Actually, CAPE is wrong. CAPE can be off by years so why use it. Sure, eventually stocks will be down at some point, they always are. There is no indicator that can predict when prices reach tops or bottoms so the best way IMO to use a mechanical method.
The easiest way is using asset allocation rebalance. Suppose you have 60/40 stock/bonds, when they are off by 5% just rebalance. No need to listen or follow any adice/experts/indicators.
I use the following for years since portfolio preservation is the most important to me because I just need 4.5% annual return for the next several decades.
The only indicator that works in real time, 100% guarantee, must relate to the price. Here is my simple formula. When the price of the SP500 goes under 50 days MA(moving average) and stay there several days I reduce my stocks % to under 5%, when the price goes under 200 days MA my stocks % to under 2%. Then the reverse.
So, how did the above work last time? Since the top at 09/2018 to today, my portfolio is up more than 3%. Last year, when the SP500 lost 20%, my portfolio lost just -0.9%. My portfolio volatility on the worse days was only 5-10% of the SP500.

This article discusses why the author thinks an inflection point has been reached that will begin to draw the P/E ratio back down towards long term historic norms. The focus on interest rate trends ties into the argument Gundlach makes in a video I posted a few minutes ago....

Here’s the problem that the CAPE highlights. Earnings in the past two decades have been far outpacing GDP; in the current decade, they’ve beaten growth in national income by 1.2 points (3.2% versus 2%). That’s a reversal of long-term trends. Over our entire 60 year period, GDP rose at 3.3% annually, and profits trailed by 1.3 points, advancing at just 2%. So the rationale that P/Es are modest is based on the assumption that today’s earnings aren’t unusually high at all, and should continue growing from here, on a trajectory that outstrips national income.It won’t happen. It’s true that total corporate profits follow GDP over the long term, though they fluctuate above and below that benchmark along the way. Right now, earnings constitute an unusually higher share of national income. That’s because record-low interest rates have restrained cost of borrowing for the past several years, and companies have managed to produce more cars, steel and semiconductors while shedding workers and holding raises to a minimum. Now, rates are rising and so it pay and employment, forces that will crimp profits...The huge gap between the official PE of 19 and the CAPE at 30 signals that unsustainably high profits are artificially depressing the former and that profits are bound to stagnate at best, and more likely decline. The retreat appears to have already started.

https://finance.yahoo.com/news/cape-fear-bulls-wrong-shiller-151355864.html

According to Schwab:
Cash & Equivalents 99.51%
Government 0.49%
How exactly do you get to 6.5% that way?

As I charted STATX against RPHYX, ZEOIX and MINT, I noted a supernatural steadiness to its returns. It has returned 6.5% since inception, over the same period the others have returns something in the 3.5 - 5.5% range.
David

Yes, its that "supernatural steadiness" that really caught my eye. How do these guys manage to pull off what no other MF can?

The advisor, New York Alaska ETF Management, seems to have two employees, offices on the third floor of a nice though anonymous Las Vegas building (5550 Painted Mirage Rd) and about $90 million in assets. The founder's, Ofer Abarbanel, Linked In profile identifies him as "Founder, Prime Brokerage Ltd, Aug 2000 – Present. Contact Prime Brokerage Ltd is Israel's No.1 ranked Non-Bank Secured Credit Brokerage firm which specializes in Securities Lending, Covered Bonds, TRS, CDS and Repo transactions."
The manager, Nicholas Abbate, "has significant experience in capital markets [through] various roles at Knight Capital Group," but extensively as "a market maker in NASDAQ securities and Over the Counter Bulletin Board (OTCBB)/OTC Pink Securities in various sectors." He left KCG in 2010 and, for four years, was an independent real estate investor and developer.
As I charted STATX against RPHYX, ZEOIX and MINT, I noted a supernatural steadiness to its returns. It has returned 6.5% since inception, over the same period the others have returns something in the 3.5 - 5.5% range.
No opinion or recommendation, just a bit of additional data.
David

