Reply to @cman: I agree to some degree on some of your points. In terms of number 4, I think you are right in that a lot of financial planners and others exist because people's lack of understanding of investing and how to go about it. However, there are some people who go to financial planners because they don't have the time, don't have the desire or, for whatever reason could manage their money but have the luxury of hiring someone else. Let's put it this way: I don't think that the industry would collapse, but I think it may be geared more towards the high-end. A lot of it would be in some degree of trouble.
6. Teens are going to play video games if they aren't on social media. Teens haven't learned the value of time in ... ever. I don't know if financial literacy would change that. Speaking of video games, people can play against someone in another country from the comfort of their own home. If you go on XBOX Live or PSN, you often hear other languages. Stuff I could never imagine 25 years ago playing Atari 2600 and Nintendo.
5. Retail banking is going to go in the toilet anyways, but I think it's to some degree due to people's dislike of their basic banking services (fees, for example.). The credit card companies are going after the "unbanked" in a big giant way, with Amex's Bluebird and other efforts (which they are promoting with the warm and friendly term, "financial inclusion."). The amount of people with a phone but no bank account in the world is rather remarkable (from Visa at the link below: "In 2012, an estimated 1.7 billion people will have a mobile phone but not a bank account."). I think there will still be a desire for loans and credit, but I think within this decade, you will see a substantial drop in bank locations and "basic" banking done at a location. Still loans, done at less locations.
Visa even has a "fact sheet" about "financial inclusion": http://corporate.visa.com/_media/financial-inclusion-fact-sheet.pdf
Look at Capital One's 360 Cafes. It's a Starbucks crossed with a bank and they're quite popular in the cities they're in. Long financial tech (FIS and maybe FISV again at some point.)
2. After 2008, it has become clear to me that people are never going to learn to spend within their means. After 2008, there wasn't anything about changing behavior or learning lessons, it was "how quickly can we reboot to what things were like a couple of years earlier, whatever it costs?"
People don't spend beyond their means because of lack of financial literacy in many instances. They do it because they want it (whatever it is) - it's an emotional need to buy something to get a little happiness, to keep up with their friends or for any number of reasons. People having financial literacy may help this a little, but you're still going to have people buying things to fill any number of emotional holes/needs. I don't see this changing. You have social media's popularity and while that has been positive in some ways, it's been a negative in many others and you see people who have to broadcast every.little.freakin.moment.and.thought. I find this need for acceptance and confirmation from others to be a little dismaying in ways. I know no one gives a (blank) about what I had for lunch. I feel like there's a greater level of emotional need and - to some degree, emptiness - in this world right now than any time that I can remember. It's sad.
Anyways, long story short, people's desire to spend beyond their means isn't going to go away with increased financial literacy. Long credit card companies and despite the volatility in these names, I sleep well with them. This is a consumer-driven economy and that's clearly the goal whether it's healthy or not and people are going to continue to move away from cash to electronic transactions in general.
1. I don't know what happens with real estate, but I think what's astonishing to me is that, if you watch episodes of "House Hunters" and other such things from 2007, you see people in their 20's who have to go big - a couple starting out talking about how they have to have a ridiculous amount of space. You watch these shows now, nothing's changed, people not looking for a house at all from the standpoint of utility and practicality. I do think what does best in the years ahead are places that would "make a great rental" - nice, easily maintained, efficient and location, location, location - one doesn't have to drive to everything.
In the end though, as you note, I think mass improvement of financial literacy is extraordinarily unlikely.

Be careful of what you ask for. US economy is built to a large extent on financial illiteracy and serious lack of future planning. Trying to change that will have significant impact on the economy requiring a redesign of consumption based economy, the treatment of capital vs labor, etc.
Every one of us here who are benefitting from the capital markets and depending on it for retitement are doing so arbitraging the inefficiencies of illiteracy. Good news is that educating the masses is not an achievable goal.
In a world where financial literacy is the norm:
1. Real estate markets would collapse when people really understood leverage and effective rate of return without being hindered by emotional feeling regarding home ownership.
2. Retail economy would go into deep recession as people realized how little they can afford to spend the way they are spending now and realize how they can live with much less so they can sock away more and convert human capital to financial capital as quickly as possible to play the only game in town.
3. Favored treatment of capital over labor in taxation and policy would be reversed as masses realize how depending on human capital for retirement was futile and that everyone cannot acquire sufficient financial capital unless they earned more and not just saved more. Margins for consumptive goods would collapse as companies get a double whammy - increasing labor costs and decreasing consumption. Apple would go out of business.
4. Industries based on managing other people's money would collapse as only a few would feel the need to outsource it.
5. Retail banking as it exists would be destroyed as people deleveraged and started to live within their means and demand for loans and credit disappeared.
6. Technology sector would be decimated as venture capital would find itself over invested in companies with no exits and advertising that requires financial illiteracy to create value would no longer support companies' business models. Teens would no longer idle away their time on social media as they learnt the financial value of time. Snapchats would themselves become ephemeral as companies.
The world after getting through the above might be a better place than what we have but getting through that will be worse than living through a nuclear war for a whole generation.
But the chances of that happening are miniscule since mass financial literacy is an unachievable goal. You should be thankful for that.

