FYI: (This is a follow-up article)
US fund managers have launched a new attack on global regulators as they fight a rearguard action against possible rules that would treat groups such as Fidelity and BlackRock as threats to the financial system
Regards,
Ted
http://www.ft.com/intl/cms/s/0/6fbde67a-061b-11e5-89c1-00144feabdc0.html?ftcamp=traffic/partner/feed_headline/us_yahoo/auddev,traffic/partner/feed_headline/us_yahoo/auddev#axzz3bo0KNYFu

FYI: I hope everyone enjoyed my first article in the series—Who Wins ‘Passive vs. Active’ Institutional Debate? Pt. 1: U.S. Large Cap Blend—on this highly debated subject matter. However, before we dive into the Large Cap Growth space analysis, let me respond to a few comments relative to my first article.
Regards,
Ted
http://www.thinkadvisor.com/2015/05/29/who-wins-passive-vs-active-institutional-debate-pt?t=mutual-funds&page_all=1

@MFO Members: 3/10/15 WSJ article on Vanguard Alternative Strategies Fund.
Regards,
Ted
http://blogs.wsj.com/moneybeat/2015/03/10/vanguards-alt-fund-has-investing-community-abuzz/tab/print/
Vanguard Research: ' Liquid Alternatives: A Better Mousetrap?'
https://pressroom.vanguard.com/content/nonindexed/Liquid_alternatives_A_better_moustrap_7.23.2014.pdf

http://www.sec.gov/Archives/edgar/data/313850/000093247115005671/merged.htm
(Sorry if this has already been posted or mentioned.)
As of 5/28/15, the fund is still not available as per this link:
http://www.sec.gov/Archives/edgar/data/313850/000093247115006430/merged.htm

>> you're not (in theory) getting inclusion of any more midcap stocks than are already in the S&P 500.
Yeah, I was wondering about that and how it works, in terms of what accounts for the outperformance.
Should not have used the term 'small', my bad; meant smaller.

Addendum - you're getting more heavily weighted mid cap stocks because of equal weighting, but you're not (in theory) getting inclusion of any more midcap stocks than are already in the S&P 500. Same for small caps, with the observation that M* reports zero small caps in RPG, and 0.51% in RPV.
Ironically enough, all those small cap stocks are classified by M* as small cap blend. So much for style purity, which gets one back to the original article.

If one is interested in one style (growth) or another (value), then perhaps one of these makes sense. But in combination, the argument is much less compelling.
That's because, as S&P notes in its methodology document, its growth and value indexes (as opposed to its pure growth and pure value indexes) are designed to minimize churn:

It is also worth noting that the assignment of the market capitalization of stocks not in Style baskets to growth and value indices allows graduated moves, and avoids churning of stocks between indices at each reconstitution.

Roughly speaking, you're getting half the S&P 500, because each of the style indexes includes 1/3 of the parent index (by market cap), and the pure style indexes chop off approximately 1/4 that (by style).
3/4 x 1/3 = 1/4 for each of the two pure style indexes.
But you get distortions by overlaying equal weighting on top of style weighting of market weighting. You can read the methodology yourself; my take is that one can wind up with more (or fewer) stocks in the pure value index than in the pure growth index. That's born out by the figures - according to the Guggenheim ETF prospectus, there are 123 stocks in the pure value index and 106 stocks in the pure growth index.
So growth stocks in the proposed 50/50 mix of ETFs are more heavily weighted than value stocks. The former are weighted 1/2 x 1/106, while the latter are weighted 1/2 x 1/123. That may be fine, but it calls into question why one is weighting the two ETFs equally, given the premise of the ETFs themselves is to give all stocks equal weight.
Also, if one's objective is an equal weighting of growth and value (however one defines equal weighting), then it seems one will have to rebalance periodically, as that 50/50 mix (or however one is weighting the multiple funds) will drift over time.
Put all of this together, and one comes up with what seems like an obvious question: if the objective is equal weighting and a combination of value and blend, why not use an equal weighted S&P 500 index fund?

Much better, evidently, go 50-50 RPG and RPB, with inclusion of midcap and some small to boot because of equal cap weighting:
http://etfdb.com/news/2015/02/24/why-pure-style-etfs-matter-examining-growth-rpg-and-value-rpv/

FWIW, the Quaker A shares (QEAAX) are available NTF from Schwab, and the institutional shares (QEAIX) appear to be available at a normal $2500 min in Fidelity IRA accounts (only), albeit with transaction fees.

Kind of agree with davidmoran. Too many ppl WILL NOT set up their own retirement fund or plan, no matter how easy the mechanics of it are made. Recent example: low-mid-income couple with blinders on, enough income to invest for the long haul (rather than trade stocks short-term), always declared their retirement was in their property. It finally sold, for 75% less than they had anticipated. They will be through the proceeds by the time they are 70, at which point they will have only S.S.
That story is repeated over and over, even among college-educated folks who exercise business savvy in other matters and hunt for bargains. They simply WILL NOT.

Why not own both styles as a blend in S&P 500 index?

