Unfortunately, the author is a believer in the 1 variable school of thought - i.e. a change in one variable is a good thing.
A crash in stocks could mean fewer jobs and/or lower wages for the younger investor. It also assumes the younger investor has money to buy stocks - I don't many do.

I totally get what this article is saying, but let's face it..... If the stock market crashes, the vast majority of people in cash will continue to be in cash. Let's not pretend that these people will systematically start averaging into the market as it goes down.

That's true also - more people will swear off stocks and will confirm the actions who are in cash.

Unfortunately, the author is a believer in the 1 variable school of thought - i.e. a change in one variable is a good thing.
A crash in stocks could mean fewer jobs and/or lower wages for the younger investor. It also assumes the younger investor has money to buy stocks - I don't many do.

I totally get what this article is saying, but let's face it..... If the stock market crashes, the vast majority of people in cash will continue to be in cash. Let's not pretend that these people will systematically start averaging into the market as it goes down.

@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.

Hi @Old_Skeet, I did a screen of all domestic and international equity funds with a P/E below 12, of which there are 122 distinct portfolios. There are exactly 9 that have a prospective P/E less than half of the S&P and 7 of them are emerging/frontier markets. The two lowest P/E ratios? Fairholme Allocation at 6.74 and Pinnacle Value at 6.28, which is still not even close to 75% below the S&P. Both funds are within the "core" value column of the style box although the Fairholme fund it further to the left.
When I restrict the list to funds that have a price/book of less than 1 only 3 of the 9 funds survive, including PVFIX, and there are only 17 funds with a P/E of less than 12 and a P/B less than 1, quite a few of which were mentioned by @Vert (thank you!).
I guess it's clear I don't understand M*'s system because Chou Opportunity, which is indeed left of the style box in deep value territory, has a P/E of 16.51 and a P/B of 1.26. CHOEX has a tiny price/sales ratio of 0.25 so maybe that plays a bigger role in the style designation, but some of the others like KGGAX and TDVFX met my P/E and P/B criteria and also have P/S below 1 and they're still within the left edge of the style box.

Hi bee,
Although, I agree, it might be a complex thing to do Morningstar seems to be able do it for funds that hold any equities. In addition, they provide both TTM and forward estimates as a tool in Portfolio Manager for each fund held within my portfolio, with equity positions, and for my portfolio as a whole.
My portfolio scores according to M* on a TTM P/E Ratio of about 85% (18.3) of what the S&P 500 Index reflects (21.7). In addition, it holds a little better of 40% in value style equities, about 35% core style equities and about 25% growth style equities. This information suggest, from my thinking, that the portfolio has a value tilt ... but, not a deep value tilt although I do hold about 20% of my portfolio's assets in cash. As MSF states a large cash position might put a fund (or perhaps even a whole portfolio by my thinking) into a deep value classification but I don't think I am there with a 20% cash position.
Old_Skeet

Unfortunately, the author is a believer in the 1 variable school of thought - i.e. a change in one variable is a good thing.
A crash in stocks could mean fewer jobs and/or lower wages for the younger investor. It also assumes the younger investor has money to buy stocks - I don't many do.

Hi LLJB,
Thank you for making a post on deep value funds.
One of the things that I look at beside what you noted above is P/E Ratios, both TTM and forward estimates. Take TDVFX which has a forward P/E Ratio of 11.8 and KGGAX at 10.0 both being well back of the S&P 500 Index forward P/E Ratio at 17.7. I guess what I'd like to know is how far back of the P/E Ratio, let's say for the S&P 500 Index, does a fund have to be to score before it would be considered a deep value fund? About 75%, or so, of the Index is my thinking.
I wonder what some others might think along these lines?

Here's an article on Longleaf Partners (generally considered a deep value fund) discussing their cash buildup.
It confirms my impressions (which are admittedly vague and not well supported since I'm not a deep value enthusiast) - that the market has been trending toward growth for several years (okay, that impression is reasonably solid) and that funds have tended to drift along with the market.
As the article suggests, deep value funds have basically two alternatives - build cash (not to be defensive, but because there aren't enough companies meeting their stringent requirements), or drift with the market (staying toward the "left" side of the market as it moves "rightward"). LLPFX has been doing both - last year they had over 1/4 in cash; they've since made purchases and M* now classifies its portfolio as blend. In fact, M* has classified the portfolio as blend for each of the past several years except in 2014, when it apparently stuck closer to its knitting and let cash build.
For a fund to the left of value, take a look at TPEMX. Most of the really low P/E funds right now are EM funds.

Not picking on M* or something. Contra fund is a growth-oriented fund and S&P 500 is not its benchmark. The second comparison to the large cap growth fund is okay though.

Contrafund's 7.71 percent total return is three times more than the S&P 500's 2.48 percent, according to Morningstar. Danoff is beating 73 percent of his large-cap growth fund peers.

The collective investment trusts they referred to is a similarly managed products only available to retirement accounts but at much lower expense ratio. Looks like something at Ford is doing the right thing for their employees.

