http://www.forbes.com/sites/afontevecchia/2013/09/12/jpmorgan-bullish-on-latin-america-ultra-bullish-on-mexicos-energy-reform/

Investors have shunned Latin America as concerns over Fed tapering absorbed capital flows that had flown out, chasing yield, during previous rounds of quantitative easing. LatAm equities are down nearly 15% this year, having fallen dramatically from May to July, just as the yield on 10-year Treasuries shot up. Yet it would be a mistake to count Latin America down and out, explained JPMorgan Chase CEO for the region Martin Marron, who says they remain particularly bullish on Mexico and expect the whole continent to continue to deliver for investors, as the emergence of a consuming middle class, along with stronger institutions and the development of South-South business fuels steady growth.

MJG, sorry to be late to the party here, but as a somewhat newer investor (a little over a year) this distinction has taken up a large amount of my free time and I wanted to ask something that has been on my mind. My answers to your two questions are "no" and "maybe." Currently my strategy is to keep my core relatively cheap and to pay for areas I think managers might add some Alpha.
With my time horizon around 30 years, I'm willing to concede that in the large cap domestic arena there is probably no reason to look anywhere but a passive product. Though I prefer to avoid market-cap weighted indexes, something like VIG/VDAIX is probably going to do very well. I currently use PRBLX as a core here, but I'm weighing a switch, even if to VDIGX.
My conceptual problem comes in the areas of the market which are supposedly less efficient. Few people suggest passive bond products, and Buffet and Lowenstein have shown the success of value investing, particularly in protecting against the sorts of bubbles that plague market-cap weighted indices. I use DODWX for core exposure to domestic/int value (yes, aware of D&C's volatility, but have a long horizon. Am more concerned with AUM), but might concede VIVAX or some fundamental index would also do just fine.
My real hangup comes in areas where liquidity or market knowledge come into play. So if I buy a microcap or small value index, I run the risk of losing money to arbitrage strategies. Also, I know you've spoken against the idea that active management can reliably protect the downside, but small caps seem like an area where they might have an advantage given both arbitrage and growth risks. Fund Reveal seems to back this up with quite a few funds scoring higher on the return axis and lower on the risk axis than NAESX or VISVX. VVPSX, for instance, is marketed as primarily concerned with protection from loss of capital. Of course, there are always PVFIX and ARVIX.
The other area where I see a problem with indexing is of the international market. Many seem convinced that emerging markets are worth paying for active management, though at least part of my avoidance of an EM index is avoiding Russian and Chinese state run firms. However, Rekenthaler just wrote an article on the problem of developed international indices as well: news.morningstar.com/articlenet/article.aspx?id=608086. This makes some sense to me. The S&P 500 or Russell 3000 represents America's economy. The EAFE index represents everything else in the world considered "developed." That's a large number of countries, many of whom have little in common (Japan, Germany, Canada, for instance). Wouldn't an active manager be able to move in and out of regions to avoid valuation crises, like happened with Japan in the early 90s?
You're a particularly eloquent advocate for passive products. Was just wondering what your thoughts were on those two areas of the market in particular? Or if you had an opinion on the viability of fundamental indices?

