Redistribution of wealth has never worked, and will never help the poor escape poverty. And nobody -- whether liberal, independent or conservative -- is amenable to having the government forcibly redistribute their personal wealth to somebody with less wealth, of course after the government takes their cut of the transaction, thereby making it a very inefficient transfer of wealth.
I agree with the maxims of Rev. William John Henry Boetcker originally published in 1916:
• You cannot bring about prosperity by discouraging thrift.
• You cannot strengthen the weak by weakening the strong.
• You cannot help little men by tearing down big men.
• You cannot lift the wage earner by pulling down the wage payer.
• You cannot help the poor by destroying the rich.
• You cannot establish sound security on borrowed money.
• You cannot further the brotherhood of man by inciting class hatred.
• You cannot keep out of trouble by spending more than you earn.
• You cannot build character and courage by destroying men's initiative and independence.
• You cannot help men permanently by doing for them what they can and should do for themselves.
Margaret Thatcher and Ronald Reagan had the same thoughts about wealth redistribution. Here is a classic Margaret Thatcher moment:

Kevin

Lower fuel costs stand to hurt Alcoa. Aluminum is an expensive (lightweight) alternative to steel for transportation needs. Expensive to produce. Expensive to work with. That's why Ford's all aluminum F150 is going to struggle. Sure, they'll sell a bunch out of the gate, but it won't be the hit they envisioned until gas gets up over $3. Probably be offering big discounts about the time gas levels off at $1.50 nationwide.
The following article appeared in April, just three months before the plunge in oil began. At that time there were wildly optimistic forecasts the use of aluminum would spread rapidly among auto makers.
"Ford's New Alcoa Connection" (April 2014) http://www.post-gazette.com/auto/2014/04/17/Ford-F-150-Alcoa-Connection/stories/201404170089
It's hard to escape politics in all of this. There are mounting pressures already to ease up on mandated fuel economy standards in coming years.

Hi Tanpabay, Hi Mrdarcy,
Thank you for reading and reacting to my posts. I really appreciate feedback since that implies that I reached both your minds and your emotions.
But I didn’t expect the harsh nature of your highly charged replies. I suppose football does cause such sharp reactions from some loyal fans; football touches many emotions and nerves. I’m not one who is so influenced by football.
I didn’t comment or forecast the outcome of the Rose Bowl game because I simply did not care one way or the other. I had no skin in the game although I have a close relative who has both her undergraduate and graduate degrees from Florida State. I try to never forecast since that is a Loser’s game.
My primary purpose in referencing the Oregon-Florida State game was to introduce the investment reversion-to-the-mean concept in a manner that would attract MFO readership.
From your replies, I succeeded, but not in the way I wanted. You focused on the peripheral introductory football analogy, and not on the main investment regression topic. I’m disappointed.
You guys misinterpreted the extent and the thrust of my football analogy. I was surely not writing about the Florida State 2012 and 2013 seasons. They were superb and honestly earned by a superior football squad directed by a Heisman quality quarterback in 2013.
My comments centered only on Florida State’s 2014 season. The 2014 team did not dominate opponents like in previous years. They fell behind in a majority of their 2014 games by huge negative margins, and were very fortunate (lucky) to pull these games out of the fire. Their escapes baffled handicappers. Professional odds makers estimate that the team had something like a 1 in 10,000 chance of winning all those games. I wanted to illustrate how quickly luck can evaporate.
Also, the Florida State quarterback in 2014 did not play to the high performance standards he established in his Heisman trophy year. Statistically, the Oregon quarterback possessed a much more impressive 2014 record. That’s why he won the trophy this year. In the future, he too will likely suffer a regression-to-the-mean.
I’m sorry that you fellows are so sensitive to the Rose Bowl outcome. It neither pleased me or displeased me whatsoever. My posting was designed to direct attention to the random, checkerboard character of major investment classes, their non-predictability, and their reversion-to-the-mean tendency. The football commentary was meant to be merely ancillary.
By the way, I do Las Vegas about three times a year, and sometimes (rarely) leave with a fatter wallet. I also ran a small consulting firm after retiring as the head of a major research operation. The lesson here is to not make wild guesses or false assumptions. You never know who is on the other end of the exchanges.
I really take no umbrage from your comments. Once again, thanks for reading my posts.
Best Wishes.

