XX beats XY.
St. John Bogle says Social Security is your bond fund.
...
I do like the EM bonds, tho, but most of your bond funds are for geriatrics. We pay 20 to 40% of our return in expenses for security, which you don't need unless you will really pull the trigger and sell them all and buy stocks at the next correction, if you recognize it in time. Those funds are for fifty-somethings.
High yield with a low ER is probably OK, but they act like stocks in the crash, but recovered faster last time. (Of course, if you are in them, you might have trouble making yourself sell after a loss to buy stocks.)
...
15 to 20 years from retirement, I'd start looking at bonds in moderation, but you might be so rich by then that it wouldn't matter.
Be sure you marry the girl.

I'd be interested to hear what are your list of less geriatric bond funds to check out, In my musings since posting this I noted PONDX, but I'm not sure if that fits your criteria. I'm comfortable with and aware of the SS argument of Bogle, but am not investing here for income, just mild diversification. As you suggest I've been thinking of staying 85-90% equities - currently in a 3:2:1 ratio in US:Developed:EM - until I'm 45-50 or so.
As for DNA sequencing I have some family involved in the business so it's been done. I'm a bit special, but not enough to worry about an early death.
And yes, I shall marry the hell out of the girl.
@AndyJ Agreed about ARTFX and high yield in general, makes an EM bond fund seem maybe a better play for diversity.
@Junkster Hiking in the Sierras is one of our favorite weekend past times. Thank you for the good wishes.

Paul McCully of PIMCO made a curious statement late Thursday (CNBC) that may help answer Catch's question. Essentially, he believes the Fed is concerned that by withdrawing the "foreseeable future" clause they will: "... likely initiate a sizable stock market correction."
I think Fed watching is way overdone and don't pay any more attention to McCully than the other blow-dry pundits. Most of the time in recent years markets have simply "gagged" for a few hours or days following changes in Fed language and than resumed their prior trend.
The recent uptick in long term rates is however very significant and probably a big factor in the commodities slide. Many media pundits grossly oversimplify the relationship between the Fed and longer term rates. While the two are intertwined, markets in the end set long term rates. The Fed's authority to "set" rates is at the very very short end. What "QE" did was give them some badly needed (and artificially induced) leverage at the longer end. With QE coming to an end, I guess it's natural for longer rates to react more to economic conditions.
My equity exposure remains relatively low for many reasons - mostly personal factors. I'm however very curious about commodities because I feel they may represent a profitable short term trading opportunity (also one fraught with peril). Pundits like to cite $40 oil 10-15 years ago. Humm ... Do these guys seriously think $1.50 - $2.00 gas at the pump would be a sustainable price for very long?
FWIW
PS: OK - Bit the bullet today and made a small speculative wager in the commodities pond - which is in addition to my typical static weighting in that area. Left some room to add a little more if they go lower. I expect that the next time the thermometer hits -40 in Minneapolis, should be be to unload these positions for a small gain:-).

Markets still have that sucking sound as of 10am, September 12.
VWO 44.41 -1.03%
ITOT 91.24 -0.30%
EMB 113.94 -0.32%
IBB 271.53 -0.67%
TIP 112.84 -0.24%
LQD 117.93 -0.23%
IEF 102.91 -0.20%
IWM 116.14 -0.38%
IYR 72.25 -1.50%
HYG 92.65 -0.15%

What do you guys think of TEI (Hasenstab's CEF) as opposed to DBLEX for a buy, hold, and forget about it EM debt fund? It's got terrible momentum but a great long-term record and is trading at an usually large discount for it (-7.5% vs. 3 year avg of +0.55%, according to M*.)

I believe the reason it's trading at such a large discount is that TEI cut its monthly yield 20% ($.25 to .20 p/s) a couple months back. GIM cut its yield even further. Long term you're probably fine, but you might want to dig around Franklin's site first.

The indexes keep going up and up but the fear and worry of most investors is still low. Should we worry?
This is an original preface.
http://www.cnbc.com/id/101991855

Conversant (CNVR), formerly Valueclick, largest SCMFX holding as of 6-30, +31.45% pre-market agrees to be acquired by Alliance Data. Yes, I do own SCMFX.

