Reply to @MikeM: Hi MikeM. 4-5 years ago we decided to use a 50/50 mix of domestic bonds to international bonds. This obviously was a lucky guess, since those non-U.S. bonds have been real winners. The only problem was that domestic bond managers have been increasing their non-U.S. holdings, too, so we started seeing a real over-allocation to those bonds last year.
We have used alternatives over the last few years to reduce our equity risk. But we are now moving more dollars to equities and capturing bond gains, moving those dollars to alternatives. Personally, I think EM bonds have a lot of attraction. We have used TGBAX and GSDIX for our foreign bond allocation, but are moving more dollars to GSDIX for committed non-dollar exposure. TGBAX has always owned non-dollar bonds, but we want to have some dedicated exposure there.
So our overall bond allocation remains about 50/50 domestic and foreign, but still tilted a bit toward foreign bonds. We are ramping up our purchase of LASYX, which is essentially a long-short bond fund with very strong management. It's a newer fund, but the Loomis folks running it (Eagan, Kearns, Vandam) seem to have found a good strategy. It could be a good buffer as interest rates move higher.
So, ikn answer to your questions: 1) Overall domestic/foreign allocation is around the same at 50/50. 2) Starting to move dollars from bond funds to alternatives and to be sure our domestic bond exposure is in flexible-mandate funds. Using alternatives to hedge our fixed-income allocation, instead of hedging our equities.

I like the "Elevator Talk" addition David.
A peek at Rocky Peak's recent holdings shows Radio Shack RSH, which Scott and I have been posting about lately - it has rebounded an extraordinary 50% YTD:

So, of course, I had to look a little further into RPCSX.
The small cap fund category has several notables - many favorites on MFO, like ARIVX, RYSEX, PVFIX, MSCFX, ARTVX, HUSIX. So, a tough group to get noticed in, especially given the modest returns RPCSX has delivered out of the gate since inception last April...but it has had its moments.
Morningstar shows 578 US small caps, or about 6.5% of all funds, oldest share class only, as of Dec 2012. Their caps average from $50M to $3B. (There are 43 so-called micro caps included with average caps under $500M.) Here's further break-out of small cap demographic:

RPCSX holds 42 equities, as of Sept 2012, fairly evenly distributed across its portfolio at 1.5-3% each, with average market capitalization of $1.1B.
Another of its holdings, Duff & Phelps Financial DUF, announced a going private transaction on the last trading day of the year - the stock jumped 20% :

Before that, Mr. Kerr reported that another holding, CoreLogic (CLGX), a So Cal provider of real estate data, rose 44.9% in the third quarter. He sold the position after achieving a 62.3% gain from purchase, explaining the rapid price appreciation "exceeded our conservative calculation of intrinsic value..."
More recently, he's added Herbalife, which Dan Loeb's Third Point hedge fund also bought 9 million shares, or 8% of the company. (Loeb's long position runs counter to the massive short put on by Bill Ackman's Pershing Square.)
On its website, Mr. Kerr provides monthly updates and commentary, along with descriptions of how he invests and his guiding principles for RPCSX. Here are some takeaways:

Rocky Peak Capital Management strives to optimize long-term returns with a focus on mitigating risk.
Downside risk is often considered one of the most crucial elements of stock selection. You win in both investing and sports by avoiding frequent and big mistakes.
Most of our research is done internally, free of Wall Street biases and short-term focus.
To quote legendary investor Sir John Templeton, "To buy when others are despondently selling and to sell when others are greedily buying requires the greatest fortitude yet pays the greatest reward."
We will not chase the popular or fashionable investing trend of the day.
A long-term time horizon...a minimum of two to three years is required to recognize the performance benefits of this style of investing.
We are candid about our mistakes as well as our successes and speak in plain language instead of confusing financial jargon.

Since inception last year, RPCSX has out-performed some seriously good and high lifetime performing funds, like gold-star Perkins Small Cap Value JSIVX, FMI Focus FMIOX, Conestoga Small Cap CCASX, Royce Micro-Cap Invmt RYOTX, Turner Emerging Growth Investor TMCGX, and gold-star Artisan Small Cap Value Investor ARTVX:

But it well under-performed others, depicted below, like Walthausen Small Cap Value WSCVX, Mairs & Power Small Cap MSCFX (on fire Max), Huber Capital Small Cap Value Inv HUSIX, TETON Westwood Mighty Mites AAA WEMMX, Pinnacle Value PVFIX. (It has just about broken even with its small value benchmark.)

