Agree with Lewis ... the line of reasoning in the article (from Ted's copy & paste) appears to confuse having a marketplace/exchange for finance and capital formation in general vs. the bizarre and corrupted form of a marketplace that exists today. Besides that, salaries and wages are much more crucial for living a decent life than Wall St. is - without reasonable levels of the former, there's nothing to invest in the latter.

I could do without iPhones, Netflix, Chevy pickups and wide screen TVs. Grocery stores yeah I need those, but local groceries could easily exist without Wall Street. Capitalism could still exist without Wall Street. And even local banks and credit unions could lend without Wall Street. Precious little capital formation is done on the stock market today. New issuance of shares via IPOs and secondary offerings is only a minuscule fraction of the annual volume on today's stock exchanges. Wall Street is largely an entity that exists as a self-contained unit for itself today in which speculation rules. It is one highly paid trader and institutional manager trading to another or shaving a few points off the spread off some retail investing rube. It is paper trading hands without precious capital formation. And even when companies do issue new securities, of late that issuance hasn't been to grow their businesses, invest in R&D and create new wonderful products and jobs. A lot of times it's been to issue debt to buy back stock and juice earnings. Yes, Wall Street does still have a valid purpose, but that purpose has been dwarfed by a lot of unnecessary speculation and financial engineering.

I bought BPTRX for my daughter years ago as I liked his other funds ( way before the asset bloat there) and thought she had a 50 + year horizon. The crazy leverage he uses helped drive the fund to one of my best investments but I wouldn't recommend it for anyone who needs the money before sometime in the 2040s.
As an added benefit, Ron Baron has an annual meeting with a suprize entertainer that some years caught her attention when the stock performance did not. (Paul McCarthy one year) a nice bennie although who knows what that cost us shareholders?
Now we should lighten up but who wants to pay capital gains?
Couple of thoughts
1) Not a big an issue now but back then (1990s) hard to find decent funds that would take small amounts of money
2) given the vagaries of managers and performance would pick a fund with something resembling a team approach in a big company so you dont get stuck with an under preforming fund with a a large capital gain years hence.
But realistically best to use SPY or VTI

Sometimes, investing is much like the weather. At times the sun can be out with a nice blue sky along with the temperature in the mid 80's and calm winds ... and, here comes a solar votrex that disrupts communications, travel and other things.
With this, now in retirement I run an all weather conserative asset allocation in my portfolio along with a rebalance plan that adjust my equity allocation based upon certain stock market conditions plus I also harvest some capital gains in the rebalance process thus keeping them from becoming vaporized in major stock market declines.
With this, when the day gets spoiled by a solar vortex (so-to-speak) and the bear comes growling I am already ahead of most; and, it is a big reason I keep an ample cash on hand so that I can become a buyer of stocks in major stock market pullbacks and corrections.
With my portfolio management tools and rebalance processes as the markets recover I continue to sell down equities through a systematic process. Really nothing complex about this just a disciplined and systematic approach that keys off of stock market pullbacks and their recovery where I harvest some capital gains along the way.
Folks ... thus far, this process has worked well form me and my family through the years. It has worked thus far for me, my father, his father and so on and so forth. It's really quite simple ... Make harvest of the crops whether they are capital gains in the markets or crops in the soil.

@bee. Yeah I think I heard someone say this on NPR couple of weeks back. Stock Prices have been influenced more because of cheap money funneled into buybacks rather than producing any economic benefit.
But as you know, this time is different. Sure. We will have different percentage downturn in the stock market. There are times I feel it might be catastrophic if it does not happen until 3rd year of Presidency. 3rd years are when they pull out all stops to make sure things stay "good" while they are campaigning. Better take a 20% correction before 2018. If we wait till 2020, who knows what will happen.
Also, didn't someone post article on MFO about subprime autoloan problem being the same size as the home subprime problem?

FYI: Friday is the last day of the first quarter, and one of the prominent themes of the first three months of 2017 has been the leadership displayed by emerging markets equities. With one trading day left in the quarter, the widely followed MSCI Emerging Markets Index is higher by almost 14 percent. Said another way, the combined gains of the S&P 500 and the MSCI EAFE Index do not equal that of the emerging markets benchmark.
Regards,
Ted
http://www.marketwatch.com/story/investors-pour-into-em-etfs-to-close-q1-2017-03-31-7464558/print

@Crash
You and I, or anyone here could build a fund named "Eight Ball Total Return Fund" (BALLX).
---25%, U.S. equity
---25%, International, ex-US, equity
---25% investment grade bonds
---25% high yield bonds
Our motto: We'll do our best to provide the highest possible "Total Return" while attempting the preservation of capital

