Tribute to Davis Swensen:


The Persistence and Predictability of Closed-EndFund Discounts - Burton G. Malkiel:

Unlike a regular (open-end) mutual fund, which sells new shares at net asset value (in some cases plus a sales charge) and also redeems shares at the net asset value (in some cases minus a redemption fee), a closed-end fund issues a fixed number of shares that then trade in the stock market just like an ordinary stock. Holders of shares who wish to liquidate must sell their shares to other investors. The shares are typically issued at net asset value (NAV) plus a fee to defray underwriting costs. Thus, the fund begins life selling at a premium. But typically, within months, the stock of the fund persistently sells at a discount to NAV.This persistent discount appears to violate the law of one price and constitutes the closed-end fund puzzle.

www-stat.wharton.upenn.edu/~steele/Courses/956/Resource/CEF/MalkielXu.pdf
Closed-End Fund (CEF) Investing: 14 Criteria For Better Yield:
https://wantfi.com/closed-end-fund-investing-guide.html

May 7th

Snippets of rules and regs.....
The below is from BOA, but typical of other banks:
--- In order to add or remove an owner and add, remove or update a beneficiary on your Bank of America account, you'll need to schedule an appointment in a financial center. When adding an owner, all account owners will need to be present at the appointment and bring a valid government-issued photo ID.
Example: Parent or parents want to add an adult daughter(s) or son(s) to their savings/checking account at their bank or credit union. A very good idea in the event of impairment or death of the parent/parents. Control of the account may be maintained for bill paying, etc.; by the daughter(s) or son(s). Account beneficiary(s) as well as a Power of Attorney is a separate matter for this discussion. SO.....mom, dad and adult son (who lives nearby) have to be present together to sign new documents. Later, let's add 1 daughter who lives 100 miles away. Mom, dad, son and daughter all have to be present to sign another new document. Still later, let's add daughter number 2 who lives 220 miles away. Mom, dad, son and daughter number 1, with daughter 2 all have to be present with a bank officer to create another new document.
I asked a bank officer I know about this process. I asked about which provisions for all of this may be relative to the Patriot Act. She only stated that some policies of the bank were internal to their operation and that other policies were "noted" as a "follow the Federal rules" aspect.
2005.....Patriot Act compliance, then and renewed/expanded since
Patriot Act and banking

I recall an old pilot’s saying to the effect that you never have “too much” runway or altitude. The runway behind you or the sky overhead won’t do you any good if trouble arises.
Suspect that’s somewhat akin to financial resources. The money you’ve already spent / squandered or the investment opportunities you’ve overlooked won’t be of help if an unforeseen need arises.
Than there’s this.

From the Gambler, Frank, the loan shark, played by John Goodman...(I cleaned up the language a bit)
"You get up two and a half million dollars, any arse in the world knows what to do: you get a house with a 25 year roof, an indestructible Jap-economy sheetbox, you put the rest into the system at three to five percent to pay your taxes and that’s your base, get me? That’s your fortress of freaking solitude. That puts you, for the rest of your life, at a level of freak you. Somebody wants you to do something, freak you. Boss pisses you off, freak you! Own your house. Have a couple bucks in the bank. Don’t drink."
I dunno...I know retired attorney's who chase the little white ball around all day...learn to paint, travel to lands that I have no interest in seeing....seems kinda boring to me, what's the point?
I think the real how much/wealthy are the one's who are healthy, their family is healthy and secure, they don't worry about affording groceries, live in safe neighborhood, low crime/dingbats/noise and they are happy working in jobs they enjoy and do not dread Monday mornings and have several weeks off during the year to recharge.
To each his own, I guess..and we have to play the card's we are dealt, no?
Good Health and Good Luck to all,
Baseball Fan

https://www.nasdaq.com/articles/how-much-money-does-it-take-to-be-wealthy-heres-what-americans-think-2021-05-14
Think maybe dependent of your lifestyles and what your goals are

Hello, @hank …
At the moment, my fund managers have me -6% in short positions. Cash and bonds.
57: bonds
39: stocks
"other:" 3
Net 4% in cash.

@Crash Thanks for clarifying. Yep - you did specify RPSIX. I get RPSIX and PRSIX turned around all the time. I don’t hold RPSIX and haven’t for over a year. FWIW Yahoo shows it holding 4% in their Global Dynamic Bond Fund - Class Z.
If I’m reading you correctly, you are net-short the equity markets. That’s remarkable considering RPSIX alone has a 14% weighting in their Equity and Income fund (PRFDX).
Might work. Nothing I’d be comfortable with. Good luck with that.
No disrespect to M*, but I haven’t used their analyzer in years. (Apparently, it’s widely used and respected among the community here.) I try instead to evaluate each fund in the portfolio on its own merits based on current holdings, charts, manager, investment style and expenses. Just different ways of attempting to determine potential risk & reward I guess.

