FYI: Both the media and a wide array of financial advisers preach owning a diversified portfolio. Below, I have created a hypothetical asset mix that a moderate growth investor might employ:
Regards,
Ted
http://investorplace.com/2014/10/sp-500-now-safer-diversifed-portfolio/print

Very classy Bill and even classier of Gundlach to tell the press about it. Worth a good laugh though. The next line was (according to what Reuters says Gundlach said that Bill told him):
"I have five rings, you have two rings - probably going to five,” a reference to the number of NBA championships the two players have each won.
and one more line from Gundlach:
"I did think there could be some kind of 'Dream Team' concept," Gundlach said.

This thread will too quickly degenerate to a battle of opinions on whether or not the market is overvalued.
I find these arguments and attendant disagreements as bad as those on passive versus active. They tend to go nowhere. Each side defending its position based on past data and/or perception.
Maybe the valuation argument is even worse, since it is always about correlating past data to help predict future performance. A premise impossible to know until it plays out.
So, it's Hussman vs Arnott vs Akre. Or, Shiller vs Siegel vs Fama. Forever, seemingly. Each steadfastly holding their position.
Thinking about it...a little less hubris in their arguments (Akre seems most moderate here) would go a long way.
Clements helps fuel the fire in this debate...

Share prices have almost tripled since the March 2009 low, as measured by the S&P 500 index, and are now richly valued.

Selectively pick a metric that supports your position, then state your conclusion. QED.
I would probably have reacted better if he just came out and stated that he believes the market is overheated. And, his advice to those that believe the same way should...
@hank. Thanks man. I will read through, see if I can get better appreciation.

You can measure the valuations at bear market lows by a variety of stats; p/e is common, but Leuthold tracks four others. For p/e, bear market lows tend to be at the 25th percentile of their historic means; that is, the market returns to fair value (the 50th percentile) and proceeds to overshoot on the downside but typically bottoms at the 25th percentile. Getting there from here would require something like a 33% decline. (I'll check the exact number later this evening when I'm in my study.)
David

Will be interesting to see what you come up with, David. Appreciate if you will also include your methodology, some of the details of how you came up with it.
The following website has a lot of data and appears to be very useful in this regard:
http://www.multpl.com/
It has the trailing twelve months' P/E for every month from 1871 to the present. As well as a great deal of other info.

The stats that strike me as more interesting come from Leuthold, who simply asks "well, how bad could it get?" That is, they're not currently predicting a meltdown but they are tracking the magnitude of "normal" bears from here. You can measure the valuations at bear market lows by a variety of stats; p/e is common, but Leuthold tracks four others. For p/e, bear market lows tend to be at the 25th percentile of their historic means; that is, the market returns to fair value (the 50th percentile) and proceeds to overshoot on the downside but typically bottoms at the 25th percentile. Getting there from here would require something like a 33% decline. (I'll check the exact number later this evening when I'm in my study.)
Perhaps the question might be, if the equity portion of your portfolio declined by a third between now and year's end, what would be (a) your reaction and (b) your action plan?
David

Putnam Funds
https://www.putnam.com/literature/pdf/EO183.pdf
Janus Funds
https://ww3.janus.com/SiteObjects\published/FFFFFFFFA8347B540106A689CB6E5086/6A67B6EDC7721332F91A5B876C820459/file/Janus Funds Preliminary Distribution Estimates 2014.pdf
AMG Funds (file is a PDF) (Yacktman, SouthernSun, etc...)
https://investor.amgfunds.com/income_cap_gain_distributions
Thrivent Funds
https://www.thrivent.com/mythrivent/tax_resources/mutual_fund_tax_resources_guides/capital_gains_distribution.html
Principal Funds
https://www.principalfunds.com/investor/aboutus/news/article-08312014-capital-gains-estimates.htm
or
http://www.principalfunds.com/investor/docs/tax/MM3682-23.pdf