FYI: With interest rates rising in the U.S., income investors might want to look abroad, where a rally in higher-yielding emerging-market bonds is delivering outsized gains, said Jack McIntyre, a portfolio manager at Brandywine Global Investment Management.
Regards,
Ted
http://www.marketwatch.com/story/for-the-best-bonds-travel-to-emerging-markets-says-brandywine-fund-manager-2017-03-29/print
M* Snapshot GOBAX:
http://www.morningstar.com/funds/xnas/gobax/quote.html
Lipper Snapshot GOBAX:
http://www.marketwatch.com/investing/fund/gobax
GOBAX Is Unranked In The (WB) Fund Category By U.S. News & World Report:
http://money.usnews.com/funds/mutual-funds/world-bond/legg-mason-bw-global-opps-bd/gobax

I almost posted this in the thread that noted that even active funds that are outperforming are losing assets to index funds but I decided it might generate more discussion as a separate thread .scussion as a separate thread
Speaking for myself I am truly sorry that since 2013 I did not have most of the assets in my taxable accounts in index funds(until that year distributions were not that large). Outperformance by up to 3% does not compensate for 10% or more capital gain distributions which throw me into a higher bracket and make me exposed to other penalties Even worse any underperformance can result in large withdrawals by others resulting in even larger distributions. Selling the funds is no solution as that results in a bigger tax bill.Obviously if I had to do it all over again I would do it differently . Any ideas would be appreciated as my current strategy of avoiding taxes is to die and that strategy has flaws

FYI: (Click On Article Title At Top Of Google Search)
Consumer staples aren’t the haven they used to be. the sector’s vulnerability became all too apparent in February, when news leaked that Kraft Heinz was making a play for Unilever. Staples stocks quickly traded down, as the promise of catching Warren Buffett’s eye dissipated. Buffett’s Berkshire Hathaway (ticker: BRKA) and Brazilian conglomerate 3G Capital control Kraft Heinz (KHC).
Then Unilever (UL) rejected what would have been the largest food and beverage deal in history, and consumer staples stocks sprang back to life. The sector is up 1.4% since its February swoon, versus a 0.3% gain for the S&P 500.
https://www.google.com/#q=Consumer+Staples+Could+Be+in+for+a+Fall+Barron's&*
Regards,
Ted

1. Don't know if it's an SEC requirement, but Have yet to read a recent mutual fund prospectus that does't show returns year-by-year dating back a full decade. When considering a new fund, that's one of the first things I look at. The '07-'08 global market debacle did us one service. It painted vividly how funds than in existence held up during the downturn. As Lewis rightly explains, each bear market is different. We need to be careful in making projections based on past performance. But I ike to look at the '07-'09 history.
2. For a newer fund like DSENX that record doesn't exist. I'm not sure it could be "mirrored" by looking at various asset classes at the time, since its performance appears highly dependent on manager execution.
3. I have purchased new funds for which '07-09 records weren't in existence. IMHO this requires a higher degree of confidence in management (based on track record) and an even better understanding of the fund's investment approach than might otherwise be needed. One such fund is RPGAX which I've owned almost since inception in 2013.
On the other hand, concerned about equity valuations and a narrowing spread between high quality and junk bonds, I recently sold OPPEX (Oppenheimer Capital Income). This is a normally low volatility fund which attempts to hedge market risk (equity and bond) in various ways. It's provided a smooth ride over the year I've owned it. However, in looking back at '07-'08, this otherwise low volatility income fund managed to shed 40% over 2 years (nearly 38% in '08). I'd started with a small commitment to the fund. As the amount grew (and markets evolved) I decided that the risk-reward profile wasn't suitable for my needs.
FWIW

OK, so what you're saying is the portfolio is both leveraged, adding to volatility, and has counterparty risk via the swaps. Look at the holdings here: https://sec.gov/Archives/edgar/data/1480207/000119312517055343/d321548dnq.htm
So the counterparties responsible for the swaps tied to the CAPE index are Barclays Capital, BNP Paribas, and Bank of America. Anything goes wrong with them and there's a problem. Additionally the swaps cost between 0.43% to 0.47% of the swap's value to put on, adding to fees. So there is added risk and cost and I still don't think this would be that hard to replicate with a small options position to add a little bit of leverage. Now you could say the leverage isn't bad in the fund as it is bonds on top of stocks and those two asset classes aren't highly correlated normally. The only problem is there are circumstances when those asset classes are correlated such as in a rising interest rate or highly inflationary environment causing both bonds and stocks to fall. I would say that environment or a credit crisis where Barclays, BNP or Bank of America get into trouble could expose the added risks here.