GGN is a managed distribution fund. Quoting from Gabelli literature:
"A fund's distributions may contain a return of capital, which should not be counted as the 'yield'. ... Investors, ever eager for income, rely on sources which fail to use the correct 'D' word: that is, incorrectly labeling a cash payment to shareholders as a dividend when it is in fact a distribution."
From the fund's latest PR on its distributions: "The Board of Trustees ... declared monthly cash distributions of $0.09 per share for each of January, February, and March 2014. ... The distribution rate should not be considered the dividend yield or total return on an investment in the Fund."
In short, that 16% "yield" (which is about to become 12%) is largely a return of your own principal. The true yield is much lower. You can't get "income" from gold. You can only get it from companies (e.g. mining companies) that make profits and distribute (some of) those profits as dividends.
The page you linked to shows that about half the current 12c/share distribution is return of principal. You can see a similar pattern in other managed distribution funds here.

via Seeking Alpha
A tripling of the market over the last five years has made it a difficult environment for value investors looking for ideas, writes Tsachy Mishal; difficult, but not impossible. Mishal has recently put money to work
Muni Bond Closed End Funds
Catalyst: End of tax loss selling
Municipal bond closed-end funds are getting it from both sides - fears of higher rates and credit worries. Throw tax-loss selling into the mix and many are now trading at near-10% discounts to NAV and yielding almost 7% - the taxable equivalent of over 10%.
Municipal bond closed end funds (muni CEFs) are down as much as 30% from their highs in some cases. Fed tapering and headlines from Puerto Rico and Detroit have brutalized the municipal bond market and muni CEFs even more so. This leaves many muni CEFs trading at high single digit discounts to NAV and yielding nearly 7%, which is the taxable equivalent of over 10%.
I believe that scary headlines like those in Puerto Rico and Detroit are outliers. For the most part municipal finances have improved over the past year as tax receipts have grown along with the economy. One could even argue that municipal bonds value versus treasuries should be higher than ever as tax rates are higher so the tax advantage has grown. Municipal bonds offer the best after tax, risk adjusted return of any asset class. Once tax loss selling ends the market should begin to recognize this. I am long NRK VMO VKQ PMO NAN
Posted on Seeking Alpha by Tsachy Mishal at 12/27/2013 06:22:00 AM T A M Capital
http://www.tamcm.com/#!strategy
http://www.capitalobserver.com/

Reply to @PRESSmUP: Its a capital gains distribution, a really big one.

http://www.sec.gov/Archives/edgar/data/1353288/000116204413001437/wegenerfinal497.htm
497 1 wegenerfinal497.htm Wegener Adaptive Growth Fund
a series of the Wegener Investment Trust
Supplement Dated December 27, 2013
to Prospectus Dated November 1, 2013
The Board of Trustees of the Wegener Investment Trust has concluded, based on the recommendation of Wegener, LLC, that it is in the best interests of the Wegener Adaptive Growth Fund and its shareholders that the Fund cease operations. The Board has determined to close the Fund, and redeem all outstanding shares, on December 30, 2013.
Effective December 27, 2013, the Fund will no longer pursue its stated investment objective. The Fund has begun liquidating its portfolio and will invest in cash equivalents such as money market funds until all shares have been redeemed. Any capital gains will be distributed as soon as practicable to shareholders and reinvested in additional shares, unless you have requested payment in cash. Shares of the Fund are otherwise not available for purchase.
ANY SHAREHOLDERS WHO HAVE NOT REDEEMED THEIR SHARES OF THE FUND PRIOR TO DECEMBER 30, 2013 WILL HAVE THEIR SHARES AUTOMATICALLY REDEEMED AS OF THAT DATE, AND PROCEEDS WILL BE SENT TO THE ADDRESS OF RECORD. Prior to December 30, 2013, you may redeem your account, including reinvested distributions, in accordance with “How to Redeem Shares” section in the Prospectus. If you have questions or need assistance, please contact Mutual Shareholder Services, LLC at 1-800-595-4077.
This Supplement and the existing Prospectus dated November 1, 2013 provide relevant information for all shareholders and should be retained for future reference. Both the Prospectus and the Statement of Additional Information dated November 1, 2013 have been filed with the Securities and Exchange Commission, are incorporated herein by reference, and can be obtained without charge by calling the Fund at 1-800-595-4077.

