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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.
  • Seafarer Overseas Value Fund now available
    Fidelity, Vanguard, and Schwab are now offering the institutional class, SIVLX for a 100K minimum, basic and IRA. None of these offer the investor class SFVLX so far. What I don't understand is the statement by the person who manages Client Services for Seafarer Capital Partners who said, "We do not expect that the investor share class of the Seafarer Overseas Value Fund (SFVLX) will be made available on these No Transaction Fee platforms." Hmm.
  • what to do and where to go w semi-nearterm moneys?
    I think that you have to balance the risk of a capital loss with income for that time frame and goal.
    The only one in that group that make sense to me it PONDX. You get a 7.33% return. So if it were to decline 15% over 2 years you would break even - a low risk occurrence. The the others return is so low that with even a minor decline you would lose money.
    You might look at DSL, PREMX, to add to the mix wit PONDX.
  • Our Forecasting Curse
    Hi Guys,
    Try as we might, it is a challenge to be neutral about the marketplace’s direction. Everyone and his uncle has an opinion, a few more informed than most others.
    That’s our forecasting curse, and it often does us more harm than good. We all like to participate in what often turns into a Loser’s Game. One extrapolation of the 80-20 rule can be used to establish the creditability of that argument.
    You all are familiar with the generic 80-20 rule. One of its most popular interpretations is that 80% of the work is accomplished by 20% of the folks, or that 80% of an individual’s output is coupled to only 20% of his efforts. Lots of wasted motion.
    The 80-20 variation that I want to discuss highlights the futility of forecasting follies. Trying to anticipate market movements rather than simply staying-the-course loses more often than it gains. The behavioral researchers have tested this hypothesis with an experimental game they call Red Light, Green Light.
    Test participants in this game are asked to forecast if a random light will be either red or green. They are informed that the light color is randomly selected, but that it will be green 80% of the time. Now they play the game, and their score is recorded.
    The expected correct score should be approximately 80%. Just about all experiment subjects fail to achieve that level. They fail because they believe they see a pattern that can be exploited. They are wrong. Here is a Link to a NY Times article that discusses some experimental results:
    http://economix.blogs.nytimes.com/2011/02/17/forecasting-is-for-the-birds-and-rats/?_r=0
    A superior strategy, given that each outcome is randomly independent, is to forecast green every single time. From simple probability theory, if that strategy is used, the player will be on average (1.0 X 0.8) + (0.0 X 0.2) = 0.80 or 80% correct.
    Most participants adopt a more complex strategy. Some like to play a strategy that is weighted to the given 80-20 distribution. Again, from a simple probability calculation, the player will on average generate (0.8 X 0.8) + (0.2 X 0.2) = 0.68 or 68% correct guesstimates. This strategy has decreased the odds of winning.
    This simple probability analysis demonstrates the power and wisdom of betting on the favorite outcome consistently. Lower level animals learn this lesson quickly. Investors don’t. The strategy of betting in proportion to the frequency of occurrence lowers the likelihood of a successful outcome.
    This type of analysis can be applied to the equity marketplace. The historical data reveals that on a monthly basis, equities have increased in value 59.6 % of the time since 1950. The upward reward happens roughly 70% of the time on an annual basis.
    Doing the same analysis for a 70% positive annual equity return yields the following results for the two strategies defined. For the no-brainer who is always in the market strategy, that investor will obviously get positive rewards 70% of the time,
    For the more sophisticated investor who plans to be committed to equities 70% of the time and in bonds/cash 30% of the time, his success ratio, on average, is likely to be (0.7 X 0.7) + (0.3 X 0.3) = 0.58 or 58%. Here again, the frequency strategy is likely to be less rewarding than the always-in strategy.
    Unless an investor is prescient or especially insightful or perhaps just plain lucky, his forecasting (likely linked to a pattern seeking and seeing tendency) will probably degrade his cumulative long-term returns. Once again simple beats complex. Or does it?
    There is a danger to oversimplifying a problem. I tend to be more or less committed to being in the market. But I do adjust my percentage of equity holdings depending on some measures like overall market P/E ratio. I hold fewer equities when that measure is high. As H.L. Mencken said: “For every complex problem there is an answer that is clear, simple, and wrong”.
    Certainties do not exist in the investment universe. So I hedge and broadly diversify. What do you do?
    Best Regards.
  • Can Low Rates Keep Lifting the Stock Market?