Social Security as part of your portfolio
BY ANDREA COOMBES,
MARKETWATCH
COPYRIGHT © 2013 DOW JONES & COMPANY, INC. ALL RIGHTS RESERVED.
MARKETWATCH — 08/19/13
Counting benefits as fixed income: opportunities and risk.
You may be counting on Social Security but if you’re not counting Social Security as a part of your overall asset allocation, you may be missing out on bigger gains in your retirement-savings portfolio.
Some financial advisers say retirement investors should consider the value of their Social Security benefits as a piece of their fixed-income investments.
Generally, adopting that strategy would mean shifting a big portion of your investible assets out of bonds and into stocks.
For example, if you’ve got $300,000 worth of Social Security benefits and a $700,000 investment portfolio, then your total portfolio is worth $1 million. If you wanted 50% of that portfolio, or $500,000, allocated to fixed-income investments, then just $200,000 of your investment portfolio would be in bonds, while $500,000 would be in equities.
There are different ways to gauge the present value of future benefits; one simple tactic is to add up your monthly benefit (you’ll have to guess how long you’ll be alive to collect benefits).
“We go through a process where we value someone’s Social Security like a TIP,” or Treasury Inflation Protected security, said Bill Meyer, chief executive of Social Security Solutions, which offers fee-based claiming tools and services. “Then we add it into the household’s allocation.”
In one scenario involving a hypothetical single person who claimed benefits at age 70, owned an investment portfolio worth $500,000, and employed a tax-efficient withdrawal strategy, Meyer said he found that this strategy led to 8 extra years of retirement income, compared with not counting Social Security in the person’s investment allocation.
Famed investor Jack Bogle, founder of the Vanguard Group, seems to agree. In an interview in June with investment researcher Morningstar, Bogle suggested retirement savers should consider the value of their Social Security benefits in their asset allocation.
First Bogle cited his penchant for basing one’s asset allocation on one’s age. (If you’re 40 years old, you have 40% of your investments in fixed income and 60% in equities. By the time you’re 60, you’ve got 60% in fixed income, 40% in equities).
Then he talked about Social Security, citing a saver who has $300,000 saved in an investment portfolio.
“If you capitalize that stream of future payments, most people’s Social Security is going to be…let’s say $300,000 for an average investor,” Bogle said. “If you have $300,000 all in equity funds, even equity-index funds, and $300,000 in Social Security, you are already at 50/50” fixed income versus equities, he said.
Meyer, of Social Security Solutions, acknowledged that many people “will be uncomfortable with taking on a larger stock position,” he said.
In his practice, after coming up with a value for a client’s Social Security benefits, the next step is a conversation with the client.
“That’s where Social Security meets risk management,” he said. “What does this really mean to have more stocks? How are you going to feel when the market goes up and down? A lot of people will say, ‘I understand this concept but I really don’t feel good when my 401(k) goes down $50,000,’” Meyer said.
People need to understand that “with the additional stock exposure there will be more volatility,” Meyer said. “With our clients, we’ll give them a target asset allocation and then we’ll give them a range.”
He tells clients: “Given your amount of Social Security, you could tilt your equity exposure as much as X.”
Then, Meyer said, “We show them the additional money they can get by having more stock. But then we run a Monte Carlo simulation to show them the volatility. What’s the most you could win, but what’s the most you could lose.”
Also, he warned, married couples—who can employ a variety of Social Security claiming strategies—might have a harder time estimating the value of their future benefits.
Income, not assets
Some disagree with this approach. “I advocate including [the value of Social Security benefits] in a net-worth statement, but I don’t necessarily go so far as to include it in a traditional investment allocation,” said Bob Klein, a certified financial planner and president of Retirement Income Center in Newport Beach, Calif. who also is a MarketWatch RetireMentor contributor.
“It’s a psychological issue, more than anything,” Klein said. “Say we’re in a real down market—they’re not going to be comforted necessarily by the fact that they have Social Security. They’re focusing on the fact that their portfolio is going down.”
Klein said he prefers to calculate the present value of projected retirement income from a client’s various retirement-income sources, such as an investment portfolio, Social Security and annuities.
“You’re not looking at assets per se. You’re looking at income and how the income is allocated,” he said.
One reason he likes that approach: It forces a focus on generating retirement income.
“The reality is you need income to live on and, furthermore, with life expectancies increasing, you’re going to be retired, chances are, for a lot longer than your parents were,” Klein said. “Income is the name of the game at that point.”
He added: “It’s important to recognize that Social Security does have value to it and include that present value, whatever it is, in a financial statement, but don’t include it in a traditional investment allocation format.”
How do you go about figuring the present value of your benefits? Looking at your statement on SSA.gov can help, but you will have to make a guess as to how long you will live. And if you’re many years away from retirement, you’ll have to make some guesses as to how much you’re likely to earn later in your career.
“You have to use a lot of assumptions,” Klein said. “The closer you are to full retirement age, the easier it is to do the calculation. However, you still have to make assumptions about longevity, which is tricky.”
Others agreed with Klein’s approach.
Counting Social Security as part of your investment allocation, and thus tilting your investments more heavily toward equities, puts your portfolio at too much risk, according to an article written in 2009 by Paul Merriman, president of the Merriman Financial Education Foundation, a longtime financial adviser and a MarketWatch RetireMentor.
Merriman said he still agrees now with what he wrote then.
“In a serious bear market, that heavy equity allocation could wipe out your portfolio’s ability to keep generating the income you need for retirement,” he wrote in the article.
“You’d still have your Social Security, but you might not have much else. You could be forced to drastically cut back your lifestyle—an unfortunate result that started when you didn’t think clearly about this,” he said.