@johnN: FWIW ... I have not bailed from the markets nor have I jumped largely to cash.
Old_Skeet has raised some cash ... but, I have not bailed. I'm still with my "all weather" asset allocation of 20% cash, 40% income and 40% equity. Now being in my early 70's I felt it wise to increase my cash and income areas by about 5% each and throttle back my equity area by about 10%. This put me at 20/40/40. Within equities I'm tilted towards value.
With the strong upward run stocks have lately had has skewed my asset allocation and put me a little equity heavy. To solve this, I'm simply putting new money to work in my cash and income areas while I'm letting equities build.
At the end of the first quarter I may decided to rebalance if warranted. My rebalance threshold is + (or -) 2% from my target allocation for both my income and equity areas while I generally let cash float. With this, I could be up to 42% income and 42% equity and at 16% cash and not rebalance. Going the other way, I could be 38% income and 38% equity and 24% cash (or somewhere in between) and not rebalance being inside the upper and lower limits of my gardrails. Thus my asset allocation along with my gardrail stops has become part of my risk management tool kit while allowing for some asset valuation movement without triggering a portfolio rebalance.

I'm normally 80-20 stocks but over the last 18 months have been cutting back slowly to now about 55-45. About 20% is cash now. Don't know if it will pay off, but I'm at a point in my life that it is better to keep what I already have than to build it all over again.

Small post Xmas new yr crash...
Is it another small hump before the real large crash - 35%s bound to happen
Anyone jumping largely to cash + govt bonds beside Ted and skeet.. Bailing out?!

FYI: Famed bond fund manager Jeffrey Gundlach said some high-net-worth individuals should be paying more in taxes. The rate he pays in taxes, however, is high enough as is, he said.
Regards,
Ted
https://finance.yahoo.com/news/jeffrey-gundlach-tax-high-net-worth-individuals-211226955.html

Dear friends,
In an interesting development, Eric Cinnamond (ex of Intrepid Endurance ICMAX and Aston/RiverRoad Independent Value ARIVX) and Jayme Wiggins (ex of Intrepid Endurance ICMAX) are joining forces to launch the Palm Valley Capital Fund. A small cap absolute value fund. 1.25% expenses (undercutting ICMAX on price), $2,500 minimum. ICMAX has a cluttered manager history with both guys on the fund from 2005-08, then Wiggins leaving in 08, Cinnamond leaving in '10, Wiggins returning in '10 and leaving in '18. Mark Travis, the firm's founder, helped manage the fund from 2005-17, left, then returned for about four months after Mr. Wiggins' sort of sudden departure. ICMAX is now managed by three guys who I don't particularly know.
Messrs Cinnamond and Wiggins are both excellent stock pickers, a fact mostly masked by their absolute value orientation. At base, absolute value investors believe that stocks are sometimes insanely profitable but are always insanely risky. The only rational time to buy is when you can buy them at a 50% discount to what they're worth. In most markets, there are dozens of stocks, especially the stocks of tiny firms, that are massively undervalued. In part of every market cycle, though, such bargains disappear as momentum investors and froth fiends pile in. When that happens, absolute value guys run out of stuff to buy and begin building cash. Later still, their holdings become uncomfortably expensive (that is, risky) and get sold one by one; if there's nothing to replace them, cash builds further. Somewhere in there investors with short memories are seized by FOMO and flee from the absolute value funds to the funds that have made the most profit during the market's frothy phase. Somewhere thereafter, the market collapses, the folks in the riskiest funds get burned the most badly and the absolute value investors make a mint for their remaining investors. Shortly thereafter, panicked people fleeing the high growth funds rush in the door, assets soar and the cycle begins anew.
Market cycles usually run around seven years, but the intervention that probably saved the economy in 2008 kept market valuations from plumbing their normal bear market lows and a decade of effectively zero interest rates have prolonged the current one. As a result, absolute value guys were holding historic levels of cash for historic periods; in consequence, they became historically unpopular. In 2016, Mr. Cinnamond decided to liquidate ARIVX which was sitting at about 90% cash; his argument was that he didn't see an immediate prospect for a return to normal valuations and he wasn't willing to indefinitely charge his investors equity fund fees for something close to a money market. In 2018, for reasons not made public, Mr. Wiggins left ICMAX which was sitting at about 85% cash.
The launch of Palm Valley, likely at the end of April, raises interesting questions (what led the managers to decide that this was the time to beginning raising capital which will only be useful after a really substantial correction?) and will offer a really interesting opportunity for small cap investors who are intensely aware of the need to manage the enormous extremes of such stocks.
https://www.sec.gov/Archives/edgar/data/1650149/000089418919000884/spt-palm_485a.htm
David

