Three words: don't do it.
When I read the opening paragraph of the NYTimes article, my thoughts immediately jumped to the question: is this a prohibited transaction? That would void the IRA, making it immediately taxable (and subject to penalties if you're under 59.5). "When the I.R.S. spots a violation, it shows little mercy." Not a risk to assume lightly.
A music teacher is running an instrument leasing business (inside the IRA) to his students. That might be considered a prohibited transaction because the teacher (a "disqualified person") appears to be providing a referral service (referring his students) to his IRA's business. I really don't understand the rules well enough to say. A disqualified person, such as the IRA owner, must not furnish goods or services to the IRA.
A key virtue of traditional IRAs (e.g. provided by brokerages) is that they ensure you are not coming close to prohibited transactions. Maybe if you're a Mitt Romney building a $100M IRA a self-directed IRA would make sense, but then you'd also have a slew of lawyers backing you up and watching out for you.
It gets even worse. Do a search on "checkbook control IRA". I'll let the pages you find explain that one.
Here's a page I just dug up explaining prohibited transactions and containing lots of links to very technical writeups of ambiguities in the law, what could go wrong, etc.
https://www.questira.com/ira-prohibited-transactions-every-investor-needs-to-know/
To its credit, this is a page being provided by one of the companies that you can use to set up a self-directed IRA.

I think we’re setting up for something like a repeat of ‘87. Market action past few days looks shaky. Anytime a lot of folks start thinking it’s easy pulling 15-20% a year you’re looking for trouble - especially at a time of 1-2% on CDs. Might make it into January. Doubt it.
Market crashes and corrections do have a lot to do with luck. Like the old game of musical chairs.
For the record: Current DJ 23,400, S&P 2578, NAS 6728, 10-Year 2.38%

.....And the wonderful young agent was, typically, tripping over himself with multi-syllabic utterances so that he would sound intelligent and informative, grasping at different words in order not to be repetitive, and so that there would not be any "dead air" between us. Jay-zuz, I hate that. I suppose they are TRAINED never to use the word "no," even when "no" is the appropriate, true and correct reply. And if they dare to simply communicate within a common sense framework, they'd earn demerits. I guess the trainer-types have all forgotten the 13th Commandment: ESCHEW OBFUSCATION.
..... That 5 minute conversation should have taken maybe 90 seconds. At least, amid all the pap flapping around me from his end, I was informed that there is no way to figure out or plan for just when that fund may open for business, and no way to let me--- and interested folks like me--- know when it happens.
Interesting summary prospectus, though. Already posted here, and I bookmarked it. Monthly pay-outs. Stock-bond split that is divided more evenly than the PRWCX which we all already know and love. I'm interested because I'm looking to grow my dividends these days, preparing to start taking divs. rather than re-investing them. And TCAPX can hold foreign securities, too, though not in amounts that would make it function like my current holdings, PRSNX or PREMX. Yes, I'm ALMOST married to TRP. I have a good slug in Mairs & Power, too, and then just a couple of very small other holdings. Here's that link, again:
https://www.sec.gov/Archives/edgar/data/1689311/000168931117000021/canpta-may35.htm

Hi Guys,
I too suspect that most investors do not fully understand the tradeoff that exists between skill and luck when making investment decisions. Luck is a far more significant contributor then is commonly appreciated.
We are fooled by randomness (that's the title of an excellent book authored by Nassim Nicholas Taleb). The likely reason why we are fooled is that we don't recognize how large numbers of participants contribute to a respectable number of winners.
For example, if 1000 market forecasters exist, after a single forecast 500 are probably correct given an equal interpretation of the likely market outcome. For the successful forecasters, repeat this test again, and the successful number is reduced to perhaps 250. If the challenge is repeated 8 times, a simple probability calculation suggests that maybe 4 forecasters would be correct on all the 8 tests. These fortunate four might be skillful, but they just might be lucky..
These lucky few announce their prescient calls and are now respected as market forecasting wizards. The large number of initial forecasting candidates almost guarantees this outcome and the subsequent misleading interpretation. Indeed, we are often victims; we are fooled by randomness.
Best Wishes