Gundlach's argument seems to me modest enough that it is probably right: the days when moves in the rate curve assured these guys big capital gains are over, but they're not idiots, they too see how interest rates are moving and are skilled enough to prepare for it and maintain a decent dividend.
At least that's how I understand it.

Reply to @Investor:
Investor- appreciate the reply and somewhat agree. You will note that my portfolio does not consist of long-short funds as I do not believe one can consistently time the ups and downs. I'm primarily investing in very risk conscious value managers (Romick, Inker, First Eagle Team) that is balanced with active fixed income and momentum players (Good Harbor, managed futures). I'm adding to emerging since I like the long term risk reward but am very cautious of US equities at current valuations.
As a steward of my own capital my strong preference today is direct lending funds which I have a substantial position in lending club and a small business loan fund. Currently reviewing a first deed fund as well. IMHO, these represent a much, much better risk reward than anything else at present time. Perhaps one day I can spend the time to post my arguments.
Cheers

Hi Heather,
A thoughtful write(s).
A view I offer is from my personal technical (electronic/mechanical background); not as in "technical analysis" related to investing.
I hold a 6" long hex-headed threaded bolt in one hand and the appropriate hex-headed threaded nut in the other hand. I can either turn and thread the nut onto the bolt or visa-versa; or thread both onto one another, turning both at the same time. If I had proper physical access to both pieces, I would turn both at the same time as a matter of being efficient. This is my active part of the work, until both pieces are tight to perform the task.
The "binding" of a portfolio; which with this example, needs at least two pieces.
For this minimum portfolio of two pieces or the nut and bolt being two pieces; I may choose to have a helper or manage the work myself. The helpers would be the active managed funds or with managing the work myself, could be a mix of active and passive helpers.
The active side being the human side and the passive side being the more purely, mechanical side.
In either case, and I suspect would be the majority case among investors here; I will still actively manage the managed and passive. In the case of the human managed funds, I have added another layer of trust into someone or a team with whom I have no real insight. My own intuition and theirs is in play for the active side. The passive investment side only requires my own intuitions.
We are all correct in choosing our own mixes; based upon our intuitions with the humans we entrust our monies towards; as well as how we deal with the passive/mechanical funds.
You noted: "Do you define risk in terms of volitility or loss of capital? I believe most individuals define risk as a loss of capital."
Our house defines this area in the same fashion, loss of capital. One can not gain the value of forward compounding so easily, with negative numbers, eh? As to volatility . Our house views this as a form of opportunity to either leave or stay at the party; that will affect the "risk". Volatility is well expressed with two market sectors ,in particular, over the past few decades, being the metals and emerging markets. Lots of opportunities for profits and lots of chances of a portfolio receiving a good butt kicking, if the owners were not paying attention.
We're actively managing a portfolio, at this house, period.
Take care,
Catch