Does anybody know what the 5 letter symbol is for fund 82 on the Great Owl listing? It is named as the American Funds Growth Allocation Portfolio C. I went to the American Funds website and only found the American Funds Growth Portfolio, GWPFX.(F1) Are these the same funds? On this website instead of a 5 letter symbol, the number '10923M609 is listed.

@MJG - Thanks for the link. I feared it was some MonteCarlo sim - but it isn’t. :) Let’s folks imput different allocations to many different classes of equities, bonds, cash etc. and see how they performed over specified time frames. Should be of interest to many.
If possible, some of us “seniors“ should by now be able to do our own back-testing. I ditched my fee-based 403B “advisor” (skimming 4+% off contributions) in ‘95. Switched to TRP and took charge. I’ve got some rough recollections of my investment history from ‘95-‘98. After ‘98, when I retired, I began keeping detailed records. I know how I was invested each year and what the % of gain or loss was. The plan changes little - but I’m aware of when allocation changes (mostly age-related) occurred. That’s my back-testing - detailed records spanning nearly a quarter century.
I know what my IRAs were worth in ‘98. I also know I’ve now withdrawn considerably more dollars over those years than the beginning balance. And I know that I currently have nearly double the amount invested that I started with. (Withdrawals didn’t begin until 5-7 years into retirement.) Over the first 7-8 years investments compounded at around 7% yearly - but less in recent years. Except for 2008 when I lost 20% (followed by +28% the next year), I can’t recall another down year of more than 5 or 6%. I don’t consider these returns very good relative to others. I’ve always been very risk averse.
Of course, a dollar today isn’t worth what it was in ‘98. Assuming a 50% decrease in purchasing power over those 21 years, I’m at about where I was when I retired. One source estimates inflation averaging slightly above 3% over a 20 year time-frame with prices roughly doubling over that time. (Can’t vouch for its accuracy.) https://inflationdata.com/Inflation/Inflation_Rate/Long_Term_Inflation.asp
Maybe what I’m saying here relates mostly to the value of keeping good records. No attempt to tout returns. As I said, many will have done much better. (I’m in envy of a number of others on the board. :) )
Regards
* Footnote - Being conservatively positioned allows me to remain 100% invested all the time in a wide variety of fund types, including a modicum of cash. Mention that because many maintain multi-year cash reserves separate from their “investments” and exclude that cash when calculating returns. May result in apples-to-oranges comparisons.

The answer is actually "it's different for everybody." There is no formula.

Couldn’t agree more. Some have no REI since everything is covered by SS and pensions. My REI is 45 years and I am about to turn 72. That tells me I need to obsess more about spending my nest egg instead of more accumulation. But old habits are hard to break. Even more so since in early January there was a buy signal I have seen but 4 times since 1960.

