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Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
  • Old_Skeet's Market Barometer ... Spring & Summer Reporting ... and, My Positioning
    Hi @Puddnhead,
    Thanks for making comment and for your question(s).
    For me to hold no load funds through my current broker I'd have to open another account which would have a wrap fee associated with it. Thus, I stick with what I can buy at nav and/or reduced sales charges. Thus, I hold no Vanguard funds.
    With respect to SPECX. It is one of my longterm holdings and due to its organic growth it now has a sizeable unrealized capital gain associated with it; and, should I sell it I'd owe the tax man. In addition, I have it paired with another Alger fund AOFAX which is closed to new investors. Both of these funds have been good long term performers for me.
    American Mutual (AMFFX) is a quality fund and one that I have owned, in the past. Years back, I did a nav transfer out of it into ANCFX and no longer hold American Mutual A share, AMRMX.
    Although, I do not own ANZAX I own another convertible securities fund FISCX and at one time had a whole sleeve of convetible funds. I hold FISCX in my hybrid income sleeve. It has been a good performer for me through the years. A fund that I own that has about 1/3 of its assets in convertibles is AZNAX which pays out 7 cents a share per month. That equates to about a 7.3% distribution yield based upon current valuation.
    I have six small mid cap funds. They are AOFAX, FKASX, KAUAX, LPEFX, PMDAX & SMCWX. I have no plans to eliminate any of them and may add to SMCWX and KAUAX in the future.
    I always enjoy reading your comments and perspectives. This is what makes the MFO board so great by the many investment ideas presented where investors are finding success. One of the things that I find of great interest in investing is that there is no one right way for finding success.
    Since, I have no long necks Bud Lights ... in the fridge ... I'll have to toast you with a Bud Light ... from the can.
    Keep up the good work ... and, remember me to DUKE!. Smart dog.
    Take care ... Old_Skeet
  • Exciting New Territory for the S&P 500
    SP index analyst Howard Silverblatt on 2nd quarter S&P 500 earnings:
    "For Q2 2020, 313 issues have reported, as estimates for Q2 2020 have been reduced 47.9% since the start of the year, which explains why 257 issues, an astonishing 82.1% of the issues, have beaten them (the historical average is 67%). "
    Estimates are way easier to beat when you lower them by nearly half, notes John Waggoner. BTW, the S&P500 increased 5.51% (5.64 with dividends), and the three-month period return was up 12.23% (12.87% w dividends).
  • Exciting New Territory for the S&P 500
    Interesting concept:
    It seems in this exciting new territory for the S&P 500, stock prices are reacting more to changes in the expected rate of growth of the Fed's balance sheet than they are to changes in the expected rate of growth of the S&P 500's underlying dividends per share.
    How long that might last is anyone's guess. The only thing we know for certain is that eventually, all periods of relative order, disorder, disruptive events, or bubbles in the stock market come to an end. It's only ever a question of when.
    order-disorder-disruptive-events
  • Old_Skeet's Market Barometer ... Spring & Summer Reporting ... and, My Positioning
    @Catch22 -
    The 39% YTD return for long duration zero coupon bonds is eye-catching. In seeking to enhance my cash allocation with some speculative plays last March I attempted to seek out the best risk / return possibilities in my judgment ... Sorry - But capital appreciation from long-dated “zeros” or other bonds isn’t something that comes to mind when I attempt to sort out relative risk-reward scenarios in the current financial environment. Not back in March. Not today. Others may arrive at different conclusions.
    -
    PS - Thanks @Catch22 for linking the chart. You’re my #1 bond guy and chart guy here. I hope you were able to pocket some of those great returns from bonds the past few months!
  • Vanguard U.S. Value Fund (investor class) to be reorganized
    AS of 7/31/2020:
    Marathon Asset Management LLP
    Baillie Gifford Overseas Ltd.