Hello, @hank. I read all of that with interest. I don't own PRSIX. But I DO own RPSIX. That's where my remark about a possible typo comes in, above. i like your idea of using PRSIX as a comparison benchmark. I shall keep it in mind.
At the moment, my fund managers have me -6% in short positions. Cash and bonds.
57: bonds
39: stocks
"other:" 3
Net 4% in cash.
(Morningstar X-Ray.) ... So, I'm not trying to light the world on fire these days. I've been aiming for a traditional retiree's portfolio of 60 bonds and 40 stocks for years. My fund managers won't let me. :) Getting close, though. MFO has offered me a helluva financial education through the years.

...Surely I DO! RPSIX is that bond fund-of-funds with a smattering of stocks which I own. I don't own PRSIX. Maybe you just typo-d? Thanks for the explanation, @hank.

Crash,
Didn't intend to imply you owned TRRIX and / or PRSIX - just guesses. But it appears you do own the second. Good for you.
Charles Bolin does a nice job discussing those two funds along with other similar cartegory funds in this month’s Observer’s Commentary. Well worth a read: (“ One Stop Mutual Funds with Good Multi-Year Metrics … ”)
As I’ve noted in the past, I use PRSIX as my benchmark. It’s how I gage my own portfolio’s success (or lack thereof). The things I watch closely are: (1) daily and longer term volatility and (2) overall longer term performance. Frankly, not adhering to some type of benchmark would seem to me a good way to get oneself in a lot of trouble. As full disclosure, the fund also constitutes 7-8% of my holdings.
Here’s a description from TRP’s fund snapshot for PRSIX.
“Invests in a diversified portfolio typically consisting of about 40% stocks, 55% bonds, money market securities, and cash reserves; and 5% alternative investments, including through hedge funds. The manager can rebalance the investment mix, within defined ranges, based on the economic outlook, interest rates, and financial markets. The fund may invest up to 40% of its total assets in foreign stocks and bonds. “
From Lipper, here’s the current allocation for PRSIX.
44% Bonds
41% Stocks
9% Cash
6% Other
@Crash - I don’t think of PRSIX as a “bond fund-of-funds with a smattering of stocks.” (Others are free to disagree.) The “other” (listed at 6%) is likely the Blackstone hedge fund Price uses. So you’ve got 47% committed either to equities or a hedge fund.
To me the above represents a pretty aggressive market exposure for a 75 year-old individual - especially considering today’s lofty market valuations. :)

With so many workers returning to the office, not to mention Vanguard's continual expansion, Vanguard has got to house its employees somewhere.

Newly hired crew will work remotely until the new office opens in early 2022. Consistent with the existing virtual PAS service model, advisors in the Dallas office will engage with clients via phone, email, and videoconference.
The Dallas office will be Vanguard's 5th U.S. location. The firm was founded in Valley Forge, PA, in 1975 and has additional offices in Scottsdale, AZ (1994); Charlotte, NC (1997); and Washington, DC (2007).

But if average investors were hoping to be able to walk into an office, they may just have to keep on hoping.
https://www.inquirer.com/philly/blogs/inq-phillydeals/Vanguard-plans-new-offices-for-upscale-clients.html

A snippet of Morningstar's CTFAX analysis dated 04/30/2021.
"In 2018, when the current managers took over the fund, a new layer was added to the process that includes an assessment of whether the stock market is 'expensive' or 'normal.' This is determined by comparing the seven-year cyclically-adjusted earnings of the S&P 500 to the past 40 years. When this metric shows markets are in the most expensive quintile over that time period, it is deemed to be expensive. Under an expensive market, the fund’s equity allocation could shift from 10% to 90% (the fund’s historical range) but in 'normal' conditions the equity allocation is floored at 50%. This new approach should help the fund keep pace with its benchmark better when the stocks are rallying but not in their most expensive quintile. The trade-off is that it may not do as well at protecting against sudden sharp drawdowns when its equity allocation is at the floor."