FYI:
Regards,
Ted
February 14, 2019
Dear WEALTHTRACK Subscriber,
18th century British nobleman Baron Nathan Mayer Rothschild is alleged to have said: “Buy when there is blood in the streets.” He supposedly made a fortune speculating when Napoleon was defeated at Waterloo. We know for a fact that legendary 20th century investor Sir John Templeton followed his: “Buy in periods of maximum pessimism” principle to great success.
If you were to name places in the world where you wouldn’t consider investing today what comes to mind? How about Venezuela where the economy is in ruins, the president discredited and the opposition mounting? Or a specific company in this country like Pacific Gas and Electric, PG&E for short, the California utility that filed for bankruptcy and bore the physical and legal brunt of the recent devastating California wild fires? Those are fertile ground for contrarian investors, or just traditional value investors who look for opportunities where others fear to tread.
This week’s guest is just such an investor. Her specialty is fixed income but she has the latitude to invest around the world, anywhere in a company’s capital structure and she revels in the hunt. She is Kathleen Gaffney, Director of Diversified Fixed Income at Eaton Vance where she is also the lead portfolio manager of the Eaton Vance Multisector Income Fund, which she launched as the Eaton Vance Bond Fund when she joined the firm in early 2013.
The fund is known for its flexibility to seek higher total return opportunities wherever available in the world and the capital structure of the companies chosen. That approach has also meant “significantly more volatility” than its peers in Morningstar’s Multisector Bond category. It carries a 3-star rating but is ranked in the top one percentile for the last 3 years, the middle of the pack for the last 5 and has beaten its benchmark since inception.
Gaffney is also lead portfolio manager of the somewhat more traditional Eaton Vance Core Plus Bond Fund. It carries a 5-star rating and has ranked in the top performance percentiles for the last 3 and 5 year periods under her leadership.
The last time I sat down with Gaffney in late 2017 she told us we were at an important inflection point, shifting from a secular decline in interest rates to a gradual rise. She will share her views of where we stand now.
If you’d like to watch any of our programs ahead of their official broadcast they are available to our PREMIUM viewers on our website about 24 hours before. You’ll also find the EXTRA interview with Kathleen Gaffney about her technique to keep mentally fresh.
If you would prefer to take WEALTHTRACK with you on your commute or travels, you can now find the WEALTHTRACK podcast on TuneIn, Stitcher, and SoundCloud as well as iTunes and Spotify.
Thank you for watching. We hope you had a happy Valentine’s Day. Make the week ahead a profitable and a productive one.
Best regards,
Consuelo
Video Clip:

M* Snapshot EVBAX:
https://www.morningstar.com/funds/XNAS/EVBAX/quote.html
Lipper Snapshot EVBAX:
https://www.marketwatch.com/investing/fund/evbax
EVBAX Is Unranked In The (MB) Fund Category By U.S. News & World Report:
https://money.usnews.com/funds/mutual-funds/multisector-bond/eaton-vance-multisector-income-fund/evbax

Within equities Old_Skeet holds about 9% in energy while the S&P 500 Index holds about 5%. One of the reasons for my overweight in the sector is because a good number of the energy related companies are fairly good dividend payers. Plus, energy has been a fairly beaten up sector over the past five years. My thinking is that it is a good value play and I will get paid while waiting for it to finds some legs. Thus far and year-to-date I am finding that energy (XLE) is the second best performing major sector within the S&P 500 Index with a return of 13.46% while over the past five years it has had a loss of about 25%.
And, if this dog (XLE) can continue to hunt ... Well, I've got me a winner winner chicken dinner!

I am calling BS on this one. I have told this story before
Northern Technology Fund. $5000 to invest. Instead of investing the $5000, I thought I will first "study" how to invest. I learnt I should not "lose" the opportunity" and I "should also cost average". So I invest $2500 - the fund minimum - and then $250 a month for next 10 months.
After the dot com bust hit My total investment was under water. If I had invested the $5000 at the beginning I would have been positive. I would have held the fund instead of selling.
DCA is like everything else. Wait for the right time of the year/decade/whatever then do a "study" to say "a-ha i told you so".
My motto - when you go in, you go in quick. IF you go in after dip you went in at lower price. Math. The only good 4-letter word.

Lots of reasons to hold managed funds - low cost ones can do well, some categories are not amenable to indexing, some funds are unique.

@msf, thanks for the input. I agree with 2 of your points, "some categories are not amenable to indexing, some funds are unique". FD1000 mentioned that bond funds are a category that needs a good manager. You, bring-up SmallCap International as not being amenable to Indexing. I mentioned a great balanced fund like PRWCX and a unique fund like DSENX that continues to outperform the S&P 500. I think we are on the same page.
But I contend, the vast majority of funds talked about here, especially Domestic equity funds would probably best be held in zero cost index funds. Do you agree with that?
And a secondary point I was trying to make... holding a collection of funds in the same category is no different than holding a very high cost index fund. I tried to be subtle, but that's what I believe.

