Howdy,
Got a few moments right now as I have had to escape the foul Michigan weather today; having a strong northwest wind pushing the rain at a temp of 44 degrees.
Poop or get off the pot; for if you linger much longer your legs will lose blood flow and when you attempt to stand, you will indeed fall down !
Mr. Catch is a fairly patient person; and will not dismiss that the economic problems that came forth 3 years ago are very complex in their nature and will/do require correct and a slow process for repair of the problem(s). But, far too many folks in power positions and those who advise the same chased after misguided thinking for these same 3 years. I must presume misguided thinking that everything would self heal from the aspect of the state of the condition of the "public" and the massive jobs losses; and that from this, the president and those associated found no problem in the pursuit of a health care plan, and a very nasty cap and trade bill (which is dead for the time) and we should not forget the "green" programs and legislations thinking. Am I being nasty to these politicians for pushing these social programs, in the light of what they could not see crashing down around them? Yes, I am. I would not care to which political party was in power and still chose to travel into some other magical path of this or that. Heck, G.W. Bush wanted all of us to just go shopping after the trade centers fell to the ground. Give me a break, eh? So, Mr. Obama and company chose their path with their presumed power and chose to go the social and the greener earth programs route; and apparently chose not to see or smell the smoke from the burning economic fires.
For 3 years in this country and a full 2 1/2 years in Europe the battles rage about the economies. Again, I will note that these problems are not simple fixes; but I am afraid when "they" attempt to stand, they will fall down; cause they have been on the pot too long, and even without benefit of a good BM.
Meanwhile, the individual investor and pension funds; both of which have been badly damaged, and in the case of the pension funds, many negelected, poorly planned and managed and/or underfunded continue to "take a haircut and bleeding values." This fuels an ongoing lose of confidence from their observations of the political side of events, the economic damage; both personal and otherwise, and the inability of both individuals and companies to form a plan of action that is more than 3 months forward.
"If" the EuroZone is able to place a credible "fix" in place, one may suspect a very large equity rally; at least for a few weeks, months or perhaps longer.
The above leads this house to consider the most serious "rock and a hard place" that exists. The massive debt in place in many developed countries should be reduced. But, if the reduction also eliminates jobs in the government sectors and eliminates or reduces in place entitlements to many; the problem snowball continues to grow as there would be even less money for many citizens. The print more money solution is likely the best path for the central governments, as this will lead to more a "feel good" for the citizens. While the investment community and those who study the markets know the potential problems with this action; the "feel good" may be a better suited "plan" for the general public; for whom the majority do not understand the relationships of these actions. One should be able to predict the answer outcome with a poll at the local mall and asked at least 100 of the those who are unemployed the following question: "Would you prefer to have work and higher price inflation; or no work and some price inflation?"
Our Funds Boat has maintained a fairly conservative/moderate investment profile since the market melt. I/we most assuredly do not know the outcome of any policy plans for the U.S. or the EuroZone. But, we are slowly continuing a "haircut" and "blood letting" with our current mix of funds. We will let these funrs ride for the weekend coming, gather the numerous dividends that will be placed and attempt to determine a new path. The old boat is not taking on water; but there is too much now awashing upon the deck.
This house's few nibbles of thought above may not be reading things properly; and your input would be greatly appreciated by us and the board. I/we would prefer to write a more glowing report of our thoughts about the economic situation, as there is already enough thinking floating around that is not to the positive side of events.
I place this link for a SNL piece that found its recall in my brain this morning. Perhaps you too will be able to "substitute" some of the skit words and thinking into today's world of political and economic battles taking place here and in the EuroZone. Attempt to "convert" the medical problems and apparent solutions of medival medicine; to "see" the correlation with the economic problems of today; and the proposed solutions. Hopefully, you will be able to place the circumstances/problems and the some of the various characters related to the supposed solutions.
(6 minute runtime)
http://www.medicallessons.net/2010/10/classic-saturday-night-live-on-bloodletting-therapeutic-phlebotomy-and-barbarism/
Or, perhaps my brain is really not functioning properly...:):):)
No spell check or reread....hope its readable!
I thank you for your time.
Respectfully,
Catch and Co.

"In August 2005, U.S.-stock funds alone took up 54% of mutual fund assets (excluding money market funds), while foreign-stock funds absorbed 14%. Meanwhile, taxable-bond funds represented just 15% of overall assets. The landscape has shifted significantly since then. U.S. stock funds’ market share has dropped to just 41% of assets, as investors have shifted into taxable-bond funds, which now account for 25% of assets."