Thanks @Ted. Interesting story. Reading over PRWCX’s most recent report (June ‘17 I think) Giroux commented that if rates rose much more he’d increase his high quality longer dated bond position - mostly out of concern over equity valuations. He went further in saying he felt bonds would prosper if equities fell off a cliff. Well - rates are up. We’ll see if he followed through. Somewhat unrelated to the CALPERS story - except that both point to a growing concern about valuations among money managers. Guess a lot of us are waiting for “the jello to hit the fan”.
Here’s where I’d appreciate more insight from those in the know: With the equity markets having roughly tripled in less than 10 years, why are so many public pension funds still in trouble? If the reported numbers are correct (particularly your own state, Illinois, Ted), than imagine the trouble those pension funds would be in had not the equity markets recovered.

They're in trouble because they promise too much money.

Not for everyone, but interesting enough to post. Self Directed IRAs once set up properly can invest in many things other than merely just mutual funds, stocks/bonds or ETFs.

It may be surprising, but it is true: No law dictates that retirement plans be invested in stocks, bonds and mutual funds. In fact, the government allows investors to put the money in their I.R.A.’s and Roth I.R.A.’s into almost anything, be it condominiums or airplanes. A growing number of Americans are doing just that, through so-called self-directed I.R.A.’s that steer clear of mainstream investments.

Exotic I.R.A.’s: Leaving Stocks and Bonds Behind
nytimes.com/2007/10/20/business/yourmoney/20money.html?_r=1
Cautions to Consider:
real-estate-in-your-ira-be-careful

Hi @hank
Bondland: Short duration yields/rates are higher, but.....
http://www.reuters.com/article/usa-bonds/treasuries-u-s-2-year-note-yield-hits-another-9-year-high-flattening-continues-idUSL1N1NK0ZW
Pension funds:
1. Actuaries didn't anticipate the longevity of the "boomers".
2. Perhaps many pension funds never really achieved their goal of 8-8.5% real return adjusted for inflation.
3. At least relative to employee union pension funds; many had/have "cost of living" adjustments built into forward pension payments; including pension benefits that continue to have a "health plan", too.
4. Under-funding of pension plans, over the years. This is a known condition for many pension funds.
I recall over the past several years reading about existing pension funds in Michigan municipalities, though still having contributions to the fund; finding that paying the retired employee pension/health care outflows was consuming 50% of the assets of the fund.
Example: Central States Pension Fund (Teamsters); of which, I read about several years ago. A story of, we may be able to maintain the monetary base of the fund; but ya'll will have to take a 30% decrease in your pension or the fund will crash and burn. Check some of the links in the search below, in particular to "UPS" drivers who were moved into the Central States Pension Plan. The link below is for numerous search items.....read for your choosing.
https://www.google.com/search?source=hp&ei=EBoLWrGHNJuzjwSX9LzgDw&q=central+states+pension+fund+news&oq=central+states+pension+fund&gs_l=psy-ab.1.1.0l10.1146.11288.0.13276.27.27.0.0.0.0.314.3286.1j25j0j1.27.0....0...1.1.64.psy-ab..0.27.3280...46j0i131k1j0i46k1j0i10k1.0.clw8X-GyJ9Q
Side note: Although great to have a pension, the majority of pensions do not have a "cost of living" adjustment. If inflation was running at the "old" annual rate of 3%, or so; after 10 years folks would be loosing about 1/3 of their spending power from a pension, yes? I spoke with a few folks I know a number of years ago about this as a future planning tool relative to their spending habits going forward.
Well, this is my small take on such a big world.
The snowblower is lubricated, gas full and tested. Now waiting for April again in Michigan.
Take care,
Catch