As Mr. Kerr states, eight-nine months is hardly enough life to make a performance assessment of RPCSX. But in that time, the fund upheld its promise to minimize down side and draw down risk. The fund he previously co-managed, now called Core Street Capital (CSC) Small Cap Value Investor CSCSX, produced high life-time risk adjust returns returns based on Sharpe (in top 20% of more than 100 small caps between 12 and 15 years old), but with fairly high down-side volatility. By the numbers, since Oct 1998: 10.5% APR, but 13.4% DSDEV and (gulp) 18.8% Ulcer Index, which resulted in 47% draw down in 2008. For me at least, I hope Mr. Kerr does indeed correct "mistakes that my former colleagues and I made such as not making general or tactical stock market calls, or not holding overvalued stocks just because they are perceived to be great quality companies."
If RPCSX does manage to keep its down side in check going forward, here are some of the lower volatility, no-load small cap funds (with attendant performance and risk) that I believe Rocky Peak will ultimately be compared against, oldest to youngest:

In any case, for now at least, I am adding Rocky Peak RPCSX to the notable list.

Hi rono,
Thanks for stopping by.
I am thinking many on the sidelines will be drawn in feeling they are being left behind. Heck, from my thoughts, the train left the station about three years ago. I've played the upward movement with some selling along the way and then redeployment of some capital during the pull backs. Once the smart money figures the dumb money has join the party ... They will be leaving just to buy back in at lower valuations and those that just joined the party will get fleeced as a down draft developes and margin calls begin for those that leveraged. Anyway, that is how I see it ... and, that's why I have been selling into what I beleive to be a near term overbought market. Rally on, I am making good money.
Good to hear from you.
Skeeter

http://www.sec.gov/Archives/edgar/data/1480207/000119312513033926/d440347d497.htm
497 1 d440347d497.htm DOUBLELINE FLOATING RATE FUND
DoubleLine Funds Trust
DoubleLine Floating Rate Fund
Supplement dated February 1, 2013 to the Prospectus for Class I and Class N shares of
DoubleLine Floating Rate Fund (the “Fund”) dated February 1, 2013
This Supplement updates certain information contained in the above-dated Prospectus. Please review this important information carefully.
Shares of the Fund are only available for purchase by advisory clients of DoubleLine Capital LP (“DoubleLine Capital”) and its affiliates; employees and officers of DoubleLine Capital and its affiliates and their family members; and DoubleLine Capital and its affiliates. One or more of the Fund’s investors may control the Fund. A shareholder who beneficially owns 25% or more of the Fund is presumed to control the Fund. Persons controlling the Fund may be able to determine the outcome of any proposal submitted to the shareholders for approval.
INVESTORS SHOULD RETAIN THIS SUPPLEMENT WITH THE PROSPECTUS FOR FUTURE REFERENCE.
DLFRFPROSUP

Reply to @mns: Ackman's fund is going to IPO on the London Market, it would appear.
http://www.valuewalk.com/2013/01/pershing-square-capitalizes-new-hedge-fund-with-over-1b-ahead-of-ipo/
Third Point (Dan Loeb) is another large hedge fund that has a London listing, although the shares have traded at enormous discounts to NAV at times.
Greenlight, Third Point and SAC have started up reinsurance companies whose floats are invested in the same manner as the hedge funds in order to get permanent capital, but only one - Greenlight - is public, and the reinsurance side of it continues to lag.

