I took Social Security at 62 and don't regret it one iota! By the time it all equals out, something like around 78, it won't make any difference as I assume my nest egg will be that much larger. I just learned today that one of my lady friends in one of my hiking groups woke up the other morning and found her boyfriend dead beside here. He was 65! No matter how great we may feel, we just never know. In old age methinks it is better to start enjoying those budding fruits of our long time financial labor than to just keep over-obsessing and over-planning till the day we drop.
Edit: I should also add that I turned 62 in April of 2009. Since then the market has been super. Taking early SS is just that much less of my capital I would have had to use for living/lifestyle expenses.

>>>>>@Junkster, is the reason you would salivate at a Fed Funds of 3.75% because you would want to invest in those money market funds or Certificates of Deposit, at the decent yields that we used to see in the past?<<<<<<
Yes! Unlike most here, I have no pension/employer retirement or a large monthly Social Security check. So what I earn on my nest egg is critical. At 2% (actually 1.50% to 1.75%) and more that would be more than enough to cover my lifestyle/expenses and even continue growing my capital. I am even beginning to watch the 5 year T-Bill rate like never before albeit not sure I would ever want to tie up my funds like that.

Oaktree has been raising money for distressed investing.
http://www.bloomberg.com/news/2014-09-02/oaktree-said-to-seek-10-billion-for-distressed-fund.html
"The world’s biggest distressed-debt investor is seeking $10 billion for a new fund with plans to sit on most of the capital until rising markets reverse course, three people with knowledge of the plans said. Oaktree plans to raise $3 billion that it can start investing immediately and $7 billion for a reserve pool to deploy when more distressed opportunities arise, said the people, who requested anonymity because the plans aren’t public."
Also:
“Aggressive extensions of credit of the sort we’re seeing today have always been a precursor to a substantial distressed-debt opportunity.”

@Tampabay:"Can we make it a whole 4th quarter of gains ?" You better believe it !!!
Regatrds,
Ted
Oh Happy Days: Etta James:

OH, HAPPY DAYS, can we make it a whole 4th quarter of gains?

FYI: Oaktree Capital Group LLC (OAK), the world’s biggest distressed-debt firm, is starting its first in-house mutual funds as it joins the largest private-fund managers in raising money from individual investors.
The Los Angeles-based firm filed today with the U.S. Securities and Exchange Commission to sell shares in the Oaktree High Yield Bond Fund and the Oaktree Emerging Markets Equity Fund. The minimum initial investment in each would be $25,000, according to the filing.
Regards,
Ted
http://www.bloomberg.com/news/print/2014-09-15/oaktree-to-start-first-mutual-funds-to-woo-individuals.html

Thanks for the more complete writeups, LLJB. From the WSJ piece, it does sound like the index reconfiguration (and piles of investor $ going into FM funds?) was the catalyst for the warning. The quote from the spokesperson, though, was about the attractive "yields" of FM funds, not capital gains, which is a hard argument to make when the 3 FM funds I see mentioned most often yield a whopping 0.16, 0.10, and 0.35%.
The piece also had a short 'graph about other recent FINRA warnings:
"With the alert, frontier funds are joining a list of products Finra warned investors about, namely Bitcoin, promissory notes, and high-yield certificate of deposits. Last month, Finra warned about stocks in companies that claim to provide products that protect against the spread of viruses or other harmful diseases like Ebola."
I was curious so googled FINRA + mortgage-backed to see if I could find an equivalent warning about subprime MBS in ~ '06-'07, but there were so many hits I didn't go through them all. It was FINRA, though, that brought the actions against Schwab for its essentially fraudulent YieldPlus fund and some of the big banks for breaking disclosure rules related to MBS after the crisis.
FWIW, AJ

@jlev
I'm only parroting what I read several years ago: 10-15% bonds in a portfolio will not produce significant protection, since the percentage is too small. Made sense to me then, and now. (This begs the question whether a 29 y.o. needs portfolio protection.) If you have ongoing contributions, you are averaging in when the market is down as well as when it is up. You might be better advised at your age to park some money in cash and watch for the decline (like when ARIVX is fully invested, you'll only be a little bit late.)
With 20 years to go before I'd start buying bonds or bond funds (if I were your age), presuming 35 - 40 years until retirement, and presuming that new money would go into bonds at that time, the stock funds, stock ETFs, or stocks you buy now would have had a run of 30 to 40 years when you retire, if you can keep your hands off the trading icon (except for the individual stocks - I'd watch [or avoid] those). Since few managements are stable over that period of time, index funds are appropriate.
You are paying a significant portion of bond fund gains in ER currently. Looking at my bond fund purchases (all recommended at MFO, which include some of your choices) in the past 2 years, I find minimal gain and some losses, aside from the River Park funds, where I am paying about 20-25% of my gains in ER. (I regard those as geezer funds, btw.)
Since I doubt most currently successful bond funds will have the same management in 20 or 30 years, I have no recommendations. The big companies, such as Fido and Vanguard, can buy brains; smaller funds are a crap shoot. If you want shorter term recommendations, you have many above.
I assume you have read William Bernstein. If not, check him out. I
don't anticipate participating further in this topic.