Pretty interesting statistic.

Hi Guys,
The Japanese have a great term that summarizes unnecessary work, inefficient effort, and wasted time; the single word is “muda”. We do a lot of muda when constructing and monitoring an investment portfolio.
Scottish philosopher and economics thinker David Hume observed that “In proportion as any man’s course of life is governed by accident, we always find that he increases in superstition.” Since investment performance returns are not controlled by anybody, we are subject to uncertainty that is often interpreted as bad luck when an investment sours. That is an uncontrollable accidental outcome.
To compensate for our misfortunes we sometimes fall under the spell of false prophets, to the charades of charlatans, or to the superstitious beliefs that some wizard can reliably foresee the future. That is abject nonsense; it is surely not commonsense.
Reflect on the unimpressive, and in some instances dismal, records accumulated by acclaimed market wizards and gurus. The CXO Advisory Group has a lengthy posting that documents the performance of 84 experts, not all of whom have a sufficiently large record that permits a statistical rating. Notice how the accuracy listing scales between a 67 % high to a 23 % low correct score. The average successful score typically hovers around the rather mundane 50 % level.
Here is the Link to the CXO survey:
http://www.cxoadvisory.com/gurus/
A 50 % accuracy rating is equivalent to a coin flip probability. It should be much better because the equity marketplace has historically delivered positive returns about 70 % of the time annually. Given that statistical loading, a guru should be correct in excess of 70 % of his predictions to demonstrate any special skills at forecasting future results.
If I were to project positive returns every year forever, it is likely that I would accrue about a 70 % successful forecasting record. Note that the highest rating scored by the CXO guru participants is currently below that level.
Also, because of a few of their dubious crystal ball mystic readings, some of the so-called gurus on the CXO list belong in a flaky fringe category of financial wizards.
Another aspect of our investment profile is our tendency to overreact to a dynamic marketplace. These changes are overemphasized and overly analyzed by a duplicitous media seeking attention. These same market gurus understand that bias, and build a career satisfying our fears with seemingly daily updates. Excitement and explanations proliferate in this environment. Most of them are simplistically wrong.
In the Roman Empire period during the reign of Nero, writer Gaius Petronius observed that “We tend to meet any new situation by reorganizing; and a wonderful method it can be for creating the illusion of progress while producing confusion, ineffectiveness and demoralization.” We reorganize our portfolios far too frequently.
Numerous industry and academic studies have demonstrated that “frequent trading is hazardous” to the wealth of individual investors. Since women are typically more cautious investors than men, and consequently trade less often, these same studies have discovered that, on average, women generate outsized returns relative to their male counterparts.
Annually, the individual investor mutual fund performance survey reported by Dalbar also documents the underperformance of private fund owners relative to the returns delivered by the funds themselves. Over a long time horizon, we only claim about one-third of the returns generated by the funds that we buy.
We investors get into hot funds too late, and often bailout of currently poorly performing funds too early. There appears to be a regression-to-the-mean tendency in play among mutual fund products. As a cohort, we have failed to demonstrate any market timer or trading acumen. But we are predictably proactive. Unfortunately, much of our misdirected efforts are muda. It is counterproductive and destructive to end wealth.
One obvious answer to this debilitating dilemma is to avoid over-activity. Don’t permit our emotions to dictate ill-advised action. We must take time to engage the deliberate, analytical portion of our brains. As Jason Zweig concluded in his “Your Money and Your Brain” book, all good decisions require a merging of the reflective and reflexive portions of our brains to reach solid investment decisions. Patience and balance are needed attributes that must be consistently applied. And costs always matter.
Stay cool and deliberate during this stressful period. The rugged equity landscape is just the market being the market, warts as usual. Volatility has its rewards as well as its pitfalls. Depending on your investment style and strategy, an investor can profit by just recognizing and integrating market volatility into his investment program planning.
The easy access to all the endless investment information is a double-edged sword. It should improve our decision making if it is properly assimilated and interpreted. However, there is such an Intel abundance that it likely saturates our ability to put it in context and analyze it correctly. It could be overwhelming. As management educator John Naisbett said, “We are drowning in information, but starving for knowledge”. The mixed metaphor aside, Naisbett is on-target.