@billr et al: Alger makes it tough to get into its mutual funds, especially the small and mid cap focus strategies managed by Amy Zhang. She helped make BCSIX a success before decamping for Alger in 2015. Just this year Alger opened an opaque (my editorial comment) MCG ETF managed by Ms Zhang. FRTY does not have much of a track record yet but it appears to have shot up out of the gate and then returned to earth like AOFAX. This month Alger announced a large cap ETF that will have 35 positions, but not a Zhang product. From what I garner on the website, the list of holdings is not revealed daily. Detailed holdings are provided as of 4/30/21, so one eventually gets to look under the hood. Active management by a proven growth manager in an easily traded format. Alger warns that the market price may not accurately reflect the value of the assets held on a given day. @fundfun: FRTY reports a P/E of around 38.

RPIEX. Overall performance this year is good. But still, the dividends are paltry. 51% in "cash?" They can't mean actual "cash" or MM? Could they???

Hi @Crash, Good question. As we’ve discussed before, funds that short stocks need to carry large cash balances. RPIEX may not short stocks (to any large degree anyway), but it does short bonds. That’s how it intends to make money during a period of rising interest rates (which everybody plus the alley cat assumes is going to happen). As with TMSRX, TRP is offering a fund here that might “buck the trend” should both equities and bonds tank.
Because it shorts bonds, I think we can assume RPIEX is required by SEC regs to maintain a high cash level. I don’t fully understand all this - but am learning along with the rest of us.
Here’s a SOURCE that addresses stock shorts. Pretty sure the same applies to bond shorts.
“Regulation T (or Reg T) was established by the Fed in order to regulate the way brokers lend to investors. It requires short trades to have 150% of the value of the position at the time the short is created and be held in a margin account. This 150% is made up of the full value, or 100% of the short plus an additional margin requirement of 50% or half the value of the position. In case you were wondering, the margin requirement for a long position is the same.
Here's an example: If you were to short a stock and the position had a value of $20,000, you would be required to have a total of $30,000 in the account to meet the requirements of Regulation T—$20,000 from the short sale plus the additional $10,000.”
I’ve considered this fund in the past. Never figured out how to work it into my asset allocation. However, I think you’ll find that TRP incorporates it into several of their allocation funds. It (in either investor or institutional class) comprises about 8% of PRSIX and 3.6% of TRRIX according to Yahoo. (Possibly, you own some RPIEX without realizing?)

Let's hope the timing is right on twice. The change from 10% equity from 50% is a significant departure. The managers must expect the Fed will not raise rates this year or next year in order to deal with inflation. No further details on the bond sectors the fund is invested in.

I've never heard of a fund company changing policy 2x in 1 year. Makes me question what management is doing. They probably should just create 2 funds, a conservative one with a 10% floor and a moderate one with with a 50% floor. Huge difference in how you use this fund. Their changing philosophies make it hard to know how it fits in your portfolio.

I charted COTZX against a more "static" conservative allocation fund (FCONX) as well as a VWINX. COTZX seems to have done a great job recently Identifying the March 2020 buying opportunity. I wonder if the fund can manage its high allocation to bonds with the same opportunity.
PV Link

Compare: 5 years from 05-13-2016 to 05-13-2021
PRDSX: 111%
BCSIX: 140%
DVSMX: 190%
AOFAX: 190%
Relax.......

Compare:
PRDSX 3 mo -6.95%
1 mo. -4.46
1 week. -3.77
YTD +1.53

@billr: I did just what you contemplate. When I turned 66 and first filed for SS, we had two kids at home, one 15, the other 7. The benefits for each continued until their graduation from HS. In the case of the younger one, contributions to the Michigan Education Savings Program (TIAA managed) and invested in Global Equities amounted to a nice pile of dough for tuition, etc. I did not explore taking SS earlier than 66, but as @msf points out, it might have worked for us. FWIIW, I continued to work until 70.

Thanks. Good to know it works. I'm still working (about 30 hrs per work) and spouse is still working as well and we're well over the $$ limits so I think I have to wait for FRA.
I'm reading the kitces.com article now that "msf" posted.

Additionally , I really liked the use of the word "only "
"You will pay tax on only 85 percent of your Social Security benefits, based on Internal Revenue Service (IRS) rules. If you:
file a federal tax return as an "individual" and your combined income* is
between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits.
more than $34,000, up to 85 percent of your benefits may be taxable.
file a joint return, and you and your spouse have a combined income* that is
between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits.
more than $44,000, up to 85 percent of your benefits may be taxable."
Thats a pretty low threshold of income .$44,000 of income between two people .
https://www.ssa.gov/benefits/retirement/planner/taxes.html