Reply to @bee: I am also a bond investor ! My capital preservation portfolio contains, individual government and corporate bonds (Investment Grade & Junk), individual preferred stocks and PFF. I also own a number of blue-chip dividend paying stocks two bond funds (PONCX & PBDCX). However, I do not have 98% of my assets tied up in bonds. Every investor should have a good share of equities in their portfolio at all times
Regards,
Ted

Reply to @scott: I think Royce Heritage Fund used to have such a lock up period (couple of years?). The fund seemed to have done quite well back in the day. Royce abandoned the format, however. And now Heritage is just another of Royce's "SMid-cap" "mix and match" funds.
In principle, I like the idea of a lock-up period.
I"m a FAIRX holder; my position is fairly small, I have no idea what I'd do if I wasn't allowed to reinvest, say, my < $100 in cap gains.
I'm starting to think Bruce is a bit of a nut. I think of the folks at Artio in some ways too: pretty decent fund managers, who were less-decent fund company managers. When you read the stories about Fernandez, you'd wonder how Bruce could have ever been taken in hook, line, and sinker (going so far as to by Fernandez a house next to Bruce's).

Seems like moving to a closed-ended format would be a more straightforward way to create a permanent capital base and not have to worry about investors pulling money at inopportune times. Bill Ackman is moving in this direction.

Dear Flack,
I believe that statistical analysis is extremely helpful. The problem is that one may get different results by averaging differently. That is why there are many indexes for the same stock market: capital weighted, equal weighted, fundamentally weighted, etc. For example, should we make an average counting mutual funds, independently of their AUM, as people usually do? One may argue that most of the funds that die become small first, so most of the bad funds should be small. Thus by averaging over the number of funds ignoring their size one makes an obvious mistake. A better question is: How the money grow, in average, if they are invested in actively managed funds? These two questions require absolutely different averaging; the last one takes into account the fund size, but it should also take into account human psychology which forces them to jump from one fund to another. And here it is important to be a better than average investor, a hard task for many of us...
I do believe that the proponents of passive management are making a very solid case for their strategy. Also, MJG does not impose his view on others, he just gives the arguments, which are good and solid. But I really wonder, as a test, whether the people advocating passive management keep all of their bonds in the total bond index, or they actively manage it. This is a burning question right now, when many people believe that long term Treasuries are toxic. So if you are an index holder and honestly and consistently stay on this position, you should keep the long term Treasuries as a part of your portfolio, and keep all of your bonds in the total bond index fund. Eventually we may know whether this was a wise decision. Up to now, investing in PIMCO total return was a much better strategy.
Andrei

Reply to @Shostakovich: Here's the thread you initiated last December: "Any OAKBX owners Freaked out?" http://www.mutualfundobserver.com/discuss/index.php?p=/discussion/comment/17592#Comment_17592
I attempted than to dispel the notion that OAKBX has a significant position in long term treasuries by looking at the than most recent fund report.
I wrote: "As of June 30, 2012, Oakmark Equity and Income Fund Holdings: Common Stock 70.1%. Fixed Income 22.4%. Short Term Investments 6.4%. Approximate cash on hand 1.1%
Re Above: Fixed Income (22.4%) With the exception of less than 1% invested in Norwegian government notes, this consists of U.S. government debt obligations. Of these TIPS comprise just under 15% of the total. The TIPS also have the longest dated maturities, some extending out to 2020. The remainder are mostly Treasury issues with substantially shorter maturities - most 3 years or less.
Re Above: Short Term investments (6.4%) These appear to be about evenly split between a repurchase agreement involving Federal Home Loan Bank short duration securities and Canadian government short term bonds. Less than 1% consists of commercial paper.
Re Above: We can infer the fund does not hold any junk bonds.
In his commentary, Clyde McGreggor, Portfolio Manager notes the fund's "... low fixed income duration of 1.7 years." If this sounds at variance with the stated maturities above, it's because maturity and duration are two different animals."
----
NOW - Longer term treasuries certainly represent a better value today than they did last summer. The yield to maturity on the 10-year is around 2%, compared with 1.5% at that time. That suggests about a 33% increase in future returns over what they would have produced last summer. I have no evidence OAKBX has lengthened bond duration recently. (Perhaps you do?) However, with that kind of dramatic rise in yield over just a few months, I'd be disappointed if they aren't beginning to nibble at longer duration bonds.

