Reply to @clemg64: I would hold onto MAPIX as long as you can unless something happens to Matthews which I sincerely doubt.
As far as I can see, Asia is still going to be a big engine of the worlds economy. The volatility you see in EM is actually normal. Big gains come with big risks. With that said, having a small percentage in a fund like MSMLX will ensure you are participating in that growth.

In regards to DCAing a lump sum or not, ordinarily @Ted is correct: studies have shown that given a certain amount, lump sum investing that whole amount beats DCAing it about 70+% of the time, if memory serves.
You have to decide your own comfort level though, given two variables: 1) market valuations seemed stretched currently and we may be going through a correction; and 2) this money is for long term investing. If 1) makes you queasy, DCA. If you conclude from 2) that short term valuations matter little given a 30+ year horizon, lump sum it.
You can also split the difference. FWIW, I lost some gains last year by DCAing some inherited monies between March and September.

Reply to @bnath001: Stress testing, shortfall and VaR are three of the techniques for risk assessment/management in finance. In the retail investment context, stress testing is only recently becoming popular with companies like hiddenlevers providing the technology to advisors. Some stress testing tools have also been included in the software used by advisors for portfolio management. It is simulating for very specific scenarios regardless of the probability of such an event. It helps better understand the risks of their investment.
The shortfall assessment is what is typically determined by the Monte Carlo simulations often mentioned here. They are designed to measure the probability of falling short of a financial goal such as sufficient money to last until death. But they don't say what the implications are in specific scenarios even if low probability. And the scenario models especially in public tools are not usually as sophisticated as those used in stress testing tools to conserve computational effort - breadth over depth.
Value at Risk or VaR Measures the risk of a specific loss in a portfolio. What is the probability that a portfolio will lose $X in T time? T is usually short. This is more useful in financial institutions where a sudden deep loss might create systemic risks so used for minimum capital requirements, etc. For retail investing, it may be useful if you are trading on margins or options trading where thresholds trigger events not much otherwise.

The Hussmann funds all posted nice gains and are all up YTD. Forward Credit Analysis Long/Short, under its new PIMCO team, also made a solid gain - up nearly 0.7% on the day.
David

Starting this as a separate thread for the portfolio construction exercise for tp2006 starting from his model portfolio that captures his circumstances and risk tolerance.

US Stocks Vanguard VTI ETF 21%
Foreign Stocks Vanguard VEA ETF 18%
Emerging Markets Vanguard VWO ETF 22%
Dividend Stocks Vanguard VIG ETF 13%
Real Estate Vanguard VNQ ETF 16%
Corporate Bonds iShares LQD ETF 5%
Emerging Market Bonds iShares EMB ETF 5%

Notes to @tp2006
1. This corresponds to a 50% domestic, 40% international and 10% bonds selected for your age, income profile and risk tolerance, etc. You are just starting out with a small amount in a retirement account and hence the not so conservative portfolio.
2. It answers part of your questions on how to divide the allocation. This tool splits it between asset classes that have the lowest correlation possible for your profile on a risk adjusted performance basis. Hence the domestic stocks split between total market, real estate and dividend stocks. The total market divides it for size according to market weighting within the US total market.
3. Now create this portfolio on M* as if you invested your entire portfolio on Jan 1. Get the composite statistics provided by M* for the portfio in the Xray, volatility numbers and post them here.
4. The exercise will be to either just keep this portfolio or tweak it maintaining the risk/volatility profile. Some small deviations won't matter much. For example, you can try to solicit find suggestions to replace VTI. Or you can ask people to create an equivalent or better portfolio and compare its characteristics. You can also try to map your existing portfolio to this and create a transition plan.
5. If you are feeling adventurous you can go to hiddenlevers.com and create a dummy free account. The information you provide including email address can be fake. You can only add 5 funds for the dummy portfolio, so just use the equity etfs. It is a.very painful site to use but allows you to stress test your portfolio for various scenarios from commodity crash, end of QE, demographics change, etc. What you are looking for is how the portfolio behaves in those scenarios so you can withstand it. So, for example, it might say that your equity part may go down by 50% in the last financial meltdown scenario. Can you stand it without panicking? If not, go back to wealth front dashboard and turn down the risk tolerance to get new allocations and repeat.
6. At the end of this exercise, you will have a portfolio that you can buy and monitor perhaps once a year at most and go through the same exercise again or beter just rebalance it.
7. For the amount of money you have you should be aiming for 3-8 funds total. You can get to this in many ways including a single allocation fund for two or more of those model portfolio funds or splitting another. But every fund you add should be justified in the context of the whole portfolio.
8. With a larger portfolio, you can create another pot for funds with alternate strategies, other asset classes, etc. But this is not worth it for the capital you have available at the moment.
The above is what a competent investment advisor might do if you paid money. If you don't want to do the above, then find an advisor or try to stick as close to the model portfolio as possible without getting tempted by the blue and red marbles being suggested, however intriguing the fund might seem and just throwing it in to create a kitchen sink portfolio.
Good luck.

