FYI: DoubleLine Capital’s co-founder Jeffrey Gundlach says that investors are underestimating the potential impact of higher rates on the economy and across financial markets.
Regards,
Ted
http://blogs.barrons.com/focusonfunds/2015/08/19/king-of-bonds-gundlach-no-great-case-for-higher-rates/tab/print/

Chris Davis funds (Selected American, Clipper, and New York Venture) consistently overweigh financial sector and they often performed poorly in down market than his peers.
My small emerging market allocation through Wasatch Emerging Small Cap and EEMV have not done well this year. YACKX, ARTQX, and VNQ also lagged badly. Surprisingly, the more conservative funds including Vanguard Min Voltatitly, TRP Capital Appreciation and FMI International have done well that negated the former funds.

This is bad news for holders of contrafund in taxable accounts as it will probably lead to a significant increase in capital gain distributions. I suppose the best case is that Danoff becomes bullish in about a month and takes almost all of the $900million out of cash and short term bonds.

FYI: China’s currency devaluation is roiling global markets for the second day in a row.
Strategas Research Partners put together a handy cheat sheet for evaluating which assets in your portfolio are likely to register gains or losses as long as China stays in the news. It even includes a cheeky line about the U.S. Presidential election.
Regards,
Ted
http://blogs.barrons.com/focusonfunds/2015/08/12/chinas-devaluation-and-your-portfolio-a-cheat-sheet/tab/print/

I found this one pretty damning from a June speech he gave to the CFA Society:
"Capital formation, as this process is known, is largely represented by the raising of equity capital for new and existing companies. In recent years, total public stock issuance (IPOs, etc.) has averaged some $250 billion annually. On the other hand, during the same period, the annual volume of stock trading has averaged $35 trillion. Thus, capital formation has represented just 7/10ths of 1% of the activities of our financial system, trading activity 99.3%. And much of that trading, to state what must be obvious, has nothing to do with long-term investment. In fact, much of that frenzied activity is merely short-term speculation. Our challenge is to return long-term investing to its starring role in the financial movie, not merely as a co-star or in a cameo role, nor as a mere extra."
What does this say about the functioning of our capitalist system to spur job creation, innovation and true economic growth when so much money is devoted to just paper trading hands and so little is actually devoted to new capital formation?

People who complain about things like this are labeled as "doomers" until the issue can't be ignored and then we hear about it as a "crisis" and the financial media of course goes, "who could have known?"
Hey, ZIRP was really great at creating something sustainable and not just another boom/bust, right? The fact that the dollar volume of ETFs traded has now gone past US GDP (and as you mention above, capital formation has represented just 7/10ths of 1% of the activities of our financial system, trading activity 99.3%) shows an economy not built on sand, right?

Yeah, Reckless monetary policy powered by absurdly short-term thinking only results in positives. Right.
It wouldn't surprise me if this is the "ultimate" bubble and things in the global economy look very different on the other side.
Now the he Chinese have devalued, the economy is weak, it would appear that there's a bust going on in oil that will very likely get worse and the Fed seems less and less likely to raise interest rates, or they'll raise 50 basis points only to come back down to zero which will look awful. Yeah, the economy couldn't take a rise in the interest rate of 50 basis points, but everything's just a-okay.
If we have another crisis at or near the zero bound after several years or ZIRP and multiple QEs, the Fed will have some explaining to do.
So hey, what's next? John Kerry is making threats about how the dollar may not be the reserve currency if the Iran deal isn't passed. Wouldn't surprise me if it just happened anyways.

So, again, my view is that this period ends badly. It's not a question of if, but a question of when.

