FYI: Africa could be the next big story in emerging-market stocks.
Regards,
Ted
http://www.marketwatch.com/story/you-arent-investing-in-africaand-youre-missing-out-2014-12-02/print

Hi Davidrmoran,
Thank you for your reply. I originally thought that you indeed dropped a “not” in your opening statement.
Apparently that was not the case, and you provided 3 references that purportedly support your memory of their writings. As President Ronald Reagan said: “trust, but verify”. As a matter of personal policy, in most instances I do try to verify, even my own flawed memory.
In the financial universe, almost nothing is totally black or white, but rather varying shades of gray that change over time. Diversification mostly works well, but does suffer from shortfalls and application limitations. The market experts mostly rate it a net plus when scoring the advantages and the disadvantages.
The three articles that you referenced do discuss both the merits and the hazards of diversifying, especially in the International marketplace. But your choices were somewhat puzzling. Their bottom-lines strongly agree with the position that I presented; most recently, correlations, particularly International ones, have collapsed towards the perfect correlation One level. That tends to neutralize the benefits of holding international elements in a portfolio, but does not completely eliminate their advantages.
In the Michael Schmidt article, he concludes that: “There has, however, been a trend of increased correlation between the U.S. and non-U.S. markets.” That’s precisely the thrust of my comments.
In the first John Waggoner article, he says: In “The past five years, Lipper's large-cap core international and large-cap domestic core indexes have a 94% correlation.” The Vanguard study shows that was not the situation 10 and 20 years ago.
In the second John Waggoner article he asks and answers as follows: “Is it time to re-think diversification strategies? No. But it's a good time to make sure you're really diversifying your portfolio.” In another section, he says: “And diversification is a good strategy.” Still further in the reference: “Foreign stocks tend to move in lockstep with U.S. stocks these days — particularly when the markets are down.” Again, this column really reinforces the arguments that I offered.
Enough! Your references added depth to the Harry Markowitz academic findings that diversification is important when assembling an efficient and effective portfolio. Any correlation coefficient between two components below “One” helps to lower the portfolio’s overall volatility (standard deviation).
That’s goodness to enhancing compound returns over the years, dampening negative market swings, lowering the odds for a losing annual return, and influencing an investor to control emotions to stay the course. Diversification does not eliminate risk from the marketplace; it does help to manage it.
Time to move ahead now. This is a minor matter that has likely wasted too much of both your valuable time and mine. Memory should never be fully trusted.
Have a great Holiday season. Best Wishes.

Robeco Investments
http://www.robecoinvest.com/assets/pdf/Robeco-Investment-Funds-2014-Est-Cap-Gain-Dist.pdf

Reference previous posts, November 19, this thread:
• Max: ".......We’ve recently made a number of updates to the site, so we’re working to categorize and understand this issue so that we can resolve it definitively......"
Shaking my head. What does this even MEAN?
• Old Joe: Not really important, Max. The main thing is that she will reach out to you, and you can feel free to reach out to her.
• John Chisum: Corporate speak.
• Old Joe: She left out the "stakeholder" parts. Must be new. Pretty funny, actually: right out of "Dilbert".
Reference above post, December 2, this thread:
"I can see that they’ve looped in some additional stakeholders"
So they've now upgraded to involve "stakeholders". Absolutely hilarious. Dilbert lives!!

I think this depends on a great many factors, including age, tax situation, etc.
(my age 69.5)
We got into Roths late - doing a conversion of a portion of our Traditional near the '09 market bottom and after we had already begun taking SS benefits. Initially it was 100% invested in aggressive global growth funds because they were among the most beaten-up when we converted. Now, we're more interested in protecting our sizeable tax free gains (counter to the traditional approach to Roths).
Roth now comprises nearly half our investments. it's still a bit more aggressively positioned than the Traditional IRA portion - but not that much so. Mostly balanced funds along with a portion in diversified income funds. I will say the Roth contains what I consider the finest funds we own - so overall quality of the Roth investments is better - and it continues to out-perform the Traditional IRA. Kinda begs the question: Why don't we move everything to those select funds? Go figure.
Future uses? (1) Would be handy should we encounter some unexpected major expense - as wouldn't incur the tax cost pulling from the Traditional would. (2) Since Roths aren't subject to RMD, we'll be able to protect that tax-sheltered portion longer than otherwise.
PS: Goal is to run completely out of money the day before we die. :)

