FYI: It’s been a long time since the S&P 500 has experienced a double digit loss. The last one ended in October of 2011, so we’re coming up on three years of relative calm in the markets.
Markets always seem easier with the benefit of hindsight, but there’s always an economic, market or geopolitical headline at the time that adds to the uncertainty. There have actually been a couple of double digit losses since the market bottomed out in early 2009:
Regards,
Ted
http://awealthofcommonsense.com/even-bull-markets-arent-easy/

Years ago, the Vanguard International Index Fund started out as a fund-of-funds, holding shares of the European Index and Pacific Index Funds.
At some point, it, too, converted to a structure in which the fund held foreign shares directly.
Does anyone recall whether or not investors in Vanguard's International Index fund incurred capital gains distributions? If not, how did Vanguard do it? Clever timing (i.e., conversions incurred at a time when there was a loss), or something else? Thanks.

First, a clarification on funds. The fund you're referring to was (and is) Vanguard Developed Markets Fund. As you wrote, it used to hold two index funds. In late 2008/early 2009 it switched to investing directly in stocks. Earlier this year, Vanguard merged it into its Tax-Managed International fund, and called the resulting fund Developed Markets Index Fund.
AFAIK, there isn't/wasn't a fund called Vanguard International Index Fund. There was (and is) however, a Vanguard Total International Index Fund. That fund used to be comprised of three index funds - European Index (VEURX), Pacific Index(VPACX), and Emerging Markets Index(VEIEX) funds. (Tickers are correct - Vanguard invested in Investor class shares, not Admiral class shares.)
About half a year or so before Developed Markets was allowed to invest in individual stocks, Vanguard started the same transition for its Total International Index Fund. Vanguard announced the completion of that transition Feb 27, 2009.
Here's a Bogleheads thread on the Total Int'l Index fund transition. In it, the second poster quotes from the Vanguard announcement:

The change ... is not expected to result in capital gains distributions to shareholders.

So that's part of the answer to your question.
As to how, your guess may be correct. Note that these conversions took place late 2008 early to mid 2009, when most funds were sitting on large losses due to the market collapse. Clever timing indeed.

Hi bee,
I am not familiar with Isralesen, so appreciate if you can share some reference point of credibility.

Ted provided this link to other referenced articles.
financial-planning.com/thought_leaders/israelsen.html
If youe're asking me, "Is he a quack?"
Well, he does have a PHD after his name (so he may like to Piles it Higher and Deeper).

Then there is the 8.3% in cash. Is this for planned withdrawals? If not, perhaps a ultra-short bond fund would be a more prudent option. Perhaps it would be better just to invest in a mix of 5-6 'dynamic allocation funds' like FPACX, TIBIX, MALOX, PRWCX, OAKBX, etc. In the end, there is no perfect allocation. The ideal allocation is one that an investor can live with when times are bad. I am not sure about this one.

I personally have no problem substituting "cash" with short term bonds or similar vehicles.
In another article by Israelsen as weighting in the other eleven pieces of the pie ebb and flow the cash position is available to help rebalance those positions.
There also is an age based adjustment to cash with his allocation strategies. From 50-60 years of age his startegy raises cash (from 8.3% to 20% cash), 60-70 (40% cash), and 70+ (60% cash). I start to worry about "growing" a portfolio when holding this much cash. Cash can buoy a portfolio during market down drafts, but act too much like an anchor when markets rise.
Finally, judging by the performance of the the three cash/equity allocations compared to the two "non-cash indexes" he used as benchmarks (Vanguard's Balanced Index and Vanguard's S&P 500 Index), cash does seems to have a dampening effect of portfolio DD% as shown here (check out the yellow highlighted results for 2008):

I never understand the kind of allocation advocated, where every piece of the pie gets equal treatment. And the 25% in 'alternatives' could be problematic. Then there is the 8.3% in cash. Is this for planned withdrawals? If not, perhaps a ultra-short bond fund would be a more prudent option. Perhaps it would be better just to invest in a mix of 5-6 'dynamic allocation funds' like FPACX, TIBIX, MALOX, PRWCX, OAKBX, etc. In the end, there is no perfect allocation. The ideal allocation is one that an investor can live with when times are bad. I am not sure about this one.

None of these are particularly aggressive. In fact Templeton, Fidelity and Loomis are among the more conservative international bond funds, and Loomis has almost 35% in domestic bonds. PIMCO uses their typical derivative hocus-pocus to reduce volatility.
All of these funds have been pretty tame in reality. STDs are pretty tame, not a lot more than most domestic bond funds.