    Yes... cheap money remains hot money. Post BREXIT, at this short point in time after the fact indicates that hot money is still hungry, eh? At least relative to the equity side of the markets. The main question being which sectors, and will big money rotate the sectors to maximize gains.
    Also, from the author: "And so, bond yields in the U.S. ended the week at record lows, while major stock averages wound up just shy of record highs. Far from irrational exuberance, many institutional investors voice resignation (or worse) to the fact that they are forced to put money to work at record low yields—1.366% for the benchmark 10-year Treasury note—since that’s better than nothing, which literally is what they earn on the estimated $11.7 trillion of global debt securities with negative yields.
    >>>The bold above indicates that a "static" 1.366% yield is in place. The written presumption is that institutions, insurance companies and pension funds placed all of their monies into the sector of bonds on this day. The writer fails to offer the fact that monies already held in a sector mix of investment grade bonds have an average of about 10% YTD returns, as of July 8. If the 10 year remained fixed from today until year end, with static price range; these folks would have a nice profit forced upon them at year end.
    Recent reports note that institutions, insurance companies and pension funds are unwinding hedge fund positions, as these have not had the expected returns; especially with the involved fees.
    So go the markets and the professionals, eh?
    Regards,
    Catch
  • DoubleLine's Gundlach: Gold Remains Best Investment In 'Shaky' World
    FYI: Jeffrey Gundlach, the chief executive of DoubleLine Capital, said on Wednesday that gold remains the best investment amid fears of instability in the European Union and prolonged global stagnation, as well as concerns over the effectiveness of central bank policies.
    Regards,
    Ted
    http://www.reuters.com/article/us-funds-doubleline-gundlach-idUSKCN0ZM25Z
    (As Of 7/5/16)
    GLD: 27.61% YTD
    SLV: 43.90% YTD
    CEF: 45.65% YTD
  • Fund suggestion for my friend's wife
    rjb112: I would not hesitate to take Ted's advice for now. I was put in the very same position 3 1/2 years ago, but we had not discussed investing my inheritance since we both were active investors, its how we met. He led a class on investing that I took. I chose to take on an advisor, but have since taken some out to manage on my own since I am confident I can do as well. It did give me some excellent planning and allocation plan, which I am basically following. As your friend learns more about investing and gains confidence, she can then branch out to some investments she make like better. I am not a fan of Vanguard's advisory service concept since they only will invest in their products. She may find others investments she likes. If she is does not want to have an advisor help manage right now, she may want to go to https://www.napfa.org/ and find an hourly rate advisor to help come up with a plan for the future when she is ready.
  • Regression to the Mean will Happen
    @MJG As usual, I find your wisdom very helpful. I've been a maximizer with my investment philosophy, and it hasn't served me well. I've plunged into active funds that seemed to have everything going for them. Some have outperformed; others have underperformed; and on balance, especially since most of my investments are in a taxable account, I would have been better off in index funds. And the whole process has been a gigantic time suck.
    " Instead, being satisfied with near Index returns is easily accomplished with little effort and even little time commitment." This is what I'm aiming for now although, like an addict, I find myself thinking, "just one more active fund, this one really ought to be a winner, but it's the last, I promise."
    And despite relative underperformance I am sitting on sizable capital gains, so it may be more a question of new money going into index funds.
    My personal experience is of course not meant as criticism of the many participants on this board who've managed to consistently choose outperforming funds. My hat is off to you guys, but I don't have what you do.
  • Surprise ... SPY Up 4.0% & AGG Up 5.5% At Mid-Year
    My goal is always 0% cash, otherwise I am not working hard enough.
    Fortune favors the bold. - Latin Proverb
    It is true that when we take chances, we stand to lose. But it is also true that we will never win anything if we never even enter the game. Lucky people are aware of the possibility of losing, and indeed they may lose often. But since the chances they take are small, the losses tend to be small. By being willing to accept small losses, they put themselves in position to make large gains. - Max Gunther
  • Can someone or many explain this comment from David's July commentary
    @catch22 said
    Flexible and adaptable perhaps do not always fit into a managers mold of what he/she views as "what should be"; versus the real outcomes.
    I suspect most here are really value investors. We want to buy cheap and sell at a higher price, yes? When the investment gears don't turn in the anticipated directions, value can become a sink hole.
    FPACX. Not a sink hole .But certainly stuck in the mud.Mr Romick has consistently believed that Fed Policy has been in uncharted territory and will not end well.Eventually he may be correct,but in the meantime.....