    Stay Safe, Derf
  • Old_Skeet's Market Barometer ... Spring & Summer Reporting ... and, My Positioning
    Hi guys,
    As of Friday market close July 31st not much has changed in the barometer's reading as the barometer produced a reading of 128 indicating that the Index is overbought. In checking some of the barometer's data feeds ... I thought I'd share some of the inputs that might be of interest for the S&P 500 Index. The dividend yield is listed at 1.82%, the earnings yield is found to be 3.45%, earnings for the Index (TTM) are listed at $115.55 and the (TTM) P/E Ratio is listed at 28.12. However and interestingly, I'm finding that the dividend growth rate is listed at 6.43%.
    Because of the fairly strong dividend growth rate Old_Skeet has been repositioning on the equity side of his portfolio and increasing his exposure to good dividend paying mutual funds and decreasing his exposure in some growth areas. Remember, I am retired and my focus is to grow my income stream since I am in the distribution phase of investing while at the same time, as a secondary objective, continue to grow my principal to offset the effects of inflation.
    With this, Old_Skeet is wanting to see better meterics before he becomes a buyer of equity ballast. And, with this, I am keeping on ... keeping on ... with my current asset allocation of 15% cash, 45% income and 40% equity. My normal asset allocation is 20/40/40. As you can see I am +5% heavy on the income side of my portfolio due to low cash yields and overvalued equities. On the equity side I'm 25% in the growth and income area and 15% in the growth area. In addition, my portfolio has an income yield of about 3.4% with a distribution yield (which includes capital gain distributions) of about 5%.
    Funds that I benchmark against (all with dividend yield's in the 3.4% to 3.5% range) are Income Fund of America (AMECX), Capital Income Builder (CAIBX), and American Funds Conserative G&I Allocation Fund (INPAX). A fund that I'm seeing some interest in is Cloumbia Flexible Capital Income, CFIAX. CFIAX has performed inline with my benchmark funds and with a higher yield at 4.8%. It just might soon become my 12th fund in my hybrid income sleeve.
    My three best performing funds for the month of July were SPECX +7.70% ... ANWPX +7.18% ... and, DWGAX +6.70%.
    Have a grand weekend ... and, I wish all ... "Good Investing."
    Thanks for stopping by and reading.
    I am ... Old_Skeet
  • Bond Yields Are Sending a Scary Signal on Stocks
    The article made only a passing reference to the ongoing fiscal stimulus being provided to the economy. At least a sentence or two more with some counterpoints about why the stock market will decide to ignore that stimulus would have been helpful. Here is a little of what Ed Yardini is currently writing about Modern Monetary Theory (MMT).
    So far, all the government stimulus has provided some support for the global economy. But the virus is still out there, and so are the recessionary forces. As a result, price inflation remains subdued even though much of the ballooning fiscal deficits are being financed by central banks’ purchases of government securities, which MMTers also support. In Kelton’s dreamland, that’s a perfect outcome, because she and her merry band of arm-linked MMTers believe that the only limit on deficit-financed government spending is price inflation. Sure enough, the US government has responded precisely as she advocates, producing one stimulus program after another. Another one is imminent, sized to the tune of $1.0 trillion, which will most likely cause the Congressional Budget Office to raise its current fiscal 2020 budget deficit estimate from $3.7 trillion to $4.7 trillion
    image image
    blog.yardeni.com/2020/07/welcome-to-oz-where-mmt-enables.html
  • Vanguard U.S. Value Fund (investor class) to be reorganized
    I agree with that sentiment, and would offer higher praise than "decent". But IMHO that applies to those actively managed funds that Vanguard outsourced to companies like Wellington, Primecap, and Bailie Gifford.
    https://mutualfundobserver.com/discuss/discussion/56592/time-to-get-jiggy-with-vwigx
    M*, Vanguard's Best Active Large-Cap Funds
    I'm inclined to take a closer look at funds submanaged by these money managers regardless of the family selling the funds. OTOH, Vanguard quant funds like US Value are run in house (at least in part) by Vanguard's quant group. Ignoring for the moment the question of whether quant funds are truly active funds, Vanguard doesn't seem to excel with them.