FYI: The collapse last week of securities tied to Fannie Mae and Freddie Mac punished some of Wall Street’s best-known money managers, with star investor Bruce Berkowitz’s main mutual fund losing more than $600 million.
The value of the $8 billion Fairholme Fund’s stakes in preferred and common shares of the U.S. mortgage-finance firms slid to less than $550 million Wednesday, from $1.2 billion at Tuesday’s close, based on holdings disclosed as of May 31.
Regards,
Ted
http://www.washingtonpost.com/business/in-fannie-freddie-ruling-mutual-funds-hit-with-right-hook/2014/10/03/9b74853a-49c4-11e4-891d-713f052086a0_story.html

FYI: It’s time to get ready for the stock-market collapse that may not happen.
There’s been much chatter about a possible selloff, which suggests many investors have already placed that bet—and perhaps a big decline isn’t in the offing. Still, it’s good to be prepared: Share prices have almost tripled since the March 2009 low, as measured by the S&P 500 index, and are now richly valued. As a precaution, consider these three steps:
Regards,
Ted
http://online.wsj.com/articles/are-you-prepared-for-a-stock-selloff-1412468241#printMode

Yes, interesting interview.
The Fed just said it expects the Fed Funds rate to be 3.75% by the end of 2017. Gross has a strong opinion about what would result:
"The Fed has said that the appropriate interest rate long-term to keep the economy in balance is 3.75% to 4%. I say it’s 2%. If the Fed follows through by raising the federal funds rate to 4% in the next few years, there will be bear markets for all assets."

@vintagefreak:
Well when I bought the fund, it was concentrated, but not to this extent.
From Fairholme reports:
In Nov 2008, largest holding Pfizer 18.7%, next Sears 6%
Nov 2009, largest holding Sears 10.6%, Berkshire 10.1%
Nov 2010, largest holding General Growth properties 13%, next AIG 9.2%
Nov 2011, largest holding AIG 26%, AIA Group 11.4%, Sears 10.7%
Nov 2012, largest holding AIG 42.3%, Bank of America 11.5%
I sold when the fund was still doing well (progressively sold over end of 2013 to
beginning of Jan 2014). I should have probably pulled the trigger earlier, but it
was definitely not as a result of a big drop like last week.

Look, i am not trying to start a war. If you sold earlier then you did when vs what and good for you. However then why criticise the fund?
For those who knew w 10 days back it was risky. You waited for the 10 percent drop and then sold. Why did you not sell earlier? If it didnt drop 10% woud-ld you be holding.
One should have reason for holding actively managed fund. Yes, one can change ones mind. However, lets be honest to ourselves. This is MFO. This is not facebook or twitter.

US bond market remains twice equity market...huge:

If I had billions dollars like Mr. Buffett and would still have billions of dollars even after a 50% equity drop, I probably wouldn't worry about tempering my portfolio with bonds either. But the fact is they do make sense for most people, especially older investors. Most people do need bonds or something similar, be it cash or annuities or some other stable asset class, as a shock absorber to smooth out the ride.

FYI: In an exclusive interview, Pimco’s former boss explains his new role at Janus, and why he thinks interest rates will stay low.
Regards,
Ted
http://online.barrons.com/news/articles/SB51517841841143733463604580184300213564076#printMode

FYI: (Click On Article Title At Top Of Google Search)
U.S. stocks have had a strong, multiyear run, while emerging markets have ... not. According to Burton Malkiel, that means it’s time to move your portfolio abroad.
Regards,
Ted
https://www.google.com/search?newwindow=1&site=&source=hp&q=emerging+markets+where+to+go+barron's&oq=emerging+markets+where+to+go+barron's&gs_l=hp.3...1533.14565.0.14876.37.29.0.8.8.0.141.1993.27j1.28.0....0...1c.1.54.hp..7.30.1694.W1gdFQf9l3A