Thanks @Ted. Interesting story. Reading over PRWCX’s most recent report (June ‘17 I think) Giroux commented that if rates rose much more he’d increase his high quality longer dated bond position - mostly out of concern over equity valuations. He went further in saying he felt bonds would prosper if equities fell off a cliff. Well - rates are up. We’ll see if he followed through. Somewhat unrelated to the CALPERS story - except that both point to a growing concern about valuations among money managers. Guess a lot of us are waiting for “the jello to hit the fan”.
Here’s where I’d appreciate more insight from those in the know: With the equity markets having roughly tripled in less than 10 years, why are so many public pension funds still in trouble? If the reported numbers are correct (particularly your own state, Illinois, Ted), than imagine the trouble those pension funds would be in had not the equity markets recovered.

Anyone getting giddy on European Funds?
Europe Heading Toward Golden Period:
from-lost-decade-to-golden-years-euro-economy-picks-up-the-pace
To me, a good managed fund navigates these dynamics better than a broad index. Many here are familiar with risk averse FMIJX.
Using a "European only" fund screen shows:
DFA's (DFCSX),
Brown Advisory's (BAHAX) and
Columbia's (CAEZX) all having higher risk adjusted returns (high Sharpe Ratios).
From a fee expense angle the nod goes to (VEURX), but it is an index approach.
PIMCO's USDollar unhedged (PPUDX) has 97% exposure to Developed EU and uses PIMCO's derivative strategies in an attempt to outperform the index. The USDollar hedged version is PPIDX.
T. Rowe Price's (PRIDX) has International Small/Mid Cap exposure splitting itself between Europe/UK (48%) and Japan / Em Asia (45%).
Fidelity's (FSCOX) has a similar approach with a strong convictions towards Japan (33%), Europe (32%) and the UK (19%).
Under performers with high exposure to Europe include:
AAIPX - 4*, (68%/24%) Greater EU / Greater Asia
TRIGX - 3*, (64/32) Greater EU / Greater Asia
LISOX - 3*, (56/30) Greater EU / Greater Asia
BBHLX - 3*, (65/19) Greater EU / Greater Asia, (17%) cash
THGIX - 2*, (62/24) Greater EU / Greater Asia
USIFX - 4*, (62/33) Greater EU / Greater Asia
CIVVX - 4* (65/27) Greater EU / Greater Asia
MQIFX - 4*, (58/37) US/Greater EU
USAWX - 5* (58/39) US/Greater EU
IVFLX - 1* (28/65) US/Greater EU
An interesting World Allocation fund, BBALX, which is divided pretty evenly into thirds-US Equity, Non US equities, and US Bonds- but over weights Non US equities (50/50 Greater EU/Asia) compared to the category.

FYI: The role of skill is far smaller than most of us want to admit.
Regards,
Ted
https://www.marketwatch.com/story/when-you-realize-how-much-luck-goes-into-investing-you-might-change-your-methods-2017-11-13/print

Pudd, You are correct as I am a Journeyman electrician. Don't dwell on the ex-wives thing. Latest wife is wonderful. It's not that I think CHTTX is a good fund it is the only US MC fund choice in my workplace 401. Two of my midcap choices would be WSMNX AND UMBMX.

Investment grade and high yield bond market overview for last week, from M*.
http://news.morningstar.com/articlenet/HtmlTemplate/PrintArticle.htm?time=1823137

Slick, A nice collection of funds. Curious did you make an effort to transfer 401's and IRA's to the ROTH after you retired? This is something I am thinking about doing as you do not need earned income to make a transfer.

The reason for this distance is because that was the measurement used in England and the U.S. railroads were built by British expats.

No the U.S. railroads were built by mostly non-British immigrants, many of them Chinese:ocp.hul.harvard.edu/immigration/railroads.html

Chinese laborers were brought in by the Central Pacific Railroad in large numbers. Indeed, by the height of the construction effort in 1868, over 12,000 Chinese immigrants were employed, comprising about 80 percent of the Central Pacific's workforce.

