Hi Guys,
Thanks one and all for a very stimulating and detailed discussion exchange.
Forecasting equity returns is an extremely challenging assignment. Separating "The Signal and the Noise"' is not easy work. The Signal and the Noise is an excellent book authored by Nate Silver. Here is a Link that accesses the full text:
http://www.stavochka.com/files/Nate_Silver_The_Signal_and_the_Noise.pdf
Developing some method to reasonably predict upcoming market returns from numerous historical data correlation candidates has escaped just about everyone, including industry giants like Vanguard.
Here is a Link to a rather exhaustive and comprehensive attempt reported by Vanguard that explored a wide array of potential correlating parameters:
https://personal.vanguard.com/pdf/s338.pdf
Vanguard does honest work. All correlation attempts failed, including the use of last year's returns to project next year's equity rewards. See Figure 2 in the referenced document. I suppose one response to these forecasting failures is to accept prediction defeat and simply stay invested for the long haul.
Best Wishes for a happy and prosperous New Year.

Not much inflation fighting happening with STPZ; but if one can handle the big swings and have a feel for the markets; go play with the big dog/cousin LTPZ. Have played in this area before and escaped with a decent return, but one has to pay close attention. One could make a living playing this area.
http://stockcharts.com/freecharts/perf.php?stpz,ltpz

I am bullish for the upcoming year, but have just sold a patch of DSENX (post-runup) in a Roth just to be able to think clearly about cash needs (dau wedding) next fall and possible dip buying prior (CAPE vs NOBL vs QUAL vs DGRO).
Also about $200k <4% heloc with interesting nondeductibility looming. Do I care whether it is 3.75% deductible, or a bit higher?
Am tracking SOI to buy in Jan, maybe.
Will be running ORP several times w new tax situations to see about where to fund non-SS cashflow for the year too.

FYI: It is that time of year, when the financial industry engages in its annual ritual of making forecasts, which is usually little more than the prelude to looking foolish. Titles like “Outlook for 2018, “What to expect in the new year,” or some variation thereof litter the landscape. Over the years, it has been my distinct privilege (and truth be told, pleasure) to point out how silly this process is.
Regards,
Ted
https://www.bloomberg.com/view/articles/2017-12-15/wall-street-wises-up-to-the-folly-of-forecasting

Of the 128 alternative & mixed asset funds launched this year, here are the top performers in each: Arabesque Systematic USA (ASUIX), Measured Risk Strategy I (MRPIX), Gotham Master Long (GMLFX), GMO Climate Change III (GCCHX), DoubleLine Shiller Enhanced International CAPE I (DSEUX), Driehaus Multi-Asset Growth Economies (DMAGX) ...

Is this an error, or what the heck happened? DSENX down -6.45%. That's what I see on my Schwab account.

Couldn't resist the visual look to satisfy my curious brain. I also have been watching as to or if the "value" area is going to receive a more aggressive bump up.....and there is a bit here now.
Nov. 2013 to date:
http://stockcharts.com/freecharts/perf.php?DSEEX,CAPE,JKF,JKE&n=1023&O=011000
Last 6 months to date:
http://stockcharts.com/freecharts/perf.php?DSEEX,CAPE,JKF,JKE&p=3&O=011000

Interesting. If you graph CAPE $10k growth over 4/3/2/1y/ytd you could argue CAPE tracks JKF (meaning its wiggles) rather more closely than JKE --- except for the last year, when CAPE has moved more like JKE. Fwiw.

@LLJB - nice description. I agree that the writer probably doesn't understand the fund or the index. I suspect that cause of the mischaracterization can be laid at M*'s feet. They're the ones classifying this fund (and the CAPE ETN) as LCV.
There's another part of the description that's wrong, though it seems almost everyone gets that wrong. The CAPE index does not pick among the 10 S&P sectors. For one thing, the index added real estate, which is not an S&P sector, but (per prospectus) comes the Dow Jones U.S. Real Estate Index.
There are 10 S&P sectors, so that would seem to add up to a pool of 11 sectors. But the index combines two S&P sectors (technology and telecom) into one.
Here's a table of those 10 "real" S&P sectors along with dated info on their CAPE ratios.
http://siblisresearch.com/data/cape-ratios-by-sector/