Hi cman,
Thanks for the recap. Most of the funds I put money into recently ... I was able to add money around the middle of December just before the upward Santa bounce hit and the fed's announcement to taper. I have thus far only purchased a sum equal to about one half of one percent of my total equity allocation. I am holding off until mid January as Congress will have to address the National debt limit. I am thinking another entry will appear on my screens on or about this time. I most likely will not add to all twelve funds that I hi-lighted but they are my current watch list ... and, who knows, a nice pull back might be forthcoming and I can then do some good shoping. I usually position in by raising in a quarter of a percent to one half of a percent of my overall equity allocation at a time. A good buying opportunity would be adding up to a full percent and reducing cash by a like amount(s). I had wanted to get back to a full allocation (45%) to equities, currently at about 43%. Then with anticipated capital appreciation dial the allocation back as equities advance much like I did last year. For every 25 point increase in the S&P 500 Index I would dial by equities back by about one percent. This did two things, it kept my equity allocation form getting to far from its target allocation and it increased my cash allocation as I moved into retirement. I now hold about 20+% cash and the + percent is what I am looking for opportunities to put to work and since I am 95% of my target allocation to equities. With this, this is the area I am looking to raise. Not a lot, just a couple percent.
Thanks again,
Old_Skeet

Reply to @davidrmoran: I am not sure I understand what you mean by selective destructions and quoting out of context in a different thread is never helpful.
Here is a broader response to what I think you are asking which will explain my position better in all situations:
There is a saying in some venture capital circles (because these tend to be male dominated and crude when drinks are involved, I have substituted for the actual euphemisms to apply to all investing)
A small bet in a big idea or a big bet in a small idea ... neither makes money.
In my experience, all investing involves three components: the strategy with which you bet, how much you are risking in the strategy and how you manage risk if that strategy isn't working out.
This applies to your whole portfolio or parts of it.
If you aren't sticking your neck out enough for an investing decision, then it doesn't matter if the strategy was good or bad or if you didn't have a plan to manage risk.
A lot of investors do this and think they are doing well meddling when just sitting on their hands with a diversified portfolio would have done equally well or better. When bet works, they feel happy and when it doesn't , they forget it because it doesn't hurt. So selective memory keeps them happy. Been there, done that.
Your caveat of $10k in a fund that is very conservative sounds like you are not sticking your neck out much and rationalizing the decision that way. So whether your thesis is correct or not or if anyone else is thinking the same isn't worth writing a post about because it makes very little practical difference one way or the other.
My answer was in the context of making a decision that has consequences (for example, the $10k is a significant part of your portfolio or someone else is planning on making a more significant move with the same thesis). Merriman's suggestion of putting all of your money in equities and for some all of it in just value or small for 30 years is definitely placing a big bet. That is the context in the other thread. This is why the responses are the same.
In such cases, the strategy and how you manage the risks are important. My thesis is that if you are a passive investor making a significant decision that matters, then creating a global and balanced allocation and staying with it is a good strategy and requires no additional risk management efforts. There are enough studies to show this works better than most meddling. So yes, buying the total market to the extent it is practical is a good thing for such investors.
But I do believe that you can be a smart and active investor and stretch your neck out away from the above that is optimal for passive investors. But you need a plan on how to act and to react in significant ways if your investment thesis on which you placed the bet isn't working any more or turns out to be wrong.
Out of all the posts I have seen on this forum so far, only @Ted and @Junkster seem to stick their neck out from the norm, the latter in asset classes used and the former in equity exposure for his age. I would bet that both of them are active in monitoring to make significant changes in their portfolio if the markets were to change as opposed to passive investors. That is perfectly fine.
Within that context, it makes sense to look at the validity of strategy as well. Your thesis that all bad news is perhaps baked in is the same as "a bottom has been reached or close to it". Labeling it contrarian doesn't make it better or worse or different. In my experience, trying to predict bottoms or tops is futile. I am more in @Junkster's camp of trend following than predicting or timing as a better approach but it requires one to be an active investor.
So, I gave three of the best suggestions based on those components of investing. If you are a passive investor, stick to a balanced portfolio rather than make bets something will happen, or if you want to stick your neck out in this particular case reduce the duration of bonds and remain passive rather than acting on an assumption of the bottom having been reached, or if you are an active trader, follow the trend than trying to anticipate a reversal and make that change when the market changes. That may be next year or in many years. No way of knowing.
Same basis of advice in the Merriman thread or in the specific case of a poster who bought EUO hoping for a reversal when the trend was down.
If you think that is too broad or too narrow, fine. I am open to what other suggestions might exist.
If your question was really the equivalent of the guy who goes to Vegas and says "I want to be a contrarian and bet on all reds and here is a whole dollar to bet on it", then it isn't worth discussing whether that idea is a good or a bad one. :-)

