Minimum investment $250,000 danario. Possible bone in the soup.

Good piece, backing up the clear tendency of market-cap indexes to be great on the way up and very un-great on the way down. It's amazing how something as simple as the clearly documented record of those indexes in up- and down-markets escapes the cognition of the 'indexes are all you need, now and forever' commenters.
I'd been thinking the reason there's been so much of that sentiment flying around the finance sphere is that many of those making said comments must be thinking only in terms of the standard return periods, and any of those from 1-5 years show market-cap indexes as brilliant choices because the last 5y neatly coincides with the latest bull market - clearly the sweet spot of a market cap index.
One of the best analyses of an optimal stake in stock indexes in a long-term portfolio came from, believe it or not, Gus Sauter, former bigwig at Vanguard (sorry, no link, haven't been able to find it recently), which took into account many years of data and concluded that something like 30%, but no more, of a stock portfolio in index funds made an optimal contribution to long-term returns.

This surely won't sit well with MJG. First, Charlie Munger on academic theory:

"Academics love EMH  because they can claim that they have mathematics-based formulas which can predict the future even though the underlying assumptions (borrowed from physics) are provably false." "Life is infinitely more interesting for an academic if they can create beautiful mathematics in their papers." "I understand its seductiveness to people with large mathematical gifts. It just had a difficulty in that the fundamental assumption did not tie properly to reality.”

And now this!!

"Specifically, there were no time periods in which the S&P 500 outperformed 90% of mutual funds. The index was a middle-of-the-road performer in most of the 24 separate time period/peer group combinations we studied ."

HYG trading like stocks and down from high of 95.43
HYD down from high of 30.58 The question is if the last 2 days decline was due to US bonds weakness or the usual(LY) post distribution decline.

To say again:
This country has been in some form of default for at least the last 50 years.
The government(s) continues to trample the citizens and their monies.
Any hedge fund or others who assume to be enlightened towards investing in this country apparently have not studied and do not understand or have knowledge of the modern history of the country; and perhaps think they know how to work the system of investments there or just feel lucky.
Without a doubt, some of the folks who are on the losing end of these investments right now are just pissed about their skills and judgements.
Numerous articles are readily discovered regarding these circumstances.

From article:
"The US Federal Reserve has begun to pivot. Monetary tightening is coming sooner than the world expected, with sober implications for overheated bourses, and for those in Asia, eastern Europe and Latin America that drank deepest from the draught of dollar liquidity.
We can expect a blistering dollar rally, perhaps akin to the early 1980s or the mid-1990s. It is fortuitous that the BRICS quintet of Brazil, Russia, India, China and South Africa have just launched their $100bn monetary fund to defend each other's currencies. Some of them may need it."
My Take:
The British Sterling pound has had a great price appreciation over the past year. With low borrowing rates and a strong currency the real estate market in England also shot higher. If interest rates rise as the US Dollar rises I see less upside to US Real Estate valuation, but if the Fed can keep home mortgage rates low watch for US Real Estate to benefit from a stronger dollar.
Article Link below image:

Fed-kicks-off-global-dollar-squeeze-as-Janet-Yellen-turns-hawkish

FYI: Yesterday's steep decline left four of ten S&P 500 sectors in oversold territory, and three more are set to open oversold based on red futures this morning. Consumer Staples and Industrials are both more than 3 standard deviations below their 50-days, which is as extreme as it gets. When sectors get that oversold, you typically see a near-term bounce.
Regards,
Ted
http://www.bespokeinvest.com/thinkbig/2014/8/1/sectors-oversold.html?printerFriendly=true

FYI: For investors, the lesson from Argentina's default Wednesday should be, "If you can't take a loss, don't invest in emerging markets with a bad history of debt repayment." No one said investment maxims have to be catchy.
Regards,
Ted
http://www.usatoday.com/story/money/columnist/waggoner/2014/07/31/learning-from-argentinas-woes/13415969/

@JohnChism Depending on which Arnott funds you are talking about, you may have not liked them for the past 5 years (March 9, 2009) or so, up until a few days ago.