Another guy writing stuff that's misleading, probably because he doesn't understand it. Do an instant X-ray on the 4 sector etfs in the fund and you'll find out it is NOT a value fund. I haven't tried to test that over its entire history but I'd be surprised if it's ever been a value fund based on M*'s definitions and how other funds are classified. When I've done that in the past it has always ended up as a growth fund or a blend fund close to the border with growth. People naturally think investing in the 4 lowest CAPE sectors (excluding whichever one of the "cheapest" 5 has the worst momentum) is a value approach and maybe it is, but that's not what this fund is doing. It's investing in 4 of the cheapest 5 based on the CAPE ratio relative to it's own history. So if technology has traded at an average CAPE ratio of 400 over the last 10 or 20 years (sorry, can't remember the precise details) and its only trading at a CAPE ratio of 300 today while Energy is trading at 25 today but has historically traded at 20, then technology is the "cheaper" sector in ranking terms for determining the funds investments.
The approach has worked very well and may continue to work but it has not led to a "value" portfolio based on the definitions M* uses to categorize other funds, it's not necessarily invested in sectors with the lowest traditional CAPE value and it's the traditional CAPE value that has proven more predictive of future (long-term) performance than most other things.
Outperforming value funds when it has "growth" investments is meaningless even if people keep writing about the fund that way. Buyer beware!! For transparency sake I do own the fund and I like it. I just don't appreciate the way it tends to be written about because I think it's likely to make people believe they're getting something that they really aren't.

FYI: The DoubleLine Shiller Enhanced CAPE Fund doesn’t directly own stocks, yet is in the top 1% of the large-value equity fund category
Regards,
Ted
https://www.marketwatch.com/story/doubleline-fund-doubles-the-returns-of-rivals-by-uncovering-a-curious-strategy-2017-11-30/print
M* Snapshot DSENX:
http://www.morningstar.com/funds/xnas/dsenx/quote.html
Lipper Snapshot DSENX:
https://www.marketwatch.com/investing/fund/dsenx
DSENX Is Unranked In The (LCV) Fund Category By U.S. News & World Report:
https://money.usnews.com/funds/mutual-funds/large-value/doubleline-shiller-enhanced-cape/dsenx

FYI: (Click On Article Title At Top Of Google Search)
Millions of Fidelity Investment's retail customers were unable to access their online accounts on Wednesday morning due to an internal technical error, according to CNBC and other news outlets, but the outage did not appear to affect advisers using the firm's institutional online trading and wealth management platform, WealthScape.
Regards,
Ted
https://www.google.com/search?source=hp&amp;ei=BM4fWqKGJsnF_QawxYywBA&amp;q=Fidelity+outage+sidelines+retail+customers,+but+advisers+not+affected&amp;oq=Fidelity+outage+sidelines+retail+customers,+but+advisers+not+affected&amp;gs_l=psy-ab.3...3625.3625.0.5284.3.2.0.0.0.0.77.77.1.2.0....0...1c.2.64.psy-ab..1.1.83.6..35i39k1.83.k8NRAZNeTR4

Also what do you think of Matthews? I used to own 2 of their funds. Now, none. I now think of them as overpriced and under achieving. Just me saying.....

If someone wants to weight the Asian region on their own, I personally think Matthews funds are the best way to do that. I own SFGIX though, which has a heavy dose of Asia, both developed and EM. GPGOX also is quite heavy Asia. In fact, M* xray has my portfolio over-weight Asia in the foreign sector. These fund managers are a bit smarter then me, so I don't think I need a sector or region fund. To me it dilutes their (my fund managers) expertise. Hell, that's why I'm paying them. :)
All that (regional weighting) said though, I am strongly considering combining my percentage in DSENX fund with DLEUX to get a bit more of the CAPE value theme with developed European. Same process, more value(?) That's my thinking anyway.

" - And yes, I have reported (my "technique") that one who purchases DoubleLine NTF / higher-ER class shares at Fido can get them reclassified for free at DoubleLine to the lower-ER class once above a certain $ amount.
- This last procedure has nothing to do with anything else."
You do sound emphatic that this has nothing to do with anything else, including BCOIX.
"And yes, I am saying that Fido says one cannot buy BCOIX for other than a $50 TF, and moreover with a 25k min except for self retirement accounts, where the min is $500. "
I'll admit that I haven't asked Fidelity about this Baird fund specifically, but I have verified in the past that they'll let you convert Baird funds with no TF.
"As for transferring TF fund shares from one brokerage to another, I don't know much about that, never having bought (rightly or wrongly) TF fund shares. I don't know anything about other ways to escape TFs. I think someone here posted that the receiving brokerage sometimes pays one's fees of that sort. Certainly some give plain bonuses for transferring, though not Fidelity except in the form of lower-commission or some free trades. ML otoh pays serious moneys for transferring, depending on amounts"
As I've posted before, the fact that Fidelity does not currently have a cash offer on the table does not mean that it has not done so in the past or will not do so again in the future.
I have had positions in TF funds at Fidelity that I opened at no cost at another brokerage. When I closed that other account, I moved all the positions in kind to Fidelity. In fact, I opened a half dozen funds for free specifically to create open positions at Fidelity should I later choose to invest more than a small amount in them. Of course they were carefully selected funds; I wasn't going to open up dozens of junk funds "just in case".
I've also opened funds directly with the distributor when they were closed at brokerages, for the sole purpose of transferring them to my brokerage account. That can often be an easier process than going through a brokerage.
It's not that I'm insensitive to cost. It's that I'm willing to put in little sweat equity to get something that's both cheap and ultimately convenient. I'm also willing to pay a few bucks for convenience, but not much. Certainly not $75 - I'll do that to get cheaper shares (institutional TF vs. 12b-1 NTF); I won't pay $75 for convenience alone.
Everyone has their own threshold. Yours sounds like $0. But just in case it's a little higher, you might want to check out your ML account's fee schedule for purchases and transfers. Just follow this link (you'll have to log in):
https://olui2.fs.ml.com/RelationshipPricing/CommissionsAndFees.aspx