I am not comfortable given this overload condition. I continue to search for ways to simplify. The emerging science of Knowledge Discovery in Databases (KDD) potentially offers techniques that will enhance forecasting accuracy. It is very complex mathematically, and today is mostly a promise rather than a functioning actuality. I classify it as experimental data mining with added constraints and enhancements.
KDD deploys conventional data mining methods, but augments it with a priori insights, expert advice, market models, multi-parameter inputs, screening for bad data, and numerous and frequent computer iterations. IBM researchers have worked on the problem for years and have generated some successes. But it is a tough slog and not yet ready for prime time. It may never be.
Here is a Link to a website white paper that I recently discovered. I am a rookie in this arena so I can not vouch for its accuracy or completeness. I am now in a learning mode. For what its worth, the introduction seems honest enough and the paper is current. Good luck. The Link is:
http://www.conradyscience.com/white_papers/SP500_V12.pdf
Hope springs eternal. KDD seems to violate Occam’s Razor to keep things at their most simple level. I suspect I’m guilty of muda with my attempts at understanding KDD.
Best Regards.

A few various notes/theories:
1. Many people are stunned by the difference in returns from gold vs. gold stocks. You are looking at an instance where irrationality is pretty remarkable in terms of gold stock valuations. It just depends how long the irrationality takes to reverse (or if it does?)
2. There were a number of discussions earlier this year about hedge funds shorting gold stocks and going long gold.
3. The Jim Rogers theory: if you want a commodity (whether it be gold or whatever), invest directly in it - stocks (moreso these days) are too carried around by whatever the market is doing and it's too difficult to pick the right play to take the best advantage of a particular commodity.
4. People just wanted the physical, they did not want a miner who could be subject to bad weather, technical problems, higher costs, bad hedging/management, yadda yadda yadda. This is why I continue to recommend Toqueville Gold (TGLDX); certainly voaltile, but John Hathaway is the best manager in the sector.
5. There seemed to be a point where gold started to look like it was taking on a monetary vector a month or two ago (which goes back to the line from JP Morgan: "Gold is money and nothing else."), and that may have added to gains. People who don't want to be in the dollar, but the world can't pile into the Swiss Franc and other currencies have problems, too - so...? This can also be filed under loss of confidence (in the system, currencies, governments ability to handle economies, etc.)
6. Maybe declining production? (I don't know, I haven't really looked at that - all I know is supply is gaining a bit over 1% a year, last I heard.)
7. Something worse than anyone is publicly aware of is brewing under the surface. (see: http://www.zerohedge.com/news/bank-america-cds-hits-escape-velocity)?
Again, I stress diversification in terms of investing in commodity, commodity-related or "real asset"s. The precious metals are fine, but agriculture is also something I'd highly recommend looking at.
Additionally, the Midas fund you have appears both leveraged and aggressive; if things are going well for the sector, it has the potential to outperform. In a situation like this, it can end up at the back of the pack - it was at the bottom of the category in 2008 and was near the top in 2009. Again, I'd recommend the Toqueville fund for a smoother (by comparison) holding.
Also, to add: the article portion of this summarizes my thoughts pretty well (although I don't think this ends with deflation):
http://finance.yahoo.com/blogs/daily-ticker/gold-rallies-money-flees-leveraged-financial-system-dempsey-182933547.html

http://www.nytimes.com/2011/08/14/opinion/sunday/the-mutual-fund-merry-go-round.html?_r=1&pagewanted=print
stock funds' cash reserves hit record lows
http://www.stltoday.com/business/local/article_4fb82690-60cd-5454-baa1-8a4f93be66dd.html
digging up undervalue stocks
http://www.google.com/#sclient=psy&hl=en&site=&source=hp&q=Digging+Up+Undervalued+Stocks+&pbx=1&oq=Digging+Up+Undervalued+Stocks+&aq=f&aqi=&aql=1&gs_sm=e&gs_upl=663l663l0l1562l1l1l0l0l0l0l201l201l2-1l1l0&bav=on.2,or.r_gc.r_pw.&fp=af5f4f3fbb50940f&biw=1366&bih=521
ordinary investors leave stocks, stay in 401k
http://www.miamiherald.com/2011/08/12/2356848/ordinary-investors-leave-stocks.html
raw materials escaped the carnage
http://www.smh.com.au/business/raw-materials-escape-carnage-20110809-1ikw5.html

Hi Guys,
Are you curious about the roots, the principle actors, and the interconnectivity that caused the housing bubble and its financial support system to inflate and then implode?
