It is the volatility that spooks the markets. And when the oil price is high, big oil companies each spend tens of billions a year in capex. With low prices, they cut their capex bugets. Energy touches every aspect of the economy.

But the CAPE process does not permit discretion, really, right? It's just a system (algorithm).
Okay, so maybe it is sorta like Belichick...

@catch, it's a great observation that I have a few additional thoughts about having been a Patriots fan since the '70s and more recently a fan of Doubleline's Enhanced CAPE fund thanks to all the discussions here.
Both sports, especially football with so many guys playing during a game, and investments, with tens or hundreds of investments, are very complicated systems. The goal, I think, is to put pieces together that work extremely well TOGETHER rather than assembling a collection of 'star' performers that don't work as well together. Belichick has a system and he seems to be extremely good at taking lots of different players over the years and getting them to work together. Quite a few of these players aren't individual stars but he gets so much out of how he gets them to work together that they've been perennial contenders for many years. And, which I think is very important, he's very quick to part with anybody who causes or might cause disruption to the system because the value he gets out of cohesion is far greater than what he could ever get out of an individual star.
I think the same is probably true for fund managers but they have even more pieces to manage and they don't have the ability to 'teach' anything to their investments to get them to perform 'better' in their system. They do get it right sometimes, occasionally for long periods of time and I would suggest it's not easy to guess when they're going to lose it as Bill Miller did. In the case of the Doubleline funds, most of the performance is rules based and there's no reason to think a set of rules can't work extremely well for some period of time too. The bonds play an important role too and it seems both the math and the bonds have been working very well together since inception. Figuring out if and/or when the math won't work as well isn't easy but it's probably the key to knowing when it's time to move on.
In another more active example, the Primecap guys have had a team approach to their funds forever and the performance speaks for itself. Since the members of the team manage their pieces with a high degree of autonomy, at least according to what I've been able to read, it has to mean they've put team members together and taught them a system that has worked extremely well together for a very long time. As the team turns over, as it has some through the years, finding new team members who can employ the system and who mesh well with the other team members is probably the biggest source of their success. Since POAGX is my biggest single investment I'm hoping that continues for a long time.

The Beatles have already established the phrase of "Magical Mystery Tour", but the words appropriately describe some personal investing styles and active managed funds, IMHO.
Be it musical groups, sports teams, corporations, small private companies or your other choices; the stars do align from cosmic forces, a function of cyclical mathematics or some other energy that one may choose to attempt to define; or perhaps, just by chance; circumstances find certain people and events to discover one another and bind into a positive and overwhelming presence of intellect that is difficult for 99.99% of the world population to comprehend.
I suspect most folks here have and can define, to a point; a recollection of a sports team or musical group that "just had that superior edge", at least for a given time frame. Although I'm not a big time sports fan and don't fly U of Michigan or Michigan State flags at the house, I do pay attention. Superior head coaches and the selected staffs help build a successful program which results in attracting superior athletes to the sports team. These periods may run for many years and then get "clunked" for any number of reasons. The duration of success for many collegiate teams today is highly impacted by the money draw into professional sports, that finds superior college team players exiting after two years. These magic combinations of managers, staff and players may also be found in professional team sports. One must also consider the other side of the coin into the world of "can't get it right" for long time frames. The Detroit Lions football team comes to my mind for such a circumstance, and especially relative to the New England Patriots, eh?.
Well, anyway; you get the gist of my thinking, yes?; as related to active managed mutual funds.
Are these the circumstances behind the superior performance of DSEEX DSENX PIMIX PONDX (both classes noted for the purpose of one's purchase limits)?
Will this superior performance continue for 1, 2, 3, 5 or 10 more years? Your guess is as good as mine, I imagine.
Is the risk involved with the magic sauce formula of these funds over and above some threshold of personal investment risk tolerance? Only the individual investor can answer this question, yes? But, one can not argue against the skill of the use of the "magic sauce" by management, at this time, correct?, based upon performance.
We're investors and have exposure to many forms of investment risk beyond our control and vision. Tis the old adage of "get out of the kitchen, if you can't stand the heat".
Six month, after inception, slide report DSEEX / DSENX . You may find this document of interest, although the subject matter has been discussed here previously.
http://www.valuewalk.com/wp-content/uploads/2014/05/5-20-2014-CAPE-webcast-slides-Valuation-Its-All-Relative-mailing.pdf
Alright, the end of the early morning jabber from this house; and moving on to another cup of coffee before starting chores for this day.
Take care,
Catch