FYI: Click on box #2
Regards,
Ted
http://www.morningstar.com/solutions/ETFSolutions.aspx?docid=291492
The Simple Math Doesn't Add Up !: http://seekingalpha.com/instablog/503677-ma-capital-management/1335991-the-simple-and-dangerous-math-behind-leverage-etfs

Just a thought: if these people borrowing at such high rates had truly low credit risk, they should be able to borrow from conventional channels at lower rates than here.
In this industry there is truly no high returns at low risk. In this case if the borrowers are paying off early the rates are not high as it seems. On the other hand, if the borrowers are willing to pay pawn-shop style rates they are not truly high grade.
In that case, before I risk my capital I would like to see some tangible asset backing it. At least with conventional bonds you are first in line in case of bankruptcy. Here you are an unsecured creditor. As others have pointed you might not be even a creditor in legal sense and might not have represented in bankruptcy court.

Sorry, Charles, but health care generally is a zero sum game. When stockholders gain, policyholders or patients lose. I hear emerging markets might be due for for some (long-term) gains. (At least that's where the world tilts - they do have the younger population .)

Regarding SATMX, here is the link (an August 16, 2013 article) from their web site announcing when they plan to close SATMX.
http://www.prnewswire.com/news-releases/got-us-small-cap-exposure-advisors-rush-to-invest-in-small-cap-funds-before-they-close-219923481.html?advisorid=408164
Excerpt from article:
"...Satuit's three U.S. domestic focused equity strategies, Satuit Capital U.S. Emerging Companies Fund (SATMX), Satuit Capital U.S. Small Cap Fund (SATSX) and Satuit Capital U.S. SMID Cap Fund (SATDX) "are focused on U.S. domestic equity securities," states Mr. Sullivan. "Our flagship fund, SATMX, has a 13 year track record and consistently ranks as one of the better long term performing small cap growth strategies. The strategy has $190 million of assets. We do not expect to close the fund till $750m of assets..."

Yes - Every year we dust off a wonderful Christmas album by "the great one" who was quite an orchestra conductor as well. I'm astounded at some of the gains this year.

Reply to @varmint: I also own BRUSX since BRMCX was reorganized into BRUSX. I took the option of getting into the fund since I missed it the first time and continue to invest in it prior to it having another "hard" close.
You are lucky to have stuck with it for all of that time. Problem with micro-caps is that eventually the build-up of capital gains will have to be paid. WAMVX, TMCGX, SATMX and BRUSX had/will have large payouts this year.

Yes, "Junkster" I recall such things. I have been an investor since the 1970s and a manager of others monies since the early 1990s. Now I head a multi family office.
I was an early lurker at Fund Alarm and greatly, greatly admire David's efforts here to inform, educate and hopefully allow the individual retail investor to accumulate capital through intelligent investing in mutual funds.
Here's hoping for a prosperous New Year for all. If "Ted" wishes, he can close this thread now. It has probably outrun its usefulness.