    Morningstar Moderate Target Risk
    Rank in Category Ytd 95 1 Yr 78 3 Yr 77
    http://performance.morningstar.com/fund/performance-return.action?t=FPACX&region=usa&culture=en_US
    Will Brexit spark a much-needed market revaluation?
    Steven Romick
    Co-Portfolio Manager, FPA Crescent Fund
    June 28, 2016
    Even when investing in pockets of value, it doesn’t mean the rest of the world will immediately agree
    with you. That was evident recently with regards to our position in financials. As good of a value as we
    perceive them to be, the market sold them off in the wake of Brexit and that has contributed to our
    equity portfolio declining more than the market in this recent downturn. The financials we own have
    largely U.S. exposure and what business they conduct overseas is broad-based without disproportionate
    exposure to the UK. Nevertheless, their stock prices are volatile, causing our portfolio to do better than
    the market some days but worse on others. What happens on any given day doesn’t matter; what does
    matter is the businesses’ operating results while we own them and where these stocks are trading the
    day we sell them. We don’t know how they will ultimately perform along the way or in the end, but low
    valuations - combined with historically strong balance sheets – give us a margin of safety that will
    hopefully protect our capital and then provide a return on it.
    The Crescent Fund’s (the “Fund”) portfolio of value investments (both equities and debt) should provide
    downside protection in a severe market downturn. The relatively small market price decline since the
    Brexit vote is more market noise than anything else. The Fund’s 36% cash position provides additional
    protection in the portfolio and will be used when the inevitable opportunities arise to purchase good
    companies at cheap prices.
    http://www.fpafunds.com/docs/special-commentaries/brexit-special-commentary-6-28-2016_final.pdf?sfvrsn=2
  • Can someone or many explain this comment from David's July commentary
    i also questioned this paragraph... the last sentence contradicts the first part.
    "U.S. Treasuries are a disaster. Treasuries have been propped up by international buyers, mostly Asia or OPEC, who needed to find something to do with their trillions of excess US dollars. The oil price collapse and a sputtering Chinese economy have pretty much put an end to such buying. Treasury yields could drop to European levels; that is, zero or below."
    I don't get it;If treasury yields drop to European levels won't I make a reasonable capital gain on my treasury bonds
    ...
  • Can someone or many explain this comment from David's July commentary
    "U.S. Treasuries are a disaster. Treasuries have been propped up by international buyers, mostly Asia or OPEC, who needed to find something to do with their trillions of excess US dollars. The oil price collapse and a sputtering Chinese economy have pretty much put an end to such buying. Treasury yields could drop to European levels; that is, zero or below."
    I don't get it;If treasury yields drop to European levels won't I make a reasonable capital gain on my treasury bonds
    I can even market time by selling at 10 year yield = .5 and so get out before the "smart money" who is watching this stuff on an hourly basis/So the question is why are treasuries a disaster?
  • Calamos Discovery Growth Fund and Calamos Mid Cap Growth Fund to liquidate
    https://www.sec.gov/Archives/edgar/data/826732/000119312516640530/d221359d497.htm
    497 1 d221359d497.htm 497
    Filed pursuant to Rule 497(e)
    File Nos. 033-19228 and 811-05443
    CALAMOS® INVESTMENT TRUST
    Supplement dated July 1, 2016 to the CALAMOS® FAMILY OF FUNDS Summary Prospectuses for Class A, B and C and Class I and R of Calamos Mid Cap Growth Fund both dated February 29, 2016, the Summary Prospectuses for Class A and C and Class I and R of Calamos Discovery Growth Fund, both dated February 29, 2016, Prospectuses for Class A, B and C and Class I and R, both dated February 29, 2016, as supplemented on March 14, 2016 and on June 10, 2016, and the Statement of Additional Information dated February 29, 2016, as supplemented on March 14, 2016 and on June 10, 2016.
    The Summary Prospectuses, Prospectuses and Statements of Additional Information for the Calamos Investment Trust (the “Trust”) are hereby supplemented. The following information supersedes any information to the contrary regarding the Calamos Discovery Growth Fund and Calamos Mid Cap Growth Fund (each a “Fund” and, collectively, the “Funds”) each a series of the Trust, contained in the Summary Prospectuses, Prospectuses and Statements of Additional Information:
    The Funds will be liquidated on or about October 6, 2016 (the “Liquidation Date”).