I own PONDX (PIMIX) and PTIAX.
I've avoided OSTIX, despite its admirable record/returns, as it seems to be junk-focused --- and with corporate credit-spreads so tight, that just is not a place I am personally interested in being right now. Besides the spreads being tight, junk does have a high correlation to equities. So if we enter turbulent times for equities, junk proxies will likely swoon in sympathy. Moreover, the Fed seems to be on a path to yield curve inversion.
Its true PTIAX currently emphasizes munis taxable and tax-free. OTOH, PIMIX has some EM exposure. In the case of both funds, I am relying on management to navigate through the fixed-income landscape. PTIAX in particular, due to its (relative) diminutive size, should be nimble enough to move in/out of sectors with some aplomb.
My current bond OEF strategy is to give prominet positions to PIMIX & PTIAX, with some 2dary emphasis to DBLTX and PMZDX. Those latter 2, both mortgage-centric, I view as more defensive than the former two.
Equities are not cheap. Bonds are not cheap. So which OEF of the 3 to choose may depend on which bond sector you view as "least worst" -- junk (OSTIX), munis (PTIAX) or EM (PONDX). Pick your poison!

No mention of NOBL and OUSA. An interesting analysis of how they parse their space, but all (I think, did not check in detail) are beaten by CAPE (yes, not notionally a div play per se).

@bee,
Unless I am missing your point, is it not that etf charts are nav or close, no reinvestment, while mfund $10k-growth charts show reinvestment of everything? Compares apple vs apple tree.
I always start w mfund chart (some SP500 fund, say), and then add whatever I want to analyze. That's the (only) way to see $10k growth of CAPE or AOA or DVY compared w OAKBX and TWEIX, for example.

I'm not confident the style dot means anything. I took sector etfs from a couple different companies and did an instant X-ray based on the sectors the fund currently holds. They all came out large blend and more on the growth side than value. I can't imagine any way the fund is on the border between small and mid cap ever, they'd have to be inverse market cap weighting the smallest X% of stocks in the sector or something crazy like that, and while I'm a little surprised at the growth leaning I guess I'd chalk it up to the difference between CAPE ratios and current statistics.

See
http://portfolios.morningstar.com/fund/summary?t=DSENX&region=usa&culture=en-US
Last year style was deemed LC b/w G and V, and this year MCV, deep value actually.
Is that because the lower SP500 holdings are typically 'smaller' companies?
M* category remains LV. Benchmark = Russell 1k Value.
fwiw, M* CAPE entry has almost no data. LV is category.

Andy, wouldn't you like to have lunch with her and CapeCod?

Ha! I think I'd prefer to be a fly on the wall - any closer, I could get buried by the fur flying ...

Andy, wouldn't you like to have lunch with her and CapeCod?

It would be very cool to see what CAPE held and when wrt being in and out of those 5

I'm more interested right now in timing overweighting small value. Using PVFIX as my barometer. If even PVFIX is going down, I'm not touching any other SV. While I will admit, like I've said before, small+energy is actually hitting PVFIX hard.
If it is one thing I've learnt it is to be patient. I did do some movement around S&P 500 in my IRAs. Overweighted international switching some money to target funds. Eliminated Mid Cap Value, and overweighted growth with TRP Inst LG Growth (symbol escapes me).
I have "Jennison Private Account" or some such fund. Thinking might be close to HACAX, but I don't like investing in funds without ticker.
In an IRA I'm overweighting using TRBCX. I still have some money in cash because my ANALysis says Mid/Small is rolling over. So not fully invested.
PS - 275 Pound New York ....WTF? Mail Chauvinist Pig OverTheHill (MCPO)? I really need to understand your Nick...

I'm not doing timing, and regardless, the arguable appeal of the RG_ set is that they are the opposite of megacap, being equal weighting of the SP500.
RPG wins over the last decade, while MGV lags even SP500. Interesting.
Over 5y it's RPV, with all the others bunched.
So maybe a timing strategy would be the way to go. If only we knew how to do that.
Over its last 4.5y, CAPE beats all.
For all these spans, the performance of the two MG_ is inferior.

FYI: (Click On Article title At Top Of Google Search) "A Different Perspective on Global Income"
As a teen, Nick Clay earned money painting landscapes and selling them to American tourists from a store in London’s Covent Garden. He toyed with going to art school but decided it would be more financially prudent to study economics and philosophy at the University of Leeds. Although economics helped him launch his investment career, critical thinking and logic are the basis for most of the work he does today.
Regards,
Ted
https://www.google.com/#q=A+Different+Perspective+on+Global+Income
M* Snapshot DEQAX:
http://www.morningstar.com/funds/XNAS/DEQAX/quote.html
Lipper Snapshot DEQAX:
http://www.marketwatch.com/investing/fund/deqax
DEQAX Ranks #36 In The (WS) Fund Category By U.S. News & World Report:
http://money.usnews.com/funds/mutual-funds/world-stock/dreyfus-global-equity-income-fund/deqax

It appears worthwhile to track RPG vs RPV vs SP500 over various intervals the last 11y, since the RP_ inception. (Growth wins over that span.)
Being equal-weight, they also beat the cited Vanguard ones over the 11y span.
I did not check shorter spans in detail, though it looks as though the Vanguard ones outperform for some and maybe most spans.
Then compare all with CAPE, the last 4.5y of its existence.

