Hi Guys,
I resisted as long as I could, but so many of you contributed that I felt obligated to participate from peer pressure considerations alone.
My current senior holding is the Dodge and Cox Balanced (DODBX) mutual fund. I have held the fund without interruption for about 26 years. I still own it.
I have been more than pleased with its overall performance. During my holding period, DODBX delivered a 12.07 % annual average return with a 13.24 % volatility.
That performance beat expectations, especially when contrasted to the S&P 500 (an unfair comparison) which delivered a 10.05 % annual return with a volatility just north of 15 % for that same timeframe.
All values cited include reinvested dividends.
Dodge and Cox was not my first venture into the mutual fund industry. I bought Fidelity’s Magellan fund sometimes in 1984.
I primarily was encouraged to invest in mutual funds by Peter Lynch’s stellar record in earlier years. As a neophyte, I was chasing performance; I was swayed by hot money. That was one of my first lessons in the mutual fund industry. Performance is not persistent.
Peter Lynch’s outsized performance did not persist. In the years just before his retirement around 1990, he struggled to capture equity market rewards. Lynch suffered a two stage career. In the first part he generated scintillating outcomes; in the second part he regressed-to-the-mean. The magic was gone. I was with Magellan fund during the epic struggle phase.
I finally sold Magellan when Fidelity decided to fire Jeff Vinik, who was a second generation replacement for the Famous One, after Vinik made a poor timing decision by selling equity positions and going into the bond market. At that point, Fidelity had decided to honor a consistent fund investment policy rule that they claimed Vinik violated.
There’s a lesson there too since Vinik later developed a successful Hedge Fund management career while Fidelity failed to find and assign a superior manager to their Magellan product.
Best Wishes on April Fool’s Day.

Thanks.
I noted the following sections below:
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Model Portfolio Changes
We’re dropping commodities from our investment models.
...
We are dropping our exposure to commodities as an alternative asset class based on three factors: (1) It has become much more equity-like in its behavior, reducing its ability to hedge equity risks. (2) Costs and liquidity make it less desirable—we never liked its 85 basis-point operating expense. Nor did we like the three-day hold before cash distribution on sell orders. And (3) the expected return profile is significantly below equities because the return potential is tied more to the inflationary environment than equity market fundamentals.
We’re introducing a new tool for reducing volatility and capturing return for all of our portfolios.
New research by Robert Novy-Marx (2012) has identified a way to capture a dimension of expected returns related to profitability. Novy-Marx found that profitability, as measured by gross profits-to-assets, has roughly the same power as book-to-market in predicting the cross section of average returns. While this changes a very basic premise in the Fama/French value model, controlling for profitability dramatically increases the performance of value strategies, especially among the largest, most liquid stocks. And controlling for book-to-market ratios improves the performance of profitability strategies.
Another way of explaining this is that strategies based on profitability are growth strategies that also provide an excellent hedge for value strategies. Adding profitability on top of a value strategy reduces the strategies’ overall volatility. According to Novy-Marx, both profitability and value strategies generally performed well over the sample time periods, but both had significant periods in which they lost money. However, profitability generally performed well in the periods when value performed poorly, and vice versa. As a result, the mixed profitability-value strategy never experienced a losing five-year period (data set July 1963 – December 2010).
Dimensional Funds has aided in this new research and has identified a way to capture a dimension of expected returns related to profitability. Dimensional has made major advances with research in this area and has found a robust proxy that can be applied to portfolio management.
We have stayed in tune with this research and the recent announcements from Dimensional Funds. We’re excited to bring this new key ingredient to our clients and will be incorporating the profitability strategy into our AssetBuilder portfolios.
We will be introducing model portfolios in distribution.
For most of our lives we accumulate assets. But when we retire, our portfolios go into distribution, distributing interest, dividends and assets as needed. Research has shown that we can make our money (and income) last longer by annuitizing a portion of our assets
Annuitized income doesn’t increase the yield of a portfolio. It defines a guaranteed income stream and works to reduce the demand on the remaining portfolio for distributions in the first years of retirement. That, in turn, increases the odds of portfolio survival7. If you need a relatively high annual withdrawal and don’t have a pension, this solution may work for you. We believe this is a better solution for the income problem than reaching for higher yields and taking higher risks.