Reply to @andrei:
Hi Andrei,
I fully understand your frustration with an investment policy that passively seeks average performance. To most, that is unappealing because it appears like a cowardly surrender before the battle begins. The behavioral researchers would enjoy a field day with such thinking and the anxiety must be overcome on a personal level. Not easily done. Nobody wants to be labeled as just average.
I partially converted to the passive Index policy about 15 years ago after reading John Bogle’s “Common Sense on Mutual Funds” book. Since that milestone moment, I have continued my conversion incrementally; I prefer small steps, especially when investing retirement money.
The general public has matched my trickle towards index holdings, but institutional investors have increasingly flooded that trickle into a tsunami. In spite of their human and capital resources, these institutions are finally getting the message. They are so talented at what they do that they are neutralizing each other, and nobody can maintain a competitive advantage. Thus who wins and who loses (they basically distribute the market returns according to Bill Sharpe) becomes a roll of the dice. This equally matched and dedicated talent pool means that performance persistence is illusive.
Even with some giant institutions becoming major participants, Indexing is still a small fraction of daily market trades, and is likely to remain that way. That’s a good thing since the daily trading establishes the market price, keeps it fresh, and reasonably efficient.
Now let’s focus on issues surrounding the collection of merely average returns. That may seem unexciting on an annual basis, especially when contrasted against some rock-star performers. But remember, even on the short-term single year standard, Index players will outperform two-thirds of all the market participants. And if an Index strategy is consistently applied, the Indexers ranking on the rewards ladder will soar upward over time. That accumulated effect is the product of always taking an annual position that has an above average likelihood of winning over half the market participants. It is simply an exploitation of the odds strategy.
That ladder climbing is almost a certainty because year-after-year the Index policy will generate average returns while the superstars will have a few bad years slipped into their highly successful years. Make up is tough sledding; end wealth erodes quickly. It is integrated Indexing consistency that makes a champion investor destined to outperform 90 % of the market participants over the long haul. This seems to be a remake of the children’s tortoise and hare story. It is.
It is also salient to note that rock-stars all too often flash destroy, giving themselves rather than the market exaggerated credit for their success.
Ken Heebner is the poster-child for the hero turned villain turned hero again professional money manager. His annual returns volatility is breathtaking. At times his average returns are very attractive, but his clients still lose money because of poor entry-exit point tactics. To paraphrase Paul Simon, investment gurus keep slip-sliding away. Many are ephemeral players; a few do have staying power and deserve special attention.
Experience teaches that no single investment strategy works forever or under all market circumstances. Styles change.
Look, you’re a serious investor, and are totally capable of making your own investment decisions. It’s good to get other’s opinions, but in the end, you are the master of your portfolio construction, not of its performance. In the final analysis you will not “stay the course” with your portfolio unless you are comfortable with the overall choices you made and the investment policy you adopted.
The key is that you understand and fully endorse your freedom of policy design and product choice. Remember, nothing is permanent. You always retain the option to change your mind and your investments, including an overarching strategy adjustment. Also, investing is not an either/or set of decisions. You can elect to sit on the sidelines or you can move incrementally. You choose and bear full responsibility.
Best Wishes.

Reply to @Shostakovich: Sorry Shosta, I'm too slow...you are being facetious, aren't you? I could not find your reference to suspending "reinvestment of cap gains and income distributions for existing shareholders" anywhere.