I found this one pretty damning from a June speech he gave to the CFA Society:
"Capital formation, as this process is known, is largely represented by the raising of equity capital for new and existing companies. In recent years, total public stock issuance (IPOs, etc.) has averaged some $250 billion annually. On the other hand, during the same period, the annual volume of stock trading has averaged $35 trillion. Thus, capital formation has represented just 7/10ths of 1% of the activities of our financial system, trading activity 99.3%. And much of that trading, to state what must be obvious, has nothing to do with long-term investment. In fact, much of that frenzied activity is merely short-term speculation. Our challenge is to return long-term investing to its starring role in the financial movie, not merely as a co-star or in a cameo role, nor as a mere extra."
What does this say about the functioning of our capitalist system to spur job creation, innovation and true economic growth when so much money is devoted to just paper trading hands and so little is actually devoted to new capital formation?

Actually, TGBAX is doing better than Fuss and Gaffney, not as well as Ivacyn and the Poobah. But why anyone would compare him with these is beyond me. Nothing has changed with the way TGBAX is managed. What HAS changed is the various world economies, and the dollar in relation to other currencies. Investors who bought this fund should have bought it for the diversification it adds to a portfolio, not for the returns that it had in any given year or time frame. Hastenstab is incredibly defensive right now, with a duration of 0.13 years and an average maturity of 2.36 years. We captured some significant gains a year or so ago, but we maintain our positions in the fund.

Heads above the rest of the pack in the bank loan category SPFRX/SPFLX has led the way YTD with gains over 5%. It's low volatility and trend persistency has been a thing of wonder and just what I look for in a bond fund. I have tried month after month after month to buy this fund and with every penny of my next egg but to no avail. That's because it is only available in 20 states. After finally calling the company today, it appears they have no immediate plans to expand to other states.

Hi @ MikeM,
I know you are looking at top line performance which would consists of both income and capital appreciation (total return) as a major factor to pick your choices.
One of the things that is paramount for me is income generation with now being retired. I have chosen to pick funds that have respectful total returns but kick off a good income stream if held within my income and hybrid sleeves and I moved toward these type funds many years ago after I had reached my investment goal. Even today, I still maintain a growth & income area along with a growth area within my portfolio to keep pace or exceed inflation creep.
I have listed the yield for the funds you have made reference to. They are PRWCX with a yield of 1.23%, FBALX with a yield of 1.39%, FPACX with a yield of 0.60%, OAKBX with a yield of 0.78%, VWELX with a yield of 2.42% and MAPOX with a yield 2.42%.
The yield on my overall portfolio is much, much higher and according to M* is about 3.2% on valuation and better than 4% on amount invested. The income and hybrid sleeves generate a yield of about 4.25%. With this, my portfolio can make its distribution needs to supplement my income requirements without having to sell any securities. When you consider the profit that has been made from my spiffs from time-to-time I have a surplus of income generation. Then factor in the capital gains distributions made time-to-time form my mutual funds and with this I am well head of my income needs and can either grow my cash position and/or reinvest into my funds with the excess income generated.
Although top line performance is important it was not the only item I was looking for in selecting the funds that I currently hold as I was also looking for their ability to generate yield.
Thanks again for your participation and comments.
Old_Skeet

Guns or butter. "...Some argue that the Undistributed profits tax enacted in 1936 caused a panic in Corporate America. Faced with the specter of taxation on retained earnings the business world immediately ceased most planned expansion and capital equipment purchases."
https://en.wikipedia.org/wiki/Recession_of_1937–38
I notice that about 50% of tv commercials are for cars and trucks. Think the price for vehicles could be reduced if all those damnable ads didn't have to be paid for?

T. Rowe is an interesting case as it isn't owned by a larger financial conglomerate such as a bank and has long specialized in no load funds. Yet I do think it has drifted some away from its original mission with advisor share classes and some funds seeming pretty bloated.