If you are and want to satisfy that curiosity in a painless way, I suggest you secure a copy of Michael Lewis’s 2010 book “The Big Short”.
Lewis’s reporting is not pure academic research, but it seems to be an accurate and especially lively record of this wealth destroying event. Michael Lewis is the ultimate storyteller. His most recent book, like those before it, is filled with fascinating characters who played a major role in the development and resolution of the crisis, and permit Lewis to present the complex details of its financial underpinnings (like collateralized Debt Obligations (CDO) and Swaps of these opaque products) in an understandable and comprehensive manner.
“The Big Short” reveals the incentives and the financial machinery that was invented and introduced by a Wall Street that was mostly driven by the profit motive. Lewis names those responsible, and offers no forbearance. The book is filled with villains, but also identifies some unlikely heroes.
At the base of the villain list are the individual home buyers, many of whom simply lied about their jobs and incomes. In the end, the no-documentation loans originated by the loaning agencies and accepted by unqualified home buyers were doomed. Lewis reports about a Bakersfield, California strawberry picker who received a $724,000 loan, the total selling price of the house, when his annual income was merely $14,000. Do you think he survived the market downturn, or could even pay his summer air conditioning electrical bill?
The deceptive practices and misleading interest rate quotes generated by outfits like the failed Household Finance Corporation (HFC) were highlighted. The discredited HFC operation sold loans to uneducated buyers by improperly citing the interest rate on an equivalent 30-year mortgage, that was actually signed on the basis of a 15-year contract. This trickery permitted the unscrupulous lender to quote a false annual rate that was almost one-half the rate he was charging in reality.
The big Wall Street Investment Banks were major players. They not only invented many of these highly leveraged products, but they also did themselves a disservice using grossly faulty statistical analyses methods that underestimated default probabilities and their own Value-at-Risk. In the end, they bought into their own junk science.
Lewis identified Goldman-Sachs, Deutsche Bank, and Morgan Stanley as essential innovators, participants, and big time losers. Some of these firms kept selling their defective products to sophisticated, but unknowing, institutional investors and hedge funds even while the markets for these dubious products were collapsing.
Lewis described several financial advisors whose incentives were profit alone, without regard to protect their unsuspecting, far too trusting, clients. These advisors demanded and were rewarded with high fees for this disservice.
The analytical models were based on a set of doubtful assumptions. The data set timeframe was far too small to be statistically relevant. The modeling wrongly assumed diversification, not only in location, but also in product mix. The models postulated low correlation coefficients when in fact, the correlations approached the perfect level. A normal Bell Curve distribution was embedded in the Black-Scholes formulation that was used to price the products. That also proved to be erroneous. As did the fact that statistical fat-tails and the likelihood of Black Swan events were totally ignored
The statistical characteristics of the various loan pools and their tranches were incompletely documented. Most reports only listed averages without even including standard deviation data. For example, only an average FICO score was reported. That’s equivalent to saying that a group of nine unemployed workers plus Bill Gates had a millionaire’s average earnings level. Improperly formulated statistics can present a very distorted picture. The housing loan statistical modeling was a disaster zone, and gave True Believers a false sense of security.
Almost all housing bubble participants did not recognize the pervasiveness of the subprime lending. Almost nobody recognized that it was the 800-pound gorilla in that segment of the marketplace. Joe Cassano, chief boss at AIG Financial Products, never understood what fraction of his firm’s risk profile was tied to this particular financial structure. Yale professor Gary Gorton, the expert who built the AIG-FP model, never appreciated the percentage of subprime loans to which AIG was exposed. True risk mitigation by diversification was not accomplished in any of these first tier financial firms.
The rating agencies, Standard and Poor’s, Moody’s and Fitch, also participated in the Kabuki dance. They were complicit in allowing substandard housing loans that were well below triple-A quality to be repackaged in a manner that allowed these defective loans to be reevaluated as investment grade quality. The rating agency people were hoodwinked by the Wall Street crowd. That’s almost to be expected since the rating agency pay scale is so depressed relative to what Wall Street pays its employees. The smartest financial folks migrate towards the deep money incentives.
Somehow these rating companies deceived themselves that they possessed the power to convert Lead unto Gold. The Gold Rule wins again; he who has the Gold, dictates the Rules. And Wall Street has the Gold.