T. Rowe Price Global Technology Fund, Inc.
https://www.sec.gov/Archives/edgar/data/1116626/000111662619000004/gtfstatsticker-february20193.htm
497 1 gtfstatsticker-february20193.htm
T. ROWE PRICE GLOBAL TECHNOLOGY FUND
Supplement to Prospectus Dated May 1, 2018
On page 6, the portfolio manager table under “Management” is supplemented as follows:
Effective March 31, 2019, Alan Tu will replace Joshua K. Spencer as the fund’s portfolio manager and Chairman of the fund’s Investment Advisory Committee. Mr. Tu joined T. Rowe Price in 2014.
On page 9, the disclosure under “Portfolio Management” is supplemented as follow:
Effective March 31, 2019, Alan Tu will replace Joshua K. Spencer as Chairman of the fund’s Investment Advisory Committee. Mr. Tu joined the Firm in 2014 and his investment experience dates from 2010. Since joining the Firm, he has served as an equity investment analyst covering the technology sector. Prior to joining the Firm, he was an associate at Huron Consulting and then an investment analyst at Ananda Capital Management (beginning 2010).
The date of this supplement is February 14, 2019.
https://www.sec.gov/Archives/edgar/data/80248/000008024819000003/nhfstatsticker-february20192.htm
T. Rowe Price New Horizons Fund, Inc
497 1 nhfstatsticker-february20192.htm
T. ROWE PRICE NEW HORIZONS FUND
Supplement to Prospectus Dated May 1, 2018
On page 5, the portfolio manager table under “Management” is supplemented as follows:
Effective March 31, 2019, Joshua K. Spencer will replace Henry M. Ellenbogen as the fund’s portfolio manager and Chairman of the fund’s Investment Advisory Committee. Mr. Spencer joined T. Rowe Price in 2004.
On page 8, the disclosure under “Portfolio Management” is supplemented as follow:
Effective March 31, 2019, Joshua K. Spencer will replace Henry M. Ellenbogen as Chairman of the fund’s Investment Advisory Committee. Mr. Spencer joined the Firm in 2004 and his investment experience dates from 1998. He has served as a portfolio manager with the Firm throughout the past five years.
The date of this supplement is February 14, 2019.
F42-042 2/14/19

Can anyone explain why they use managed mutual funds that cost you 1-2% to own ...
What do others think? What are the reasons to use managed funds over free ETFs?

You're starting with a number of questionable assumptions:
- that ETFs are all passively managed index funds
- that my managed funds cost over 1%
- that mutual funds (as compared with ETFs) are actively managed, or even that they cost more than ETFs
I've said before that all else (or at least ERs and transaction costs) being equal, I'll take the mutual fund format over the ETF format because I don't risk tracking error (i.e. the part of tracking error from market price not matching NAV) and I'm not charged SEC Section 31 fees.
So I'll rewrite your question as: What are the reasons to use managed funds over index funds?
Almost none of the funds I own cost over 1%. I own a number of actively managed Vanguard funds that cost around 531;% or less. My two largest Vanguard holdings (which I've had for several years if not decades) continue to outperform; my newest (held for a couple of years) is still subject to reconsideration.
What would you suggest for small cap int'l? That's where I've had the most difficulty finding good, inexpensive funds. There's always VFSAX if one wants an index fund (or its ETF share class VSS if one insists), but one ought to be able to do better in this category. VINEX doesn't exactly excite, and ACINX has not done well for years. There are DFA funds (available through VAs, HSAs, etc.), but they're hard to get.
If one is willing to go up a bit in price, the stalwart PRIDX continues to roll along. Do you feel that index funds will do better than this?
What index fund do you feel would do a better job than RPHYX as a cash alternative? (Despite the high cost of RPHYX.)
Lots of reasons to hold managed funds - low cost ones can do well, some categories are not amenable to indexing, some funds are unique.
Still, I agree that it's getting harder to beat index funds, and over the next decade or two I'll likely shift more investments into index funds.