Ted,
I finally surpassed my previous portfolio record high set on 10/28.Also a good day for foreign and precious metal funds, which have been an anchor.Like you say,don't fight the fed! Kenny Polcari this AM:
"Stocks are moving higher because the FED is feeding the beast, investors have nowhere else to go for yield, that they are forcing the risk trade and not because everything is coming up roses….and that about sums it up -the sign says: More Stimulus Ahead…"
http://www.reuters.com/article/2013/11/14/markets-precious-idUSL4N0IZ2P420131114
From Reuters BY WAYNE COLE
SYDNEY Thu Nov 14, 2013 7:53pm EST
The Nikkei .N225 jumped 1.3 percent early Friday to bring its gains for the week so far to a heady 6.9 percent, its best performance since December 2009. It also cracked major chart resistance around 15,000, which opened the way for a return to the May peak at 15,942.60.

Reply to @clemg64:
Fairholme proposes $52B recap for GSEs: WSJ
Fairholme Capital Management offers to spearhead a move by a consortium of investors aimed at "purchasing, recapitalizing, and operating the mortgage-guarantee businesses" of Fannie Mae (FNMA) and Freddie Mac (FMCC) as state-regulated bond insurers, WSJ says.The offer was reportedly outlined by Bruce Berkowitz in a letter sent Wednesday evening to federal regulators.Earlier: Hedge funds pitch takeover of Frannie

Reply to @willmatt72: It was certainly open on October 1st when I made my initial investment at the NAV of $10.00. I believe it opened some time in September.
Thanks, Andy. I'm looking forward to the 'whopping increase' in the dividend in the future. The capital appreciation (1.1%) during the last month and a half is not bad either.

Vanguard Funds
https://personal.vanguard.com/us/insights/article/preliminary-capital-gains-11122013

"El Pollo Loco bank loan" for 1.9%. Guess that's me, since I just put my mutual fund winnowings into RSIVX. 8% sounds WAY too good to be true - nearing Madoff territory, but I'll settle for 4% and capital preservation for the next three years.

Decided to go with the CAPE or PE10 slopes and sold most of my recent mutual fund gains while keeping the base positions (probably should have sold more, but I can't make myself leave good funds). I didn't sell the L/S funds, but I may reconsider the long predominant funds.
Plan to put most of it into RSIVX and try to control my impatience.
My pending buys require a 10% correction.
Haven't reduced my stocks, probably a mistake, but I'm not paying 1-1.5% a year for them, and most pay a dividend.
Didn't sell in 2008-9, but was younger then. Won't sell if it happens within 3 years. Plan to be more balanced after that.
Fund managers generally did no better than the indexes in 2008-9. Those with significant cash now are preparing for the next correction, so they might be worth buying.
Depending on your age and risk acceptance, using index funds with 50-70% US stocks and the remainder of your stocks in international indexes, and 20% (high risk acceptance) in bonds (most writers suggest all US, but I like some international thru Vanguard), or 40% bonds (usual ratio)) has been good in the past. If near retirement, Social Security represents a bond equivalent, as per John Bogle, who has a lot more experience and is older than I, so you should shade your investments more toward stocks.

Using your classification my question was about "Capital Appreciation" and "Capital Preservation" accounts.
My understanding these two accounts can be inside of one portfolio. If that portfolio has 60/40 asset allocation how would you divide it between "Capital Appreciation" and "Capital Preservation" accounts and what asset allocation each account should have?