Hi Guys,
Charles’ recent “Irrational Markets - Proof Positive” post prompted me to initiate this topic. That discussion highlighted the discordant opinions and recommendations made by supposedly financial and investment experts. The cacophony is loud, endless, and often much less than useful. Chaotic investing is a likely outcome.
The Charles post emphasized the mind-bending character of old wisdom saws like “Out of the mouths of babes comes wise insights, yet, only with age comes wisdom”.
If the latter is true, I have accumulated much wisdom. I guess you should seek investment advice from either young Wharton business school graduates or perhaps from older, more senior graduates. I listen to both, but weight them differently.
For many years, an industry agreement seemed to have been reached with regard to an acceptable retirement portfolio drawdown rate. Portfolio survival for an extended retirement period is the obvious goal.
These earlier studies mostly suggested something approaching a 50/50 mix of equity and fixed income holdings. High portfolio survival rates were estimated when withdrawal rates were limited to roughly 4% per year adjusted for inflation. The original work in this arena was done at Trinity University in 1998 and has been frequently updated.
Here is a Link to one readable update written by Wade Pfau in 2010:
http://wpfau.blogspot.com/2010/10/trinity-study-retirement-withdrawal.html
The Pfau analysis didn’t much change the earlier study findings. However, some concern over the current overpriced marketplace, coupled with a very low interest rate environment, has persuaded a few gurus to shorten the recommended drawdown schedule from the standard 4% rule-of-thumb to an even lower 3% annually.
Now for the controversial analysis and recommendation that wants to upset this comfortable apple cart. It will surely add to Charles’ distress over conflicting and competing financial advice. That’ll never change.
It is a retirement study from the Director of Research at the Putnam Institute. Here is the Link to this cart upsetting 16-page, 2011 release:
https://www.putnam.com/literature/pdf/PI001.pdf
Please give it a road test. It merges portfolio returns uncertainty with life expectancy probabilities for both men and women separately. The methodology deploys a novel Retirement Present Value (RPV) model to project portfolio survival likelihoods.
The RPV’s surprising and controversial output is that the retirement portfolio that offers the best survival prospects includes a much smaller fraction of equity holdings than does the original Trinity study and other follow-up Monte Carlo analyses. Check it out; controversy is good.
Personally, I’m not comfortable with the Putnam work product. The manner in which the “optimum” portfolio equity/fixed income mix was determined escapes me. Certainly a portfolio with only a single Index-like equity position is retirement dangerous because of its volatility (standard deviation). But fixed income is likely more dangerous because of muted annual returns.
The standing answer has been broad portfolio diversification that trades off a little annual return for a major decrease in overall volatility. Outcomes are definitely timeframe dependent, but I still trust this generic and time-tested approach.
You get to choose your own poison. My head spins off-axis as often as Charles’ does. Let MFO members know your thinking on this matter.
Best Regards and Happy Holidays.

from the DSENX report end September:
\\ In the six-month period ended September 30, 2014, the DoubleLine Shiller Enhanced CAPE returned 7.39% and the S&P 500 Index returned 6.42%. The DoubleLine Shiller Enhanced CAPE performance was due to a 6.05% return from exposure to the Shiller Barclays CAPE U.S. Sector Total Return Index and a 1.34% return from the fixed income portfolio. Hence the key driver of outperformance was the fixed income portfolio. The Shiller Barclays CAPE U.S. Sector Total Return Index was exposed to the healthcare, industrials, technology and energy sectors throughout the six-month period. All four of these sectors contributed positively to return with technology contributing the largest amount (2.58%) and industrials contributing the least (0.36%). The fixed income collateral pool was primarily driven by a rally in emerging market debt and mortgage-backed securities. The worst performing sector of the bond market was the high yield sector as new issuance was in excess of investor demand.
Don't know whether to transfer retirement equity fund moneys into this or not.

ok, ok, ok, I see what Ted and IE were getting at now. Forget the locking in as Announcement idea; that still leaves everyone the now unwieldy task of scrolling thru page after page after page to find the fund they're looking for. All that has yet to come in will be but a trickle. Yes, the time is ripe to separate and consolidate.
@The Shadow. It would entail a lot of copy and pasting, but you could alphabetize as you worked your way thru it. If you and David can settle on a style/format, it could end up being kind of a classy display (and, I suspect, greatly appreciated). Not to mention, the perfect excuse to escape a tiresome family dynamic, if present: "Aunt Mildred [you crazy bat], I do love ya, but I got ob-li-ga-tions; and time is of the essence!"

(Now if someone can explain why DSENX has done well through recent volatility.)

I dunno enough about how they run it to know, but I'm mildly interested too. I s'pose the bond sleeve helps in stock selloffs.
Is there any way to keep up with the sectors they're invested in? Utes, real estate, and staples have had the only thing approaching momentum very recently, and maybe they're also lower on CAPE so those sectors made the team for the time being? If Dbl reconfigures the sectors often, maybe they were on top of it.

