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

Wonderful, wonderful. If you own it, congrats...

Hi David.
Here status as of 1Q14:
http://www.mutualfundobserver.com/fund-ratings/?symbol=PRBLX&submit=Submit
Right, it just misses cause the 5 year returns "only" rate a 4 (4th quintile).
But, by the numbers, PRBLX is excellent, GO or not.
Give me a minute and I will look at the cycle and life time numbers.

That is not a statement that it will outperform any index just that it will show a gain over a specific period of time
step 1 Do nothing until the $+P 500 drops 30% from its most recent high
At that point dollar cost average into a 500 fund over the next 36 months and sell in the fourth year once you have achieved long term gains on your investments. It is possible that this did not work for some past date other than starting in 1970 and selling in 1974 but I have trouble thinking of one.(and am not sure the market had dropped 30% in 69-70

@Guido: FYI: I have been linking John Waggoner's weekly USA Today column for over 15 years here at MFO & FundAlarm.
Regards,
Ted
http://www.mutualfundobserver.com/discuss/discussion/14189/john-waggoner-new-highs-don-t-mean-you-have-to-sell#latest

Related News:

Proposals to replace the 117-year-old system of fixing prices for the $5 trillion silver market are poised to add more transparency for the London benchmark used in the $18 trillion gold industry as well.
London Bullion Market Association members will hear firms’ proposals tomorrow for alternatives, including electronic trading, to replace the silver fixing by banks that began in 1897. The daily procedure will end Aug. 14, when Deutsche Bank AG quits the meetings as part of the German company’s exit from commodities, leaving just two banks to set prices. The World Gold Council yesterday called for a meeting next month for the industry to discuss changes to its own valuation process.

bloomberg.com/news/print/2014-06-18/new-silver-benchmark-seen-heralding-gold-fix-revamp-commodities.html

"Global brands" certainly seem to represent a popular theme among the international crowd. There's really a sense that the emerging EM middle class will be a growth driver (50% of global GDP currently, 60% by the end of the decade) and that lots of emergent yuppies want to buy "the good stuff."
Not good for valuations, but good for growth.
David

Hi Professor David and MFOers,
With apologies to its author Elbert Hubbard, thank you for your Message to MFOers ( originally to Garcia). Your messages, in almost real time, of what’s what at the annual Morningstar Conference should permit us to take the investment initiative. So far that hasn’t happened. That’s not your fault. It’s like we are seated in the conference rooms with you.
It’s really not surprising that a fair review of the proceedings is almost always a mixed bag. Are the insights gleaned from the presentations worth the time and effort? Typically, these conferences generate a jumble of rubbish and a few gems. The wheat must be separated from the chaff.
For years (like 15), both my wife and I have been attending and even occasionally participating in the annual Las Vegas MoneyShow. Each year we question if the learning is worth the price. Yet each year we return with an optimistic mind-frame. Hope springs eternal. Fortunately we usually return home with a few nuggets of wisdom. So I suppose my answer is “yes”. Although the promises and expectations far exceed what is ultimately delivered, it is still a worthwhile time investment.
The Morningstar agenda at this conference is clearly directed at financial professionals. That suggests that the presentation bar should be set a bit higher given the likely sophistication of the audience.
Based on your summary reporting, the bar standard is unacceptably too low, or perhaps, the presentations are so generic or fuzzy, that the bar height can not even be accurately defined. That too is bad, but it is not a shock either. If the presenter actually had a special forecasting insight or investment preference, he/she is not likely to freely reveal it to a non-subscribing audience. If I were the presenter, I would reserve this gem for my paying clients.
I find it somewhat puzzling why a few MFO members are so short-tempered and even hostile towards Morningstar’s limitations, errors, and costs. Research and data collecting costs money. Folks are imperfect and blunders are made despite the best organizational, structural, and double-checking safeguards. Accepting that reality, I adopt a more forgiving posture. Even my Toyota was delivered with several minor flaws which the manufacturer quickly corrected.
I’m not advocating the elimination of skepticism. A skeptical attitude is needed when making all investment decisions. However, it has a limit to its usefulness. It has the usual diminishing returns characteristic. At some point, it detracts from permitting a timely decision from being made.
Morningstar is one of the preeminent mutual fund data sources available to us individual investors. Overall, it has served us well. How do I know this?
It has a growing legion of loyal customers who trust its services. It attracted a huge number of professionals at this session who were willing to invest time and to pony-up 795 dollars to attend these sessions. Its sponsor and exhibitor lists are impressive. It has a history that dates back to when Peter Lynch managed the Magellan fund. Morningstar must be doing something of service to the investing public.
Since it is a successful enterprise, it must be a win/win scenario for both the buyer and the seller. Otherwise money would not change hands. Morningstar is prosperous and expanding; it continuously tries to improve its products. Certainly not all of these experiments are successful or equally useful for its disparate customer base.
Early in its history, Morningstar was very weak on analytical talent. Originally they hired professionally trained writers while passing on market analytical/investment types. Eventually, Morningstar recognized that shortcoming and integrated Ibbotson into their team. As an elite provider of investment data and analyses, Morningstar is committed to keeping its edge. Sometimes their efforts work; sometimes these efforts fail. It is up to their users to assess the merits of these exploratory projects for their special circumstances.
It is far too easy to be a constant critic. The bad is overemphasized while the good is swept away without acknowledgment. If the Morningstar presentations are too dull or too inept, the answer is simple enough: abandon the ship.
As usual, Warren Buffett had a succinct and wise way of putting it: “ Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.”
Regardless of its shortcomings, I plan to continue using Morningstar as a primary mutual fund data resource. In the end, it is my responsibility to critically examine that data to judge its reliability prior to making a decision.
Your description of Bill Gross’s weird behavior is reminiscent of a like event at the recent Las Vegas MoneyShow. At that event, Ken Fisher made a presentation that seems to be a mirror image of Gross’s misstep. It was totally not decipherable and made no sense whatsoever. To be generous, everybody has a bad day. Perhaps it was caused by the Chicago air compared to the Newport Beach air? Nope, these guys are just being human.
We are often Fooled by a Random Success. I capitalized the phrase because I coupled a Nassim Taleb saying with a contribution from an old friend. Even tossing 10 consecutive heads doesn’t mean we’re in control. Luck is always an investment component. For what it’s worth, we each have a 1 in 1024 probability of tossing 10 straight heads. Not likely, but doable.
Professor, please keep the report flow coming. I wish I were there with you.
Best Regards.