I have spent the better part of my investing life as a promoter of passive investing and disciple of Gene Fama and DFA. While their research is certainly not without merit, I have come over the years to realize that the premise that markets are efficient is nonsense. Do you truly believe that investors make rational decisions based on the facts presented at all times? Indexing implies that prices should be adjusted so that the expected return of any stock should be the same. Do you believe that? Gene Fama doesn't believe it either which is why he recommnends a value/small cap tilt . If markets are efficient than why does a value premium exist? Fama says he doesn't know why. I think I do. Because markets aren't efficient. Gene Fama once told advisors that he only claims that his approach will work over an investment lifetime. Are you willing to wait your investment lifetime to see if he's right? I asked Gene Fama one time how he can say markets are efficient if tech stocks were trading at multiples in the hundreds and companies without revenue or assets were valued higher than established companies in the same industry? He said that you could have shorted them any time 3 years prior to the crash on the assumption that they were overvalued, and you would have incurred large losses. I told him I meant they could have just been sold. I wasn't referring to betting against them. If you had just sold them you would have been better off. No response for that.
So I pose the question does one believe that markets are efficient or is the entire premise flawed? Or should one overlook these flaws and adopt a passive approach, because it is still likely to beat an active approach? I think ultimately one has define who they want to be as an investor. Do you want to target relative or absolute returns. If you are happy with relative returns and style box investing, perhaps you will be better off with a passive approach. I am no longer content with relative return victories. If the market is down 40% again at some point (a real possibility) I am not going to be satisfied that I am down 30%. Passive strategies are great in up markets because they produce positive returns. When I believe the wind is at our back and stocks and bonds are cheap again I will be happy to re-adopt a passive approach.
Further, style box, or relative return investing does not account for the notion that you could be entirely removed from an asset class, or invested in another. For example. let's say a large cap growth fund was down 5% when the market was down 2%. But at the same time, high yield bonds produced a return of +6%. Were you better off becuase you only lost 2% vs. 5%, or worse off because you missed out on +6%. A passive investor would argue that this is proof you can't beat the market. I would argue that you missed an opportunity.
One more thing I would like to point out is the definition of risk. Do you define risk in terms of volitility or loss of capital? I believe most individuals define risk as a loss of capital. They should also define it as a loss of purchasing power, but that is not easily comprehended by the typical investor. Let's say you invested with a concentrated stock manager that modestly trailed the index after 10 years, but didn't lose money in any year while the market had some significant down years. Without knowing the future, would you be more comfortable knowing that your manager was managing your downside even if it cost you modest returns in the end? It's like buying a put option on your index portfolio. Is it worth the cost of insurance to know your downside is limited? I would think most investors would say that the risk protection and peace of mind is worth the cost of a modest reduction in returns. And don't ever forget what happened in Japan (market down 75% after 20 years) or the US for 20 years after 1929. It can happen again I am pretty sure Gene Fama will not be writing you a check to cover your losses if it does.
There is certainly more than one way to succeed as an investor. Your decisions become more significant each year that passes. The number gets bigger and there is one less year to accumulate assets. If you were closer to retirement I would strongly suggest you abandon the passive, static allocation approach. However, if you are young enough one could justify the approach as long as you are willing to stick with it through all market conditions. I am at a position in my life that I am far more comfortable with the active approach. I think there are going to be some excellent opportunites with great risk/reward trade-offs in the years ahead and I want to protect my capital to take advantage if and when they do arise. The current market and economic imbalances are great. In economics, imbalances must be corrected. It can be gradual or abrupt (like 2008) but they must correct. I am not predicting a market crash, but the risks are elevated due these imbalances. 60/40 portfolios will not hold up well in that environment (especially with the risk of rising interest rates)!
Now let's consider investing from a macro context...Enormous debt pile, record low interest rates, taxes that almost certainly will rise, and demographic headwinds and you start to see that the conditions we have become so accustomed the past several decades will be difficult to duplicate. Anything is possible but so many things would have to go right that beta returns has become a low probability outcome. Personally, I want the deck to be stacked in my favor before I make a 60/40 bet. That does not currently appear to be the case. This is especially true for risk sensitive investors and those with short-intermediate time horizons.

Fidelity hasn't posted the 9/6/13 distribution on the fund page, but looking at the historical data, FLPSX distributes most if not all its cap gains (as opposed to ordinary/qualified dividends) in September. Likely little in cap gains left for a December distribution.
I'm confident that FLPSX's low turnover (19%) has something to do with its absence of short term gains. Conversely, FOCPX's high turnover (149%) likely goes far in explaining the relatively high amount of short term gains (1/6 of all the cap gains distributed were short term).
But I'm left wondering about FDGFX. Its short term gains were the highest fraction of total cap gains (1/5), yet it sports a reasonably modest 63% turnover, and there was no management change (which could have explained a high turnover of the portfolio).
It's nice that Fidelity posts these breakdowns, so that one can ponder such minutiae. :-)