I take its CAPE portion to be simply rules-based, so not active the way my other actively managed funds are. I also wouldn't call CAPE black-box. The bond sauce, maybe.

Hi VintageFreak,
Thanks so much for your informative and direct comments. Your comments leave little uncertainty about your position on the matter. That.'s goodness.
I have read several articles from the Pension Partners organization. In general, I found that those articles offered sound albeit rather conventional investment advice. Since I consider myself an amateur investor I learn from most articles of that type.
Awhile ago, I did briefly consider the Pemsion Partners' fund offerings for inclusion in my portfolio. I quickly rejected the idea because of high costs and a limited performance record. Reviewing the current Morningstarr data on these funds makes me either a minor genius or just lucky. Lucky is the likely answer.
Those funds are a double barreled disaster with continuing high fees and poor performance.
But that doesn't mean their articles are worthless. It is not uncommon for folks to properly talk the talk, but fail to walk the walk. Execution and planning are two distinct functions. Good execution includes a timing component that escapes even the most intelligent investor. Investor returns are not a good measure of investor IQ.
So I will continue to read the Pension Partners articles while I continue to not invest in their mutual fund products. That's not totally wacky!
Thanks again for your contribution to this discussion.
Best Wishes

There is no way I'm going to be able to explain how to build regression models. What I tried to do was just offer the simplest model (100% CAPE + static bond return - static expenses).
I rattled off a few of the many simplifying assumptions inherent in this model. Since the model does not fit the actual performance figures, some of those assumptions must be wrong. One way to figure out which ones is to relax (weaken or remove) some of the assumptions and try fitting the resulting, more complex model to the data.
While it may look like you've got lots of data points to work with (each day's performance), there's lots of noise inherent in that data, especially since you've no real idea what's going on with the bond portion (more below). There are various standard filtering/smoothing techniques that can be tried to deal with this. The end result, while cleaner, would leave you with too sparse a data set to fit to most models. (Call that intuition from experience, I haven't worked the numbers.)
While DoubleLine may say that the bond portion has returned a fairly steady 2.87% annually, it's not clear whether that is net or gross, or what portion of the portfolio the bonds represent ("up to 100%"). One sees, e.g. at least 7% of the fund in cash (so add that to the model). One doesn't even need M* to see the cash. In the latest (semi) annual report, the fund had 7.8% invested in three MMFs (Blackrock Liquidity FedFund, Fidelity Institutional MM, Morgan Stanley Institutional).
Nor is the bond return all that steady. In that same semiannual report, the six month contribution of the bond portion is reported to be 2.3% (not annualized). Annualized, that's 4.65%, a far cry from 2.87%. How likely is it that they're fudging 2.87%? I'm sure that this is a reasonably accurate number. It's the "steady" part that's dubious. Not from a 100,000 foot level, i.e. the bond returns are not bouncing around like some EM bond funds. But it's hardly constant, certainly not close enough to build a model around that assumption.
Personally, I'm comfortable with my prior posts - that the fund should approximate CAPE (for better or worse; I didn't comment on how that might behave) less overhead (leveraging costs, management costs, administrative costs, trading costs, clawback costs) plus bond portfolio returns (as much or as little a black box as one regards all of DoubleLine's bond funds).
Read the fund reports - they give the contributions from the CAPE side and the bond side. Add these numbers, subtract the fund's ER, subtract a bit more for the stuff that isn't reflected in the ER, and you get the total return of the fund. That much is easy to confirm.

@davidrmoran
Here is a similar chart link to the one I posted, but this is for a 124 day/6 month time frame starting at the end of October, 2013.
Under the graphic, you will find a "slider" with the number"124 days". Place and hold the pointer/cursor (onto the 124 days area) with whatever electronic device you're using to "drag" this 6 month time frame to the right to view whatever 6 month time frame you choose to review. Hopefully, this graphic may help visualize the relationships of returns for CAPE, SPY and DSEEX.
Just another way to view, eh? My brain reacts positively to this type of display.
Agreed that this type of study is important to help one understand and "see" an investment path; and especially when it may affect a large portion of one's investment portfolio.
Hope this helps with your study.
http://stockcharts.com/freecharts/perf.php?CAPE,SPY,DSEEX&l=0&r=123&O=011000
Regards,
Catch