It is unrealistic to expect shareholders to "elect" trustees for their mutual funds. First, investors do not own ALL funds at a shop, so they shouldn't be allowed to select trustees that oversee all funds at shops with multiple funds. It is an idea that can be explored at boutique shops with ONE fund.
Even at boutique shops with one fund, how does one elect trustee at inception?. Even otherwise after a few years, it would need a sufficient number of investors in the fund to make this meaningful. Then again why would someone who has $1M invested in a fund care about what someone with $1000 invested thinks about who is the trustee. And do we want our trustees to be politicians and campaign for election.
The problem is so many articles are written to sensationalize a concern but do little to offer real solutions. I know the world sucks, but what can I do about it? I do my research and FWIW land upon a fund I want to invest in. One fund sucks and trustees don't get paid anything. Another does well and pays trustees $100K each. Which fund do you think I'm investing in?
Berkowitz owns $150M (I believe this is correct) of FAIRX shares. The largest shareholder. He is the chairman of the board of trustees at Fairholme. Anyone else deserves to be? Shareholders should elect someone else? Why?
If someone is genuinely concerned about the problem then offer a solution. Telling me my fund company is doling out earnings made on collective assets of mine and other investors only gives me an ulcer. It does not give me any options. If WSJ really cares about investors, then be bold and suggest a regulation - a good one for a change - such as "A trustee receiving compensation to be on the board of a Mutual Fund needs to receive 50% of that compensation in fund shares in an IRA". OR "Trustee needs to have $100K invested in the fund". Maybe that will attract the right kind of "trustees".
This is about helping the investor. Otherwise an article like this is not even news. Yesterday I learnt my plumber overcharged me and that ticked me off. This article just ticked me off again.

FYI: Little-known, directors of mutual funds can pull in six figures—for what?
Regards,
Ted
http://online.wsj.com/articles/on-board-at-a-mutual-fund-1409757187#printMode

FYI: For long-term investors only: two intrepid world-bond funds and two emerging-markets bond offerings.
Mutual funds that focus on foreign bonds, while not especially large in number or in assets, are an especially eclectic group.
Regards,
Ted
http://news.morningstar.com/articlenet/article.aspx?id=663852

@VintageFreak.
Me too. My very first screening criteria was to look at min return over any rolling 3 year period.
But I think you are right that 5 and perhaps even 7 may better capture cycle for more patient investors.
Perhaps could start making available in screening tools max and min 3, 5, 7 rolling returns for all funds.
Will work on that!

We really REALLY appreciate the hard work you put into these things Charles. I'm sure you have so many other things to do and at the risk of stating the obvious, all of those managing MFO are true treasures.

Interesting that on a down tech day for the NASDAQ, MATFX held its share price. Nice to see all other Matthews Asia funds green.

@Gary: The farm is located north of Epworth, a little more than half way between Dubuque and Dyersville.
Regards,
Ted
http://www.dubuquecounty.org/LinkClick.aspx?fileticket=l_5MpQakit0=&tabid=193

SEPTEMBER 03 2014
Aggressive central bank accommodation from Europe to Japan and a dovish Federal Reserve bode well for equities and bond prices.
Global CIO Commentary by Scott Minerd Guggenheim Partners
Back at home, we expect the Fed’s band will keep playing its merry tune for now. The voting members of the Federal Open Market Committee in 2015 will be even more dovish than the current committee. If there is a risk, it is that the Fed will keep monetary policy at a high level of accommodation for longer than previously anticipated.
Financial markets heard the sweet song of easy money from Jackson Hole loud and clear, sending equities up strongly while driving U.S. Treasuries’ prices higher and yields lower. The recent high of the New York Stock Exchange Advance-Decline Line supports this optimistic hypothesis, suggesting that stock prices will continue to reach new highs.
http://guggenheimpartners.com/perspectives/macroview/central-banks-pump-up-the-volume?

Yes, we did very well in tax-free around this time. I figured that if inflation (then figured to be 15-20%) were to keep increasing the money in the bank would be worthless anyway- why not buy tax-free at 14-15% and see what happens next?
Worked out nicely, for a change.

Thanks for your thoughts, everyone.
@msf, I guess that makes sense about PDI, but I'm not sure it makes me feel better -- it gives the manager an extra motive to lever up, though he's got a ton his own money in the fund that I presume he believes what he's doing. Is that common for CEF expenses?
I haven't read the prospectus/offering, I'm not planning to invest in it unless there's a major dip (I like my bond funds boring), though I sure regret not having bought it a year ago. Anything striking in the prospectus?

