@Andy. Yes, think we lost lock. Not sure I'm following the issue, sad to say, again.
When you say M* has it, you mean because M* gives PRBLX 5 stars...but it's not a GO on MFO?
If that is the issue, the explanation is easy. M* uses a composite of years 3, 5, and 10 when assigning stars. In the case of PRBLX, here's what M* has:

In this case, those 3, 5, and 10 year ratings turn-out to be same ratings MFO assigns. Right? The difference is for a fund to be designated an MFO GO, it must be to in top quintile for all evaluation periods.
Really that simple. Believe results are consistent with definitions in both rating systems.
Note too that M* has PRBLX risk at 1 or "Low", while MFO has it as 4 or "Aggressive." The difference here is MFO's system is hyper sensitive to risk and all funds are rated against market, while M* rates risk within category. So, a volatile fund like VGENX can get low risk rating at M* because its within the energy category, which is generally volatile as a whole.
For a closer look at the M* system, might check this out: http://www.mutualfundobserver.com/2014/03/morningstars-risk-adjusted-return-measure/
If I'm still missing the issue, I apologize. Happy to keep assessing if you see something amiss.
PS. Looks like we match here too...

>> step 1 Do nothing until the $+P 500 drops 30% from its most recent high
How many buying opps does this represent? I am having trouble reading the history.

>> step 1 Do nothing until the $+P 500 drops 30% from its most recent high
How many buying opps does this represent? I am having trouble reading the history.

OK,will try to defend myself though I don't mind criticism. All of us know people who are afraid to invest of the stock market for fear of loss.We often suggest they dip their toe in but we are afraid to strongly encourage them because of our fear that we will make them invest just in time to have their head handed to them.I am basically suggesting that if we wait fora 30% dip and follow with dollar cost averaging it seems unlikely that this investment will show a loss.. While past performance etc etc. if such a strategy only failed during the south sea bubble there is a good chance that we will not make our friend unhappy with us.

I kinda see where you're coming from, Charles, but not really. I'm not able to get past the fact that since SMVLX launched, a period that includes both up and down markets, PRBLX has gained 85% cumulative vs. SMVLX's 63% ... with lower drawdown.
From that ~ full cycle history, I think Morningstar has its numerically-based distinction about right. Not sure exactly what accounts for the difference, other than the fact that a 3y-5y basis right now in history gives the nod to any fund that thrives best in a bull market ... so the difference is apparently that M* weights downside risk more than MFO.