    Effective August 1, 2016, the Funds will stop accepting purchases from new investors and existing shareholders,
    except that defined contribution retirement plans that hold Fund shares as of July 1, 2016 may continue to purchase Fund shares through September 29, 2016 and existing shareholders may continue to reinvest dividends and capital gains distributions received from the Funds through September 29, 2016. The Funds reserve the right to modify the extent to which sales of shares are limited prior to a Fund’s liquidation. After the close of business on the Liquidation Date, the Funds will liquidate any remaining shareholder accounts and will send shareholders the proceeds of the liquidation.
    Each Fund intends to declare and pay any dividends required to distribute its investment company taxable income, net capital gains, and net tax-exempt income accrued in the Fund’s taxable year ending at to the Liquidation Date or any in any prior taxable year in which the Fund is eligible to declare and pay a dividend. These dividends will be taxable to shareholders who do not hold their shares in a tax-advantaged account such as an IRA or 401(k). You should check with your investment professional and tax professional regarding the potential impact of the Funds’ liquidation to your individual financial plan and tax situation.
    At any time prior to the Liquidation Date, shareholders may redeem their shares of a Fund pursuant to the procedures set forth under the section “How can I sell (redeem) shares?” in the Prospectus, as supplemented. Shareholders may also exchange their shares, subject to the restrictions on exchanges as described under the section “How can I sell (redeem) shares? — By exchange” in the Prospectus, as supplemented. Any such redemption or exchange of a Fund’s shares for shares of another fund will generally be considered a taxable event for federal income tax purposes. Shareholders who hold their shares in a Fund through a financial intermediary should contact their financial representative to discuss their options with respect to the liquidation and the distribution of such shareholders’ redemption proceeds.
    Subsequent to the liquidation of the Funds, all references to the Funds in each Fund’s Summary Prospectus, Prospectus, and Statement of Additional Information are hereby removed.
    Please retain this supplement for future reference
    MFSPT3 07/16
  • Stocks haven't gone anywhere for 1 1/2 years
    Here's the chart you described. Thanks for being so clear.
    You couldn't have put money in these funds on January 1st. January 4th was the first trading day of the year. If you had put $10K into open end funds (which get end of day pricing) on January 4th, you'd have missed the market movement on January 4th (which was down). So you'd have gotten a return higher than the YTD return.
    This is easy to see. For FUSEX, the Jan 4th price was $70.72. The July 1st price was $74.31. Ignoring dividends, you'd have gotten a return of $74.31/$70.72.
    $74.31/$70.72 = 1.050764, so $10K invested at $70.72 would be worth $10,507.64, plus dividends. Much more than M* is showing.
    So let's use the correct price for a full YTD return - Dec. 31st close. That was $71.80. For $10K, you received 139.276 shares. This was a rounding up of 139.2758 shares, and so you got a gift of $0.02 due to rounding.
    On April 15th, you got cap gains and income divs totaling $0.368/share, and reinvested at a price of $73.23. This is according to Fidelity's page.
    That's $51.2536 in dividends, that got rounded down to $51.25. This was reinvested at a price of $73.19. So you got an additional 0.700 shares (again due to rounding); this was worth $51.25, costing you about 1/3 of a penny. You then had 139.976 shares.
    The closing price on July 1 was $74.31. Your final value was thus $10,401.62.
    I went through this in gory detail to demonstrate two facts:
    1) The starting date for YTD returns of open end funds is December 31, not January 1st (or 2nd or 4th).
    2) Rounding can give or take a few cents here and there, when shares are denominated in thousandths, and money is denominated in pennies.
    As to VOO, I'll say again that the chart you're looking at is showing NAV return. So the answer to your question "is $10,381.34 the value you would see for your VOO investment", is no, it is not. You investment would be worth more.
    The 3.81% return ($10,381.34) shown for VOO is not YTD through July 1, but YTD through June 30th. I know this because Vanguard gives YTD figures for VOO (through June 30th) as 3.81% (i.e. $10,381 and change) for NAV, and 3.84% (i.e. $10,384 and change) for price.
    You can also just look up the VOO YTD returns on M* without using the chart. If you use the daily tab, rather than the montly tab, you'll get the YTD figures through July 1:
    VOO (price) 4.10%
    VOO (NAV) 3.81% (this matches the return shown in the graph - $381.34/$10K
  • Stocks haven't gone anywhere for 1 1/2 years
    Hello fellow MFO members,
    I am , and have been, an investor in the capital markets for a good number of years now (better than forty). Through this time I have seen many periods of time when the market moved side ways (within certain trading ranges). This fits into part of my overall investment strategy as use an adaptive allocation and do some buying during times of pull backs when the stock market has become oversold and then sell some off as the market advances becoming overbought and richly priced. During the time bought to the time sold I collect dividends as I invest in stocks and mutual funds that pay dividends as part of this strategy. This is not to say that this is the only strategy that I employ within my portfolio but one that certaintly has its place within my investment tool kit.