http://www.sec.gov/Archives/edgar/data/745467/000119312513358529/d594379d497.htm
Meridian Equity Income Fund®
Meridian Growth Fund®
Meridian Value Fund® (now known as Meridian Contrarian Fund®)
(each, a “Fund” and collectively, the “Funds”)
Supplement dated September 5, 2013 to the
Prospectus dated November 1, 2012, as supplemented
On May 15, 2013, Arrowpoint AIM LLC, a wholly-owned subsidiary of Arrowpoint Asset Management, LLC (“Arrowpoint”), entered into an agreement with Aster Investment Management Co., Inc., the previous investment adviser to the Funds (“Aster”), to acquire substantially all of Aster’s assets, including its management rights with respect to the Funds (the “Transaction”). The Transaction was subject to certain conditions to closing, including, among others, approval by Meridian’s Board of Directors and by each Fund’s shareholders of a new investment management agreement between Arrowpoint and Meridian, on behalf of each of the Funds; such approvals were obtained on June 11, 2013 and August 28, 2013, respectively.
The Transaction closed on September 5, 2013, and, as a result, the following proposals have become effective as of this date:
• Approval of a new investment management agreement between Arrowpoint and Meridian, on behalf of each of the Funds.
• Amendment of each Fund’s fundamental investment restrictions with respect to issuer diversification requirements.
• Amendment of each Fund’s fundamental investment restriction with respect to entering into repurchase agreements and making loans.
• Amendment of each Fund’s fundamental investment restriction with respect to short sales of securities.
• Elimination of each Fund’s fundamental investment restriction with respect to purchasing and writing put and call options.
In view of the foregoing, and other related matters, the Prospectus for each of the Funds is hereby supplemented as follows:
1. Change of Fund Name. Effective as of the date of this supplement, the name of the Meridian Value Fund is being changed to the Meridian Contrarian Fund. The investment objective, investment policies and the investment strategies of the Fund are not being changed in connection with the name change for the Fund and the current portfolio managers will continue to manage the Fund.
As a result of this change, all references to the “Meridian Value Fund” in the Prospectus are deleted and replaced with the “Meridian Contrarian Fund”, except as the context may otherwise require.
2. Change of Investment Adviser. Arrowpoint is the investment adviser to the Funds.
• All references to the “Investment Adviser” in the Prospectus are deemed to be references to Arrowpoint, except as the context may otherwise require.
• The information under the caption “Management” in the “Fund Summary” section of each Fund is hereby replaced with Arrowpoint Asset Management, LLC.
• The first paragraph in the section of the Prospectus entitled “Organization and Management – The Investment Adviser” is deleted and replaced in its entirety with the following:
Arrowpoint Asset Management, LLC, located at 100 Fillmore St., Suite 325, Denver, CO 80206, serves as the investment adviser to the Funds. The Investment Adviser, an investment adviser registered with the Securities and Exchange Commission (“SEC”) since 2009 and privately owned by its principals, manages the investments of the Funds’ portfolios, provides administrative services and manages Meridian’s other business affairs. These services are subject to general oversight by the Board. Pursuant to an Investment Management Agreement and Service Agreement between Meridian, on behalf of the Funds, and the Investment Adviser, dated September 5, 2013 (the “Management Agreement”), the Investment Adviser provides investment advisory services to the Funds.
Prior to September 5, 2013, the Funds were managed by Aster Investment Management Co., Inc. (the “Previous Investment Adviser”) pursuant to an Investment Management Agreement and Service Agreement between Meridian, on behalf of the Funds, and the Previous Investment Adviser, dated July 13, 2012 (the “Aster Management Agreement”). On May 15, 2013, the Previous Investment Adviser entered into an agreement (the “Asset Purchase Agreement”) to sell substantially all of its assets, including its rights with respect to the Aster Management Agreement, and transfer certain liabilities to Arrowpoint AIM LLC, a wholly-owned subsidiary of the Investment Adviser (the “Transaction”). The Transaction was subject to certain conditions to closing, including, among others, approval by Meridian’s Board of Directors and by each Fund’s shareholders of a new investment management agreement between the Investment Adviser and Meridian, on behalf of each of the Funds; such approvals were obtained on June 11, 2013 and August 28, 2013, respectively. The closing of the Transaction occurred on September 5, 2013 and resulted in the automatic termination of the Aster Management Agreement.
There are no material differences between the Management Agreement and the Aster Management Agreement. In this regard, the Management Agreement and the Aster Management Agreement contain the same terms, conditions, and fee rates, including applicable breakpoints, and provide for the same management services.
3. Portfolio Manager Changes. The portfolio managers primarily responsible for overseeing the investments of Meridian Growth Fund have changed.
• The information under the caption “Portfolio Management Team” in the “Fund Summary” section of the Meridian Growth Fund is hereby replaced with the following:
Chad Meade serves as a Co-Portfolio Manager of the Fund. Mr. Meade, who joined the Investment Adviser in 2013, has served as a Co-Portfolio Manager of the Fund since September 5, 2013.
Brian Schaub, CFA, serves as a Co-Portfolio Manager of the Fund. Mr. Schaub, who joined the Investment Adviser in 2013, has served as a Co-Portfolio Manager of the Fund since September 5, 2013.
• The information in the section of the Prospectus entitled “Organization and Management – Portfolio Managers” is deleted and replaced in its entirety with the following:
James England, CFA
Co-Portfolio Manager of Meridian Equity Income Fund and Meridian Contrarian Fund.
Employed by the Investment Adviser as an investment management professional since 2013. Mr. England was formerly employed with the Previous Investment Adviser since 2001. Before that, Mr. England was an equities derivatives trader with TD Securities from 2000 to 2001.
Chad Meade
Co-Portfolio Manager of Meridian Growth Fund
Employed by the Investment Adviser as an investment management professional since 2013. Mr. Meade previously served as a co-portfolio manager and Executive Vice President of the Janus Triton Fund and the Janus Venture Fund. He has 14 years of experience in the financial industry and focused on small and mid-capitalization stocks in the health care and industrials sectors as an equity research analyst at Janus Capital Management LLC from 2001 to 2011. Prior to starting with Janus in August 2001, Mr. Meade was a financial analyst for Goldman Sachs’ global investment research team. He graduated summa cum laude from Virginia Tech with a Bachelor’s degree in Finance and was a member of the Omicron Delta Kappa Honor Society.
James O’Connor, CFA
Co-Portfolio Manager of Meridian Equity Income Fund and Meridian Contrarian Fund.
Employed by the Investment Adviser as an investment management professional since 2013. Mr. O’Connor was formerly employed with the Previous Investment Adviser since 2004. From 2003 to 2004, Mr. O’Connor was a Research Associate with RBC Dain Rauscher. Mr. O’Connor was an Investment Bank Intern at RSM Equico in 2002. From 2000 to 2001, Mr. O’Connor was a Compliance Associate at Thomas Weisel Partners.
Brian Schaub, CFA
Co-Portfolio Manager of Meridian Growth Fund
Employed by the Investment Adviser as an investment management professional since 2013. Mr. Schaub previously served as a co-portfolio manager and Executive Vice President of the Janus Triton Fund and the Janus Venture Fund. He has 13 years of experience. Mr. Schaub served as an equity research analyst at Janus Capital Management LLC from 2000 to 2011, focused on small and mid-capitalization stocks in the communications sector. He graduated cum laude from Williams College with a Bachelor’s degree in Economics. Mr. Schaub also holds a Chartered Financial Analyst designation.
The SAI provides additional information about James England, Chad Meade, James O’ Connor, and Brian Schaub, including their compensation structure, other accounts they manage and their ownership of securities in the Funds they manage.
4. Short Sales. The following sentence is inserted as the last paragraph in the section of the Prospectus entitled “Further Information About Investment Objectives and Principal Investment Strategies – General”:
The Funds do not engage in short sales, but the Board may permit a Fund to engage in such transactions in the future.