@MJG, no, no flipping of intent, or a dropped not, and I thank you much for your thoughtful analyses and data provision.
It all depends on how much diversification the word wants to mean.
I was going chiefly by my memory of
http://www.investopedia.com/articles/financial-theory/09/international-investing-diversification.asp and
http://usatoday30.usatoday.com/money/perfi/columnist/waggon/story/2011-12-01/euro-crisis-your-portfolio/51554946/1 and
http://usatoday30.usatoday.com/money/perfi/funds/2009-01-06-diversification-stock-fund-losses_N.htm (note the Doll quotes).
Perhaps in the future things will return to the rather less correlated statuses. But in retirement I have cut back on general international funds and bothering to research them while contrarily adding (small) some Matthews Asia and a couple of Japan funds.

http://www.sec.gov/Archives/edgar/data/35348/000003534814000086/Main.htm
Supplement to the
Fidelity Fifty®
August 29, 2014
Prospectus
Proposed Reorganization. The Board of Trustees of each of Fidelity Hastings Street Trust and Fidelity Capital Trust has unanimously approved an Agreement and Plan of Reorganization ("Agreement") between Fidelity Fifty® and Fidelity® Focused Stock Fund pursuant to which Fidelity Fifty® would be reorganized on a tax-free basis with and into Fidelity® Focused Stock Fund.
The Agreement provides for the transfer of all of the assets of Fidelity Fifty in exchange for shares of Fidelity Focused Stock Fund equal in value to the net assets of Fidelity Fifty and the assumption by Fidelity Focused Stock Fund of all of the liabilities of Fidelity Fifty. After the exchange, Fidelity Fifty will distribute the Fidelity Focused Stock Fund shares to its shareholders pro rata, in liquidation of Fidelity Fifty. As a result, shareholders of Fidelity Fifty will become shareholders of Fidelity Focused Stock Fund (these transactions are collectively referred to as the "Reorganization").
A Special Meeting (the "Meeting") of the Shareholders of Fidelity Fifty is expected to be held during the second quarter of 2015 and approval of the Agreement will be voted on at that time. A combined proxy statement and prospectus containing more information with respect to the Reorganization will be provided to shareholders of record of Fidelity Fifty in advance of the meeting.
If the Agreement is approved at the Meeting and certain conditions required by the Agreement are satisfied, the Reorganization is expected to take place on or about June 5, 2015. If shareholder approval of the Agreement is delayed due to failure to meet a quorum or otherwise, the Reorganization will become effective, if approved, as soon as practicable thereafter.
The foregoing is not a solicitation of any proxy. For a free copy of the Proxy Statement describing the Reorganization (and containing important information about fees, expenses and risk considerations) and a Prospectus for Fidelity Focused Stock Fund, please call 1-800-544-8544. The prospectus/proxy statement will also be available for free on the Securities and Exchange Commission's web site (www.sec.gov).

Not quite 70 so not quite your desired sample, but our Roths are the most aggressively invested, and indeed sometime over the winter I think I will swing more and more into DSENX.
Kids get low-debt house plus anything left over, but the goal is to spend it, not heir-leaving. Maybe college help for grandchildren.
Of course my travel abilities in 10-15y (if I am still alive) will be (even) more diminished than now.

Another Article on the topic:
"US producers have locked in higher prices through derivatives contracts. Noble Energy and Devon Energy have both hedged over three-quarters of their output for 2015.
Pioneer Natural Resources said it has options through 2016 covering two- thirds of its likely production. “We can produce down to $50 a barrel,” said Harold Hamm, from Continental Resources. The International Energy Agency said most of North Dakota’s vast Bakken field “remains profitable at or below $42 per barrel. The break-even price in McKenzie County, the most productive county in the state, is only $28 per barrel."
Saudis-risk-playing-with-fire-in-shale-price-showdown-as-crude-crashes

@linter: Your combination provides the following exposure: 50% HC, 22% Tech, and 13% Industrials. You may want to consider an equal mix of PRHSX and POAGX, which would be my preference. But if you want a higher octane, then you may consider a mix of PRHSX 5%, FBIOX 5% and POAGX 10%. In our portfolio, we own 10% positions in both PRHSX and POAGX.
Kevin

Makes sense to me. But also the more I look at it, the more I think that instead of 10/10 maybe the wisest thing is to go PRHSX (or similar: pjp?) 10% and POAGX 5%, especially if we are soon coming to a top or even if we aren't. Has there ever been a meaningful time period when POAGX outdid PRHSX either on the upside or lost less on the down? Heck, maybe the whole thing should go into PRHSX. Even if health corrects in a major way, I still don't see it correcting more than POAGX, right?