Reply to @MarkM: I'm waiting for Ted to say it's time to close this thread. In the meantime, back in the 90s you could trade in and out of mutual funds on a daily basis (if needed) at fund families such as Strong and INVESCO. I took full advantage of the liberal fund policies back in the days. You could also "dateline" mutual funds back in the days with impunity and with no redemption fees etc. As those who were around then and actively participated, datelining was the closest thing ever to a free luch on Wall Street. Much different landscape today. I always felt it best to be a hybrid trader/investor. An investor when the position is moving in your direction, a trader when it stalls or reverses.
Edit: I believe I mentioned this before and *not* meant in a "pejorative" manner, this is a very, very, conservative group of investors here. I just never had the luxury of being conservative because I got such a late start trying to build my limited capital back in the days. I was forced to think outside of the box.

This is just some notes with no conclusion, moral at the end, or recommendations. Based on my experiments with leveraged funds over the last couple of years. These are things you only learn by doing and not by being an armchair investor. Have the battle scars to prove it. Just sharing.
Started with $60k in a separate account as play money to experiment and learn. Small enough to not be much consequence if I lost it all but big enough that emotional factors of losing come into play which is an important factor in investing.
The account quickly went down to about $40k in my early experiments and is currently above $70k. All of this in a bull market in the last two years. 20% over two years may not seem much but climbing back from losing a third required some fast learning and adjustments and so the later attempts have been much more successful. These comments are based on that.
First, the term leverage. This term has a lot of baggage. People bring out crosses and garlick when they hear that term. And yet the biggest channel of investment for most people is a highly leveraged play - real estate that one purchases with a mortgage with a small down payment and without a guarantee that they are going to live there for a long time. This can be as high as 20x and yet people knee-jerk to a 2x leveraged ETF.
The main difference is volatility and the structure of the typical leveraged funds tied to indices. Leveraged funds use futures and options. To provide liquidity they have to keep duration short and roll it over so they try to track daily moves and not long term performance. This has been well documented. The underlying index may have a strong upside return and yet a leveraged fund of that index can have negative results.
This characteristic is why leveraged funds get such a bad rap. But it is a tool. Like any high performance tool, it must be understood, respected and used for the right job.
Leveraged funds are recommended as short term trading instruments rather than longer term holdings. This is for the reason stated above. It is true that they are not buy and hold type of instruments but they are not a tool for day trading or as it is called wiggle trading to exploit small movements in indices either. At least not for retail investors trading without HFT platforms at very cheap fees.
This is how I quickly lost money. Leveraged funds going against the market can lose value quickly, so waiting for a turn around is not a viable strategy. They are extremely sensitive to volatility. So, the first lesson is don't play with leverage with highly volatile classes.
There is a myth that you should not buy ETFs that don't have decent daily volume. The rational is that spreads tend to be high and subject to manipulation. This is not true as long as the ETF is tied to very liquid, low spread asset classes underneath like the major indices.
There is much talk about the term "decay" in leveraged ETFs. Part of it is the characteristic mentioned above on how they track and part of it is from the compounding effect. But the latter works to your advantage when you have the direction right and so in low volatility movements up or down, leveraged etfs in that direction can provide more than their daily tracking multiple of 2x or 3x just as they can lose if in the wrong direction. But the two charactetistics are often confused.
It is impossible to predict the movements in a market as people know to any level of accuracy especially short term and so anyone claiming to make money from trading small wiggles in the market up or down isn't giving you the whole truth.
So, one has to use a probabilistic method to increase the chances of success and to be in the sweet spot which is having the right direction funds in a long bull or bear market. This is where leveraged funds make a lot of money, ironically with long term holdings in that period.
The problem is that markets are unpredictable and the approach is highly sensitive to entry points and to a much smaller extent to exit points.
This implies you need a good plan for entry and have an exit plan always using stop limits. This doesn't prevent losses but limits them.
The second learning is that leveraged funds are not instruments to be fully invested at all times. Many are misled as I was by thinking that since there are both long and short leveraged funds, you can switch back and forth and be fully invested at all times. This results in steep losses. The key is to wait for the right moment to enter, make money and get out when the market says so. But finding such moments aren't easy or foolproof of course.
There are two approaches to this. One is base it on some fundamentals such as overvalued markets, or expected economic conditions - increasing interest rates, for example. In my experience, this doesn't work. As they say markets can stay irrational longer than you can stay solvent.
The second is to base it on Technical Analysis. TA has a lot of cult behavior behind it and is good or evil depending on who is talking. In my experience, you cannot do any leveraged fund entry decisions without some kind of reliance on TA. Personally, I don't find any voodoo magic in TA or some mystical powers to predict. It is simply a tool that works as self-fulfilling prophecy primarily because so many people, retail and institutional use it, and nothing else.
One can see the effect of this in simple resistance and support level behavior of major indices. The indices bounce off of these things as if they were some mysterious oracles.but they do so only because enough people believe in them to make their buy and sell decisions for lack of anything else to base it on. This is my reading of it. This is typically what happens when there is very little new news to move markets. But they are not absolute.
Market moving news or sentiment can break those and regularly do but they provide more insight to market behavior than anything else. People get way too much into this with all kinds of pattern detection, which I think is mostly nonsense unless enough people believe it in which case it becomes a self fulfilling prophecy.
But simple is better and one doesn't need more than moving averages and standard deviation bands to get a sense of where the market is moving at the moment. All you are trying is not to do entries against the tide, so to speak. The volatility metrics also help in deciding on where to place stop limits. Otherwise, too tight a stop limit will stop out your position too soon, too far would increases losses if the market turned against your direction.
This simple reliance was enough to turn the performance around from my initial experiments. Which TA indicator to use is not that simple to answer because it depends on the fund and how frequently you want to trade.
Barchart.com is a site that provides some empirical data for various technical indicators but you need to do a free registration to access that part of the site. It is useful to do so if you do any kind of TA or are curious. It keeps track of a hypothetical trade at each signal for each indicator for each fund over time and displays average time between trades and the cumulative gains or losses by doing so. You will notice that many indicators result in losses for many funds while some require more trading than others, So, it is necessary to customize what you use for each specific fund and the duration of holding you prefer, for example 60 days in my case.
The consequence is that I mostly sit out of the market most of the time because neither long nor short leveraged funds can make money when the market is swinging up and down but there are periods in which it is like being on a fast elevator with many trades that get stopped out with small losses but overall gains in such periods.
Like I said at the beginning, there is no conclusion or moral or recommendation at the end of the story. Just a travelogue.