VF: You now have won this title for your constant use of low class, uneducated, toliet language.
https://www.google.com/search?q=potty+mouth+image&newwindow=1&biw=1600&bih=731&tbm=isch&imgil=Tl4X4P9hJi-B8M%3A%3BmcmwCCl7LbUsDM%3Bhttp%253A%252F%252Fwww.petco.com%252Fproduct%252F105487%252FFour-Paws-Potty-Mouth-Tablets.aspx&source=iu&pf=m&fir=Tl4X4P9hJi-B8M%3A%2CmcmwCCl7LbUsDM%2C_&usg=__POetfwYzi-6twYOZLIs9YIiLn40=&ved=0CDkQyjc&ei=dOkSVIXPB4uoyATDnID4Ag#facrc=_&imgdii=_&imgrc=Tl4X4P9hJi-B8M%3A;mcmwCCl7LbUsDM;http%3A%2F%2Fwww.petco.com%2Fassets%2Fproduct_images%2F0%2F045663150624C.jpg;http%3A%2F%2Fwww.petco.com%2Fproduct%2F105487%2FFour-Paws-Potty-Mouth-Tablets.aspx;350;350

What do you guys think of TEI (Hasenstab's CEF) as opposed to DBLEX for a buy, hold, and forget about it EM debt fund? It's got terrible momentum but a great long-term record and is trading at an usually large discount for it (-7.5% vs. 3 year avg of +0.55%, according to M*.)

XX beats XY.
St. John Bogle says Social Security is your bond fund.
Check the ER of your bond funds against yearly return and quit investing like a geezer (unless you have some chronic illness or a bad genome - I think you can get your DNA sequenced for less than a grand now, so it might be a good investment or cost you the XX, if the results are bad).
I do like the EM bonds, tho, but most of your bond funds are for geriatrics. We pay 20 to 40% of our return in expenses for security, which you don't need unless you will really pull the trigger and sell them all and buy stocks at the next correction, if you recognize it in time. Those funds are for fifty-somethings.
High yield with a low ER is probably OK, but they act like stocks in the crash, but recovered faster last time. (Of course, if you are in them, you might have trouble making yourself sell after a loss to buy stocks.)
If I had known at 30 what I know now....
But I didn't.
Now, I'd either sequence my genome (or not, if that's too deterministic), invest in a total US stock index for 50%, non-US world index for 30%, EM (probably managed funds) for 10%, and allow myself 10% to chase fads. If you believe that small caps add value, you can adjust the recommendations by 5 -10% in the first 2 categories, but the ER increases. 15 to 20 years from retirement, I'd start looking at bonds in moderation, but you might be so rich by then that it wouldn't matter.
Be sure you marry the girl.

I hold a larger position in this fund and established it almost at its inception. I understand the reason holding large cash position, and also understand that we should consider this fund as a conservative allocation fund with cash as the other alternative asset. But with 75% in cash, this fund still lost .53% today in a slightly down market. Did I miss anything here with this fund, or should I move on to other real SCV funds?

Look at ARTVX year to date to get some perspective. It is good ARIVX is in 75% cash. If you are fundamentally still okay with Cinnamond still invests, and still looking to switch, one option is his old charge ICMAX. PVFIX also cut off the same cloth. Also compare with BRSVX. Going into ARIVX we need to accept how the manager is investing. He is doing what he said he would do all along.

I don't know why we are complicating this.
Microsoft goes down 50%, Goes up 100%. Back to square one. Volatility High. NOT RISK.
Enron goes down 50%. Goes down another 50%. Goes down another 50%. Goes Bankrupt. Volatility High. Permanent Loss of Capital. RISK

Could an investor think of the commodities sector as an inflation hedge?
Companies like Rio Tinto (RIO) or BHP Billeton (BHP) pay an solid 4ish% dividend.

I like anything that resembles a toll road - railroads

CSX raising guidance after hours. Note the bold.
"Economic trends and the company's continued commitment to leveraging high-growth opportunities underpin confidence in its ability to return to generating double-digit earnings growth and margin expansion beginning in 2015. Longer term, the company continues to target an operating ratio in the mid-60s, and will continue generating shareholder value by maintaining its focus on inflation-plus pricing, continually improving efficiency across the business, and capitalizing on economic trends."