@bee: Thanks for reminding the board about Puddhead's head's-up on auto loans. Just as an aside I own ALLY-A GMAC Capital Trust I, 8.125% Fixed Rate/Floating Rate Trust for it's excellent yield.
Regards,
Ted

In last month's Elevator Talk, Paul allows that he'll pursue for SFVLX some investments that are riskier than what would be appropriate in SFGIX.
If you want to limit downside, consider a fund that hedges its equity exposure. There are three possible hedges: a hybrid fund that holds bonds (often flagged "Total" or "Multi-asset"), a fund that's willing to hold a lot of cash, or a fund with a formal hedging policy. I screened for open, retail funds with the lowest downside deviation over the past five years. Here are 14 of the 15 "best" (the other was an institutional fund). Ten of the 14 have peer-beating returns over that period. Remember: these aren't recommendations, these are just a set of funds that meets one of your criteria that you might want to learn a bit more about.
David
GuideMark Emerging Markets GMLVX - 98% equity exposure
Capital Group Emerging Markets Total Opportunities ETOPX - 45% equity
Deutsche X-trackers MSCI Emerging Markets Hedged Equity ETF DBEM - hedged equity
Harding Loevner Frontier Emerging Markets HLFMX -95%
ICON Emerging Markets Fund ICARX - 88%
New World Fund NEWFX - 84%
Amana Developing World AMDWX - 87%
AB Emerging Markets Multi-Asset ABYEX - 47%
Fidelity Total Emerging Markets FTEMX - 63%, a Great Owl
Lazard Emerging Markets Multi Asset EMMIX -47%
Baron Emerging Markets BEXIX - 92%
Calamos Evolving World Growth CNWIX -80%
Seafarer Overseas Growth and Income Fund SIGIX - 90%, a Great Owl
iShares Edge MSCI Min Vol Emerging Markets ETF EEMV - hedged equity

I think Dolphin nailed it. If you have no other IRAs, then just roll this one into a Roth IRA and you'll just pay the income tax on the gains that have taken place. The actual deposits move for free.
401k holdings don't apply at all UNLESS you roll those into an IRA. Then suddenly this little IRA becomes only a part of your total IRA holdings.
I once had this type of IRA also. When I cashed it out to buy a house, the tax due was only on the increase in value. Same concept as rolling it over.

@briboe69, How about SGENX? I own both IVWAX and SGENX. The performance and risk profile are comparable.

A great fund, I've owned it for 20 years. I'm a little concerned about asset bloat with SGENX, so I also own FEBAX since there is a lot of overlap between the two. My four largest holdings in order are PRWCX, FEBAX, IVWAX, and SGENX. My main goal is capital preservation first, growth second, despite being only age 45.

Converting a non-deductible IRA to a Roth IRA is straightforward if you have no other IRA assets. The taxable portion is only on the gains since the contributions have already been taxed.
However, it's rarely a good idea if you have other traditional IRAs. Total balances of all your IRAs are used to determine the taxable amount of your Roth IRA conversion.

Here's some info from the IRS that doesn't specifically answer the question but would be interesting if you wanted to get all the after-tax contributions out of the IRA and into a Roth while moving whatever gains are there into another pre-tax plan.
https://irs.gov/retirement-plans/rollovers-of-after-tax-contributions-in-retirement-plans
I didn't follow any of the other links on the page but my guess is that you might find specific answers about the tax implications and/or penalties in one of those links.
The tax returns and Form 8606, which is used to report after-tax contributions to the IRS is all you need to prove your basis. I believe, but I'm guessing a little, that brokers or trustees have to report the value of retirement plans to the IRS annually or at least when there's a distribution so the IRS can calculate what portion of the distribution you should be paying tax on.

@LLJB. If at least I can confirm the penalty is only on the gains after cost basis, that'll be good. However, it would be really nice if there is not even that penalty since the IRA was funded with after tax dollars anyways.
I've tried to get this clarified reading Roth IRA conversion rules, but this situation is not addressed anywhere that I can find. Hoping someone can provide some guidance.
Finally, there remains the item of proving your cost basis, whether for Roth IRA conversion right now, or whenever I sell out the IRA. Because I'm thinking even if I let money stay in current IRA when I sell it, I should not have to pay deferred taxes on the entire withdrawal since after all I have a cost basis on which taxes were already paid. I did put this in my tax returns so it shows up I have a cost basis.

Sorry I'm not an expert but I also have after tax dollar in an IRA together with pre-tax money I rolled over from a previous employer's 401k. My understanding is that the after-tax contributions gives me, and your wife, a "basis" in that IRA. Just like when I eventually take distributions and I won't have to pay tax on everything I believe your wife would only pay tax on whatever gains are in the account if she does a Roth conversion.
Based on the research I've done about converting my rollover IRA to a Roth I also don't believe there's any penalty, just whatever tax is due on the gains you covert to the Roth.
Hopefully someone is able to confirm my opinion because I probably wouldn't want to rely on it alone.