    On the one hand, you have a fund like VGIAX, where Vanguard keeps a tight leash on what the fund can do. The result with this fund is a large cap blend that tracks the S&P 500 closely (R² of 99.82%) with a slightly higher beta and lower alpha than VFIAX. Why bother?
    On the other hand, you have a fund like this VUVLX, where the leash is not so tight. From M*'s writeup: "changes made in 2016 resulted in a more flexible portfolio that has struggled to deliver." Given greater flexibility, the quant group didn't deliver: 2017, 2019, 2020 (YTD) - bottom quintile; 2018 - 73rd percentile.
    M* reports a similar relaxing of constraints for VSEQX in 2016, with fairly similar results (decline in relative performance).
    Investopedia blames some of this on Trump, or more precisely, his random tweets that make it harder for quant funds to function. FWIW.
    https://www.investopedia.com/why-quant-funds-are-stumbling-as-bull-market-rallies-4589215
  • Eastman Kodak stock price surge
    Day before the announcement on Kodak, trading went up to about 15X normal.
    Great to see insider trading made great again. Crony capitalism at its best.
  • ZEOIX misses
    It's not just tux rentals but clothing sales (Men's Wearhouse, Jos. A. Bank, etc.). "There is not going to be as much demand given the work from home environment." (CNN story, link below.)
    Tailored Brands had been working with bankruptcy advisors as early as mid-April. It wasn't as confident about its cash cushion as was Zeo Capital Advisors.
    https://www.cnn.com/2020/06/14/investing/mens-wearhouse-bankruptcy-threat/index.html
    Given the company's concerns over viability, it doesn't seem unreasonable that it took advantage of a standard grace period in the terms of the bonds. The semiannual interest payment was due July 1, but won't be in default until July 31.
    As of Oct 31, ZEOIX owned $13.6M (par) in Men's Warehouse bonds, valued at $13.3M. The fund increased its position slightly, holding $14.8M (par), valued at $14.6M at the end of January.
    But then ZEOIX doubled down, literally, increasing its position to $27.0M (par) as of April 30th. However, those bonds were valued at only $11.3M (42¢ on the dollar), a drop of 4/7 in value in three months.
    Maybe Zeo thought it was getting a bargain basement deal, if the price had dropped before purchasing the extra bonds. Or maybe it bought all those bonds shortly before Tailored Brands started looking into bankruptcy in April. Hard to tell from the timing.
  • ZEOIX misses
    http://www.zeo.com/documents/Reports/2020.Q2.ZeoQuarterlyLetter.pdf?goal=0_c45a9658bc-7815b58e3a-332418909
    a company that had enough cash on hand to pay interest decides not to. Is it unreasonable to expect that in March they should have known Proms were DOA for the time being?
  • MetWest Flexible Income Fund - MWFEX, MWFSX
    I don't have a bone in this since I don't own MWFSX.
    The monthly distributions are clearly going down, and they are a huge part of the total returns.
    Date Dividends
    July 31 will be around 0.72% to 0.75. Down from 2%-->1.8%-->1.6 and now to 0.75%
    Jun 30, 2020 0.135 Dividend
    May 29, 2020 0.153 Dividend
    Apr 30, 2020 0.162 Dividend
    Mar 31, 2020 0.184 Dividend
    Feb 28, 2020 0.205 Dividend
    Performance in the category is at 95% for one month and 86% for 3 months.