Carlson is confusing design with building, and even there he's wrong. Theodore Judah--born in Connecticut not Britain--designed the Transcontinental Railroad:
https://en.wikipedia.org/wiki/Theodore_Judah
Moreover, the three prominent early designers of U.S. railroads were American born:
Stephen Harriman Long, George Washington Whistler, and Herman Haupt.
https://en.wikipedia.org/wiki/Rail_transportation_in_the_United_States
While they were influenced by British trends, they were not British.

Just put some "rewards cash" into FMIJX. Weird that credit cards now throw off rewards for investment. Adjusted my retirement (403B/401A) deposits to go to VHCAX & VWENX rather than a target date fund and encouraged the other money to go towards international.

FYI: In the U.S., the standard distance between railroad train tracks is four feet, eight-and-a-half inches wide.
The reason for this distance is because that was the measurement used in England and the U.S. railroads were built by British expats.
Regards,
Ted
http://awealthofcommonsense.com/2017/11/one-of-the-biggest-sources-of-market-inefficiency/

FYI: This article is part of a regular series of thought leadership pieces from some of the more influential ETF strategists in the money management industry. Today’s article features Jack Gilligan, director of research for ClearRock Capital.
We spent two days this month in Newport Beach, California, at the Inside Fixed Income conference. It was a great opportunity to try to get our finger on the pulse of the active versus passive debate in fixed income, a deeper dive into the intricacies of trading fixed-income ETFs and an attempt to soak up the market outlook of industry sages such as Dennis Gartman, Bob Smith and Jim Grant.
Here are our key takeaways from two jam-packed days
Regards,
Ted
http://www.etf.com/sections/etf-strategist-corner/inside-fixed-income-2017-takeaways

I have updated my November 11th post with an update. With this, I choose to bump the thread to the front of the stack.

High Yield bonds have been in the news this past week, eh? Some folks sense a twitch to the "dark" side of investment land and perhaps a prelude to something else. Tis not pure profit taking as the returns YTD are not in need of a hair cut. Articles have noted the failure to secure loans at a "decent" rate for financing in a few retail sector companies. One may presume there is good reason to "demand" a higher rate.......like, we're not happy with the forward business model. Makes sense, yes?
@bee , I recall, placed a post which included debt burdens of large retailers. This is one sector that indeed may be on shaky ground to pay off the debt, but is not a large percentage of outstanding high yield bond area.
So, are junk bonds just a forward view of the growth potential of the economy in general? My pay grade is not high enough to know the answer. I'll let the technical indicators point the way.
---High Yield below. A few choices on the list have been prior holdings; although we do not currently hold any HY directly. Of the 6 below, one may be able to "see" the value of active management.
1 week and YTD
ARTFX = -.7%, +7.9%
SPHIX = -. 8%, + 7.4%
DHOIX = -.7%, + 6.5%
PRHYX = -.8%, + 6.4%
HYG = -1%, +5%
JNK = -.9%, +5.4%
The below chart for the above from June 2 through Nov. 10
http://stockcharts.com/freecharts/perf.php?ARTFX,SPHIX,DHOIX,PRHYX,HYG,JNK&n=113&O=011000
Lastly, at least related to the etf side of high yield is that etfs are "used" by hedge funds and other similar to help them use the efts as portfolio "insurance" or "adjusters" or whatever phrase/word one prefers. I would not be surprised that the option side of calls/puts has had some effect on HYG and JNK.
Let us keep our fingers crossed that companies make enough profit to pay off the "investment grade bond" debt, too; lest it become junk.
---HY bond $ issued 2016 = $204 Billion; 2017 to date $240 Billion
---IG bond $ issued 2016 = $1.16 Trillion; 2017 to date = $1.2 Trillion
Oh, well.
Good night,
Catch