successful in today’s marketplace as he was in yesteryear’s investing world. I doubt it.
Peter Lynch's record is unarguably outstanding. There can be no debate over his superior 13 years of active Magellan fund management. Today’s investing environment is significantly different. In his hay-day, Lynch enjoyed several advantages that do not currently exist.
His Fidelity boss (Ned Johnson) allowed him to go anywhere; today, a manager is more tightly constrained by a discipline to stay within prescribed box styles. Lynch was permitted to invest internationally, a rare option in the late 1970s and early 1980s. He invested in countless stocks, some after merely visiting a busy store; one wonders about the sagacity of that tactic. It is often said that Lynch never saw a stock that he didn’t want to buy.
Thirty-five years ago, Lynch was mostly investing against Joe Six-Pack. The competition was definitely inferior when contrasted against today’s fully trained money managers. This is the most common explanation for the disappearing Alpha phenomenon. It is tough to build long winning streaks when nobody owns an advantage for very long. Information exchange quickly erodes any such advantage.
I’m sure Lynch would do a competent managerial job today. Given the highly sophisticated and competitive environment that currently exists, becoming a superstar fund manager is far less likely. This is not a knock specifically aimed at Peter Lynch. The financial field is presently loaded with talented, deeply supported folks.
Institutional agencies carefully research and hire successful active fund managers. It is a laborious process. These institutions are finding that a much more challenging task. The selected management’s performance records are deteriorating. Alpha is more elusive. In response, these same institutions are now punting, and are presently hiring more passively managed sub-units. Things change.
Best Wishes.