a. MAPTX ,OARIX and PCVAX. MAPTX is a money maker and the other 2 are the best choices in 401 where bulk of retirement monies are. Most of the other funds in 401 have been replaced in the last 5 years with for the mostly with better choices.
b. no idea what I will change or do this year much less 10 years out. Right now flexible funds such as FPACX, WPOIX ,IVWIX and MFLDX along with small/mid caps, infrastructure, EM Markets and health care funds dominate our portfolios.
Art

Hmmm ...
Artisan Small Cap Value (ARTVX) - since '97 or '98. I sold my shares of Artisan Small Cap (ARTSX) pretty much as soon as SCV opened and transferred the money. Likewise, Artisan International Value (ARTKX) - since '02, when I did the same thing with my Artisan International (ARTIX) holdings.
From which I recall that I really do rather prefer value to growth and from which I've concluded that active management can work even though there are going to be stretches of explicable or inexplicable weakness.
I suspect that my cash management accounts (RPHYX and RPSIX) are the most secure. Beyond that, it's hard to say. In a decade I'll be able to start thinking about ratcheting back on work which might suggest a more conservative allocation with fewer stock funds. But it's also possible that in a decade stock valuations will be compelling, so ...
Ambivalently,
David
p.s. wasn't thinking about the retirement account. That would likely be Fidelity Low-Priced Stock (FLPSX), around '92 or '93.

Reply to @Ted: Hi Ted:
Thanks in advance. I have been doing DCA inti PRHSX from 2009 or so. At 60 yo, what should be the final weightage (currently at 8%) to aim for?(in a moderate risk portfolio per MF)? No need to withdraw for some years after retirement

FYI:
Regards,
Ted
http://www.investmentnews.com/article/20130328/FREE/130329929?template=printart

2013 1st Q wrap:Four + years into retirement. Retirement accounts breakdown: 30% cash,lucky to get 1.47% in G'ment TSP. 20% international equity led by MSMLX,MAPIX,WAEMX(closed),MAPTX. 19% small growth led by WSCVX (closed) SATMX. 15% core led by BRUFX, FPACX,MFLDX. 8% bond led by RPHYX, DLENX. 5.5% precious metals TGLDX ,DWGOX. And 2% real estate HLPPX. Pretty close to a classic 60/40 portfolio considering the cash yield with no risk from the Gov't TSP G fund.Slowly drawing the cash portion into equities,but in retirement it's no time to go all in!

I am going to devote a portion of retirement monies to the Market Leadership Strategy that Skeeter has mentioned in the past. Looks like Microcap may be the next category to move to a "buy". Buffalo Microcap(BUFOX) is my choice if I were to buy today. So I will do my research and have a few other funds picked out. Recently as part of this strategy I have added to Aston / Fairpoint Mid Cap(CHTTX) for the mid cap value and I have the small cap value covered with Allianz Small Cap Value(PCVAX).
Now that Fidelity has many LW funds available that has significantly added to my research of funds to add to my watch list of funds to buy. May need to rethink some of my existing funds for replacement.
Added Vanguard Health Care(VGHCX) to the accounts at Vanguard this year.
Anyone have thoughts on IVA Worldwide I(IVWIX)? If I want a new fund in my ROTH this is the one I would sell/reduce.
I have wondered of late what type of funds do people put in ROTH's vs IRA's or is that not a consideration for you? My thought would be to put the riskier/more potential growth, such as Wasatch EM Small Cap(WAEMX), in the ROTH due to the no tax policy on earnings.
Art
http://investwithanedge.com/leadership-strategy

FYI:
Regards,
Ted
http://www.marketwatch.com/Story/story/print?guid=5005AE6C-9269-11E2-8A9D-002128040CF6

Hey you guy's while reading you for a minute I thought I was listening to CNBC's Fast Money.
But go ahead have a lot of fun. I'm too near retirement age..... although I can still drink beer.
prinx

I have not a clue as to what dollar value or percentage of individual investments are reflected in any of the data over a given time period; but I will also note, at least relative to the dollar cost averaging aspect for individual investors that I know and have known many folks over a 20 year period who participate in retirement plans (401k, 403b, 457, etc.) who place monies into these plans only to the point of obtaining a full match amount from the employer; and then do not contribute more.
One would suspect that at least some of the data outcomes are skewed by dollar cost averaging related to these folks and that contributions may no longer be in place after the mid-year point of a given year.
Past the study and the broad implications one way or another; it does not affect investment behavior at this house.
Thanks for the post, Mark; and to the followup comments from all.
Hi-ho, hi-ho.......back to work I go.
Regards,
Catch