FYI: The stock market has hit new highs and growth stocks are leading the way. Whatever growth stocks are.
Or value stocks, for that matter. These are two of the most common labels used in investing, and nobody knows what they mean. Which is to say, there are so many descriptions and definitions that consensus can’t coalesce around any one of them. And therein lies the challenge for investors.
Regards,
Ted
http://www.marketwatch.com/story/etfs-for-growth-and-value-stocks-can-trip-up-investors-2015-05-29/print

Despite declines for the day and the week, the major averages posted solid gains for the month: Dow +1%, S&P +1.1%, Nasdaq +2.6%.
Treasury prices rose as a weak reading on regional factory activity added fuel to typical month-end demand; the 10-year yield fell 3 bps at 2.10%, the lowest in three weeks
http://seekingalpha.com/news/2552306-stocks-stumble-but-still-positive-for-the-month
Nat Gas big loser for week.
Weekly ETF Gainers / Losers
May 29 2015, 16:17 ET | By: Jignesh Mehta, SA News Editor
Gainers: TLT +1.94%. VXX +1.82%. UUP +0.71%. OIL +0.57%. KBWD +0.39%. Losers: GAZ -14.89%. UNG -9.05%. EWZ -5.73%. KOL -5.39%. FXI -5.03%.
http://seekingalpha.com/news/2552276-weekly-etf-gainers-losers
Monitoring The Trend In Treasury Yields With Moving Averages
By James Picerno | May 29, 2015 at 08:01 am EDT The Capital Spectator
The recent stumble in US economic data raises new questions about the timing of the Fed’s plans for raising interest rates. The earliest forecast for the first round of tightening monetary policy has been pushed up to September, although some analysts say that the turning point for rates will come later, perhaps early next year. Much depends on the incoming data, of course. Meantime, what is the Treasury market telling us? One way to cut through the noise in search of signals is to calculate a series of moving averages on Treasury yields. By that standard, the market’s sending mixed messages these days. The 2-year yield—considered to be the most sensitive spot on the yield curve for rate expectations—is trending up. The 5- and 10-year yields, by contrast, continue to trend lower, although there are some clues that suggest that the slide has run its course in longer-term maturities.
Let’s start with the 2-year Treasury. As the chart shows, there’s a clear upside trend in progress
By contrast, negative momentum continues to prevail in the 5-year market. Although there have been attempts to revive an upside bias, those rallies have come to naught so far
The benchmark 10-year yield tells a similar story. There have been several rallies, but so far the downtrend hasn’t been broken. But perhaps that’s about to change. Note that the 50-day E M A for the 10-year yield ticked above the 100-day E M A in the last two days for the first time in more than a year.
With Charts
http://www.capitalspectator.com/monitoring-the-trend-in-treasury-yields-with-moving-averages/

FYI: Stocks in the U.S. ticked lower, while those in China showed some stabilization after a messy decline on Thursday. A second revision for first-quarter U.S. gross domestic product — a broad measure of economic output — wasn’t as bad as anticipated, showing a decline of 0.7%. Oil prices jumped back above $60 a barrel for the first time in over a week. Next week could be a busy one: on tap are elections in Italy, a rate decisions in Europe, a deadline for Greece’s debt payments and a May jobs report in the U.S.
Regards,
Ted
http://blogs.barrons.com/focusonfunds/2015/05/29/etf-market-vital-signs-may-29-as-wind-in-dry-grass/tab/print/

@scott Yellen? Who cares what she has to say? I'm much more interested in what Gina has to say, following (yet another) court defeat to her children re. inheritance and trustee issues!

http://thenewdaily.com.au/news/2015/05/28/rinehart-loses-control-4-billion-family-trust/

FYI: (The Linkster says, stay as far away from these funds as you can, the leverage will kill you !)
Short-term traders were gifted some new power tools this week in the fast-moving biotechnology and energy sectors
Regards,
Ted
http://blogs.barrons.com/focusonfunds/2015/05/29/triple-bull-and-bear-etfs-debut-in-biotech-energy/tab/print/