Hi Guys,
A one million dollar nest-egg is an unrealized dream for most retirees.
The median retiree nest-egg is shockingly small when contrasted against that illustration number. Different estimates locate a retiree's pot of gold at 20% to 35% of that target.
The median nest-egg depends on home ownership, on being single or married, and upon sex. Home value represents about one-half of the nest-egg sum. Married folks enjoy a retirement pot that is roughly double that of a single person. Single men save slightly more than women.
Also, a one million dollar nest-egg might be (a) totally inadequate for one who earned $300,000 annually, (b) comfortable for an individual who earned $100,000 annually, and (c) nirvana for a sole who struggled with a $40,000 annual income. It all depends.
Nest-egg survival is a challenge for most retirees. I trust most MFO members have escaped or will escape this dilemma.
Best Regards.

I listened to the whole thing. Sounds like a nice guy. But, like many stock market 'talkers' he leaves a lot to the listeners interpretation and leaves himself 'outs'.
Basically, he said the stock market valuation is high, not as high as 2000, and could go higher.
Let's put him in the same class as Art Cashin.

I also listened to the whole thing. Yes, very nice guy, won the Nobel Prize in Economics in 2013 along with 2 others.
He says the current CAPE is 26, with a historical average of 15. But it was 45 in the year 2000. The current CAPE still suggests positive returns, but not nearly as high as expectations. CAPE in Europe is significantly lower, and much lower still in the PIGS or PIIGS countries and China. He said his theory would be to invest there, in the low CAPE countries, but he hesitated and said he wanted to think about that....Too bad the interview was so short and didn't cover bonds, except for the briefest mention of them. Would like to know Robert Shiller's thoughts on the bond market.

FYI: Pacific Investment Management Co. suffered roughly $10 billion of withdrawals following the Friday departure of co-founder Bill Gross, a person familiar with the matter said, a sign of how quickly Mr. Gross’s surprise move is reshaping the bond-investing landscape.
Regards,
Ted
http://www.marketwatch.com/story/billions-fly-out-the-door-at-pimco-2014-09-29/print

What an awful day overall.
And, IMHO, on no real news.
No event occurred that has not already been with us.
Just, lack of data. And this ubiquitous (if unfounded) fear that the market is over-heated...that a drawdown is past due.
As if it's been too good for the past 5 or so years, so...time to retract.
The fact that returns in SP500 over past 10-15 years have been abysmal appears to be forgotten fact in the current clamor that the market is over-extended.
Be it the CAPE crusaders. The prognosticates of D3...deficits, debt and demographics. Or, those convinced another 50% drop is right around the corner...just because.
Is it that we must pay for sins of our fathers...excessive returns of the 1980-90s?
Again, apologies...just my humble opinion.
Honestly, earnings season can't come fast enough for me.
Perhaps then, the market will get back to movements based on data.
c

Quick follow-up...
Morningstar Introduces Industry’s First Strategic Beta Classification System; Publishes Global Landscape Report to Help Investors Identify, Compare, and Analyze Strategies.
Here's link:
http://corporate.morningstar.com/US/asp/subject.aspx?xmlfile=374.xml&filter=3093

Ben Johnson, Director of Manager Research at Morningstar, hosted an excellent overview this afternoon on Exchange Traded Fund trends, during a beautiful pre-autumnal day here in Chicago. It's the 5th such conference M* has held.
The overall briefings included Strategic Beta, Active ETFs (like BOND and MINT), and Exchange Traded Fund Managed Portfolios.
We got clearance to share some charts from the Strategic Beta portion, which I also found most interesting and perhaps some of you on the board will too.
Points made by Mr. Johnson:
1. Active vs Passive is a false premise. Many of today's ETFs represent a cross-section of both approaches.
2. "More assets are flowing into passive investment vehicles that are increasingly active in their nature and implementation."
3. Smart beta is a loaded term. "They will not look smart all the time..." and investors need to set expectations accordingly.
4. M* assigns the term "Strategic Beta" to a growing category of indexes and exchange traded products (ETPs) that track them. "These indexes seek to enhance returns or minimize risk relative to traditional market cap weighted benchmarks." They often have tilts, like low volatility value. And are consistently rules-based, transparent, and relatively low-cost.

5. Strategic Beta subset of ETPs has been explosive in recent years with 374 listed in US as of 2Q14 or 1/4 of all ETPs, while amassing $360M, or 1/5th of ETP AUM. Perhaps more telling is that 31% of new cash flows for ETPs in 2013 went into Strategic Beta products.

6. Reasons for the growth summarized here:

These quasi active funds charge a fraction of traditional fees. And, a general disillusionment with active managers is based on recent surveys made by Northern Trust and PowerShares.
M* is attempting to bring more neutral attention to these ETFs, which up to now has been driven by product providers. In doing so, M* hopes to help set expectation management, or ground rules if you will, to better compare these investment alternatives. With ground rules set, they seek to highlight winners and call out losers. And, at the end of the day, help investors "navigate this increasingly complex landscape."
They've started to develop the following taxonomy that is complementary to (but not in place of) existing M* categories.