David, you've noted on this site the amount of research T. Rowe Price does on asset allocation (for example, with regard to its retirement-date funds, etc.). Is the amount and quality of their work something you can attest to based on, say, their marketing literature, or based on interviews with others or first-hand knowledge of the firm?
Thanks.
DS

Hi Guys,
Some things get better with age; apparently that rule doesn’t apply to the average investors. We continually and consistently underperform market equity returns by a substantial margin.
In its annual QAIB (Quantitative Analysis of Investor Behavior) report, DALBAR reaffirms its long standing finding that the average private equity investor only captures a small fraction of market rewards because of poorly timed entry and ext points. The recorded gap is really staggering and compromises end retirement wealth.
The annual 2012 investor returns keep this terrible record intact. To paraphrase President Ronald Reagan “there we go again”.
The 2013 DALBAR report is being publicly released momentarily. Here is a Link to a brief summary from the NY Times:
http://www.nytimes.com/interactive/2013/03/10/business/Buying-High-and-Selling-Low.html?_r=0
The graphic depicted is the 20-year rolling average comparison between the individual investor and the S&P 500 index benchmark returns. It tells a sad story.
Year after year, the average investor suffers the agony of defeat. The evidence is overwhelming. Fortunately, MFO participants are likely all residents of Lake Wobegon so the DALBAR data set does not represent us. Sure.
Note also how the S&P 500 rolling average has been decaying over the last decade. Past returns are not indicative of future rewards. Near term equity returns are likely to be very muted because of demographics and the political climate worldwide.
There are a few easy lessons embedded in these data.
Best Regards.

Reply to @Sven:
So far this year, EM equities have been very disappointing. ABEMX has a consistent record of outperforming the EM index with lower volatility, but has recently closed to new investors. THDIX has been an excellent performer since inception, and its composition has consistently varied from VWO/EEM. ABNIX currently has a significant exposure to SC/MC EM equities, currently 31%, but does not have a mandate to do so. Since the current management team took over on 10/23/2009, ABNIX has performed well with below category average volatility. All three of these funds have had attractive Upside/Downside capture ratios.
I bought AEMSX in my Fidelity retirement account when it was available for a $500 minimum and an initial $75 TF. After the initial purchase, I added to my position for a $5 fee per AIP purchase. I then requested that Fidelity convert my AEMSX to the lower cost ABEMX, which they did after obtaining approval from Aberdeen. Even though AEMSX/ABEMX are reportedly closed to new investors, they appear to be still available to new investors according to the Fidelity web site.
THDIX continues to be available in Fidelity retirement accounts for a $500 minimum and an initial $75 TF.
I bought ABNIX in my Firstrade retirement account, where it is still available for a $500 minimum and a $9.95 transaction fee.
Kevin

Howdy,
I concur with most in that they will NOT tax the Roth IRAs. Oh, they're a filthy scumbag lot, but they won't screw us that way because it would also screw themselves. In all honesty, they most often do things in a 'grandfathered' manner. If they decided to tax Roth IRA's, they will do it going forward with new contributions and on existing monies.
However, as MJG said, you cannot EVER try to anticipate the tax code and I concur. You can't do it so why try? What you do is follow, in this case, your wife's suggestions and do both, or all three, or better yet, all four. . . or more. By this I mean, you do your best to have a Roth IRA, and 401K, a traditional IRA, a 457 or 403B, a DB pension, savings, home equity, outside income, etc., etc., etc. You do it all. You do every possible variation on a retirement theme.
The reason why is to give yourself maximum flexibility when it comes time to withdraw REGARDLESS of the then current tax structure.
Years back I wrote about your Retirement Stool using the analogy of a foot stool. The more legs under your stool, the more sturdy it is. How many legs do you have? Can you add another leg or two? Can any of them be strengthened. Count everything.
good luck,
peace,
rono

Society takes time to digest seemingly unfair power moves, like say.....taking away people's corporate pensions. I don't trust the clowns on the hill just like I don't trust these CEOs trying to cut low-level staff while at the same time allowing themselves $5 million salary raises.
Like "pigs at the trough", politicians will raid your retirement plan one day - if they find enough excuses to do so. Don't think they aren't watching Cyprus like hawks.