Price sold advisor funds more than two decades ago (as a way to distribute NTF), so this isn't a particularly recent drift. Several of their best funds have been closed for years, and they have not shown reluctance to close them when they hit certain sizes (though one can make the case that those thresholds are set too high).
I agree with you that as a general principle, bank/broker/insurer-"owned" funds tend to pay less attention to their "customers" (fund shareholders). But I find that's too sweeping a generalization to be especially useful in fund searches. I wouldn't want to penalize T. Rowe Price just because it's public.
Also, I've never been entirely clear on what the term "fund shop" or "fund family" means. I take it loosely as the marketing/distribution arm, "branding" if you will. But I'm not sure precisely what company one is really talking about.
"Families" often outsource the day-to-day management, so I don't think "family" is the management company. For example, Vanguard contracts with Jennison Associates, a Prudential subsidiary. The family is still Vanguard, not Jennison, and Vanguard makes sure that management owner Prudential isn't gouging the shareholders.
From a practical perspective, it's who controls the fund's board, whatever entity that is.
I know of three (and only three) examples of true fund independence that proves the rule (by demonstrating in rare instances the parent "family" doesn't necessarily control):
Selected Funds moved from Selected Financial Services (a Kemper subsidiary) to Venture Advisers (Davis) in 1993, after Yacktman bolted. Shelby Davis took over management of both funds - SLASX and SLSSX (then called Selected Shares). Not long after, management of the latter was outsourced to Bramwell Capital Management (Elizabeth Bramwell, who had recently left Gabelli). Was SLASX better when managed (mostly) by Chris Davis (at a privately held company) or by Donald Yackman (via a Kemper company)?
Lightning struck a second time in 2005, when the Clipper Fund moved itself from Pacific Financial Research to Davis Selected Advisers. Here too, same question - Pacific Financial Research was acquired by UAM in 1997 (publicly traded), with UAM acquired by Old Mutual in 2000 (also publicly traded). In the ten years since it moved to Davis, this once fine fund has underperformed its category by 1.83%/year (per M*).
My favorite independent board was The Japan Fund, which I've described before. A coda to that post is that Nomura killed off The Japan Fund last year by merging it into Matthews Asia Japan Fund. As you can see from this mid-2014 comparison of Japan funds, this is likely a good thing for the shareholders (not to mention the fund going no-load).

FYI: DoubleLine Chief Investment Officer and CEO Jeffrey Gundlach seeks yield while keeping risk low.
If you're looking to crown someone the Bond King, DoubleLine Capital chief investment officer and CEO Jeffrey Gundlach — also a manager of several of its mutual funds — is a prime contender
Regards,
Ted
http://license.icopyright.net/user/viewFreeUse.act?fuid=MjAxMjE2ODY=

I have some small losses, but they are nowhere near the amount of gains, so the offsets wouldn't come close. I do understand your point, though.

@Ted, +1
Many of us still have losses to put new or old gains against.

HI David,
I was reading your August commentary and was interested in your strategy about thinning out the ranks relative to the number of holdings in your portfolio. I believe you indicated that you have started the process. I was curious about one conundrum that I'm sure you've encountered: selling funds that have built up capital gains. If you are like me and have held funds for several years, chances are that you have a considerable amount of capital appreciation sitting in those funds. Selling those funds would trigger capital gains taxes (mostly long-term). Do you have a particular strategy regarding these funds? For example, are you choosing to sell certain ones this year and others in subsequent years based on the amount of capital gains or some other strategy? I'm trying to whittle down the number of funds that I own, but find myself looking at funds that have considerable capital gains waiting to be taxed.
Excellent job on the commentary as always !
Will

Vanguard shows that its tax managed Capital Appreciation fund is open, with a $10K min. That's because these are Admiral shares; the fund switched from offering Investor shares to offering just Admiral shares in 2001.
Vanguard generally does not offer Admiral class shares through brokerages. Perhaps that's where you're looking?