Reply to @VintageFreak:
Just a quick note -
After a couple of years of research in the mid to late 80s, I arrived at the
10-month and 200-day moving averages as a simple mechanical buy/sell
device merely to protect my LT capital from a major market crash.
It has done that.
At the time, it was not my intention to beat the market.
It just turned out that way - and I realized that one does not have to
buy into Wall Street’s diversification advice to achieve superior
risk-adjusted returns.
Certainly there are many similar technical devices that one could consider
and that would work well given different market volatility times. But again,
my initial effort was directed as a LT portfolio protection plan.
Make of it what you will and best of luck in the future.
Flack

Hi Heather. Although I think you are set up too conservatively for a +20 year time frame, I think your portfolio is constructed pretty well. And the reason I believe that is that it looks very similar to the way I set mine up. Very similar. We have different names for our categories, but we have the same desire to use proven active management with flexible investment styles. But of course, I am only 2 1/2 years to retirement (hopefully).
You have categories called global asset allocators and tactile long/short. I just lump that together and call it balanced and alternative strategies. But it's similar in that we want good managers to have a lot of investment flexibility, geographically and with asset allocation.
You, 55% in:
WABIX, FPACX, SGENX, GHUIX, AQMIX
me, 40% in
FPACX, FAAFX, MACSX, PAUIX, RGHVX
Then we have your more conventional equity/bond mix.
you 50/50 mix, YAFFX, SFGIX / DBLTX, OSTIX, TTRZX, FPNIX
me 60/40 mix, YAFFX, ARIVX, GPGOX, OAKIX, ODVYX / MWTRX, LSBRX, PRWBX, FGBRX
I will say, I keep ~10% out of this "core" part of the portfolio to move around with the hopes of adding alpha. Not sure I really do.
So, can't argue with your portfolio structure, but, I'll give my 2cents on other stuff. I don't know much about some of your flexible allocation funds, but I do think you have way to much allocated to them. I can see where you are coming from - trying to reduce volatility, but 55% of the portfolio? I'd knock that back to maybe 30% with FPACX, WABIX and one other. I might then go with 50% in stock funds and 20% in bond funds. There are some real good capital-preservation equity managers listed on this sight to chose from - or even index funds to fill some of the large cap equity portion. Re-evaluate in 10 years and bring it closer to a 60:40 or 50:50 mix down the road if you like.
Anyway, I like what you did and I guess you have to go with your gut on risk versus reward. But keep in mind, like others have said, volatility is not the same as risk over a long investment horizon (by the way, I do equate volatility to risk for shorter horizons).
Good luck and nice job.