I would take a look at one of the Steelpath funds, which were recently acquired by Oppenheimer. We own a position in MLPZX, but I would also look at MLPTX and MLPOX. All of these funds are available with no minimum in Fidelity retirement accounts with a $75 transaction fee for the initial purchase. MLPNX appears to have a prospectus minimum of $1M at Fidelity.
Kevin

I am a big believer in the compound effect and that the greatest wealth creating tool is the tax free compounding of one's capital over time. However, had I not been an active (very active) trader of mutual funds, especially in the late 80s and 90s when my account was much smaller, I would be looking at a very bleak retirement as I would have a much, much smaller nest egg.

Reply to @Charles: Got Cortina idea from one of your charts in an earlier post.THBVX was in the latest category kings in WSJ.Both available in Fidelity Retirement Accts with very low minimums.Started a position in Cortina and looking at Thompson on weakness.Both very small asset bases.Nimble?
CRSVX
THBVX

Hi all,
After giving some thought to the title I chose Until We Meet Again after a song that was sung by Roy Rogers & Dale Evans which was a childhood TV program I use to watch. I am not saying good by … but, what I am saying is that to do good commentary and quality post takes some time to put together. I try too to add some color to my post so others find some humor in reading them form some of my life’s true events. I’ve got a lot on my plate coming in the near future as you will see by reading on.
I’ll be retiring soon and have started my retirement celebration which I plan to continue for a good year. Part of the celebration is to return to golf more frequently than I have the past couple of years, restore a house in Charlotte that was built in 1938 and has been in my family since the mid sixties. The home was built by the late Joseph W. Ervin and wife Susan Graham. Joe was a former US Congressman and member of the 79th Congress who died on December 25, 1945 in Washington, DC. His brother, Sam Ervin, Jr. was elected to fill the vacancy caused by his brother’s death and sworn in on my birthday. This is how Sam first got to Washington. He later was elected to the US Senate and chaired the Water Gate Hearings where Richard Nixon resigned the Presidency.
Although, I am not related to the Ervin’s Joe and Susan had no children and their former home, purchased by my late parents, has been my home off-and-on since I was a teenager. Today, it is my primary residence and the home is indeed in need of a make over as its last renovation was done in 1990 during my father’s retirement. Giving this home a make over is part of my retirement celebration and hopefully in doing so it will get me through another twenty years or so as my homestead. It was named Ervin House in celebration of its neighborhood centennial in 2003 which was one of Charlotte’s original street car era neighborhoods. How many people can live in a home that has an Ervin family legacy? Being a born and bread North Carolinian this is indeed something special.
Another part of my retirement celebration is to do an update to my family’s coastal property that was built back in 1985 when my father retired. Although it is in a live able condition it needs some updating for it to become a home of warmth that one would find enjoyable to live in during extended visits.
And I did mention golf. Years back, in the 80’s, I was a weekend pro shop worker much like Ted is now. I did it for the golf and to be around the people in golf and not so much for the money although I did get paid well for what I did and then to have the free golf privileges at Kiawah Island. I usually played about 72 holes a week, or more, and carried a low single digit handicap. My job was to meet my company’s corporate jet when it flew in and to make sure all had a good time while they were in Charleston. Golf was a good part of this while they were in town and they seemed to always be looking for an additional player they felt, well they could “scalp.” Let me just say my old neighborhood buddy Leon Crump would have had a field day with these guys as I usually netted more in winnings than I had in losses. You also have know, its part of the game to lose some along the way otherwise you don’t get invited back with an opportunity to pick more form their pockets. You have to make them feel you just got lucky. Hell, little did they know, I was taught by the best, Clayton Heafner himself, in an old school way how to putt. And, even today this is the strength in my game. So my goal is to get my game back to where it was over the next year or so and in this way I can have some decent fun at the course. Maybe even net more than I lose. Anyway, that is my thinking … but, I’ve got to work on my game in the early evenings now that daylight savings time is here plus all of the above and some other stuff too.
I say again … Happy Trails To You Until We Meet Again. I’ll be lurking as some say.
Skeeter