• It is interesting to note that contrary to conventional wisdom, all fixed income sectors experienced positive returns during the four rate hikes.
  I thought conventional wisdom said that historically NAV losses were more than compensated for by high coupons. Vanguard certainly makes this point in writing that buying bond funds in rising rate environments can still be profitable. (Not checking for citation now.)
  The problem is that with interest rates at historical lows, the coupons will likely not fully mitigate capital losses. The Vantage Point article alludes to this as well: "it is possible that the next upturn in rates would not result in positive returns for fixed income sectors due to unique factors, which may not have been present in the last four rate hikes."
• It gives as its rationale for not studying rising rate periods earlier than 1986 that "many fixed income sectors did not exist prior to 1986." So presumably it excludes securitized assets prior to the 1999 period of rising rates for the same reason. Yet MBSs (a major portion of secutized assets) certainly did exist then. FMSFX dates to 12/31/1984 and VFIIX got its start 6/27/1980.
• It explains that in the fourth rising rate period it studied, intermediate term bonds (actually aggregate bond portfolios) outperformed short term bonds in part because "short-term rates [rose] much more than longer-term rates, as shown by the flattening of the yield curve ". These days, there's not much more flattening to be had. Just a ¾% difference between a 3 month T-bill and a 30 year T-bond. Short term rates could again rise faster than long term rates, but that would result in an inversion not a flattening.

It creates an incentive for brokers to send orders to whoever pays the most, rather than the place that might get the best outcome for customers. ...
Canada has banned the practice. The United Kingdom recently put it under review and said in September that nearly all UK-based brokerages acting in an agency capacity had stopped accepting payment for order flow.
For their part, market makers say they give, on average, a better price than the market is offering, usually a fraction of a penny per share.

Unlike Congress, the IRS has been working on the issue and took an important first step toward reducing RMDs for most retirees. ... Back in January, I observed that if the IRS recalculated these two-decade-old mortality tables and updated the rules, it would be modestly helpful but wouldn’t make that big a difference. ... Now that the IRS has formally proposed a change, it turns out this intuition was right. ... It seems very likely that this rule will become a final regulation sometime in 2020.

One obvious thing to do would be to adjust the mortality assumptions that drive these RMDs, because they are going on 20 years old. In fact, President Donald Trump directed the Treasury Department to do just that, and when the government reopens, it will likely propose some adjustments. However, while life expectancy has increased, my back-of-the-envelope calculations reveal that such a change would not make much difference.

That sounds good in principle, but managers began to manipulate the VaR by loading up on what Guldimann calls “asymmetric risk positions.” These are products or contracts that, in general, generate small gains and very rarely have losses. But when they do have losses, they are huge. These positions made a manager’s VaR look good because VaR ignored the slim likelihood of giant losses, which could only come about in the event of a true catastrophe. A good example was a credit-default swap, which is essentially insurance that a company won’t default. The gains made from selling credit-default swaps are small and steady — and the chance of ever having to pay off that insurance was assumed to be minuscule. It was outside the 99 percent probability, so it didn’t show up in the VaR number. People didn’t see the size of those hidden positions lurking in that 1 percent that VaR didn’t measure.

Added a big slug to PRBLX in my Roth IRA now that CGs are paid out for the year.