As a sidebar, the Rating firms claimed that their scoring was misinterpreted and misused. They argued that their assessments were quantitative, not qualitative. Hence the outfits using their judgments should not have assigned a failure probability based on the scoring; the scoring only yielded a relative ranking.
This is a rather long list of villains. But there were some heroes, at least given a modest definition of hero. There were a few individuals who recognized the pitfalls that were imbedded in the sub-prime real estate derivatives markets. Michael Lewis gives the story heart and pathos by introducing these less than perfect money managers to us. Although this small group viewed the market from distinctly different perspectives, they each saw the cracks in the smoke and mirrors charade.
Here is a short list of some of the unlikely heroes; Michael Burry of Scion Capital, Charlie Ledley of Cornwall Capital, and Steve Eisman of FrontPoint Partners. These men were short sellers during the mid-2000s and made enormous profits for their hedge fund clients. Each of their stories is unique and captured in Lewis’s engaging storytelling.
You must read the Lewis book to get a more precise picture of the short sellers contribution to the story line. I recommend that you do. The Big Short documents the chicanery that bank lenders and Wall Street perpetrated on a too trustworthy public. It once again demonstrates the need to be a skeptical investor. As one of the characters in the Lewis book constantly asked: “How are they going to screw me?” In Wall Street dealings, that is a relevant and necessary question.
There are plenty of lessons to be learned from the housing market debacle and from the financial mess that fueled and exacerbated the bubble. From a grand macroeconomical perspective, it demonstrated the complexity, the interconnectedness of that rugged landscape.
In economics, things do not happen in isolation. As the French economist Frederic Bastiat noted by the title of one of his most important essays “That Which is Seen, and That Which is Not Seen”, it is critical to identify and to assess the secondary and perhaps unanticipated effects of any market action. The subprime housing debacle is yet another illustration of unintended consequences.
Another enduring lesson learned from the housing market crisis was that leverage kills. The Wall Street investment banks were typically leveraged by multiples of over 10 to 1 ratios in their oversized commitments to CDOs and the insurance CDO swaps that they also sold. They lost billions.
On a very practical lessons learned level, the housing bubble and its crash demonstrates yet again the pervasiveness of the money incentive. That’s almost a given since we are mostly in the marketplace to satisfy our financial goals. As always, its good investment policy to follow the incentive money trail.
You will enjoy the stories that make “The Big Short” a lively read. You will also learn some of the how, who and why of the subprime real estate derivatives fiasco. You will be a wiser investor from learning its lessons.
In his book’s Epilogue section, Lewis finds that “Everything is Correlated”. Indeed it is. The primary theme of Complexity Theory is the interconnectivity that ties global agents together. Especially today, one event triggers many reactions, some positive and some negative. Expect a cascade of primary, secondary, and tertiary avalanches. Marketplace correlation coefficients have become tighter with time. Recall, no happening is an island onto itself. We often can not identify the potential network of interactions.
Best Regards.

Hi Guys,
To paraphrase an unremembered source, “Just as there are no atheists in a foxhole, there are no contrarians in a market selling panic”. Many versions of this old saw have been circulated during the turmoil of our current marketplace. For example, from a June 8 ETF Guide column by Simon Maierhofer: “It is said that there are no atheists in foxholes. How about perma-bulls during a nasty correction.”
I recently noticed that an increasing number of Forum participants are asking for selling and buying advice, sometimes on the same day. They appreciate the risk of their decision and are seeking some confirmation comfort. But nobody knows the future so this is a fruitless exercise.
You might be confident what the stock market will do tomorrow. If you guesstimate an Up day, your chance of being correct is a little above 50 %. That’s the historical record, and you will be more lucky than skillful if your prediction is correct.
As the time horizon expands, your chances of making detailed, accurate forecasts erode. We seldom know what will happen a week from now; it is highly unlikely that we will project our situation with any precision next year. Uncertainties dominate the future.
The secret to successful forecasting is to forecast frequently. Random successes occur and are touted as proof of extraordinary prescience and/or skill. In reality, it is exactly what it is – blind luck.
Hell, even understanding the past is a seriously problematic task. We still debate the causes of the equity market blowup that was a forerunner to our Great Depression over 80 years ago. David Snowball states that 20,000 texts have explored the issues of Germany’s Weimar Republic with all kinds of plausible interpretations. Yet resolution of the causes still escapes us. Given these interactive, complexities, it is small wonder that an accurate forecast of the future marketplace eludes us.