Weekly ETF Gainers / Losers
Sep 12 2014, 16:13 ET | By: Jignesh Mehta, SA News Editor
Brazil largest weekly loser.(Commodities?)
Gainers: VXX +4.23%. GAZ +1.26%. UNG +1.01%. UUP +0.58%. TAN +0.12%.
Losers: EWZ -10.12%. BRF -8.96%. ILF -7.29%. REMX -5.31%. VNQ -5.21%.
Overbought market slips as Fed fears set the tone
Sep 12 2014, 16:20 ET | By: Carl Surran, SA News Editor
Investors also may have been unnerved by the prospect of next week’s Fed rate meeting, with speculation the Fed may signal the arrival of interest rate increases sooner than expected.
Much of the damage again came from the energy sector (-1.5%), which tumbled out of the gate and pulled the broader market down with it; Nymex crude slid 1% for the week, and has fallen for 10 of the past 12 weeks.
Today's session saw better than usual participation with 675M-plus shares changing hands at the NYSE floor.
The yield on the 10-year Treasury note jumped to 2.61% after beginning the week at 2.42%.
http://seekingalpha.com/news/1981165-overbought-market-slips-as-fed-fears-set-the-tone
No Rebound In Sight For Sliding Oil Prices
By Nick Cunningham | Thu, 11 September 2014 21:33
U.S. oil production also continues to rise. In June, the U.S. produced 8.5 million bpd, an increase of 500,000 bpd since the beginning of the year. Higher production continues to cut into imports, leaving greater supplies on the global market.
Perhaps most importantly, global demand has been surprisingly lackluster. The latest data from the U.S. Energy Information Agency (EIA) shows that refined product (gasoline, for example) inventories are increasing – an indication that production is overwhelming consumption.
A slowing Chinese economy is also putting a damper on crude oil prices. Weak economic data published by the Chinese government showed that China’s import growth slowed for a second straight month, suggesting the economy continues to cool.
http://oilprice.com/Energy/Oil-Prices/No-Rebound-In-Sight-For-Sliding-Oil-Prices.html
US Picks up Pace in LNG Race
This week in energy, the prospect of liquefied natural gas (LNG) exports gains momentum in Washington with final federal approval for two more projects in Louisiana and Florida thanks to a tweaking of legislation.
The pressure on Washington is indeed growing because the race to the finish for LNG exports is a tight one and will have a major impact on long-term contracts.
Australian projects in particular are warily eyeing the two new LNG export approvals in the US and Russian progress towards the same, because it may force them to renegotiate long-term contracts already in play due to a future LNG glut.
This week we also look at Canada’s LNG prospects, and what Keith Schaefer depicts as the countdown to get massive projects off the ground.
There are at least 14 proposals to export LNG off Canada's west coast, and another one to export Canadian gas down to Oregon and ship it to Asia from there.
In this heated race, the general consensus is that Washington will have to speed things up a bit more. But the good news is that the ranks of the Democrats are growing with those who believe in US LNG exports, and the general consensus is that we will see an up-tick in the momentum to approve these languishing projects—soon.
http://oilprice.com/newsletters/free/opintel120914

"I think you're also looking at a smaller pool of retail investors as a % of the broad population than you had 5-10 years ago."
That might be a good thing, suggesting that the smaller pool is perhaps a little more seasoned, and maybe a little less inclined to cut and run. But, who really knows?

I think they're going to cut and run, it's just human nature (shrugs.) 1. There should be far more financial education in this country, but I doubt that will ever happen. 2. I actually do ponder whether investors who own individual names are less prone to cut and run, because if they have a set of individual names that they have a significant interest and attachment to, are they less likely to dump those shares then a diversified fund whose holdings they probably haven't researched? I dunno.
It does fascinate me when fund managers are surprised and upset at retail investors who run for the exits during a downturn - again, there should be better financial education in this country, but again, it's an element of human nature. It wouldn't surprise me to see more large fund managers open funds in London (see the Pershing Square IPO in London later this year) or start reinsurance vehicles in the US (Greenlight Reinsurance, Third Point Reinsurance) in a search for permanent capital.
I *do* think that along with a smaller pool of investors than 5-10 years ago, you are also seeing alongside that significant buybacks at major companies and a smaller pool of shares outstanding, which those that are invested are benefiting from.
I am concerned by the mass of IPOs hitting the market. Not so much Alibaba (which I actually think is interesting, I'm rather fascinated by Alibaba and similar co Tencent), but things like Dave and Busters (which I think failed in plans to come to market once or twice before.)
As for Alibaba, I am concerned that the media isn't really discussing the fact that you aren't going to be investing directly in Alibaba with next week's giant IPO, but in a Cayman holding co. ("“You may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. federal courts may be limited because we are incorporated under Cayman Islands law, we conduct substantially all of our operations in China and most of our directors and all of our executive officers reside outside the U.S.,” Alibaba said in its filing - http://www.usnews.com/news/articles/2014/09/08/alibaba-aims-for-record-24-billion-stock-ipo.)
The roundabout way of investing in Alibaba via Yahoo or Japanese co Softbank is actually investing directly.