Hi DavidV...thanks for posing the question. Like a swimming pool's diving board, the further one goes out on the risk spectrum the greater the likelihood for ups and downs on the reward spectrum. Not all your money need be position in high dive investments...but some should. Your fears are warranted, but maybe MFO can help.
Linkster Ted often refers to his investments as being part of his "Capital Preservation" account or his "Capital Appreciation" account. I would add one more to his list of accounts and I'll call it a "Capital Spending" account. Thinking in these terms starts to sound like a plan is in place. Here's some thoughts on how I see this plan from my perspective.
Capital you need today, tomorrow, and maybe over the next 1-3 years should reside in this "Capital Spending" account. For retirees this might include a pension, an annuity, a SS payment, or an investment distribution...basically a periodic stream of money that takes care of your periodic needs. If you are working, this is your paycheck and your emergency savings. Keep this money in FDIC insured accounts...keep it flexible...keep it accessible...keep it safe.
Next, if there is extra savings beyond your short term needs (1-3 year time horizon) than I would set an investment goal that at least keeps up with inflation or a 2% return. This adds some risk, but it can be safely managed with strategies like laddering bonds or cds, as well as owning a few conservative allocation mutual funds. I would consider funds like VWINX, VWELX, BUFBX, and others. The investment time horizon for these funds is 3-5 year. Hopefuly a portion of your "fruit" from this "Capital Preservation" account can be picked periodically to replenish your "Capital Needs" account.
Finally, if you are lucky enough to have additional monies to invest...think long term....5-10 years or longer...move further out on the diving board....try to buy when the board is low...think, emerging markets and precious mining funds right now (they are under performing). Rebalance when the board in high... jump some money off when you reach a personal goal...have some fun with these rewards...stimulate the economy.
Over the long term this "Capital Appreciation" account will grow some of your money and provide needed resources to keep you other two accounts funded. Make action goals (rules to follow) for this account. One rule could be, "I will fully fund my other two accounts with a gain of 10% or more regardless of timeframe."
Hope others chime in.

PIMCO Funds
https://investments.pimco.com/ShareholderCommunications/External Documents/PIMCO_Funds_Capital_Gain_Estimates_2013.pdf
PIMCO EqS Funds
https://investments.pimco.com/ShareholderCommunications/External Documents/PIMCO_EqS_Capital_Gain_Estimates_2013.pdf
Payden & Rygel Funds
http://payden.com/pdf/CapitalGainPayment_2013.pdf
AQR Funds
https://www.aqrfunds.com/Portals/0/FundDocuments/Misc/2013CapGains.pdf
Pinnacle Value Fund
http://www.pinnaclevaluefund.com/historicalresults.asp
SunAmerica Funds
https://www.safunds.com/pdf/Tax-Center/Cap-Gains-Estimate/asset_upload_file457_6629.pdf
Cambiar Funds
http://www.cambiar.com/cms_images/file_246.pdf
Dreyfus Funds
https://public.dreyfus.com/products/distributions/year-end/equity
Sound Shore Fund
http://www.soundshorefund.com/cap_gains.asp
Oberweis Funds
http://www.oberweisfunds.com/fundperf.asp?page=capitalgains

Vanguard Funds
https://personal.vanguard.com/us/insights/article/preliminary-capital-gains-11122013

Retail casts away doubts on equities • 8:51 AM From Seeking Alpha
"I don't want to miss out." a Los Angeles real estate appraiser said in a note to his financial adviser last week after seeing one pundit up his DJIA forecast to 20K.
"Frankly, from 2009 until recently, I wanted to stay very conservative," says a technology sales manager. "I want to get more aggressive."
A Houston attorney and stock market skeptic was turned by her Schwab statement showing YTD gains of nearly 20%. She's planning on set aside more of her paycheck for stocks. "Sometimes you feel like it's too late. But it's probably never too late."
Inflows of $8.9B into long-only equity funds last week were the largest amount since March 2000. This follows October inflows into stock funds that were the 3rd largest on record.

Hey, I resemble that remark :-)
You can fine tune this strategy. Especially with large (and only vaguely estimated) dividends and cap gains distributions expected this year, it's difficult to get up to the 15% tax bracket top without going over. What one can do (assuming one has a traditional IRA) is make some Roth conversions as well. The amount doesn't matter, so long as it's enough to ensure you go over the 15% top. Then, when you have your final figures in hand, recharacterize (unconvert) enough to just bring you back to the 15% bracket. You have most of next year (until your return is due, including extensions).
Usually, it is better to use the 15% bracket to take gains (and qualified dividends) rather than do Roth conversions. That's because you save 15% with the gains (cap gains for income in the 15% bracket are taxed at 0%). But using that spare space in your 15% bracket for Roth conversions saves you only 10% (as opposed to doing those conversions in the next bracket - 25%). On the other hand, some states exempt some or all of your IRA distributions (including conversions), and so the total (fed plus state) might make it better to do the Roth conversions than recognize cap gains.
Here's another tactic. If you have a fund where the size of the distribution is expected to be higher per share than your gain per share (look at your highest cost long term shares), then it can be tax efficient to sell those shares right before the record date (so that you don't get taxed on the distributions), and buy the shares back on the ex date. Since the gain you recognize (on the sale) is less than the distribution, you pay less in taxes now (though more later).
If you think the tax code is weird, consider that converting one dollar too much costs you 30c (30%) in extra fed taxes, not 25%. For example, if you're filing as a couple, the 15% bracket tops out at $72,500. Say you've got $2500 in cap gains, $70K in ordinary income (after deductions, exemptions, etc.). Add $1 of income. Your ordinary income is still under $72K, so that dollar gets taxed at 15% (15c). But you've now got $72,501 of total income, so $1 of cap gains is over the 15% bracket limit, and thus it gets taxed at 15% also. So you're paying 30c or 30% on that last dollar.
------
Finally note that a side benefit of #6 (selling to recognize gains now in a lower bracket) affords you a tax-effective way to rebalance and/or select better funds in your taxable accounts.