“Despite the plausible ideas, the computer-tested systems, the economic wisdom, the refined techniques, the documented track record, and the common-sense approaches, the simple truth is that practically nothing in the economic or investment world works out as we were assured it would.”
That’s not me talking. These prophetic words were lifted from Harry Browne’s book “Why the Best-Laid Investment Plans Usually Go Wrong”. That fine book was written in 1987. That was a true observation back in the 1980s; it is even truer in the 2010s.
Each of us, for our own reasons, seek command and control. Behavioral studies repeatedly demonstrate our propensity towards overconfidence. The professional money manager needs this to bolster his client list and to preserve his professional reputation. Individual investor need this psychological lift to uphold his dignity and self-esteem. Nobody wants to claim the sobriquet of a market loser. So we each fudge the data and lie just a little.
But we can do much better once we recognize and acknowledge that there are precious few secrets behind the curtains along the Yellow Brick Road. Forecasting frequently fails, market beating strategies rarely deliver positive Alpha (excess returns), market advisors and wizards are prescient only 50 % of the time, demonstrating no superior cognitive skills, and private investors have been fractionally recovering merely 30 % of Index returns for decades. These are devastating and discouraging findings.
In an uncertain environment, we must learn to recognize and accept the fact that luck must be coupled with market knowledge (skill) to generate respectable returns.
Harry Browne catalogues many investment dogs that either do not hunt or hunt the wrong prey. Among the false investment tools that Browne highlights are: trusting forecasts, applying untested scientific theories, deploying unverified charting rules, being a constant contrarian by design, using inappropriate benchmarks, assuming superior knowledge, and a host of other erroneous concepts. Investing is not an easy task and demands discipline.
We have developed some loser’s characteristics over centuries of investing. Over the last few decades behavioral researchers have identified and classified a rather long list of our financial shortcomings and wealth destroying habits. We must overcome these to reach the investment winner’s circle.
One such habit is pattern seeking. We often identify patterns that are truly present, but we also see patterns that are illusionary products of our bold imagination.
Yet another habit is that we award intelligence points to ourselves when investment returns are positive; we blame others when our investments go south. I suspect some of us do not deem luck as a major component of our investment process because of our behavioral overconfidence bias.
Another common fallacy is the acceptance of charts as predictive tools. Charts and graphs are a great way to organize and summarize data. Charts document what we know. They represent history and knowledge. They have no forecasting capability except in the active minds of market technicians. A graph of the S&P 500 Index has about the same predictive power as the Periodic Table of the Elements. Using graphs to project the future in a nonlinear, complex world with untold feedback mechanisms is an exercise in futility. That’s not the way the world works.
Michael Maubaussian, research specialist at Legg Mason, believes that luck plays a major role in securing and holding market rewards. He recently appeared on Consuelo Mack’s WealthTrack show to share his views with us. I have provided a Link to a video record of his discussion.
http://blip.tv/WealthTrackSyndication/michael-mauboussin-5313504
On a spectrum scale that ranges from pure luck to pure skill, Maubaussian suggests that almost all actors in the investment story are most properly located very near the luck end of the scale. He holds that view even for professional market experts.
In that instance, professionals do have skill because of their resources and time commitment; however all market pros share about the same skill level, and this tends to neutralize each other. Hence when they compete against one another, luck is the primary residual component.
Of course, that’s not the case when a professional competes against private investors. In that scenario, the financial player has a steep advantage over the time-limited and resource-limited amateur. It’s similar to when the Indianapolis Colts play against the New Orleans Saints or against Ridgemount High School. The results are predictable.
We can do much better with a few time-tested approaches.
Before we consider doing better, it is important to recognize the distinction between an investor and a speculator. For my purposes I’ve adopted a rather broad definition. A speculator is anyone who attempts to outperform market-like returns using whatever strategies, methods, or trading frequency he elects to pursue. An investor is anyone who is satisfied with collecting market rewards.
Speculation is not inherently bad. I do some. But since excess rewards are the goal, it is likely that both the short-term tactics and the long-term strategies incorporate some additional risk elements. Being an investor and being a speculator are not mutually exclusive. A portion of a portfolio could be well served using an investor-like approach, while the remainder of the portfolio could be committed to more speculative adventures.