FYI: If a person can be too smart for his own good, as the aphorism goes, portfolio manager John Hussman may be feeling the agony of high intelligence right about now.
His latest shareholder newsletter, published Monday, describes the hard lessons he has learned related to his persistent bear market calls that have yet to materialize.
Regards,
Ted
http://www.thinkadvisor.com/2014/12/01/hussmans-returns-like-his-forecasts-are-dismal-ana?t=economy-markets&page_all=1

FYI: Look for good fundamentals, not hot streaks.
Regards,
Ted
http://news.morningstar.com/articlenet/article.aspx?id=675310

Hi @bee
Thank you. A good point; and yes, charts are very helpful to me, too.
Hopefully, the snow will not be too much this coming season; although winter is already waving its cold finger towards us............16 degrees tonight, from the clear skies; so no snow tonight here.
Take care,
Catch

"The bigger question might be at what point does an investor have too much in healthcare? "
When Health care investments start earning less than the Stock market as Whole, that would be a good time, if we live long enough to start seeing declines in Health Care costs, my guess...we won't

For me, this is where charts can be a handy tool to monitor smaller components (in this case HC) in a more diversified holding (VTI):
Since 1993, VGHCX has never trailed (in any significant way) VTI and the difference in performance might pay for that hernia operation from lifting too much snow (catch22) or too many 40 oz bud lights (TB):

GN'MAybe a good bet again.
Nice recent performance - intermediate government :

From Morningstar conversation Board
"How tiresome....portfolio again not updated" =
------ 85 Replys since 5/15/ 2013 ------
and yet, M* portfolio manager is still not completely
updated as of 7:30 pm est today 12/01/ 14 !!!!!!!!!!!!!!!!!! --- SLOTH----
Ralph

Hi Catch,
Thank you for your submittal.
Diversification is a risk mitigation and not a risk elimination tool. No risk translates to very meager rewards beyond inflation rates.
It is a nearly impossible chore to identify an equity or equity equivalent asset class that has a negative correlation coefficient compared to equities. Typically, Gold comes close with a correlation coefficient that hovers around 0.1. Some equity-like investment classes do have negative correlations for short periods. But any negative coefficient is ephemeral.
The Portfolio Visualizer (PV) website provides an excellent example. Here is a Link to a PV table that includes numerous asset classes from April, 2009 to the present:
http://www.portfoliovisualizer.com/asset-class-correlations
Note that only Bond entities show negative values. But also take note of the disparity in annual returns for these products. The risk/reward tradeoff almost always exists. Diversification is not quite a free lunch.
The trick is to decrease portfolio volatility a bunch (like a factor of two) while simultaneously retaining most (but not all) of the expected returns. That’s the name of the game with the Efficient Frontier. It is a doable task.
I’m sure you help your clients to achieve that target goal. Each individual investor must decide for himself how much return he is willing to forego for any given risk reduction. Only the investor knows his true risk tolerance. And even that changes with time and circumstances. Also that investor lies just a little, including to himself. It’s a tough nut.
Have a great Holiday season. Best Wishes.

Just this info and nothing more, at this time; relative to the most recent market melt:
Scroll down the page (from Jan. 30, 2009) a tiny bit and click on the graphic to enlarge.
Market returns, including 2008
Now, if an investor rode the market bottom through March of 2009 and didn't sell, well; I suspect they are happier now. But, for those who watched from October of 2007 and saw the wide gyrations of late 2007; too many lost their appetite as well as some money, as they bailed out.
IMHO, the only thing that saved anyone's monies was to be in investment grade bonds, including gov't. issues. The rest was highly correlated to the downside, just some worse than other equity.
In this case, IMHO = been there, done that; first person, a real view; not just "old" charts, graphs and reported stories to read.
Regards,
Catch