FYI: Copy & Paste 6/21/14:
Regards,
Ted
A well-thought-out exit strategy is vital to the success of a mission, as the recent events in Iraq demonstrate quite dramatically.
Given that unfortunate example, it might be well that the Federal Reserve appears to be thinking about the consequences of the end -- and eventual reversal -- of its massive experiment in monetary stimulation. Last week, the Financial Times reported that the central bank is mulling exit fees on bond mutual funds to prevent a potential run when interest rates rise, which, given the ineluctable mathematics of bond investing, means prices fall. Quoting "people familiar with the matter," the FT said that senior-level discussions had taken place, but no formal policy had been developed.
Those senior folks apparently didn't include Fed Chair Janet Yellen. Asked about it at her news conference on Wednesday, she professed to be unaware of any discussion of bond-fund exit fees, adding that it was her understanding that the matter "is under the purview" of the Securities and Exchange Commission.
That nondenial denial leaves open the possibility that some entity in the U.S. financial regulatory apparatus is indeed mulling bond-fund exit fees. The Financial Stability Oversight Council established by the Dodd-Frank legislation oversees so-called systemically important financial institutions, or SIFIs, which include nonbank entities. And, indeed, the FSOC has considered designating asset managers as SIFIs, as Barron's has noted previously ("Why Fund Firms Aren't Too Big to Fail," June 2).
To Dan Fuss, the longtime chief investment officer at Loomis Sayles, the exit-fee story seemed like a "trial balloon." But, he added, "from a practical point of view, I don't think it has a snowball's chance in hell, given the resistance from the retail distributors of mutual funds."
Still, he continued, "it won't make me very popular -- but I think it's a good idea." That's from someone whom I would call the Buffett of bonds. Like his fellow octogenarian in Omaha, Fuss has lived through more than a few market paroxysms and has been able to take advantage by putting money to work opportunistically during panics. Unlike the head of Berkshire Hathaway, Fuss also has had to contend with outflows from his flagship Loomis Sayles Bond fund and the firm's other corporate-bond funds, as happened during the 2008 financial crisis. For staying the course during those dark days, Fuss was named Morningstar's Fixed-Income Manager of the Year in 2009.
The latter vantage point no doubt informs his endorsement of the concept of exit fees for bond funds. As the FT quoted former Fed Governor Jeremy Stein, bond funds give investors "a liquid claim on illiquid assets." That is most acute for open-end, high-yield bond funds, Fuss says, and extends to exchange-traded funds "in less liquid areas," which would apply to junk-bond and bank-loan ETFs.
It is a fact of financial life that most bonds are relatively illiquid, in part owing to their bespoke nature; every bond has its own unique coupon rate and maturity, plus possible features such as call options, seniority, and security, even among the same issuer. In contrast, every common share of most companies is identical (with exceptions for stocks with multiple share classes). Multiple buyers and sellers of the same item is economists' definition of a perfect market, as with a commodity such as wheat. Big, listed stocks come close; bonds, given their granular nature, don't.
The problem of liquid claims on illiquid assets is etched into American culture in the Christmas-time classic film, It's a Wonderful Life. Faced with a run on his savings-and-loan, Jimmy Stewart pleads with his depositors that there's little cash in the till because the money is invested in the townfolks' mortgages and businesses. The practical solutions to this conundrum: deposit insurance and having central banks act as lenders of last resort.
Those facilities don't apply to bond funds now, and didn't to money-market funds in 2008. Following the Lehman bankruptcy, the Reserve Fund "broke the buck," with its net asset value falling below $1 a share. The resulting run on that money fund and others exacerbated the crisis as this source of funds to the money market dried up.
Officials fear that bond funds could represent "shadow banks," the FT writes, intermediaries subject to runs but without resort to the backstops available to banks. Yet, the irony is that the rush into bond funds is a result of the Fed's own policies of pinning interest rates to the floor, which spurred investors to seek income wherever they could find it. As a result, bond funds have ballooned to $3.5 trillion -- with a T -- according to the most recent data from the Investment Company Institute. That's close to the Fed's securities holdings, which total $4.1 trillion.
Statistical evidence of that reach for yield comes from a research paper from Bank of Canada economists Sermin Gungor and Jesus Sierra (which was passed along by Torsten Slok, chief international economist at Deutsche Bank Securities).
Not surprisingly, low rates spurred bond funds to increase the credit risk in their portfolios to boost returns. Canadians, it's safe to assume, are no less desirous of maintaining investment income than are their neighbors to the south.
But with investors having stampeded into bond funds, would exit fees be effective at keeping them from stampeding for the exits at the first sign of higher yields and lower prices? Research suggests otherwise. And, ironically, it comes from within the Fed itself.
According to a New York Fed staff paper by Marco Cipriani, Antoine Martin, Patrick McCabe, and Bruno M. Parigi (and surfaced by Zerohedge.com), impediments to redemptions could actually spur bond-fund investors to sell first and ask questions later. In other words, exit fees or "gates" to discourage redemptions could backfire.
In Sartre's No Exit, hell is famously defined as "other people." The crisis that might ultimately await bond-fund investors is the prospect of being stuck with their fellow shareholders as yields rise and prices fall, rather than paying a ransom to escape. The existential choice facing bond-fund investors is whether to stay and face that prospect, or exit while they can -- if they are not prepared for a long-term commitment.
THE SUMMER SOLSTICE just arrived in the Northern Hemisphere, putting the sun highest in the sky. And, appropriately, the major stock-market averages closed the week at records, notably the Standard & Poor's 500 and the Dow Jones Industrial Average, which approached another round-number milestone: 17,000.
The latest liftoff came after Fed Chair Janet Yellen made clear that neither rising inflation nor soaring asset prices would deter the central bank from monetary tightening. She called the uptick in the consumer-price index, which is running above the Fed's 2% inflation target (admittedly using a different gauge, the personal consumption deflator), "noisy." But it's hurting Americans' budgets more than their ears.
In essence, Yellen endorsed the view espoused by hedge fund mogul David Tepper a couple of years ago, that the course of monetary policy "depends" on the economy. If growth is sluggish, policy will remain accommodative, which is bullish for risk assets. Interest-rate hikes won't come until there is strong growth, which also is bullish. And as long as the monetary authorities have their back, investors have little reason to worry. So, volatility premiums collapsed in the options market; if the Fed is offering free insurance, why pay for it with hedges?
This benign environment is spurring investors to vote with their portfolios. Michael Hartnett, chief investment strategist at Bank of America Merrill Lynch, notes a big, $13 billion inflow into equity mutual funds in the latest week and the first outflows from bond funds, totaling $2.3 billion, in 15 weeks.
Have fund investors finally been infused with animal spirits? Hard to say, given that the equities data showed a record influx into utilities, some $1.2 billion, which Hartnett suggests indicates some chasing of that group's torrid past performance, up some 16% in 2014. Utility stocks are viewed as first cousins to bonds; income is their primary allure, but with the prospect of dividend growth, that should trump fixed coupons.
Still, public participation in the stock market has yet to evince irrational exuberance, notes David Rosenberg of Gluskin-Sheff. In other words, the market has yet to violate rule No. 5 of Bob Farrell, the legendary market analyst at Merrill Lynch -- that the public buys most at the peak and least at the lows.
Tops, Rosenberg explains, typically show a melt-up of a heady 11% over 30 days, which represents a first peak. A pullback lures neophytes and momentum chasers "hook, line, and sinker," to form twin peaks. That pattern was apparent in November 1980; August-October 1987; June-July 1990; April-September 2000; and July-October 2007, he points out.
To quote every parent of young kids, we're not there yet. But, Rosenberg relates, there also is Farrell's rule No. 7: Markets are strongest when they are broad and weakest when they narrow to a handful of blue chips.
Another veteran market maven, John Mendelson of International Strategy & Investment Group, last week pointed to the declining number of New York Stock Exchange stocks trading below their 200-day moving averages, a sign of waning momentum in the broad market that he says represents a "negative divergence." That is especially so with the major averages notching records.
So, easy money continues to float Wall Street's yachts. Belatedly, the gold market also has noticed, with the metal surging 3% on the week, and mining stocks leading the advance. Gold may be sending the true signal, above the supposed noise from the inflation indexes.