The success formula for the investor segment of a portfolio is not a secret. The approach recommended by an impressive collection of market luminaries is simplicity itself: Invest in a global array of low cost, well diversified mutual funds or ETFs. The diversification includes geographic, foreign exchange, real estate, commodity, and precious metal holdings that complement the usual small and large stock funds, some inflation protected bond products, and several fixed income units. It need not be a complicated portfolio.
The long list of investment wizards who preach this gospel are almost endless. It is more difficult to prepare a similar list for active investors and speculators. That is a much shorter list.
As we celebrate our Independents Day, we must be constantly vigilant to protect our personal financial independence. To enhance the likelihood of this outcome, we must be highly skeptical of false financial prophets who claim to see the future clearly, and profess to possess investment secrets and insights that they do not. Even for those who enjoy momentary success, be alert that much of that success is transitory and that luck was a likely major contributor. Luck and good fortune are fleeting attributes that change instantaneously.
Happy Fourth everyone.

Hi icyone,
I do hope this short reply finds you doing well in all aspects and circumstances. Did do the RNCOX just now and presume the electronic purchase will pass through the system in a timely manner to provide for the actual transaction.
I suppose at the very least, the reported dividend of the fund will offset the expense cost and the rest will be left to the skill of the managers. But, this fund will provide more different directions for our current mix; although the fund did not escape the 2008 melt.
Interesting about the query as to where you learned about the fund. 'Course, my electronic trade did not offer a friendly human voice.
Take care of you and yours,
Catch

Thanks MJG for getting this discussion started as well as to others for their input.
I have tried to model my portfolio in my mind as well as on paper. My first step in the process was and is to select my investments. This is the work...the learning curve that continue throughout my investing life. I will call these investment choices my balloons. My core balloons were and are my first set of balloons. As a younger investor I chose a balanced fund as the core balloon. As I now consider myself an older investor I have a set of core balloons that provide income, dividends, and risk protection. But, whatever your core is, remember they are your all weather position or positions.
During the accumulation stage of life I inflated this core with some of my own money as well as with "overinflated" winning from my other "balloons" in my portfolio. To picture my portfolio in my simple mind I imagine these "core balloons" having many valves that are interconnected with other portfolio positions (balloons). All investment connect back to these core balloons. They each can open and close accepting new money or shedding off overinflated profits. This mental image of balloons helps to remind me to take profits often but not to deflate a position I still believe in or more importantly Mr. Market still favors.
This image of balloons also reminds me that, at certain times, some balloons may need a short steady burst of "air". My "core balloons" provides that method of reflation. Hopefully I am reflating at a time when the value of that investment is out of favor and therefore a bit of a bargain...again, "buying bargain" is just as important as "selling profits"...doing this often helps to remove some of the volatility of the market and grow my portfolio.
I am a market participate and therefore I will always have core positions that I believe in at all points along the market cycle. In this environment of low interest rates a cash alternative position can be hard to find as well as a compromise to the instant liquidity of cash. My investment balloons, whether they are core or not have been selected because I perceive good management and future market opportunities. The decisions I make regarding which funds to own are based on the dynamic of me learning how to "monitor yet trust"...."trust but verify".
If our congress and regulators had only followed these simple rules things might be very different today financially speaking.
When the market retreats below its 200 dma (which is where the S&P 500 is right now) I try to discipline myself to change course...to return to my core. I try to base new decision on the evaluation of yesterday's actions and the condition of today's landscape.
Thanks to all of you here in helping me form some of my decisions.

Hi Guys,
I was anticipating some heat from Forum participants challenging me for being far too presumptive and arrogant with regard to my personal risk control mechanisms during a market meltdown. My signals feature technically-oriented parameters.
So I braced for charges that never materialized. I steeled myself by recalling an old adage often cited by US airmen during World War II: “If you are not taking flak, you are not on target.” But the flak was totally missing. Perhaps I was off target.
I want to thank those Forum members who did respond in a reasoned, an informative and a kind way. I really do appreciate your contributions to the discussion. That type of interaction stimulates learning, and learning helps sharpen market understanding and decision making. That was my sole purpose. I was aspiring for far more diverse and energetic responses, accompanied with high emotions and sharp edges. In that respect, I fell short of my expectations.
While reading and reflecting on the few replies, I am reminded of a notable quote offered by Warren Buffett at one of his recent Berkshire Hathaway stockholder annual sessions. The quote went something like this: “There is so much that’s false and nutty in modern investing practice and modern investment banking. If you just reduce the nonsense, that’s a goal you should reasonably hope for.”