Hello,
I harvest capital gains myself form time-to-time ... and, I think it's a prudent investment stradegy to follow. But, since JAOSX can transverse to global investment universe I think I'd hold on to some of it regardless of what you choose to do with the sale proceeds from the shares you may choose to sell. One of the things that you don't tell us is what percent of your portfolio does JAOSX occupy. If it is eight percent or less ... perhaps I'd do nothing while if it is a large percentage I'd trim it back and re-position some to the capital into some other funds for a more diverisfied thinking and strategies type approach.
Skeeter

I've held JAOSX on and off for about six years and it's been volatile in a predictable enough manner that it's been one of my few market-timing successes (I bought in 2008, sold half in early 2010, bought more at the end of 2011) so I've done pretty well in it despite its poor recent performance.
But though I tend to like funds with high conviction managers (JAOSX has 49.45% of its AUM in its top 10 holdings), a mandate that lets them invest broadly (JAOSX can go anywhere internationally and can even put 20% of assets into U.S. stocks), a good long-term track record, and poor recent results (e.g. Fairholme), I am beginning to lose faith in Brent Lynn and am considering selling it (this is a good year for me to harvest capital gains) and buying SFGIX instead.
It's not an exact fit, since JAOSX can go pretty much anywhere and SFGIX is emerging markets, but in recent years JAOSX is mostly EM anyway.
Aside from the fact that Janus seems a pretty disreputable asset manager these days (though JAOSX's manager has been with the fund since 2001 and has over $1 million invested in it), I have trouble forgiving him taking such a huge stake in Petrobras. I live in Brazil, and Petrobras may be cheap enough to invest in now, but a few years anyone following this country or this company even slightly could see the warning signs.
On the other hand, to walk away from a high-conviction manager with a great long term record after a few bad years seems like the exact way to have subpar returns.
Thoughts?

Certainly. The powers of tax deferral and gains in the market cannot be disputed.

I noticed interest rates are starting to go up again. I bought a 2 YR CD last year at my Credit Union (StarOne) to lock in 0.65%. Now, 12 months later I can get a 2 YR CD for 0.1% higher than I am getting on my 2 YR while the 1 YR rates is the same 0.65% so I'm even.
I remember American Express was paying 0.85% for savings last year. Rates at American Express are still 0.85% for a savings account so I would have done better putting my money there, but who knew rates would bottom?
Interesting that this Interest Rate Survey shows that GE Capital Bank is paying the highest rates. I believe GE may spin off their consumer banking so they maybe offering better rates to attract assets to get a more favorable IPO.
The top rates paid for each survey (rate survey history) show rates are still coming down with nobody over 1% for a "no strings" savings account. How many remember the days we got over 10% on money market savings accounts? With all the QE and money printing by the Fed, you have to wonder if that is ahead for us someday....

Dear Heather: I hate to tell you this, but you need to go back to square one. With twenty years and no current need for money, you need to build a capital appreciation portfolio to go with your capital preservation.
Regards,
Ted
Sample Capital Appreciation Portfolio: http://assetbuilder.com/our_portfolios/model_portfolios/model_portfolio_14
Lazy Portfolio:
http://www.marketwatch.com/lazyportfolio