Hey Ted, thanks for the read.
Seems, I am keeping some good company with some of the top notch value fund managers’ thoughts with the large cash position that I now hold in my portfolio. When your own thoughts are close to some of those that are the brightest value fund manages in the business perhaps investors that are not on this path might consider taking heed with their positioning.
Now, I am not talking about savers who usually accumulate positions in cash and cd's, nor traders that take up positions in momentum based strategies or speculators who seem to be with the wild side. I am talking about those investors much like myself who have accumulated their investment positions over time. For me it is buy low when equities are out of favor and then sell some off after they have appreciated and have become somewhat fully valued. Some may recall I started a systematic sell down process beginning at the first of the year where I sold down my equities at about one percent for each 25 point of advancement on the S&P 500 Index through early summer where I stopped this as my equity allocation reached a low approaching the low 40% range. Its high range since 2008 has been in the low 60% range. In doing this I have now built a sizeable cash position while at the same time my equity allocation has grown within my portfolio due to some asset purchases, as value was found, along with some good capital appreciation. In addition, it seems some of my flexible and hybrid type funds have reduced their allocation to fixed income securities, since summer, and raised their allocation to equities. All of this has now resulted in taking me to a mid point weighting in my equity allocation at about 50%. Since, we have now entered the traditional fall stock market rally season I have decided to ride the equity train as long as the upward momentum might last or the traditional season ends towards the end of April. Seems a plan has now come full circle as I am now positioned as to what I’d call an all weather allocation. In addition, I am currently in a cash accumulation mode as I am taking all mutual fund distributions in cash since I feel stocks, in general, are now too overbought for new investment.
Hopefully, in the near term, you'll be reading that I have entered another systematic profit taking mode. Especially, if equities reach a projection, stated by some, that the S&P 500 Index has a good chance to reach the 1850’s or 1860’s (maybe better) before year end. If so, I’ll be a most happy camper and harvest some of my equity allocation booking some profit.
I invest in keeping with my belief that one should take profit from time-to-time (harvest), within my risk tolerance, achievement of goals, time horizon and most important within my abilities and capacity.
I hope I did not ramble … as one comment that I made above seemed to lead to making another.
Have a good weekend … and, I wish all, “Good Investing.”
Skeeter

Feds on Employment Report in Dec Meeting
"hotly debated when Fed policymakers next meet, in December."
"would likely be "noisy.""
Dennis Lockhart, president of the Atlanta Fed, and John Williams, president of the San Francisco Fed, said they were encouraged by the October job gains, but they warned against reading too much into one month of data.
Still, Lockhart said he would not rule out paring back the Fed's massive stimulus program before the end of the year, suggesting that whether the Fed can safely cut its $85 billion-a-month in bond purchases will be hotly debated when Fed policymakers next meet, in December.
Lockhart told reporters that data leading up to the Fed's meeting on December 17-18 would likely be "noisy."
"This is a period in which there are a lot of unusual things going on," he said. "So for that reason, I would be a little reticent to draw up very profound conclusions from one month's positive jobs number."
Williams likewise said he does not want to be swayed by a single data point, however positive.
http://www.reuters.com/article/2013/11/09/us-usa-fed-bernanke-idUSBRE9A70ZT20131109?feedType=RSS&feedName=businessNews