    I have written about this in the past as I put this strategy in play back during the January/February pullback and March/April rebound.
    I also did a little buying recently during the most recent downdraft. Thinking there will be more downdrfts this summer I have a great deal of dry powder left to do more buying. After the fall elections I am looking for stocks to rally. In the meantime I am collecting dividends while I await my anticipated capital appreciation that should come during the fall. If so, then I'll trim my equity positions booking profits collecting dividens along the way.
    If you are looking for a mutual fund that plays stock market pullbacks automatically you might wish to study CTFAX to see if its strategy might interest you and it might be a strategy to incorporate within one's own portfolio to take advantage of stock market movement.
    I wish all good investing.
  • Stocks haven't gone anywhere for 1 1/2 years
    Sometimes in all these discussions about stocks the big picture gets lost.
    Stocks haven't gone anywhere for 1 1/2 years
    http://finance.yahoo.com/echarts?s=^GSPC+Interactive#{"range":"2y","allowChartStacking":true}
    Remember to include dividends. In real terms, even including dividends, it's true that stocks have returned nothing. But in nominal terms, stocks have provided small gains. See, e.g.
    Yahoo S&P 500 Total Return chart (2 Year, interactive), or
    M* interactive chart - Total Stock Market (VTSMX) and S&P 500 TR, Dec 31, 2014 to June 29, 2014
    VTSMX has gone up 1.45%, and the S&P 500 has gone up 2.79%.
    Given recent volatility, a single day's movement could wipe all this out. So the cumulative returns are indeed positive, but not necessarily meaningful.
  • Thank you Junkster for the Perfect Investment - High Yield Muni Bonds
    The Junkster pointed out High Yield Muni Bonds awhile ago and they have been a fantastic investment for recent times - positive capital and dividend investment.
    I've stopped re-investing the dividends to build up some cash.
    http://finance.yahoo.com/echarts?s=HYD+Interactive#{"range":"2y","allowChartStacking":true}
  • Brexit: What, Me Worry?
    As someone else noted, Britain voted to leave the EU. Close to home, more than 20 people died when flash floods swept through White Sulpher Springs, West Virginia, destroying perhaps hundreds of home and leaving folks with virtually nothing. This reminds us of what is a real tragedy. While each of us lost some of our investment capital on Friday, some folks in our own country lost everything. In a letter to our clients, we reminded them of this.
  • Active Managers Start To Feel The Pain
    Once upon a time investors thought active managers would protect them from a bear
    market that idea seemed wrong to a large extent in 2008 and then 2011 was the last straw. When active managers failed to beat the S+P in 2011 it was time to be convinced by Vanguard ads. Almost as important were taxable investors being buried by unwanted capital gains in 2014 and 2015 distribution which was followed by a move to ETFs , Full disclosure my portfolio has been affected by this trend especially when long term holding Sequoia let me down really hurting the case for active management..
  • Gundlach: DoubleLine Sold All Of Its European Equities Late Thursday
    FYI: Jeffrey Gundlach, chief executive officer at DoubleLine Capital, said Friday his firm sold all of its European equities position before the market closed Thursday, following a strong rally in global stocks.
    Regards,
    Ted
    http://www.reuters.com/article/us-funds-doubleline-gundlach-idUSKCN0ZA2GK
  • Preferred stock fund
    I'd ditto BobC's comment. Pricing is at a premium, because a lot of folks have had the same thought you have had -- but they've already bid up the prices when committing capital. As with any capital assets, its not only about the security's characteristics, but also about the price you pay...
    While I normally eschew individual holdings, in preferreds, they might make sense, and specifically, acquainting yourself with new issues -- where, if you act ahead of the herd, you can snag some good issues at/around par, rather than at premiums to par.
    Two good resourcess in this regard are quantumonline. com (specifically their IPO list of preferreds), and dividendyieldhunter.com. Those resources are free. A 3rd, good choice is a paid-subscription to Richard Lehman's "income securities" newsletter. Its not strictly about preferreds, though they are routinely represented.
    JMO. good luck.