Roger, understood; am using Miraculous Multisearch now, which is much more useful.
I would still urge tweak of GO criteria such that no one could write things like this:
"SMVLX is a much younger fund [[hence not really an owl?]]. It gets GO status because of its top quintile performance the past 3 and 5 years, so different league ... compared a top 20 year [[non-GO]] like PRBLX. And ... I suspect SMVLX will not do so well when market heads south...much worse than PRBLX for the reasons you point out. I don't see much in way of downside protection there."
Some real disconnects going on for owl designation. I do get your numbers and history points, sure. GO title to me implies something rather wiser than 'Strictly Numerical Winners'. That's all.

Good stuff Andy.
OK, I think I see what you are getting at...sorry for being slow.
Yes, funds like YAFFX do have higher standard deviations than PRBLX.
So, if you equate standard deviation with downside risk, then sure its "underweight."
But, during the past five year bull, funds like YAFFX had higher standard deviation (and higher absolute return), but lower downside deviation and lower Ulcer Index than PRBLX .
So, if you equate downside deviation and/or Ulcer Index with downside risk, then I think the result is consistent.
The rating system is based on Martin, which is related to excess return over max drawdown (aka Ulcer Index), for the period being evaluated.
Break, break.
SMVLX is a much younger fund. It gets GO status because of its top quintile performance the past 3 and 5 years, so different league to me compared a top 20 year, like PRBLX.
And, probably like you, I suspect SMVLX will not do so well when market heads south...much worse than PRBLX for the reasons you point-out. I don't see much in way of downside protection there.
Hope that helps...think we are seeing same things.
Thanks man.
PS. Here are the five year stats for the three funds we talking about:

Charles: " It is PRBLX's performance during the five year bull market that lands it in the 4th quintile."
Sorry to disagree, but that factoid actually supports the notion that low downside risk may be somewhat underweighted in the MFO system.
The icing on the cake is the fact that SMVLX makes the cut and PRBLX doesn't. Since inception of SMVLX, $10k invested there would be $16,300+ vs. $18,500+ for PRBLX - 63% cumulative vs 85% - with the '08-'09 performance the difference. I think that comparison highlights an underweight of loss avoidance (or, alternatively, an overweight of recent performance) in the MFO system.
For reference, both SMVLX and PRBLX are top quintile overall in the M* scheme. They get there by different routes: SMVLX with "above average" risk and PRBLX with "low" risk.