? Not quite following the misapprehension, but:
- Yes, I am saying that Fido says one cannot buy DODIX for other than a $75 TF.
- And yes, I am saying that Fido says one cannot buy BCOIX for other than a $50 TF, and moreover with a 25k min except for self retirement accounts, where the min is $500.
- No, I have had nothing other in mind all along.
- And yes, I have reported (my "technique") that one who purchases DoubleLine NTF / higher-ER class shares at Fido can get them reclassified for free at DoubleLine to the lower-ER class once above a certain $ amount.
- This last procedure has nothing to do with anything else.
As for transferring TF fund shares from one brokerage to another, I don't know much about that, never having bought (rightly or wrongly) TF fund shares. I don't know anything about other ways to escape TFs. I think someone here posted that the receiving brokerage sometimes pays one's fees of that sort. Certainly some give plain bonuses for transferring, though not Fidelity except in the form of lower-commission or some free trades. ML otoh pays serious moneys for transferring, depending on amounts.
HTH.

Hi Guys,
Diversification is easy to say, simple to do, but tends to sacrifice returns for reduced volatility. If you change your diversification category allocations dependent on perceived economic and/or market conditions that is a thinly disguised form of timing. It is a doable strategy but does require insights to be successful that escape most investors, and that includes professionals.
Class correlations do change as a function of time, but are just as hard to project as selecting winning stocks. It's never easy and simple. The Portfolio Visualizer site provides class returns and correlation data for various input timeframes. Here is the Link to that useful data source:
https://www.portfoliovisualizer.com/asset-class-correlations
Good luck and good timing if you deploy this strategy for your own portfolio.
Best Wishes

It's not a bad choice but he dismissed a lot of possibilities without much consideration. It sounds like he started with the answer and needed to write a 300 word article (or whatever it is) to get there. If you've got 15 years then Schiller's CAPE ratio is pretty much the best predictor that's been found and that wouldn't really lead you to US stocks at this point.

About 15% of my self managed portfolio has been in DSENX. I decided to start moving some of that money to the International (Europe) fund, DLEUX. I started the process last week.
DSENX has made me a believer in the Shiller CAPE method. I've done well with the domestic fund. Though I told myself I would give the newer fund some time to prove itself, I decided to jump in sooner than later. The CAPE value method seems to work, at least when we are in a value market. My thought here is there is more value right now in Europe than the U.S. I plan to keep moving from domestic CAPE to the European model until the 2 are closer to 50:50.
FWIW, from their website, the 4 sectors DLEUX is invested in as of the end of the 3rd Q.
Consumer Discretionary
Consumer Staples
Health Care
Utilities

Disadvantage of a VG Brokerage account:
Can NOT use the 'directed dividends' (d/d) option, which is currently available only to "regular" (i.e., non-brokerage) accounts.
If you plan it out, the d/d tremendously!!! simplifies handling of IRA RMD's.
The supposed advantages of VG brokerage escape me, and their repeated promotion of the "brokerage option" - without mentioning the loss of d/d - troubles me.
IMHO, only a fool would convert to brokerage.

@davidmoran, two things:
(1) Some investors have had Pim multisector CEFs in general close to hair trigger for a few months now, because the monthly UNII/earnings reports have been showing lower distribution coverage - and this month's (which came out on Monday) was somewhat more brutal, with UNII falling quite a bit for several funds. PCI's been one that's been hit the hardest on that score. There's been a nice runup since the first very short-lived selling bout earlier that was an apparent response to one of those earlier data disclosures, so there'd prob'ly been some short-term valuation concern building after the recent runup.
(2) There was a really silly article on Seeking Alpha (which if I recall right, also came out on Monday) by some "advisor" who demonstrated in the piece that he doesn't understand CEFs or Pimco's strategies. It cast a shadow on PCI specifically. Appeared it was widely read, so it may have had an influence.
So the selloff started w/PCI but has since spread most of the way across the Pimco multi landscape, presumably because most have had lower distro coverage from income lately. (The average CEF investor is an individual investor who's in 'em for the income, so selloffs based on fears of income cuts are common.)
However, given the continuing, large NAV gains of '17, quite a bit higher than the sum of the distributions, there shouldn't be much doubt that most or all of the funds can meet the stated distributions for quite a while before there's a real question about it. They've likely got good cap gains on non-agency mortgages and other assets they can bring into the distribution stream if and when they want.
A lot of this stuff gets discussed on the M* CEF board.
-- AJ
P.S. The selloff started in the only Pimco multisector then trading at a discount.