Some excerpts from a Memo written by John Bogle July 9, 2014
http://johncbogle.com/wordpress/category/memos-to-principals-and-veterans/
July 9, 2014
To: My Fellow Vanguard Veterans and Principals
My 63rd Anniversary
Monday, July 9, 1951, was the first day of my long career in the mutual fund industry. I vividly remember walking into the Wellington Fund offices on 1420 Walnut Street in Philadelphia
Little could I have imagined that I would remain with Wellington/ Vanguard for 63 years
Much of what was to follow was due to the ethical values and financial wisdom of my great mentor and friend, Walter L. Morgan, who did his best to impart them to his heir-apparent.
Walter Morgan was the founder and chief of Wellington Fund and Wellington Management Company, and (as I once wrote to him) he gave me his confidence when I had little confidence in myself. Then, Wellington employed maybe 75 people, and supervised $150 million of assets for the shareholders of its single mutual fund. (Tiny by today’s standards, but then one of this industry’s ten largest firms.)
You all probably know about how my career at Wellington ended (I was fired from my position as chief executive in January 1974), fortuitously opening the door to my creation of Vanguard only seven months later
It was, as they say, the opportunity of a lifetime—a chance to build something new and better for our mutual fund shareholders. The three pillars of our fledging firm were our unique mutual structure, the world’s first index mutual fund, and the unprecedented conversion to a distribution system without a sales force
Still strong, if perhaps diminished (your call on both!), I continue to use those powers to speak out for giving all mutual fund shareholders a better chance to accumulate wealth; for reform in an industry that has come to emphasize marketing over management; for the requirement that every firm that touches other people’s money be subject to high standards of fiduciary duty and trusteeship

From Wiki:
"Walter L. Morgan (July 23, 1898 – September 2, 1998) was the founder of the Wellington Fund, the first balanced mutual fund in the United States....... He graduated from Princeton University in 1920, and shortly thereafter became the youngest CPA in Pennsylvania. In the 1920s Morgan raised $100,000 from relatives and business people to create what he believed to be a stable investment portfolio. The Industrial and Power Securities Company was established in 1928. It was later renamed the Wellington Fund in honor of the Duke of Wellington. Wellington Management Company was incorporated in Philadelphia in 1933. In 1951 Morgan hired John C. Bogle who became his heir at the company"
The Duke of Wellington was Arthur Wellesley.
So two famous mutual funds are named after this Duke of Wellington, the second one being:
Vanguard Wellesley Income Inv VWINX

Hi MikeM,
According to a test trade I just made, TIBIX appears to be available in Fidelity retirement accounts for a $500 minimum with a $49.95 transaction fee for the initial purchase.
Kevin

Hi Paul,
Mr. Marcus managed or co-managed Mutual Series funds for less than 2 years, so I doubt that he earned any "pedigree" during such a brief period. And if you look at the record of MEURX, the only fund he managed by himself, it trailed the category average until the last month of his tenure. So like many new funds, I usually recommend that folks watch until some track record develops and refrain from being an early buyer.
In the World Stock space, my short list of funds to consider would be DODWX, PGVFX, OAKWX and THOIX (per test trade, THOIX is apparently available in Fidelity retirement accounts for a $500 minimum with a $49.95 initial transaction fee).
Kevin

A brutal day today 7/31/2014:
Markets:
Dow -1.88%
Nasdaq -2.09%
S&P -1.98%
Russell 2000 -2.31%
EFA -1.67%
EEM -1.75%
GLD -1.15%
GDX -2.12.%
AGG -0.12%
Alternative Funds:
Whitebox Market Neutral Equity Investor WBLSX +0.09%
Whitebox Tactical Opportunities Investor WBMAX +0.55%
ASTON/River Road Long-Short N ARLSX -0.67%
BlackRock Global Long/Short Equity Inv A BDMAX +0.17%
PIMCO EqS Long/Short D PMHDX -1.53%
MainStay Marketfield I MFLDX -0.91%
Robeco Boston Partners L/S Equity Inv BPLEX +0.19%
Robeco Boston Partners L/S Rsrch Inv BPRRX -0.87%
RiverPark Structural Alpha Retail RSAFX -0.86%
RiverPark Long/Short Opportunity Retail RLSFX -1.38%
RiverPark/Gargoyle Hedged Value Retail RGHVX -1.59%
AQR Multi-Strategy Alternative N ASANX -0.30%
AQR Diversified Arbitrage N ADANX 0.00%
AQR Risk Parity N AQRNX -1.44%

The advisor just filed the closure notice.
There are two fairly narrow exceptions:
Institutional Shareholders:

• 401k plans with an existing position
  
• Automatic rebalancing of an existing position (as long as purchase amounts are de minimis, as determined by Grandeur Peak)

Retail Shareholders (Direct Shareholders Only):

• Retirement Accounts
  
• Education Savings Accounts
  
• Minor Accounts (UTMA/UGMA)
  
• Pre-established Automatic Investment Plans
  

The fund reports about $370M in assets and YTD returns of 11.6%, which places it in the top 10% of all E.M. funds. There are a couple more G.P. funds in the pipeline and the guys have hinted at another launch sooner rather than later, but the next gen funds are more domestic than international.
For what that's worth,
David

FYI: If Vanguard had a family tree, its roots would be Vanguard Wellington Fund. Now the nation’s largest balanced mutual fund¹, Wellington Fund began operations on July 1, 1929, 85 years ago this week.
Regards,
Ted
http://vanguardblog.com/2014/07/02/wellington-fund-and-the-vanguard-family-tree/print/

"has terminated the public offering of its shares and will discontinue its operations effective on or about August 1, 2014. Shares of the Fund are no longer available for purchase"
What's up with this?
Looks like the fund inception date was 5/30/2014
Wonder what made them change their mind.