@Junkster That's kind of what I'm thinking. Not aware of tons of emerging market funds. DBLEX and FNMIX I'm familiar with, looks like there are 5 other Great Owl options in the category.
Edit: I'd guess MAINX counts to this idea too.

jlev, were I not in junk munis would be in DBLEX (and actually was in it a time this year)
Great fund. MAINX a good fund but too stodgy for my tastes and not in the emerging markets bond category. Over the past 3 and 5 years junk corporates have outperformed their emerging markets counterparts but the later shined over the past 20 years. I always worry though and one fear is the great bond rally in so many sectors that has been running for decades may someday come to an abrupt end. But then we have been hearing that for awhile now and demographics may provide more of a tailwind than some of the bond bears suspect. Good luck and enjoy the long years of life you have ahead of you. I lead hikes in my local area over the winter and have lots of 20 and 30 somethings in my group. Real refreshing people to hang around.

http://seekingalpha.com/news/1977095-end-of-the-iron-age-as-iron-ore-prices-slide-to-five-year-lows

Thanks for the article...some comment quotes:
"strong companies that control metal deposits are a good place to be. Strong means with manageable debt they can survive and enough commodity to use as currency, if necessary."
"This is not overcapacity, it is misallocated usage by China. They have cut there own throats and worse they created a shadow banking system based on that crummy Chinese ore, causing prices over the last four years to skyrocket. But that has no bearing on the real price of ore, the long term price of ore which has been commodity equivalent of 80 a ton for sixty years. The actual prices paid were lower but in comparison to buying power and other commodities, 80 is an agreeably number."
"The point is VALE and company are priced to BUY...not sell. They have spent gazillions of dollars improving their efficiency and are RAISING [not lowering] production to squeeze out higher cost producers. I personally like VALE for my own reasons, am long, am down and will continue to buy more...likely here. Vale's big advantages are it's ore which is high in quality and low in impurities such as alumina. The low levels of alumina necessitate LESS coke consumption by blast furnaces thus raising productivity. So while one can make the very valid argument that BHP and RIO have closer proximity to Asian customers, which is true, VALE has better quality ore. VALE has also built a massive logistics and energy infrastructure around their ore systems to increase reliability and lower costs and to the one poster who said or hinted that BHP is getting into the energy business...I'm not exactly sure that's the right way to look at it. VALE and BHP are massive companies and the energy and infrastructure businesses they run are really there to lower the costs of delivering their iron ore products. One company that I would say is probably moving MORE towards energy is Canadian Metals Producer Sherritt International. "

@Junkster That's kind of what I'm thinking. Not aware of tons of emerging market funds. DBLEX and FNMIX I'm familiar with, looks like there are 5 other Great Owl options in the category.
Edit: I'd guess MAINX counts to this idea too.

I also try to chart a fund's NAV. With daily price changes an investor can monitored the trending of the price (calculated with dividends) and determine whether their investment is either making "new higher lows" (trending upward) or making "new lower lows" (trending downward).
Here's an example of both conditions in a fund I own, BUFOX.

Here's a 5 year chart of USBLX and PONDX that speaks for itself:

Or, one of Ted's favorites, PRHSX, in a three year chart (this fund's chart is "pretty" all the way out to 20 years):

Could an investor think of the commodities sector as an inflation hedge?
Companies like Rio Tinto (RIO) or BHP Billeton (BHP) pay an solid 4ish% dividend.

http://seekingalpha.com/news/1977095-end-of-the-iron-age-as-iron-ore-prices-slide-to-five-year-lows
I do think of the commodities sector as an inflation hedge, but I think you have to be diversified and have a long-term view. I would favor energy as an inflation hedge more than basic materials, but it's good to be diversified.
I like anything that resembles a toll road - railroads, pipelines, credit card networks, etc. Especially like railroads - you have a handful of companies who have a lock on moving grain, energy and many other things for the foreseeable future. Railroads are one thing where I can sit and say, "what replaces this in the mid and probably long term?" The answer is nothing I can think of at this point.