FYI: ( I owned Fuidelity Magellan from 1972-1996 and made a lot of $$$ from Lynch's skill as Magellan's manager. It is the single best investment I ever made.)
Consider that Lynch’s Magellan fund averaged +29% per year from 1977 – 1990 (almost doubling the return of the S&P 500 index for that period). In 1977, the obscure Magellan Fund started with about $20 million, and by his retirement the fund grew to approximately $14 billion (700x’s larger). Cynics believed that Magellan was too big to adequately perform at $1, $2, $3, $5 and then $10 billion, but Lynch ultimately silenced the critics. Despite the fund’s gargantuan size, over the final five years of Lynch’s tenure, Magellan outperformed 99.5% of all other funds, according to Barron’s. How did Magellan investors fare in the period under Lynch’s watch? A $10,000 investment initiated when he took the helm would have grown to roughly $280,000 (+2,700%) by the day he retired. Not too shabby.
Regards,
Ted
http://investingcaffeine.com/2015/08/15/inside-the-brain-of-an-investing-genius-2/

FYI: Ford Motor Co said it was dropping Contrafund as an investment option in its employee retirement accounts, pulling an estimated $900 million from Fidelity Investments' flagship mutual fund.
Regards,
Ted
http://www.reuters.com/article/2015/08/14/us-ford-motor-fidelity-contrafund-idUSKCN0QJ1GP20150814

No need to thank me Ted.
http://kingworldnews.com/art-cashin-8-15-15/
Art agrees with me that the Fed won't raise rates. But, they may raise because so they could cut in the future.
US economy weak.
Stocks - more lows than highs, not good
Countries and states going into technical default!
Japan slipping back
Fed money printing not working, but, the Fed might do it again - QE hasn't worked either
Deflationary pressures continue to win.
Be careful of high yield areas
Biggest fear - 'things to get out of control'
Long - guns, bullets, beans ...

The manager thinks its a great time to invest in real estate... of course, he is paid to invest in real estate. If you pay me six figures to invest in Florida swamp land, I can make a case for that too. Would he tell you if he thought it was a cruddy time to invest in real estate? The link looks like a thinly-guised advertisement for this nascent fund.
This fund is brand-new -- opened in June 2015, so no operating history. Its paid one divd -- but the size of that divd may not be predictive of an ongoing yield. So if one is investing here for income, its WAY premature to do so --until a track record of consistent divds is available for evaluation...
For those looking for an explicity "income-focused REIT fund , Fidelity has a good, long-lived one (FRIFX). Though if I wanted an income focused REIT fund, I'd look at CEFs. Cohen & Steers have several. IGR is another good one (at least has been, historically). Prudential has a CEF too (PGZ), but it seems to be UNDER-earning its distribution, so I am not interested.

FYI: I hope stocks fall. That might sound pretty strange. But not everybody should be cheering for the same team. In fact, about 125 million Americans should wish for stocks to stagnate, dip or downright crash. That’s roughly the population between the ages of 25 and 55. A smaller number of people (about 76 million) should prefer stocks to rise. That’s the population of Americans above the age of 55.
Regards,
Ted
http://assetbuilder.com/andrew_hallam/why_millions_of_americans_should_hope_for_a_stock_market_crash

FYI: 600-word story on Fidelity funds wouldn’t do justice to their lineup of mutual funds but we’ll get you started with three of their best actively-managed funds here.
Regards,
Ted
http://investorplace.com/2015/08/fidelity-funds-fcntx-fbiox/print

FYI: It's a great time to be a landlord. You just wouldn't know it by looking at how real estate investment trusts are faring this year.
Regards,
Ted
http://www.newsday.com/news/fund-manager-q-a-real-estate-funds-can-rebound-1.10737403?view=print
M8 Snapshot PRKAX: http://www.morningstar.com/funds/XNAS/PRKAX/quote.html
Lipper Snapshot PRKAX: http://www.marketwatch.com/investing/fund/prkax

Just as a reminder: the core Leuthold funds always rely on a mix of tactical and strategic asset allocation. They change their equity weighting frequently, often by a few percent up or down. Those changes are triggered by changes in their Major Trend Index, which mechanically tracks 130 metrics and generates a sort of market score. A score of 0.95 to 1.05 is neutral, which causes them to stick with their strategic allocation. Over 1.05 is positive and causes them to incrementally increase equity exposure, below 0.95 has the opposite effect.
Like GMO, they don't act on their feelings about the market's condition; they react to changing reading, some forward-looking.
And they're pretty decent at it.
I've got their most recent monthly report but haven't read it yet. I'll try to work through the big picture stuff to see if there's anything worth adding here.
As ever,
David

LG should rename it the 'Alternative Balanced Fund.'
I was a long-time follower of the (former) Litman-Gregory No Load Fund Analyst, and respected their process. Since I was philosophically aligned with how they conducted due diligence on a range of money managers, I checked out their Alternative Strategies fund.
MASNX/MASFX has an enviable stable of "highly experienced managers" that provide "complementary, low-correlation investment approaches." The fund has demonstrated downside protection and alpha generating returns (check out its standard deviation, Sharpe and Sortino ratios).
It is a compelling fund - EXCEPT for its expense ratio.
I like these guys, but find it ludicrous that they claim its expense ratio is "highly competitive." They would do themselves a favor by reducing the fund's expense ratio (currently 1.49/1.74% net).
Now, THAT would add value!

FYI: The U.S. stock market is not behaving well and now might be a good time to cut exposure to equities to avoid losses down the road, a leading mutual fund manager tells USA TODAY.
Regards,
Ted
http://www.usatoday.com/story/money/markets/2015/08/13/fearing-market-top-fund-group-slashes-/31626551/

BenWP: 10:39AM
Wow! Thanks to Lewis, I was able to view the colorful, but muted, pie charts. Now that's adding value

NOW THAT'S UNFAIR! Their bar charts are pretty, too... LINK: pretty charts