EEV 5%
FXP 4.31%
Not that those gains did much to help the whole portfolio. At least, they kept the play money leveraged portfolio neutral.

Watching OAK 58.88 -1.43 (-2.37%) and OZM 14.90 -0.59 (-3.81%) and the others mentioned for further price erosion.Looks like the smart money is buying up distressed Chinese debt,which may weigh on world markets as it becomes more exposed.
Friday, Jan 24
10:40 AM Seeking Alpha....
Several bidding for stake in China Huarong
A manager of bad debts, Huarong is expected to get plenty of business as waves of loans turn sour in China. The largest of the country's four bad loan managers, the company oversees assets of about $66B.The stock offering - previously reported as a stake of 15-20% - will allow Huarong to acquire more bad loans and forfeited assets. The profit comes as the company repackages the loans/assets and moves them to other buyers.Among a large number of those trying to get a piece are KKR, BlackRock (BLK), and Blackstone (BX), reports Reuters. First-round offers are due by mid-February.
From Reuters...
CINDA APPEAL
Huarong's fund-raising plans come on the heels of China Cinda Asset Management Co Ltd's (1359.HK) $2.9 billion Hong Kong I P O in December. Cinda's stock has risen 43 percent above the offer price.
Cinda's I P O attracted some of the biggest names in global investing as cornerstone investors to provide a solid structure for its I P O. They included Oaktree Capital Management Ltd (OAK), the world's biggest distressed debt trader, and Och-Ziff Capital Management Group LLC (OZM), who were among the 10 cornerstone investors to jointly plough $1.1 billion into the offer.
http://www.reuters.com/article/2014/01/24/us-huarong-investors-idUSBREA0N0HF20140124

Nothing in core portfolio. YCS and SSO got stopped out in play money portfolio to preserve small gains.

Reply to @scott: Unlike you, when I was your age I was close to dead broke/penniless and with a negative net worth. Thus I didn't have the luxury of sitting tight with dog funds like ARIVX. In fact, my only option with $2200 (primarily from maxing out my credit cards) was daytrading stock index futures to get enough capital to venture into equity funds and then it was only the ones with momentum.

Hi TP. You've gotten some good feedback here. Most I agree with, especially adding more international flavor and maybe, since you are only 40, more small cap exposure.
One thing about this discussion board which can be both good and maybe some bad, you will be made aware of many new and often intriguing funds that you may never had heard of elsewhere. It's very easy to become a fundaholic if that's the right term. If you are going to be a mostly buy-and-holder, which it sounds like you are, do all the upfront work to hire the fund managers you are comfortable with, x-ray your portfolio to see if you are within your ballpark allocations and go with it. My opinion, and it's only an opinion, is you don't need duplicate category funds to do this. But the important thing is, what does your gut say? Another suggestion; if you have a need to play or make momentum bets or want to try new things (which I'm guilty of), segment a small portion of your portfolio for that. I do this with ~10% of my portfolio.
I'll add my own preference for choosing funds; in general I like management that can and will adjust their portfolio's with capital preservation and total return in mind (FPACX and YAFFX for example). I like more focused funds (not a lot of holdings), a smaller asset base though that is hard to keep if the fund is doing well, and mostly a fund that has a good to great upside-downside ratio as seen in M*. The up/down ratio is similar to the statistics Charles uses to display his great owl funds.
Good luck to you.

High yield munis are not for conservative or passive investors. You use it for total returns not just for non-taxable income. With its volatility, you will likely pay capital gains tax on it. For momentum or otherwise active investors, the total returns will make it worthwhile even in tax-advantaged accounts but it is not a serious buy and hold contender for passive or conservative investors. It is not even a good long term hold unless you are in the top taxable bracket to make its pricing (that factors in maximum tax benefits) worthwhile.
The current trend up in HY muni is drawing in a lot of hot money, so expect it to be quite volatile.

Official announcement from Allianz:
https://www.allianz.com/v_1390337998000/media/investor_relations/en/announcements/140121_irrelease.pdf
Consistent with Ted's comment is the curious ordering of statements - first that there are leadership changes (including "new responsibilities" for El-Erian), then repeating that PIMCO has reorganized its structure. Then a new paragraph saying that El-Erian has resigned.
Sounds a bit like Bill Miller's semi-departure at Legg Mason (CNN):

Miller will remain the chairman of Legg Mason, but the firm announced ... he will no longer manage the Legg Mason Capital Management Value Trust and will no longer be the firm's chief investment officer.