This fund has really got my interest. I really like focused value funds...especially an all cap "go anywhere" fund. I currently have one of each in Roth IRA's (OAKWX & GOODX). I've been a big fan of AUXFX and Jeff Auxier but I've always wished the fund was more concentrated. BMPEX is similar in my opinon, just more concentrated.
In Mr. Snowball's profile of the fund he writes-
Strategy capacity and closure
The strategy can accommodate about $1.5 billion in assets. The plan is to return capital once assets grow beyond the optimal size and limit investment to existing investors prior to that time. Mr. Wydra feels strongly that this is a compounding strategy, not an asset aggregation strategy and that ballooning AUM will reduce the probability of generating exceptional investment results. Between the fund and separate accounts using the strategy, assets were approaching $500 million in August 2013.
What exactly does that mean "return capital". If I were to invest 10K today and the fund assets grew to 1.6 billion. Then what? I understand closing a fund to new investors. I'm assuming closing a fund for good at 1.5 billion means I can no longer add new money, but returning capital?
Can someone please explain.
Thanks,
Clem

>>>If you think it's also reasonable that they should have produced about 60% of the market's 25% gains this year, that list contracts:<<<<
Not exactly a great way to accumulate wealth for a comfortable retirement if that is one's goal each year. I have to say, the mindset of the investors of today differs markedly from those of the 80s and 90s. I suppose because of 2000-02 and especially 2008. As for the hedged funds or "more modest still", we don't even want to go there.
Edit: My reference above are for those under 60 and still in the accumulation phase.

In the context of investment performance and choice, one day is meaningless except, perhaps, as a tool to pique curiosity and encourage a bit more investigation. So, what might one be curious about after the "oops" on Thursday? I'm curious about the funds that I track on your behalf and, in particular, the funds which should hedge your portfolio (to some degree) from the stock market's antics.
Here are three benchmarks that I looked at:
Vanguard Total Stock Market (VTSMX): unhedged domestic equity performance
Vanguard Balanced Index (VBINX): 60% equity exposure
IQ Alpha Hedge Strategy (IQHOX): a well-regarded attempt to market the performance of a broad index of hedge funds
VTSMX: down 1.39%
VBINX: down 0.78%
IQHOX: down 0.74%
So here's a thought: if your hedged fund lost less than 0.75% on Thursday, it's acting respectably. In that camp we have:
• Robeco Boston Partners L/S Equity 0.69
• Hussman Strategic Growth 0.20
• Hussman Strategic International 0.20
• Forward Credit Analysis Long/Short 0.13
• Hussman Strategic Total Return 0.09
• T. Rowe Price Strategic Income 0.09
• Fidelity Strategic Income 0.00
• Arbitrage R -0.08
• Pacific Financial Tactical -0.10
• Merger -0.18
• Whitebox Long Short Equity -0.38
• ASTON/River Road Long-Short -0.42
• TFS Market Neutral -0.43
• Diamond Hill Long-Short -0.51
• Gateway -0.52
• GRT Absolute Return -0.54
• Quaker Event Arbitrage -0.60
• Bridgeway Managed Volatility -0.61
• New Century Alternative Strategies -0.61
• RiverNorth Dynamic Buy-Write -0.66
• MainStay Marketfield -0.72
If you think it's also reasonable that they should have produced about 60% of the market's 25% gains this year, that list contracts:
• Diamond Hill Long-Short 19.17
• ASTON/River Road Long-Short 15.14
• MainStay Marketfield 13.45
If you have the more-modest goal of matching the YTD performance of the industry's best hedged fund, Boston Robeco Partners L/S (up 8.3% YTD), you'd add:
• Quaker Event Arbitrage 9.08 (the former Pennsylvania Avenue Event Driven)
More modest still? Perhaps just have bragging rights over the folks who are surrendering 2-and-20? Roughly that would mean north of 4.3%, the YTD return of IQ Alpha Hedge Strategy. You start adding covered call funds to the mix:
• Bridgeway Managed Volatility 7.08
• Whitebox Long Short Equity 6.63
• Gateway 6.19
• New Century Alternative Strategies 5.03
• RiverNorth Dynamic Buy-Write 4.88
Finally, is an "absolute value" strategy, marked by concentrated portfolios, concern about valuations and still on cash the answer? Here I looked at funds with 15% or more in cash that either I've profiled or ridiculed (Oceanstone) or that you've gotten all tingly about (Yacktman).
The columns represent Thursday's loss (under 0.75% would be nice) and YTD gains (over 14% is tingle-worthy):
• Oceanstone -0.23 29.7
• FPA International Value -0.42 15.9
• Pinnacle Value -0.45 10.9
• FPA Crescent -0.51 17.8
• Cook & Bynum -0.52 10.1
• Beck, Mack & Oliver -0.66 18.1
• Aston River Road Indep Value -0.70 5.3
• Oakseed Opportunity -0.91 20.2
• Bretton -0.96 21.0
• Yacktman -1.08 24.3
Oceanstone, F P A Crescent, and Beck, Mack & Oliver Partners make the cut. Since Aston and Pinnacle are small cap value funds, you might ask how they did against 60% of the Vanguard Small Cap Value (VISVX) index. That target would be down 1% on the down (both did much better than that) and up 16% on the year (neither's closer, though Pinnacle is a lot closer).
For what discussion it spurs,
David