Includes other information also.
http://www.sec.gov/Archives/edgar/data/1000351/000089710113001279/leuthold133732_497.htm
...The Board of Directors of the Leuthold Asset Allocation Fund, a series of Leuthold Funds, Inc., has approved a proposal for the Leuthold Asset Allocation Fund to be acquired by the Leuthold Core Investment Fund, another series of the company. In connection with the acquisition, all of the Leuthold Asset Allocation Fund’s assets will be transferred to the Leuthold Core Investment Fund, and shareholders of the Leuthold Asset Allocation Fund will receive shares of the Leuthold Core Investment Fund in exchange for their shares, on a tax-free basis. The acquisition does not require approval of the shareholders of the Leuthold Asset Allocation Fund, but shareholders of the Leuthold Asset Allocation Fund may redeem their shares prior to the acquisition. The acquisition is expected to occur in October of this year, and the expenses of the acquisition will be borne by Leuthold Weeden Capital Management, the investment adviser to the Funds.
The company will file a prospectus on a Form N-14 Registration Statement with the Securities and Exchange Commission in connection with the proposed acquisition. The definitive prospectus will be sent to shareholders of the Leuthold Asset Allocation Fund. Shareholders are urged to read the definitive prospectus when it becomes available, because it will contain important information about the proposed acquisition...

All,
Simply thought I would post my thoughts on an allocation that I'm close to adopting and would greatly appreciate your thoughts and criticism?
These investments are primarily to fund our retirement which is 20+ years away. There are no immediate income needs from the portfolio nor will we need to take any withdrawals out until retirement. I am a very conservative investor so capital preservation is a priority with an objective of generating returns of inflation plus 3-4% while generating decent upside and downside capture. Targeting a beta of 0.3-0.4.
There are four main categories of the portfolio allocation.
The first consists of Global Asset Allocators. My goal here is to invest in 5 risk conscious managers with varying views and that have great investment flexibility. 40% will be allocated amongst the following:
Wells Fargo Absolute Return (GMO)- WABIX
FPA Crescent-FPACX
PIMCO All Asset All Authority- PAUIX
Ivy Asset- IVAEX
First Eagle- SGIIX
The second category consists of what I term tactical allocation and long-short. A 20% weighting will be allocated to:
Good Harbor US Tactical Core- GHUIX
AQR Managed Futures- AQMIX
Marketfield- MFLDX
The third category consists of flexible bond funds. A 40% weighting to the following:
Scout Unconstrained- SUBFX
Doubleline Total Return- DBLTX
Osterweis Strategic Income- OSTIX
Templeton Global Total Return- TTRZX
Sierra Core Retirement- SIRRX
RiverPark Strategic Income- interested in this fund after it launches
The fourth category is invested outside of my portfolio outlined above. This consists of two direct lending vehicles, Lending Club and a private placement fund that specializes in short term small business loans.
I also plan to reduce the global asset Allocators over time and invest in the following after a 15-20% market decline:
Seafarer Growth & Income- actually might consider now
Yacktman Focused
FMI International or FPA International Value
Thanks
Heather

Morning Again Ted,
Any of the 12 notes Mr. Merriman presents will offer something to the reader.
In particular, in my opinion: points number 1, 5 and 12.
---number 1, the predictions from experts and/or charlatans. In our (you and I, and many other older members here) younger days we were bombarded with mailings about every form of magical investment method, process or other fantastic vision. The internet provides even more of this today. In particular, an investor needs to be able to sort the fact from the fiction. Marketing a thought or product is here to stay, and investors will be subject to these methods, too; not just from a tv ad or the local car salesperson.
---number 5 In my opinion, and from numerous personal observations over the years; the emotional side of one's investing can be the most destructive and difficult to resolve. An investor really has to have sound personal insight into what makes them tick; in order to have a positive investing outlook and reward.
---number 12 defensive vs offensive investing. If one is an investor, this is the offensive portion with holdings. Protecting the gains (the defensive) is more critical to obtaining investment goals. The wonderful world of compounding towards the long term positive return does not work well when a portfolio is not managed to protect the gains. Everyone will have their methods of dealing with the protection of gains.
I don't understand how the above may be viewed as "so yesterday". If one does not guard against or have a better understanding of the marketing folks selling their grand ideas or of the often highly educated talking heads who don't get things just right; or learn to understand the self-emotions aspect of investing; or of the value of attempting to understand how to protect the portfolio gains to the best of their ability, well, none of these are yesterday issues for investing. These aspects continue and are here and now, and will remain long past my time on this planet.
I find one item that could remove portions of the above considerations. Set personal investing parameters, hire an excellent programmer to establish a trading algo that suits one's needs and auto-link portfolio buys and sells into the system.
Fortunate to those who have discovered MFO; especially at a young investing age.
Hey, take care. I gotta get back to work here.
Catch