Hi Hank, Hi Guys,
Please do not interpret my posting of Jim Stack’s Las Vegas presentations as my ringing endorsement of his advice. It is not. I like his historical research and his reliance on multiple market directional indicators. I don’t necessarily agree with his conclusions. I don’t subscribe to his services,
I posted Stack’s recommendations on MFO for informational purposes. Stack is one of my favorite financial money managers because of his dependence on statistical research, but also because he is a recovering Aerospace engineer. In that regard, we share a common background that demands a heavy commitment to safety factors. That commitment is reflected in his conservative, defensive investment philosophy and strategies.
Stack has enjoyed success as a money manager, but he is a relatively small player in that field with a very limited audience. The chances that his clients would all follow his incremental equity reduction advice is small; the likelihood that a wider audience would act on that advice is remote with the probabilities approaching zero. The fear of a market meltdown as a self-fulfilling Jim Stack prophecy is just not in the cards.
Stack’s track record is a mixed bag. Since he adheres to a defensive policy, he tends to partially reduce equities early. I agree with many MFOers that Gurus are not especially prescient. Remember the CXO Advisory Group’s Guru Rating database. The overall success score was just below 50% with the highest value at the 68% level. That data reinforces my long standing observation that forecasters can’t consistently forecast.
Stack was not evaluated by CXO Advisory. Based on my general assessment of Stack’s methods, I speculate that he would have been slightly above middle of the road in that rating.
I agree that market timing is hazardous duty, especially in the short-term because of emotional investor noise, and amplified when synchronized into a herd reaction. An old cautionary saying about joining the crowd warns that “running with the herd might get you trampled”. That’s wise words,
But I do like to collect and compare Guru predictions. When properly assembled and used (I mentioned the success of a Kalman Filtering approach in earlier submittals), the herd opinions can improve the odds of success.
As an aside, it seems like many investment organizations are now using fund team managers instead of individual superstar managers. DFA and Dodge and Cox serve as excellent mutual fund examples.
Regrettably, nothing is ever perfectly simple in the investment process. Conflicting evidence must always be carefully collected and weighed. That’s one reason why information source diversity is so important. Independent analyses and interpretations are critical. I often wonder just how independent these analyses really are. There appears to be an incestuous relationship among many popular market writers and pundits.
When reading this post, please recognize that I do like Stack and rate him highly along with several other money matter advisors. But these other advisors often offer disparate market opinions. All “experts” are not equal; the value I extract from them is weighted.
The first step before making an investment decision is to gather information from several primary sources. A second step is to sort and evaluate these data without falling victim to data overload.
Avoiding “analysis paralysis” is an issue. I’m sure all MFOers approach this step differently. The decision making process is itself an art. I use a very, very informal form of the Kalman Filtering approach whereby I weight the various inputs with an estimate of their accuracy record. Ben Franklin used a check list and sequentially eliminated elements from each side. Whatever works for you is the best approach.
Thank you all for participating in this thread. I did not anticipate the interest when I reported the scribbling that I made at the MoneyShow conference.
Best Wishes.
Edit: Hank, I too am 81 years old and am still in the market. However my commitment and enthusiasm are both easily overshadowed by the fine folks participating in the MFO exchanges.

"No assumptions are necessary. Jim Stack is directing his advice to all investors: to you, to me, to MFOers, and to his legion of loyal followers."
---
Wow - If Stack's advice is to be taken seriously would his vision than not become a self-fulfilling prophecy?
Here's why: If all investors decided to ratchet-down their equity exposure by 10-15% based on Stack's forecast, equity valuations would than adjust downwards to reflect the new reality. In fact, they might well over-shoot on the downside.
I haven't learned a thing from this thread. There are hundreds of bright people like Stack whose views are worth reading. We can learn from all of them. None deserve the attention Stack seems to be receiving here. I got a lot more out of JohnC's thread on "bullish" or "bearish" as I was able to identify different types of investors (here at MFO) with the varying outlooks offered - and none of the views were served up as sacrosanct.
There's another issue here which seems to have largely escaped discussion. That's this whole notion of trying to time markets. Yes - Stack is merely advocating "reducing exposure". To me, that's a cute way of saying: try to time markets. And I think that's terrible advice for younger investors attempting to grow a retirement nest egg. For "oldsters" (probably the predominant group on this board) who have already accumulated a nest egg, timing makes a bit more sense from a defensive point of view, but is still a "dicey" (a begrudging nod to Vegas) proposition - the benefits of which are highly dependent upon both the investor's temperament and goals as well as a whole host of unknowns.

So my question is which Large Cap companies have not already been priced today for future growth? Instead of only using Price Earnings ratio PE), one recent wealth tracks interviewee (Tom Russo) suggested evaluating company growth based on a company's ability to increase market share.
I wonder if anyone here own funds where the manager's focus is on companies that dominant market share or are strategically trying to achieve increased market share. Attention to mergers and acquisitions might be one method of increasing market share. A recent merger deal between Broadcom and Avago maybe attempting to increase market share to compete more effectively with companies like Qualcomm and Intel.
The oil and gas industry as well as the commodities sector seem ripe for M&A (Mergers and Acquisitions). Columbia Funds had a fairly successful fund UMBIX that isn't talked about much these days.
Anyway, here's an interesting article on the complexity of cross border mergers:
Avagos-Pending-Broadcom-Purchase-Taps-Arcane-Tax-Structure
I wonder that as QE continues in Japan, Europe and China, will this cheap capital encourage more of these deals, cross border or not.

FYI: A growing number of state legislatures are trying to solve the nation’s retirement savings crisis.
Last week, Washington state became the second state in the nation—after Illinois—to authorize its own state-run retirement savings program for a broad spectrum of companies. The goal: to get small businesses, many of which don’t currently offer retirement savings plans, to deduct contributions from employees’ paychecks and funnel them into individual retirement accounts, where money can grow tax-deferred until retirement.
Regards,
Ted
http://blogs.wsj.com/totalreturn/2015/05/28/states-tackle-americas-retirement-savings-shortfall/tab/print/?mg=blogs-wsj&url=http%3A%2F%2Fblogs.wsj.com%2Ftotalreturn%2F2015%2F05%2F28%2Fstates-tackle-americas-retirement-savings-shortfall%2Ftab%2Fprint