My experience with TRP funds has been that the managers have successfully balance upside performance with downside risk. A number of managers have left TRP this year and I don't know how this will impact these factors going forward or what it says about the internal culture of the company.
As a company stock (TROW), not a bad perfromer either. Here's TROW charted against its starship fund Capital Appreciation (PRWCX)

What is much more relevant is what your individual return is in each fund not what the fund may have done ytd unless you steadily held that fund since the beginning and just sold it. There is the issue of what the performance is when you actually sell it. As morningstar notes, individual rate of return is often very different from fund returns. You have to have timed the bottom and top perfectly to realize the maximum gains.
With performance chasing or momentum trading, you may always have the top returning funds in your portfolio but may not have much of that performance realized yourself. Not to say this is necessarily bad but it is unrealistic to expect to capture most of the gains in high flying funds.
This is why fund managers do "window dressing" buys and sells at the end of quarter!

Reply to @hank: Leveraged is the most misunderstood and abused word in investing.
There is nothing leveraged about Gold. It goes up and it goes down and frustrates both buy and hold and performance chasing strategies. It doesn't fit the "keep going up over long term" assumption of equities on which traditional investment thinking is based on making most investors look like geniuses. It is like betting on a baseball team. Hence, the religious views on both sides, each thinking they are right!
Gold miners, on the other hand, can be seen as a "leveraged" play (in the literal sense of magnified, not leveraged in what you buy it for) not on the price of gold but on the difference between gold price and cost of gold production which is roughly about $1200 and falling recently. The higher or lower gold prices go from the cost of production, greater the acceleration in gains or losses in the miners.
Understand what you buy and buy what you understand. Articles like this one don't promote understanding, not anymore than the gold bug articles.

I'm wondering what equity funds my betters here own in their taxable accounts. So, fess up. Secondly, how are you researching tax efficiency? I thought the tax-efficiency section of the lipper leader scorecard was the way to go, until i did a few searches here and saw people recommending funds that have an efficiency rating of 2, where I'd think 4s or 5s would be best. Maybe I'm missing something.
While searching here I also came across a post that suggested that the ***best*** fund to own in a taxable acct is the most-tax-efficient one that you'll never be tempted to sell (since, of course, selling causes capital gains) and that an index fund like vgtsx is possibly the best way to go. So let's maybe also add that to the initial wonderment. Do you own any taxable account funds that your in your heart of hearts you can never see selling?
Thanks!

Added to RIT Capital Partners (RIT = Rothschild Investment Trust) in London.

Will look at SWAY, the upcoming spin-off from STWD. Key question is whether it will behave more like RESI or like SBY? May also buy some Berkshire Hathaway..B class shares, in case you were wondering. Otherwise, most of the other stuff is way above my target entry points.
Wrestling with whether to increase investments in WAFMX/THDIX and VGPMX? Both beaten down sectors; but, particularly emerging mkts, could be vulnerable to big capital outflows as the USD strengthens.

© Oaktree Capital Management, L.P.
All Rights Reserved.
As mentioned above, I was lucky in 1978 when Citibank asked me to manage a portfolio for the
brokerage house Bache, which wanted to offer a high yield bond mutual fund. This was the first of many
opportunities I've enjoyed for free lunches
It’s hard to prove efficiency or inefficiency.
Among other reasons, the academics say it takes many
decades of data to reach a conclusion
with “statistical significance"
but by the time the requisite number
of years have
passed, the environment is likely to have been altered. Regardless, I think we must look at
the changes listed above and accept that the conditions of today are less propitious for inefficiency than
those of the past.
In short, it makes sense to accept that most games are no longer as easy as they
used to be, and that as a result free lunches are scarcer. Thus, in general, I think it will be harder
to earn superior risk-adjusted returns in the future, and the margin of superiority will be smaller.
I believe many markets are quite efficient.
Everyone is aware of them, basically understands them, and
is willing to invest in them. And in general everyone gets the same information at the same time (in fact,
it’s one of the SEC’s missions to
make sure that’s the case).
I had markets like that in mind in 1978
when, on going into portfolio management, my rule was,
“I’ll do anything but spend the rest of my life
choosing between Merck and Lilly.”
http://www.oaktreecapital.com/MemoTree/Getting Lucky_2014_01_16.pdf

Reply to @cman: Perhaps an "insane focus" on the markets will allow us all to overcompensate in the best manner possible by "compounding our investment capital to such an extent that all this stuff becomes meaningless". Or, we can all calmly reflect on our frailties as investors and remind ourselves that the markets giveth and taketh away and to prepare for those times as well, as you have suggested.
BTW, I am wary of this notion of increasing equity as one ages in retirement as well.
Best regards,