Jerry
Vanguard tax managed capital appreciation is a great fund but it is a closed fund.I have VTMSX which is a tax managed small cap but it is no better than Vanguard small cap index fund. Do you have any other tax efficient funds that you can recommend ?
prinx

Hi, guys.
In response to DavFor's request, a bit of info on what's up behind the scenes.
It's been a busy year. The Core Four (Ed, Charles, Chip and me) met in Chicago last fall, after the Morningstar ETF Conference. There was a sense that I needed to try to create an enduring legal and financial structure for the Observer. To that point we had very little legal protection (and few legal resources) against the occasional angry and vindictive advisor; we're threatened occasionally and while truth and justice are defenses, they're not safeguards against bankruptcy. And we had no organizational foundation on which to build. It wast mostly me, guessing and hoping.
After talking with managers we respect and a local attorney, we decided to become an LLC. Shortly thereafter, we filed for and received intellectual property protection for our logo and name. Then a hang-up: I went to a non-profit law specialist to begin filing for the 501(c)(3) status and she informed me that LLCs cannot become tax-exempt. So then we filed to dissolve the LLC, incorporate in Iowa as a non-profit and file for 501(c)(3). She warned me that the IRS could take more than a year to adjudicate. Happily, it was closer to six weeks. Next, we need to hire an accountant who specializes in non-profits to work through the question of how we move resources from MFO's account into MFO, Inc's account. The existing account (and its attendant taxes) is legally mine because MFO was a sole proprietorship. Chip has an MBA and believes that I might be able to loan the money to MFO as start-up capital or make it a contribution. But once it's in the new MFO, it becomes a bit legally constrained.
What's next? Ohhh ... we need to recruit one to three additional members to MFO's board of directors. Chip and I sit on the board, but we need folks with broader expertise and a better understanding of the financial services and/or non-profit organization words. We've had several nominees who feel, uhh, distinctly higher on the food chain than me. Those discussions are commencing. We need to decide what, if anything, might be offered to MFO contributors. My bottom line is that nothing we do now gets taken away from folks, it remains free and non-commercial. But we might offer access to Charles's fund screener or some other editorial service. The data contracts, though, are really expensive by our standards, even after considerable negotiation. So I want to be sure we're acting sensibly before mortgaging anything.
And, oh yeah, I start back to full-time teaching and administering my academic department soon; we're searching for two new faculty and I've been asked by my president to help develop a plan to recruit and support transfer students to the college. Had I mentioned trying to finish the September issue several days early so I can drive to Cincinnati and meet the folks at the Ultimus Fund Services client conference (I'm trying to do networking for us)?
For what interest all that holds,
David

The total stock market funds are generally tax efficient.ETFs are often tax efficient Vanguard has tax managed funds. I like Tax manged capital appreciation . Owned it 20 years with NO capital gain distributions It invests in roughly the largest 10000 growth stocks (so no Exxon for example

Well Maurice, I am one of those posters. I don't feel a need to do weekly posts to promote holding AU. Nor do I ponder/fret what to do about it day-to-day. So you needn't fret about why you haven't seen such posts...
I continue to hold my position in AU bullion (all of which I self-custody). And it makes a wonderful diversifier. --- A diversifier does not mean "go up all the time". AU had a VERY LONG up-market; several down-years is nothing too unusual. -- After all, equities, after topping in 2000, took a decade to reach new highs. Assets come/go out of favor. AU excelled when stocks did nothing. AU has foundered the past few years as stocks have climbed. Definitionally,that IS diversification. Breaks in the price of AU below $1K would commence my accumulating. (If I had NO AU position, I'd probably commence SLOW accumulation here --- as the GDX/GDXJ suggests possible capitulation in those securities).
I do find from time-to-time, what I will call "gold haters" post on investment message boards, why, I do not know. Energy stocks are down sharply since Nov. EM-stocks too. Is it your contention that asset are only attractive for purchase/holding if they are at/near all-time highs..? --- I generally go about deploying capital the other way: buy/accumulate when prices are down. Maybe different strokes for different folks...?
In the past month I have initiated and expanded new positions in MLPs and EM, as those have encountered price weakness, but IMO represent real longer-term value. Will probably commence accumulating shares in Aug-Nov in quality energy producers -- my thesis being the quality producers (XOM, CVX, COP, OXY, EOG) will recover -- primarily because I suspect circumstances will eventually drive WTI higher. I don't claim to know when, but $45/WTI is not conducive to producers -- so producers will (voluntarily or otherwise) curtail production, and that will "solve" the problem of low WTI (just as happened in earlier cycles).