As I read it, this appears to be an article dated 2005 about a strategy Mr. Jacobs sells to subscribers that, backtested to the bear market low in 1975, shows 20.3% average annual gains during the period selected. Mr. Jacobs called his fund momentum strategy "Persistency of Performance". Interesting.

Regarding the Vanguard MMF cap gains distribution:
It was a short term gain, so from a tax purpose, it's reported along with the income dividends. No separate number, no tax issue whatsoever. This is a case not of Chuck making a mountain out of a mole hill, but of his seeing ghosts when there's nothing there.
In contrast, multiple tax free Fidelity MMFs paid long term cap gains dividends in 2007. That did create additional reporting issues, not to mention paying taxes on what was supposed to be a tax-free investment.

Reply to @davidrmoran: The comment was regarding his recommendation for a single basket all equities portfolio in this linked post not his diversified portfolios that you presumably used.
Consider the realistic scenario of a typical 20 something starting out with a very small portfolio and adding over time where a normal/bull market will also help grow it slowly.
If he was unlucky enough to face a bear market towards the end of the 20 year horizon with the same small only or value only single basket all equity portfolio, his draw down with such a portfolio would be horrendous and happen at a time when his portfolio had grown with contributions and gains to have a lot to lose.
The small or value 1-2% premium for the first 10 years or so on a smaller portfolio wouldn't make up for it and he would be left with a much worse situation than if he had used a diversified portfolio that didn't try to provide that premium but reduced drawdown.
In other words, the eventual outcome would be very sensitive to how the markets behaved in those 20 years. Or 30 or 40.
Merriman's radical recommendation works with a lot of assumptions - that the value and small premiums will continue for the next 20,years, and that the timing of a bear market in those 20 years will not be unfortunate as in the scenario above but will generally be a rising market with some corrections or that the portfolio will be large enough in the bull years relative to bear years and not skewed the other way.
There is no guarantee that these assumptions will hold or even a valid justification to say there is a good probability other than faith and looking in the back mirror. Simulations that ignore the reality of fat tails have seriously underestimated the probability and frequency of the previous bear markets.
Hence the value of diversification to reduce the volatility over most market scenarios with no assumptions on the thickness of tails. It will underperform in fortunate scenarios and over perform in unfortunate scenarios for that single basket recommendation.