(a little pricey, but...)
http://www.sec.gov/Archives/edgar/data/1208252/000111183014000530/cm_497e-0714_defensive.htm
497 1 cm_497e-0714_defensive.htm CM ADVISORS DEFENSIVE FUND - 497E
July 30, 2014
CM ADVISORS DEFENSIVE FUND
(CMDFX)
Supplement to the Prospectus dated May 30, 2014
Effective immediately, CM Advisors Defensive Fund (the "Fund"), a series of the CM Advisors Family of Funds (the "Trust"), has terminated the public offering of its shares and will discontinue its operations effective on or about August 1, 2014. Shares of the Fund are no longer available for purchase.
The Board of Trustees of the Trust, in consultation with the Fund's investment advisor Van Den Berg Management I, Inc. (d/b/a CM Fund Advisors) (the "Advisor"), determined at a meeting of the Board of Trustees of the Trust held on July 28, 2014 ("Board Meeting") to discontinue the Fund's operations based on, among other factors, the Advisor's belief that it would be in the best interests of the Fund and its shareholders to do so. Through the date of the Fund's liquidation, currently scheduled to take place on or about August 1, 2014 (the "Closing Date"), the Advisor will continue to waive fees and reimburse expenses of the Fund, as necessary, in order to maintain the Fund's fees and expenses at their current level, as specified in the Prospectus.
At the Board Meeting, the Board of Trustees directed that: (i) all of the Fund's portfolio securities be liquidated in an orderly manner not later than the Closing Date; and (ii) all outstanding shareholder accounts on the Closing Date be closed and the proceeds of each account be sent to the shareholder's address of record or to such other address as directed by the shareholder. In addition, the Board of Trustees decided to eliminate the Fund's redemption fee for all shareholder redemptions.
Shareholders may continue to freely redeem their shares on each business day during the Fund's liquidation process.
This transaction will be considered for tax purposes as a sale of Fund shares by shareholders, and shareholders should consult with their own tax advisors to ensure proper treatment on their income tax returns.
If you have any questions regarding the Fund, please call 1-888-859-5856.
Investors Should Retain this Supplement for Future Reference

Scott Minerd @ScottMinerd
Follow
#Fed says it will keep rates low even after employment & inflation meet targets. That says it all!
1:58 PM - 30 Jul 2014
July 30 2014
Despite a disconcerting, growing consensus among investors, the likelihood of a sudden increase in U.S. interest rates is fairly remote for now.
Global CIO Commentary by Scott Minerd
Most investors can agree that loose monetary policy and quantitative easing have caused overvaluation in some spheres of U.S. credit. Even Federal Reserve Chair Janet Yellen has said that some leveraged credit is showing signs of frothiness. But the palpable fear that the Fed’s eventual hiking of short-term interest rates will prompt a general upward shock in interest rates and an abrupt repricing of credit risk and U.S. Treasuries is getting overplayed and too much attention. The reality is that with international demand for U.S. Treasuries likely to increase and the size of incremental U.S. government borrowing expected to decline because of shrinking federal budget deficits, U.S. Treasury yields could move lower.
The likelihood that we are going to have a sudden, ugly increase in interest rates seems fairly remote for now. As for the long-run, well, the consensus view of interest rates normalizing will eventually come true. The problem with that thinking may lie in the definition of "long-run." As John Maynard Keynes wrote in "A Tract on Monetary Reform" in 1923, "In the long-run we are all dead."
http://guggenheimpartners.com/perspectives/macroview/normalize-to-what

Hey guys,
I was looking at Evermore Global Value and something seems amiss.
According to David's April update
http://www.mutualfundobserver.com/2014/03/evermore-global-value-evgbx-april-2014/
According to the post, David Marcus has substantial amounts of his own money in the fund. I was looking at the SAI and it states that he has between $100,000-$500,000. For a guy investing for so long and a former hedge fund manager, this doesn't seem like a lot.
The article goes on to state "The fund provides all of Mr. Marcus’s equity exposure except for long-held legacy positions that predate the launch of Evermore" All of his equity exposure (outside of legacy positions) is less than half a million?
By the way, thanks, David for the great post on this one.