I feel like there's a pretty good amount of worry and that seems encouraging. There are enough talking heads predicting the market could plummet to keep a large amount of money on the sidelines. I can't remember the numbers or find the reference, but within the last few months I've read that there's still an enormous amount of money people are effectively keeping in cash and that seems encouraging too. You know the bull run will be over when a lot of that money decides they can't wait for the big correction anymore and joins the party.
The market seems to be struggling a bit lately, maybe consolidating, maybe trying to decide where to go as the likelihood of Fed rate increases draws nearer. But the economic data continues to point to slow and steady progress and that seems encouraging too.
Today, long-term Treasury Bonds broke support and the USD has been very strong, or conversely the EUR and JPY have been very weak.
I spent the latter part of this week raising some cash not because I think the bull run is over but because I wouldn't be surprised to see some good volatility as the market deals with all of these changes plus mid-term elections and I wanted to cash in some gains that I can re-deploy in the coming weeks/months.

Chevron needs partner, contracts before moving on Kitimat LNG, CEO says
Sep 12 2014, 12:34 ET Seeking Alpha
“We have an advantaged resource in the Horn River basin, but the costs are very high. You have to have good alignment with partners," Watson says, so the company is working with aboriginal groups in the area and performing initial work on the site.British Columbia is closer to Asian markets than some competing parts of the world including the U.S. Gulf Coast, but the latter area's projects that are moving ahead because existing infrastructure makes them easier to develop, the CEO says.
http://seekingalpha.com/news/1980685-chevron-needs-partner-contracts-before-moving-on-kitimat-lng-ceo-says
Oil and gas company debt soars to danger levels to cover shortfall in cash
Energy businesses are selling assets and took on $106bn in net debt in the year to March
By Ambrose Evans-Pritchard The Telegraph
6:10AM BST 11 Aug 2014
The net debt of 127 oil companies from around the world rose by $106bn in the year to March
The EIA said revenues from oil and gas sales have reached a plateau since 2011, stagnating at $568bn over the last year as oil hovers near $100 a barrel. Yet costs have continued to rise relentlessly. Companies have exhausted the low-hanging fruit and are being forced to explore fields in ever more difficult regions.
The EIA said the shortfall between cash earnings from operations and expenditure -- mostly CAPEX and dividends -- has widened from $18bn in 2010 to $110bn during the past three years. Companies appear to have been borrowing heavily both to keep dividends steady and to buy back their own shares, spending an average of $39bn on repurchases since 2011.
The agency, a branch of the US Energy Department, said the increase in debt is “not necessarily a negative indicator” and may make sense for some if interest rates are low. Cheap capital has been a key reason why US companies have been able to boost output of shale gas and oil at an explosive rate, helping to lift the US economy out of the Great Recession.
Steven Kopits from Douglas-Westwood said the productivity of new capital spending has fallen by a factor of five since 2000. “The vast majority of public oil and gas companies require oil prices of over $100 to achieve positive free cash flow under current capex and dividend programmes. Nearly half of the industry needs more than $120,” he said.
http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/11024845/Oil-and-gas-company-debt-soars-to-danger-levels-to-cover-shortfall-in-cash.html

The point is if some holdings bought by a fund at an (average high) price, never make those highs again after dropping in a bear market, each of such holdings would need a corresponding holding that DID cross that high by an equal amount for the fund to recover its NAV highs.
We have a lot of large growth tech stocks that have not seen their highs since dot com bust. If no new money flows occured, and the fund which held such stocks still existed, it would be a losing proposition - permanent loss of capital. We know that most of such funds have long gone out of existence.
It is same thing. WHEN vs WHAT. Manager risk cannot compensate 100% for market risk. Funds WILL go down. What us active investors need to do is accept Manager risk to recover from the lows instead of accepting Market risk and the volatility it offers.