Honestly, think this is M* at its best.

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

I think I believe in gross market timing (CAPE says the next 10 years will be low return if one buys the broad market at current levels), so it looks like I should let my monthly additions molder in cash.

In my IRA at TDA, EVBAX was relatively costly, as mentioned above, but there were no additional charges. This was a minimum investment to keep me attentive.
I think (hope) there is too much money waiting for an entry point for stocks to drop 30 -60%, and Gaffney's comment about the portion of Treasury debt that the Fed is buying suggests there is a high floor for the short term. I think I'll start adding money at the 10% drop and take the additional hit, if it occurs, and reassess if there is a 10 - 15% gain above the 10% drop. I don't think 2008 was a once in a lifetime event, but I don't think it was a once in a decade event.

Hi STB65: I've listened to several interviews of Robert Shiller, 'co-inventor' of the CAPE, this year. He says it doesn't work for market timing. Also, he says it has been above 20 for the past 20 years. Shiller's website has the CAPE for every month from current to the distant past. I'm looking at the bear market from 2000-2002. At no time did the CAPE get below 20, never came close to its long term historical average. Even in the Oct 2007-March 2009 mega bear, the CAPE was above 20 until October 2008, and was back above 20 by the end of 2009. Waiting for the CAPE to tell you when to buy could be a very tough wait.
What did you mean by: "In my IRA at TDA, EVBAX was relatively costly"?
I'm seeing it as a No Transaction Fee fund.

After listening to the interview, I considered reducing my FAGIX and SPHIX holdings since they represented the majority of my high yield bond funds (my 403b is in Fido); but I checked the graph at M*, where they regained their return slope in about a year after 2008, so I am really conflicted. Therefore, I agree with AndyJ as to from what?
I think I believe in gross market timing (CAPE says the next 10 years will be low return if one buys the broad market at current levels), so it looks like I should let my monthly additions molder in cash.
RSIVX, RPHYX seemed to have flattened out or declined, but FSAHX may have shown a gasp of life. My hopes that I could park my "cash" in short term bond funds are now muted (especially since I have 40 X as much in the first 2 and the latter was positive on
Fri, but it's only one day.)
In my IRA at TDA, EVBAX was relatively costly, as mentioned above, but there were no additional charges. This was a minimum investment to keep me attentive.
I think (hope) there is too much money waiting for an entry point for stocks to drop 30 -60%, and Gaffney's comment about the portion of Treasury debt that the Fed is buying suggests there is a high floor for the short term. I think I'll start adding money at the 10% drop and take the additional hit, if it occurs, and reassess if there is a 10 - 15% gain above the 10% drop. I don't think 2008 was a once in a lifetime event, but I don't think it was a once in a decade event.

Professor Malkiel has been one I pay attention to when I can. However I am surprised he used just one factor ( CAPE ratio) to make an assumption.
The M* writer does bring up the low rates.
Emerging markets and muni bond. The professor mentions these as good places to be in. If the investor is well diversified then maybe they are set. A lot of investors look for the hot spot at the moment. Usually that means chasing yields.
A good article but Professor Malkiel's books are better. A Random Walk Down Wall Street is his classic and worth every investors time to read.

A nice sharp comment from the current Malkiel WSJ piece, which is weak, by a James Lear:
\\\ The CAPE analysis by Dr. Schiller is an example of sophisticated mathematics done badly. Two reasons:
1) the "cyclically adjusted" portion of his index is a 10-year moving average on *earnings* (the denominator of CAPE) but not on the price. The SMA is a common tool in electrical engineering signal processing. It removes high frequency noise but it also delays the signal by 1/2 the period of the moving average. In this case, the delay is 5-years. It turns out that it is the delay that makes CAPE seem work as a predictor, not the filtering. In other words, we can use today's price divided by earnings from five years ago, and voila we have something very similar to CAPE. The beauty of using the delayed 5-year earnings as opposed to the SMA is we can roll forward (e.g. look at 4-year earnings) and look ahead at what Schiller's CAPE will be in the future at today's prices.
2) The CAPE correlation coefficients are low.

FYI: The United States stock market looks very expensive right now. The CAPE ratio, a stock-price measure I helped develop — is hovering at a worrisome level.
Regards,
Ted
http://www.nytimes.com/2014/08/17/upshot/the-mystery-of-lofty-elevations.html?_r=0&abt=0002&abg=0

He should wonder if the CAPE has any value.