Hi Davidrmoran,
I too am not now a financial advisor client. I did use one in the early 1960s until I realized he had more incentives to churn my portfolio rather than increasing its value.
I recognize my personal experience is not universal, and the financial advisor industry can and does provide useful services for many customers. They educate and hold hands for those with weak stomachs or itchy trigger fingers. To paraphrase a Charlie Munger observation: As a money manager, he has experienced 50% drops 3 times in 50 years. The market is always 2 steps up and 1 step back. If you can't handle the 1 step back you shouldn't be in the market.
I suspect you suffered a dyslectic moment (it happens to me too) in your opening statement: “If you examine correlation history, and not just recent, global markets very often do not provide much diversification.” I remembered the data with just the opposite impact. So I checked to verify.
I used Vanguard as my primary historical data source, and updated their data summary and analysis with work I completed using Portfolio Visualizer.
Here is the Link to the Vanguard study titled “ Considerations for Investing in non-U.S. Equities”:
https://personal.vanguard.com/pdf/icriecr.pdf
The report was released in March, 2012. It concluded that although correlation coefficients have closed towards a perfect correlation of One value, diversification still mitigates individual investment class volatility and contributes towards end wealth. Vanguard concluded that a 20% to 40% foreign holding equity position had merit. Beyond the 40 % level the law of diminishing returns took hold, and in fact, acted to retard the portfolio.
Correlation coefficients are highly volatile entities. Just observe the noise like signal of the 1-year data and contrast that against the 10-year signal like data, both displayed in the Vanguard 15 page report. The data is given for many foreign Countries. It clearly demonstrates lower correlation coefficients in yesteryear with a definite tendency towards closure recently. In yesteryear, the correlations resided in the 0.4 to 0.6 range; today, those correlations are North of 0.8.
Since the Vanguard data ended a few years ago, I updated it with an analysis I made using the Portfolio Visualizer website source. Here is the Link to the Portfolio Visualizer Asset Correlation toolkit:
http://www.portfoliovisualizer.com/asset-correlations
When I said “global market diversification” I meant it in its most general sense to include all categories of asset class options. I updated the Vanguard study by examining the more recent correlation coefficients among the S&P 500 (VFINX), the total Bond market (BND), the FTSE (VEU), Emerging markets (VWO), and REITs (VNQ) as an incomplete set of primary holdings. I did mix mutual funds and ETFs since they reflect my current positions.
I had the Portfolio Visualizer compute correlation coefficients for 1, 3 and 5 years of the most recent data. Results bounced around, reflecting the unstable nature of correlations. The Bond asset retained a negative correlation against the equity holdings. The equity correlations were in the high range, very similar to the quoted Vanguard data sets with one exception. The 1-year Emerging markets correlation with the S&P 500 reverted backward to a 0.66 value.
Sorry for this detailed examination, but I felt your opening statement needed further clarification. Perhaps we are using different definitions for the short-term and the long-term. Timeframe disparities cause investment misunderstanding and need careful definition. Unfortunately, by selectively choosing timeframe, almost any position can be supported with a prudently screened data set. Statistics must always be fully scrutinized.
We agree that the article could have been more meticulously researched and more comprehensive. The cautionary “reader beware “ is warranted here.
Best Wishes.

@LLJB
You noted:
"But here's another question. I have a couple investments in start-up companies that happen to be healthcare related, medical devices. M*'s X-ray says I have 17.5% of my equity in healthcare, which I consider to be fairly overweight because healthcare is about 14% of large cap funds, a bit more for the S&P 500, only 9-12% of mid and small caps and more like 8.5% of market capitalization outside the U.S. So I'm anywhere from 20-100% overweight. But...that's without my start-ups. When I think about my exposure to healthcare, would you stick with M*'s numbers or would you add in the start-ups? I've always excluded them, because while the ultimate value of the company may be influenced by the equity markets generally and the healthcare sector more specifically, the real success or failure is almost totally dependent on whether they can successfully develop devices that are valuable in the marketplace. Essentially its an all or nothing proposition based on the skill of the inventors more than anything else."
>>>I suppose I would count money in startups as "other"; regardless of the sector.
About 6 weeks ago we purchased an IPO stock, DPLO (Diplomat Pharmacy); but this is an established company that went public, which is a whole different proposition. We do treat this holding as part of our healthcare sector percentage.
Your 17.5% in traditional healthcare would be fine by my standards at this time. But you, of course; are the one to determine this amount.
Are these startups at a venture capital stage and have not issued public stock?
Regards,
Catch