I don't know why we are complicating this.
Microsoft goes down 50%, Goes up 100%. Back to square one. Volatility High. NOT RISK.
Enron goes down 50%. Goes down another 50%. Goes down another 50%. Goes Bankrupt. Volatility High. Permanent Loss of Capital. RISK

BIP owns 27% of Vale's infrastructure. From Q2:. "We also continue to work toward the completion of the previously discussed acquisition of 27% of Vale’s Brazilian rail and port business, VLI. This business consists of approximately 4,000 km of rail integrated with five inland terminals and three ports. VLI to deploy over R$6.0 billion to upgrade and expand operations over the next seven years, allowing it to capture volume growth from increased activity in the agriculture, steel and other industrial sectors in Brazil. We are working through a number of customary closing conditions and expect to close this investment early in the third quarter."
Q3: "In mid-August, we expect to close on our investment in VLI, a Brazilian rail and port business, as we have satisfied all consents required for closing this transaction. This investment will provide us with approximately $300 million of organic growth projects, as the business has a substantial capital program to expand operations."
I'd rather own that than Vale, but otherwise, BHP is something that I've thought about a whole lot but continue to stick with Glencore due to Glencore's diversity, legendary trading operation and exemplary assets.

Risk = Permanent Loss Of Capital. "Permanent" based on one's time horizon. Max Drawdown and Rolling Returns should rule.
However I think this has been said before about volatility and risk not being the same. A certain bald person has also said it but unfortunately he is infamous.

In the below linked article form Seeking Alpha a summary of its major points are listed below:
•This is now the 4th longest bull market in history. We're in the 2nd longest period without a 10% correction. Every day, we get closer to the next correction.
•A re-balanced growth portfolio that holds a modest 25-35% bond component offers the likelihood of delivering stock market like gains (or better) with a much lower risk profile.
•The risk return proposition is likely swinging in favor of a balanced portfolio.
http://seekingalpha.com/article/2484155-theres-very-little-chance-of-beating-a-balanced-portfolio-from-here?source=feed_tag_editors_picks

Hi Charles and Guys,
When you questioned the appropriateness of calling the investment world’s regression-to-the-mean observed phenomena a law, it did prompt me to do some deeper thinking on the matter. Well, that puts us into some dangerous waters.
Certainly investment wisdom and operational rules assembled over decades of practical experience deserve some elevated status when they address investment process and not investment outcomes. Probably assigning these assembled rules the title of “laws” might be a “bridge-too-far”. Why did I do it?
In thinking about my readings over the last month, I recalled a White Paper produced by the respectable GMO investment house. It was written by James Montier, Montier titled his work “The Seven Immutable Laws of Investing”. Eureka! That was likely my inspiration. Here is a list of his laws, immutable no less:
1. Always insist on a margin of safety
2. This time is never different
3. Be patient and wait for the fat pitch
4. Be contrarian
5. Risk is the permanent loss of capital, never a number
6. Be leery of leverage
7. Never invest in something you don’t understand
There’s a ton of Warren Buffett and Benjamin Graham embedded in these “laws”. I believe they serve as excellent generic investment guidance. Maybe they do rise to the level of laws.
If you are interested, here is a Link to the complete White Paper:
http://conferences.pionline.com/uploads/conference_admin/JM_0311.pdf
These rules do emphasize investment process over investment outcomes. A nice way to illustrate the tension between process and outcomes is to visualize a 2 X 2 matrix with Process on the vertical axis and Outcomes on the horizontal axis. Both dimensions can have either a good or a bad result.
The 2 X 2 boxes can be filled with the following conclusions: Good process/good outcome is an earned reward, good process/bad outcome is unlucky, bad process/good outcome is lucky and is likely a misleading signal towards overconfidence, and bad process/bad outcome is true justice.
The key to continued long-term investment success is a solid Process that is NOT abandoned when the markets turn South. It is amazing how many investors are lured by the Sirens' song of a lucky outcome. The likelihood of any future success with a poor investment Process is dubious at best.
Enough of this serious stuff for now. I too liked Kaspa's submittal; good stuff, very well summarized.
Best Wishes to All.

CNBC is showing the direct quote below from Gundlach on the subject:
U.S. 10-year bond rates will remain between 2.2 and 2.8 percent for the rest of the year, bond guru Jeffrey Gundlach told CNBC on Tuesday.
"The low in U.S. rates was in July 2012, so U.S. rates are rising. They're just rising very slowly and I think that's going to remain the case for a couple more years," Gundlach, CEO of DoubleLine Capital, said ....
That July '12 low was ~ 1.40 on the 10yT, way below the recent low of ~ 2.33. He continues to use the 2.2-2.8 range for the rest of the year that he's been talking about for months, so, with the rate higher than 2.2 now, he isn't saying the low is necessarily in for this year. Essentially there's nothing new from JG here.