I suspect that much of what is “false and nutty” is related to overly complex modeling and imprudently assembled financial products. These models and products have generated false myths and uninspired (sometimes downright disastrous) portfolio performance.
Remember the heavily promoted Nifty-Fifty growth stocks in the late 1950s and their ultimate collapse in the 1960s. I fell victim to that irrational exuberance.
And remember academia-driven Portfolio Insurance in the 1980s that failed so miserably to protect portfolios in the October 1987 sudden equity crash. I escaped that trap.
Recall the Real Estate bubble in the late 80s with its heavy-handed S&L involvement and its subsequent dramatic unwinding in the early 1990s. I had enough reserves and geographic diversity to outlast that systemic failure.
The Long-Term Capital Management (LTCM) debacle in 1998 is yet another illustration of an academically encouraged strategy that resulted in the demise of that organization because of excessive leverage, and a failure to regression-to-the-mean modeling in a timely manner. I never even knew this problem existed before its final resolution.
Of course, we are still trying to recover from the current housing crisis that in part was encouraged by faulty Collateralized Debt Obligation (CDO) designs and sold by profit hungry institutional banking agencies. The holdings were not independent of each other as assumed, and the statistics were not normally (Bell curve) distributed as postulated. I avoided the specific CDO snake pit, but, of course, its synergistic impact of the overall economy persists.
Learning by doing is always the best classroom, especially when investing. As Jesse Livermore said about a century ago, “The game taught me the game. And it didn’t spare me the rod while teaching.”
Also, Jesse observed that “The game does not change and neither does human nature.” And finally, from Livermore, who experienced both the rewards of prescience market calls, and the destitute of bankruptcy from failed calls: “The speculator’s deadly enemies are: ignorance, greed, fear and hope.” The marketplace is a hard teacher.
By the way, it is a pity that Jesse Livermore committed suicide. He died a poor, lonely, broken man.
I believe that some of the industry’s and academia’s sophisticated models do offer some detailed structural insights, but they also often fail to capture the market’s major trends. At times, modeling simplifications can uncover that fundamental trending more successfully than more complex models. Also, these more simple formulations are accessible and deployable by private investors, thus permitting them to make their own judgments and decisions.
Several well recognized aphorisms nicely summarize my overarching viewpoints on this matter.
“Common sense is not all that common.” Continuous learning is a necessary ingredient to enlarge an investor’s financial and investment acumen and databases. It’s the price we pay for participation in the marketplace if we harbor any prospects for success in that enterprise.
“If it gets measured, it gets done.” Private investors must gain familiarity with a few market yardsticks if they expect to capture average or above average returns. Otherwise, they are an unexpected volunteer victim to the professional market hucksters and their media enablers who shamelessly tout them and their products. We can do better then that with just a little awareness and effort.
“None of us are as smart as all of us.” So let’s keep the communication links, open, on a friendly basis, and at a high, principled level. Your contributions will not only be helpful to others, but will focus and crystallize your own thinking on any investment issue that you address. Constructive group leadership is superior to individual leadership on any topic.
An early recognition and reaction to global market trends is an indispensable tool that serves to protect and preserve our retirement portfolios. Enough said; just apply history’s sometimes ignored lessons learned. Stay alert everyone.
Best Regards.

Just wish it were a bit cheaper though. Perhaps will drop in fees over time.
Lazard also just recently came out with a similar EM stock/bond strategy fund....
"The Lazard Emerging Markets Multi-Strategy Portfolio (the “Portfolio”) seeks total return from current income and capital appreciation by allocating capital across Lazard’s emerging markets equity and debt strategies utilizing the portfolio management team’s assessment of the changing economic landscape. The allocations to the underlying strategies are changed over time, and at any given point the allocation to one strategy (other than currency investments) may comprise a substantial percentage of the Portfolio’s assets. The Team gauges the global economic environment through quantitative and qualitative analysis, including the use of proprietary software models and internal and external research. By combining equity with debt strategies and periodically readjusting allocations, the Portfolio seeks to avoid the extreme outcomes typically found in emerging markets and, thereby, to create a lower volatility pattern of returns"
--- But I don't know how good and how deep of an EM Fixed-Income investment team they have as I don't see much history of EM Fixed-Income investing from Lazard unless they do so in Private/Institutitional accounts.
So investors would have to evaluate the additional costs versus the active-management benefits of getting the hands-free EM stock/bond tactical/strategic balancing done for you.