If you are sleeping well as it is, you are ahead of many others. If you are well diversified, you should not see a 50% loss or have to worry about it. I am more diversified than I used to be and as we age, that is always a good thing since we have less time to recover. If we have learned anything from the past ten years it is this: its very tempting to belong to the church of whats working now, but diversification works best in the long run. My funds that were flat last year are year to date best performers with 12% + ytd. I have no pimco funds but congrats on your PIMIX.

@AndyJ. The protocols actually do wickedly well at flagging funds that avoid large and/or extended drawdown. It is PRBLX's performance during the five year bull market that lands it in the 4th quintile. Its five year Martin placed it in spot 66 of the 405 Large Blend funds. Pretty darn good. But in the top qunitile are some other strong performers, like YAFFX, YACKX, BBTEX, SMVLX and OAKMX - Great Owls all of them.
If you are interested, here's link to methodology: http://www.mutualfundobserver.com/2013/06/ratings-system-definitions/
@davidmoran.

...TWEIX, AMANX, GABEX, SSHFX, and GABSX --- much less PRBLX!

These have all been great long-term performers...top quintile in MFO system. Here's link to summary:
http://www.mutualfundobserver.com/fund-ratings/?symbol=TWEIX,+AMANX,+GABEX,+SSHFX,+GABSX,+PRBLX&submit=Submit
Congratulations on holding them.

>> step 1 Do nothing until the $+P 500 drops 30% from its most recent high
How many buying opps does this represent? I am having trouble reading the history.

Seriously, stop trying :D. Why do we do this to ourselves?

>> step 1 Do nothing until the $+P 500 drops 30% from its most recent high
How many buying opps does this represent? I am having trouble reading the history.

Sounds to me same article could be written as "buy smaller cap funds instead of larger cap funds" and we just hit the right 15 year period to write and article.

@VintageFreak
Your lasik surgery resulted in 20/15 hindsight? Remarkable--- must be hella implants!
But now, additional meanings will have to be given to 2 phrases:
1. "Objects in the rear view mirror may be closer than they appear."
2. "Hey, buddy, you've got it back-ass-wards," [to which you can reply, "Why, yes, indeed I do!" :) ]

But seriously, unless you had a number of like -20 something, lasik should give you 20/15, or you need to ask your money back. At night, feels like "less" light penetrating into the eye. I feel I have to be VERY alert eyes open wide driving at night. Of course, it could be psychological. I did it because I was very ticked off losing my glasses during a very overdue vacation at the beach, came back and did it very next weekend. If I had thought about it, I probably wouldn't have. I'm already so good looking doesn't make much difference :P
Now REALLY seriously, how many moving average crossovers, and drawdown % buy/sell surefire formulas do we need? It would seem every so often we have these discussions looking at the past and try to predict the future. Sorry, but that's nuts.

Slick,
I have achieved my retirement goals (retired)...and won't really need to draw upon any of the funds for at least another 5-7 years (when my wife retires). However, along the way with asset allocations similar too or greater than yours, we endured portfolio fluctuations of 3-500K several times. From 1987 going forward, I've experienced them all and as I age, in an effort to avoid losses of that magnitude again, I have become perhaps overly concerned about limiting downside risk (not the 10% kind...the 50% kind). I agree that my portfolio at 42% equities is conservative...perhaps overly so, but for the present, I sleep much better at night. There are worse things than just reinvesting the bond income stream. Have you seen what the YTD total return of PIMIX is?