FYI: (Click on Article Title At Top Of Google Search)
In many ways, Will Danoff and Joel Tillinghast couldn’t be more different—and yet they’re part of the same rare breed. Danoff, a pediatrician’s son and onetime assistant of the superstar investor Peter Lynch, and Tillinghast, descendant of one of Rhode Island’s earliest European settlers, are two of Fidelity Investments’ best investors. Danoff looks for big companies that he thinks will double their earnings over five years, on the theory that stock prices will follow. Tillinghast will only buy stocks that are trading below $35 and appear undervalued despite growing cash flow. Both have built amazing track records: Since he took over Fidelity Contrafund in 1990, Danoff has returned 13.4% a year to investors; Tillinghast, since launching Fidelity Low-Priced Stock in 1989, has returned 14.6%.
Regards,
Ted
https://www.google.com/search?newwindow=1&site=&source=hp&q=fidelity+bright+stars+barron's&oq=fidelity+bright+stars+barron's&gs_l=hp.3...1578.14030.0.14375.30.29.0.1.1.0.83.1928.29.29.0....0...1c.1.54.hp..12.18.1202.bKv4WKDIEeA

I had not heard of Fairholme before I came here but it sounds like the fund slowly condensed like cooking on the stove. A lot of shareholders may not have realized what was happening until it was too late.

I think you are exactly correct. People invested in FAIRX because of Bruce Berkowitz and his superb stock managerial skills. Investors in FAIRX did not feel they needed to scour the portfolio and second guess the manager. Then out of the blue one day it's, "What, 50% of my investment is in AIG, common stock plus warrants"? 15% in BAC. Sears....ahhh. St. Joe, another risky stock. Then Freddie and Fannie, whose very existence depends on court cases, super high risk. Add it all up..... All of a sudden, this is not the guy who for years said, "Rule number one, don't lose money"....Rule number 2, don't forget rule number 1". Any FAIRX investor can handle a large weighting in Berkshire Hathaway, because most FAIRX investors are very well disposed towards value and towards Warren Buffett. I sold all my FAIRX at the end of 2013 and first week of 2014. It was the accumulated risk that the portfolio had taken on, and concomitant loss of faith that BB was really following Rule number 1 and Rule number 2, as he had promised.

@vintagefreak:
Well when I bought the fund, it was concentrated, but not to this extent.
From Fairholme reports:
In Nov 2008, largest holding Pfizer 18.7%, next Sears 6%
Nov 2009, largest holding Sears 10.6%, Berkshire 10.1%
Nov 2010, largest holding General Growth properties 13%, next AIG 9.2%
Nov 2011, largest holding AIG 26%, AIA Group 11.4%, Sears 10.7%
Nov 2012, largest holding AIG 42.3%, Bank of America 11.5%
I sold when the fund was still doing well (progressively sold over end of 2013 to
beginning of Jan 2014). I should have probably pulled the trigger earlier, but it
was definitely not as a result of a big drop like last week.

FYI: (Click On Article title At Top Of Google Search)
The stunning departure of Bill Gross from Pimco raises important questions for investors.
Regards,
Ted
https://www.google.com/search?newwindow=1&site=&source=hp&q=bonds:+what+to+do+now+wsj&oq=bonds:+what+to+do+now+wsj&gs_l=hp.3...1108.10777.0.11108.25.25.0.0.0.0.107.1772.24j1.25.0....0...1c.1.54.hp..2.23.1650.zTN_pt2RgPI

@bee, no doubt. "This fund has had many more great years as this 10 year performance chart shows."
By the way, the 2.55% YTD from 9/30/14 is now -8% as of yesterday, but up 1.77% today with good performance by Freddie and Fannie.
And possibly the 3 best years (on a relative performance basis) were 2000, 2001 and 2002. Breathtaking performance relative to the market. You would never know that was a bear market, looking at FAIRX.

Here is the 9/30/14 prospectus:
http://www.sec.gov/Archives/edgar/data/1406305/000119312514363150/d799559d497.htm