I read #6 with particular interest, because---for once--- it specifically applies to me and wifey. (Except that it doesn't apply to Trad. IRA accounts. I can't find any reference to cost-basis of shares held in my Trad. IRA accounts---> the lion's share of what we own.)
In short, my head is exploding. SELL (at a profit), in order to turn right around and repurchase those shares from the same mutual fund. Because doing so raises the cost-basis and therefore reduces the cap. gains tax bite when selling again, in the future. I can't argue. It's true and logical. But what sort of SPECIAL KIND OF WEIRD do you have to be, to have such a thought creep into your brain? ....This is a testament to the craziness of the Tax Code.

Reply to @MJG: I agree! =)
Funny that RPHYX only gets a single star at M*, because by any risk adjusted measure, it screams. Granted, the biggest distinction is Martin, which measures drawdown...something this fund never seems to have. Even misplaced in the HY category, it still scores a 5 in the MFO rating system. It is in fact one of the new Great Owls. Here are all the GOs in this category:

So why, then, deploy your analysts to write endless prose about domestic large cap funds? Because that’s where the money is.

Right. That is where reprint royalties will be greatest for M*.

You should pay particular attention to a number called the “Maximum Drawdown.”

Hear, hear!

Like the old Hertz commercial, the real rather than apparent answer is “not exactly.”

Love it!

The situation becomes even more blurred where compliance policy allows investment in ETF’s or open-ended mutual funds, which in today’s world will often allow a fund manager to construct his own personal market neutral or hedged portfolio, to offset his investment in the fund he is managing.

Unbelievable!
Really beautiful piece by Mr. Studzinski. Thank you!
Pretty sad to see Aegis Value AVALX adding load. It's 10 year performance is poor. And, 5 year performance mediocre. "It is the doom of man that they forget."
Who uses words like "triumvirate"? =)
Nice heads-up on Mr. Woodford.
American Beacon Flexible Bond Fund ranks near the bottom of nontraditional bond category in MFO ratings. Class A shares carry a 4.75% load and 1.39 er. Here is M* performance comparison:

John Park laid out its mission succinctly: “we pursue the maximum returns in the safest way possible.”

Nice. I just registered for the Oakseed call.
And, registered for the RiverPark call.
"The Gundlash" Ha!

Here’s a decent rule: if they can’t write a grocery list without babbling, you should avoid them. Contrarily, clear, graceful writing often reflects clear thinking.

Many managers update their commentaries and fund materials quarterly...

If they do not, avoid them.
This new Update summary is very helpful! Thanks to Mr. Welsch.
Tilsen Dividend TILDX, now Centaur Total Return, has a great 5 year record, mediocre 3 year, and poor 1 year record.
Very glad Professor Snowball is beginning to see the light with regard to BBALX.
Glad to see that Mr. Waggoner is an MFO fan.
Mitchell Capital All-Cap Growth Fund is one sad story...ditto for Nomura Partners...and so many others, seems like.
Great commentary David, Chip and team.
Many thanks for doing what you do.

Sequoia Fund
http://www.sequoiafund.com/si-dividends-capital-gain.htm
or
http://www.sequoiafund.com/
Wells Fargo Advantage Funds
http://www.wellsfargoadvantagefunds.com/pdf/releases/20131104_ProductAlert.pdf
Loomis Sayles Funds
http://www.loomissayles.com/internet/internet.nsf/content?readform&ctype=capitalgains&channel=dcio
Ariel Funds
http://www.arielinvestments.com/content/view/2642/1850/
Alger Funds
http://www.alger.com/pt/ShowProperty?nodePath=/AlgerAppRepository/Alger/AlgerBinaryContent/Pdfs/MarketingMaterial/InstitutionalMaterials/EstDiv2013.pdf&amp;_netui:returnActionViewRenderer=org.apache.beehive.netui.tags.internal.ReturnActionViewRenderer&amp;_netui:returnActionCallback=Netui_OnPopupDone