  • Vanguard U.S. Value Fund (investor class) to be reorganized
    https://www.sec.gov/Archives/edgar/data/836906/000168386320012215/f6527d1.htm
    497 1 f6527d1.htm U.S. VALUE FUND MERGER
    Vanguard U.S. Value Fund
    Supplement Dated July 29, 2020, to the Prospectus and Summary Prospectus Dated January 31, 2020
    Proposed Reorganization of Vanguard U.S. Value Fund into Vanguard Value Index Fund (collectively, the Funds)
    The Board of Trustees of Vanguard Malvern Funds (the Trust) approved an agreement and plan of reorganization (the Agreement) whereby Vanguard U.S. Value Fund, a series of the Trust, would be reorganized with and into Vanguard Value Index Fund, a series of Vanguard Index Funds (the Proposal). The Proposal would consolidate the assets of the Funds and place U.S. Value Fund shareholders in a comparable fund with better historical long-term investment performance, deliver a large expense ratio reduction for U.S. Value Fund shareholders, and create a larger combined fund which we anticipate would achieve greater economies of scale.
    The Proposal requires approval by U.S. Value Fund shareholders and will be submitted to shareholders at a special meeting to be held on or about January 22, 2021 (the Meeting). Prior to the Meeting, U.S. Value Fund shareholders will receive a combined proxy statement/prospectus requesting their votes on the Proposal. The combined proxy statement/prospectus will describe the Proposal, provide a description of the Value Index Fund, and include a comparison of the Funds. If shareholders approve the Proposal, and if certain conditions required by the Agreement are satisfied, the reorganization is expected to occur as soon as practicable after the Meeting.
    Under the Agreement and after the closing, U.S. Value Fund shareholders will receive shares of the Value Index Fund in exchange for their shares of the U.S. Value Fund, and the U.S. Value Fund will cease operations.
    We anticipate that the reorganization will qualify as a tax-free reorganization under the Internal Revenue Code of 1986, as amended.
    Closed to New Accounts
    Effective immediately, Vanguard U.S. Value Fund is closed to new accounts, and it will stop accepting purchase requests from existing accounts shortly before the reorganization is scheduled to occur.
    © 2020 The Vanguard Group, Inc. All rights reserved.
  • MetWest Flexible Income Fund - MWFEX, MWFSX
    If you look at a chart showing 10/04/2019 to 01/19/2020, you see that the fund was only up about 0.73% over that 3 1/2 month period. Some periods of subpar performance would not be new for this fund. Long term is all that matters.
    http://quotes.morningstar.com/chart/fund/chart?t=mwfsX&region=usa&culture=en-US
  • FPA New Income, Inc. limited availability to new investors as of August 1, 2020
    One reason maybe that AVEFX ''flies under the radar'' is it is not available at Fidelity or Schwab no load/NTF.

    In 2020 peak to trough AVEFX lost about 10% while FPINX lost only about 2%.
    AVEFX has 20% in stocks FPINX < 1%
    Vanguard VASIX is a better choice than AVEFX. See (
    chart). VASIX ER=0.11%. It has better performance and SD(volatility) is close.

    There may well be better choices for this TYPE of fund, but the criteria I was focusing on was never a down year. VASIX has had two, including down 10.53% in 2008. Not so pretty. AVEFX has an unbroken streak during its existence dating back to 2004.
    If you want only funds that never lost money then performance could lag badly. PFNIX 10 years average annually is only 2% and that's a dismal bond performance.
    AVEFX has a much better performance but 3.8-3.9% average annual return for 5-10 years are not good enough for me. At least VASIX performance annually is at 5.2-5.3% and Vanguard uses just indexes.
    My goals at retirement are 6+% average annually with SD < 3 + positive annually + never lose more than 3% from any last top.
  • FPA New Income, Inc. limited availability to new investors as of August 1, 2020
    One reason maybe that AVEFX ''flies under the radar'' is it is not available at Fidelity or Schwab no load/NTF.

    In 2020 peak to trough AVEFX lost about 10% while FPINX lost only about 2%.
    AVEFX has 20% in stocks FPINX < 1%
    Vanguard VASIX is a better choice than AVEFX. See (
    chart). VASIX ER=0.11%. It has better performance and SD(volatility) is close.
    There may well be better choices for this TYPE of fund, but the criteria I was focusing on was never a down year. VASIX has had two, including down 10.53% in 2008. Not so pretty. AVEFX has an unbroken streak during its existence dating back to 2004.