Hi Guys,
Our recent MFO discussions that center more on the originality of the market commentary and observations tend to detract from the main themes of the subject works. That’s a wasteful distraction.
Original thinking on any subject is rare. If the communication requirement is originality, a room filled with clients would be mostly silent; a written report to clients would be mostly a blank sheet of paper.
Originality is nice and in some instances is necessary, but it surely is not a prerequisite when communicating for informational or even for persuasive purposes. Sure things change, but not that rapidly. What has happened in the past (history), and what has worked in the past provide a firm basis for what is likely to happen in the future. At a minimum, it is an excellent point of departure for planning purposes.
The key point here is that the referenced James Saft article emphasizes the shortfall of return’s volatility as a total measure of investment risk. That shortfall has been recognized within the investment community ever since it was proposed as a partial risk measurement back in the 1960s (Harry Markowitz and others). It definitely is not original stuff.
Note that no expert suggests a total discarding of volatility as a risk component; they merely argue that it is incomplete in that it does not capture all the interactive elements of it. Risk is a complex, multilayered phenomena, and is likely dissimilar for different folks.
The Saft article was okay; it did draw heavily from an Oaktree clients report written by Howard Marks very recently. The Marks report is excellent and develops a risk assessment concept much more completely than does Saft. If you enjoyed an/or learned from the Saft piece, I suggest you access the Marks document at:
http://www.oaktreecapital.com/memo.aspx
The arguments assembled by Marks are not new or even novel. These things evolve over time. However, in the Marks paper, they are cobbled together in a way that just might provide an improved risk guidance for your portfolio investment goals.
In the middle of the report, the graph that depicts the risk/reward tradeoffs yields a particularly useful picture at how the statistical distribution of expected returns more correctly overlays the reality of that tradeoff. Please take especial note of it.
The more careful collection of the data, the interpretations of that data, and the extrapolation (the most dangerous aspect of the entire process) of these interpretations (dare I say a model?) make revisiting the data and some recent analyses worthwhile. Since our recall is imperfect, and since our needs change over time, this revisiting is necessary and sometimes even profitable for investment decision-making. None of this probably qualifies as highly original thinking. That doesn’t trouble me whatsoever.
Care and precision must always be exercised when presenting data or an argument based on that data. Definitions are critical. The risk debate effectively illustrates the requirement for meticulous definitions. Along those lines, Morgan Housel recently published a list of “Things You Should Know the Difference Between”; these items do make a difference. Here is a Link to it:
http://www.fool.com/investing/general/2014/09/09/things-you-should-know-the-difference-between.aspx?source=iaasitlnk0000003
These days, it seems we are all fretting over the next looming market decline. The known unknowable is that it will surely happen; the unknown unknowable is its magnitude and when that will happen. Market decline history provides guidance in this arena. There is certainly no originality buried in these data, but they do directly bear on the downturn frequency. From a statistical perspective, these data establish a base-rate.
The data I quote come from the American Funds and includes the timeframe from 1900 to 2013.
A 5% downturn blip has occurred about 3 times a year; a 10% correction about once a year; a 15% downdraft about once every two years, a 20% Bear market approximately once every 3.5 years; and a 30% panic about once per decade.
These are all merely averages so beware the distribution element. These negative outcome stats do yield an overall context. Over short periods, the spacing and durations are somewhat haphazard, so money reserves are needed. That too is not original advice since it dates back to the Talmud as I reported in an earlier post.
I hope you guys enjoy and profit from the references. It’s far less important that you enjoyed my submittal which contains no original thoughts. I offer no apologizes for my lack of originality. Good luck to all.
Best Regards.

FYI: Can you name any mutual funds that have beat the S&P 500 Index over the past 10 years? I’m sure you wouldn’t need to think long to find one that has accomplished this feat.
Regards,
Ted
http://investorplace.com/2014/09/top-3-low-risk-mutual-funds-high-returns/print

http://www.businessinsider.com/forgetful-investors-performed-best-2014-9
The link above has been bandied about here recently. Scroll down to the end for a visual of the 20 year annualized returns of various equity and bond sectors. At your very young ages, it would seem to be a no brainer to invest that 10% to 15% entirely in an emerging markets bond fund and/or a high yield junk corporate bond fund.
As an aside, I put one of my ex-girl friends' ultra conservative accounts entirely in T Rowe Price's high yield bond fund (PRHYX) before we broke up in 1992. I was shocked to learn recently she hasn't touched that account since and she has been pleased as punch. She would have been even more than pleased had I put her in PREMX, Price's emerging markets bond fund which has far surpassed even the S&P (albeit not sure that was even around in 92) I put her in the junk fund because being very risk adverse, junk funds are most noted for their risk adjusted returns.
Edit: Nothing wrong with where you are at in VFIFX at your ages either. Not sure I have seen many in-deph discussions on target funds for the young on this board being it is skewed a bit to the old timers.