@dgoodrow,
I am the same age as you and I am 70% equities, 30% bonds and cash. Depending on your needs and individual situation, as many here will tell you, you might be a bit too conservative. If however you have determined what you need in retirement and 50/50 can get you there and you sleep better at night, its fine. I am currently adding to three funds at market tops from the sale of a stock , not too much at a time, but have learned that whether you dollar cost average in or do it in a lump sum, if they are retirement accounts, it won't matter too much in the long run, assuming they are not huge amounts. If we do have a blow out second half, I will reallocate at year end, as I do not want to be over 75% equities.
Welcome to the board and please keep posting, and let us know what you decide.

Things that folks said, not quite in passing but not quite for attribution:
Ralph Wanger won't be back. A fund manager had an exchange with him that went something like this:

Squirrel One: Do you know what my first quarter returns were?
Amiable Foil: Uhhh ... no, I don't.
Squirrel One: That's right! And neither does anyone else! (Laughing) I'm so happy.

Amit Wadhwaney (Marty disciple, ex-TAVIX) might well be. Perhaps within a year.
It's not exactly a rolling coup, but the fact that Third Avenue was introducing three new managers (for Value, International and Real Estate) at the conference wasn't inconsequential. Marty loves investing but didn't really love a fund company and so delegated those responsibilities to folks he thought shared his vision. Ooops. AMG + Ooops = change of culture, change of team.
Smead Value (SMVLX) will soon be getting cheaper. They're one of three or four boutiques that are either seriously reviewing fees or have committed internally to dropping them.
Litman Gregory Masters Alternative Strategies (MASNX) won't. Representatives of the fund seemed surprised that anyone thought they were overpriced. Their contention was that they charge fees below the Morningstar multi-alternative group average.

Insert "uhhhh" about here.
This is a damnably tough category to price because of the very variable nature of short expenses and the prevalence of fee waivers, some of which Morningstar doesn't credit. Here are the numbers as best I can find them:
MASNX, expenses ex shorting: 1.74%
MASNX, expenses including shorting: 1.91%
Median expenses, no-load multialternative: 1.65%
Average expenses, multialternative: 1.69%
MASNX, gross expenses before waiver: 2.06%
Worst in class expenses: 4.74%, Hatteras Hedged Alpha "C"
Number of multi-alt funds, all share classes: 429
Number of multi-alt funds with expenses reported in the M* database: 372
Number of multi-alt funds more expensive than 1.91%: 129
Number of multi-alt funds less expensive than 1.91%: 243

Number of no-load retail multialternative funds: 84
Number of no-load retail multialternative funds cheaper than MASNX: 59
Number of no-load retail multialternative funds smaller and cheaper than MASNX: 52
But number of those smaller, cheaper funds that outperformed MASNX in 2013: 18/52
Number of smaller, cheaper funds that outperformed MASNX over the past 12 months: 25/52
Here's the inception-to-date picture.
Bottom line: clearly expensive, but not clearly overpriced.
For what it's worth,
David

Getting back to the topic at hand, "New highs doesn't mean you should sell", but is it really time to buy more equities? Between my core balanced funds and dedicated bond funds, my portfolio has about 50% bonds (I'm 63). In light of pending problems for bonds going forward, I wouldn't mind reducing that percentage by a little...but with equities at all time highs? Cash is no fun....

Although I had never given any real consideration to the phrase: "20/20 hindsight", which really only means normal vision, I now realize that hindsight is at least 20/10, perhaps 20/5, maybe even 20/2. In the future, I will claim at least 20/10 even with my developing cataracts.
What I really need is the gene that provides better than 20/20 foresight, which I think equals index returns.
Does anyone besides me think this is off-topic?

@jerry
re. step1. Yes, PLEASE. And if it would not be too much to ask, could you or one of your insider contacts get that going sometime before summer's end? A return to a more fundamentals pricing policy would be greatly appreciated. Thanks in advance, xxxxxxx
@VintageFreak
Your lasik surgery resulted in 20/15 hindsight? Remarkable--- must be hella implants!
But now, additional meanings will have to be given to 2 phrases:
1. "Objects in the rear view mirror may be closer than they appear."
2. "Hey, buddy, you've got it back-ass-wards," [to which you can reply, "Why, yes, indeed I do!" :) ]

Hindsight is always 20/20 folks. I had lasik done so it is 20/15. Good luck to all of us and hope S&P does not drop 30% and then we don't have to sell, ever. THAT will make more money :P