Hi @Starchild,
Thanks for your comment and question that you directed my way. Many of my American Fund holdings came to me via gift and inheritance with some of the funds dating back a couple of generations thus being in family hands all the way back to my great grandfather. As my great grandfather and grandfather sold off farm land they invested the sale proceeds and spread it out among family members with some of it being invested in American Funds. We also have a policy of not putting all of our eggs in a single basket.
Starchild I'd like your thoughts on where I overlap. Please consider manager stradegy with your answer as the funds might occupy the same style boxes, etc. but the managers themselves differ using many different investment strategies. Notice I've got growth, value, momentum, contrarian, equity dividend, fixed income of many types, special opportunity, etc.
I'm posting my sleeve management system along with portfolio positions so you have an understaning of what I actually do own for a better understanding of how I govern family money.
Consolidated Master Portfolio & Sleeve Management System ... Last Revised on 11/15/2019
Now being in retirement here is a brief description of my sleeve management system which I organized to better manage the investments held within mine and my wife's portfolios. The consolidated master portfolio is comprised of two taxable investment accounts, two self directed retirement accounts, a health savings account plus two bank savings accounts. With this, I came up with four investment areas. They are a Cash Area which consist of two sleeves ... an investment cash sleeve and a demand cash sleeve. The next area is the Income Area which consist of two sleeves ... an income sleeve and a hybrid income sleeve. Then there is the Growth & Income Area which has more risk associated with it than the Income Area and it consist of four sleeves ... a global equity sleeve, a global hybrid sleeve, a domestic equity sleeve and a domestic hybrid sleeve. Then there is the Growth Area where the most risk in the portfolio is found and it consist of five sleeves ... a global growth sleeve, a large/mid cap sleeve, a small/mid cap sleeve, an other investment sleeve plus a special investment (spiff) sleeve. The size of each sleeve can easily be adjusted, from time-to-time, by adjusting the number of funds held and their amounts. By using the sleeve management system I can get a better picture of my overall investment landscape. I have found it beneficial to Xray each fund, each sleeve, each investment area, and the portfolio as a whole quarterly for analysis. All my funds with the exception of those in my health savings account pay their distributions to the Cash Area of the portfolio. This automatically builds cash in the Cash Area to meet the portfolio's disbursement needs (when necessary) with the residual being left for new investment opportunity. Generally, in any one year, I take no more than a sum equal to one half of my portfolio's five year average return. In this way principal builds over time. In addition, most buy/sell transactions settle from, or to, the Cash Area with some net asset exchanges between funds taking place. My rebalance threshold is + (or -) 2% of my neutral allocation for my Income Area, Growth & Income Area and Growth Area while I generally let the Cash Area float. However, at times, I can tactically position by setting a target allocation that is different from the neutral weighting to overweight (or underweight) an area without having to do a forced rebalance. I do an Instant Xray analysis of the portfolio quarterly and make asset weighting adjustments as I feel warranted based upon my assessment of the market(s), my goals, my risk tolerance, my cash needs, etc. I have the portfolio set up in Morningstar's portfolio manager by sleeve, by each area and the portfolio as a whole for easy monitoring plus I use brokerage account statements, Morningstar fund reports, fund fact sheets along with their annual reports to follow my investments. In addition, I use my market barometer and equity weighting matrix system as a guide to assist me in throttling my equity allocation through the use of equity ballast, or a spiff position, when desired. I also maintain a list of positions to add (A) to, to buy (B), to reduce (R), or to sell (S). Generally, funds are assigned to a sleeve based upon a best fit basis. Currently, my investment focus is to position new money into income generating assets. The last major rebalanced process was started during the 4th Quarter of 2018 and was completed in the 1st Quarter of 2019 with some sleeves being reconfigured along with the movement to a new asset allocation of 20% cash, 40% income and 40% equity.
Portfolio Asset Allocation: Balanced Towards Income ... 20% Cash, 40% Income, 30% Gr & Inc and 10% Growth
CASH AREA: (Weighting Range 15% to 25%, Neutral 20%, Target 15%, Actual 14%)
Demand Cash Sleeve ... Cash Distribution Accrual & Future Investment Accrual
Investment Cash Sleeve ... MMK Funds: AMAXX, GOFXX(B), PCOXX, CD Ladder(R) & Savings
INCOME AREA: (Weighting Range 35% to 45%, Neutral 40%, Target 40%, Actual 39%)
Income Sleeve: APIUX(A), BLADX(A), GIFAX, JGIAX(A), NEFZX, PGBAX, PONAX & TSIAX
Hybrid Income Sleeve: AZNAX(A), BAICX, CTFAX(A), DIFAX, FBLAX, FISCX, FKINX, FRINX, ISFAX, JNBAX & PMAIX
GROWTH & INCOME AREA: (Weighting Range 25% to 35%, Neutral 30%, Target 30%, Actual 32%)
Domestic Equity Sleeve: ANCFX, FDSAX, INUTX(A) & SVAAX
Domestic Hybrid Sleeve: ABALX, AMECX, HWIAX & LABFX
Global Equity Sleeve: CWGIX, DEQAX, DWGAX(A) & EADIX
Global Hybrid Sleeve: CAIBX, TEQIX & TIBAX
GROWTH & OTHER ASSET AREA: (Weighting Range 5% to 15%, Neutral 10%, Target 15%, Actual 15%)
Large/Mid Cap Sleeve: AGTHX, AMCPX & SPECX
Small/Mid Cap Sleeve: AOFAX, NDVAX & PMDAX
Global Growth Sleeve: ANWPX, NEWFX & SMCWX
Other Investment Sleeve: KAUAX(A), LPEFX & PGUAX
Equity Ballast & Spiff Sleeve: No position held at this time.
Currently, I'm heavy in equity awaiting December mutual fund capital gain distributions that will preform an automatic rebalance of sorts by raising my cash allocation as I recieve all mutual fund distributions in cash. This should bubble me back towards a 20%/40%/40% asset allocation. Equities, indeed, had a nice run this year.