Sorry, I don't generally pay too much attention to closed end funds - haven't found a use for stock funds, and most bond funds are leveraged. (There's additional risk with leveraged funds, especially in a rising interest rate environment, and while I don't necessarily like my bond funds too boring, that's one factor I prefer to take out of the equation.)
I only dug up the offering for a clearer description of the expenses. So I haven't looked through the rest of the doc. If I were considering an investment, I'd be reading through it to understand all the types of securities it might buy, how it treats currency, how it compares in strategy, flexibility, and risks with PIMIX. I'd be especially focused on how it manages risk, given its high leverage and short lifetime.
With respect to ERs I generally try (but don't always succeed) to keep domestic stock funds under 1%, bonds under 0.5%, with a little more play (10 basis points or so) for international stock, small caps. Like others, I'd consider special funds that slightly exceed these parameters, such as the aforementioned LSBDX (0.63%), and TGBAX (0.61% - I wouldn't pay up for TPINX even load-waived).

Related Article from T. Rowe Price:
Encouraging Signs in the Health Care Industry
"Usually a defensive sector, healthcare has been a leading performer in recent years. Nevertheless, highflying biotechnology stocks suffered a steep decline earlier this year. Taymour Tamaddon, manager of the Health Sciences Fund, discusses recent trends and the current outlook."
linked Article:
Encouraging-Signs-in-the-Health-Care-Industry

Ag Growth International (AGGZF.PK) - a Canadian company (pays nice monthly div) that makes silos and other such containers - has done really well as a result of a bumper crop that isn't getting to market. Railroads have a lot to ship, to the point where the Canadians have mandated that railroads ship x amount per week. ADM has done well. Some ag companies are doing well as a result of this, some not.
I will say I think rails are overvalued, but I also said that 10-15% ago.

I bought some corn from local vendor two weeks ago. 6 for $3, or 13 for $5.25. I,ll give you one guess which deal I made.
Way to score Mo !!!
Derf

@VintageFreak.

Actually I think lower numbers are useful.
3 would show how fund does across typical 50% declines
5 would show investor patience justified or not (all those people lamenting investor returns don't match fund returns need to get a reality check)

Me too. My very first screening criteria was to look at min return over any rolling 3 year period.
But I think you are right that 5 and perhaps even 7 may better capture cycle for more patient investors.
Perhaps could start making available in screening tools max and min 3, 5, 7 rolling returns for all funds.
Will work on that!

Oil seen to continue downtrend.
Brent Oil Climbs Above $101, Rebounds From 16-Month Low
Reuters | Updated On: September 03, 2014 17:44 (IST)
Global benchmark Brent and US crude plummeted on Tuesday, pressured by a sharp gain in the US dollar and concerns over slowing oil demand growth in China and Europe.
Brent crude was up $1.05 at $101.39 by 1125 GMT (4:55 p.m. in India) after settling at its lowest since May 1, 2013 on Tuesday. US crude traded up $1.00 at $93.88 after settling down $3.08 from Friday's close. Monday was a US holiday.
"You would expect the market to bounce after such a major downward move yesterday," said Tony Machacek, a broker at Jefferies in London. "Fundamentally, the oil market is well supplied and the indications are prices are still in a downtrend."
http://profit.ndtv.com/news/industries/article-oil-climbs-above-101-rebounds-from-16-month-low-658574
PS Ted,when's your I P O ?
Gladstone Land Corp(NASDAQ:LAND
Gladstone Land Corporation is an externally-managed real estate company formed to invest in farmland located in agricultural markets throughout the United States. The Company’s farmland is concentrated in locations where tenants are able to grow annual row crops
Glyndon Park/Seeking Alpha
Emerging Themes In Alternative Investments: Farmland As An Asset Class Part I
Sep. 1, 2014 10:23 AM ET http://seekingalpha.com/article/2463295-emerging-themes-in-alternative-investments-farmland-as-an-asset-class-part-i
Farmland Partners Inc
(NYSEMKT: FPI)
Farmland Partners Inc., is an internally managed real estate company that owns and seeks to acquire primary row crop farmland located in agricultural markets throughout North America. The majority of the farms in its portfolio are devoted to primary row crops, such as corn and soybeans
I own LAND. VERY VOLATILE ! !