Howdy folks,
Below is the primer I wrote some years back about investing in precious metals. There are more ETF selections today but otherwise, it's pretty current. As a disclaimer, I own CEF, SIL, GDXJ in a deferred account, TGLDX taxable. PRPFX in everything.
Investing in Precious Metals – a primer
First of all, what’s an investment and what’s speculation. From my perspective, I consider a small holding of gold (more specifically precious metals) as an investment. It’s what I consider a ‘core’ holding. By small, I mean 3-5%. More than this is speculation and while speculation is fine, you need to be certain that is your intent.
I consider a small holding of precious metals as a core investment for several reasons. It serves, in many cases, as a portfolio diversifier; it is well known as a hedge against inflation; and, it’s also the number one investment in case of ‘black swan’ or Y2K type events such as war, terrorist attacks, and in general outsized uncertainty. Lastly, in recent years it’s been moving opposite the U.S. dollar. To the extent you feel the dollar will continue to drop relative to other currencies and ‘real stuff’ largely due to the twin deficits, but also because our trading partners are so $ flush, they’re starting to seek alternative investments, you will want to own some.
As for speculation, that’s a subject of personal taste and investing tactics. Some approach this from a fundamental perspective, while some from a technical perspective. I’m bullish for the longer term on precious metals for both reasons. Fundamentally, most bull markets in the natural resources (including precious metals) last for years. This is because of the nature of the beast. If the price of gold goes up, the lag time before new supplies can come to market is measured in years. It’s not like automobiles, where they can add another shift and produce more next week. With mining, you have to explore, discover, test, build refining plants, obtain all your permits, and then ship the product to market. This is true for all extractive commodities. Add to this the twin deficits and excessive amount of currency being the precursor of inflation. Further add that our trading partners hold so many dollars that they’re starting to look for alternative investments. From a fundamental perspective, these all point towards a long term bull market in the precious metals.
From a technical perspective, the current bull market began in 2002 and since then the gold index has not dipped below its 200 day moving average.
There are many ways to invest in gold – mutual funds, ETF’s, individual mining stocks, futures and the actual bullion itself.
Mutual funds that invest in the precious metals include natural resource funds, precious metals funds and some types of ‘defensive’ funds such as hard currency or Permanent Portfolio (PRPFX) type funds. With each of these funds, you need to do your research and determine exactly what they own. The easiest place is Morningstar using their Portfolio selection and Top 25 Holdings choice. Most mutual funds investing in the precious metals do so by owning shares of mining companies, although some own a little bullion. There are exceptions, such as the defense funds above that invest mostly in bullion.
Probably the least risky way to invest in precious metals is with a good broad based natural resource fund. These funds invest in energy, base metals, timber, and among other things, precious metals. A couple of examples are Price New Era PRNEX and US Global PSPFX.
Then there are precious metals mutual funds. With these there are pure play gold funds and true precious metals funds. The former only invest in gold mining stocks, while the latter also invest in silver, platinum, palladium, copper, etc. In all honesty, the vast majority of funds in this sector invest in all of the precious metals to a greater or lesser degree. First Eagle FEGIX is the only pure play gold fund I found while in the precious metals category, there are dozens. Examples include Vanguard VGPMX, Midas MIDSX, US Global UNWPX, Rydex RYPMX, Tocqueville TGLDX, etc.
In recent years, there has been the onset of ETF’s, or Exchange Traded Funds. These are sort of like mutual funds but trade like stocks. There have been some introduced that invest in bullion. These started with gold and then silver, but now cover platinum and palladium, mining stocks, junior miners, etc. There are a few dozen variations on a theme for those interested. Here’s a listing I found that has most of them: http://etf.stock-encyclopedia.com/category/precious-metals-etfs.html
A word of warning: Bullion ETF's have been determined by the IRS to be ‘collectibles’ and as such their capital gains are taxed at 28%. This is unlike mutual or closed end funds which are taxed at 15% for Long Term Capital Gains. This means you want to own a bullion ETF tax deferred account and NOT in a taxable account.
One last fund that needs to be mentioned but is in an odd category is the Central Fund of Canada CEF. It’s a PFIC for tax purposes and contains gold and silver bullion at about a 55/45 split. Because of its tax status, it’s a possible bullion play for a taxable account. You’ll want to use TurboTax or some other tax software.
Mining stocks provide the most leverage but are tied to the overall equity market. Bullion and mining stocks parallel each other over time, but often lag each other, sometimes by a significant amount. In this arena, the most leverage is with the smaller companies, but they also carry the most risk. With individual mining stocks, you can target a specific precious metal such as platinum or palladium and many actually mine more than one precious metal (e.g. Freeport-McMoran FCX is copper and gold).
Lastly, for those that wish to actually own some of the stuff, you can buy bullion. In large amounts, this is normally warehoused and insured and you don’t actually take possession. In smaller amounts, you can buy bullion in various forms and keep it in a safe deposit box or safe. There are ingots, coins, and don’t forget jewelry. For purposes of bullion you want to minimize any mark-up or premium while buying something that will be easy to sell at a later date. Same goes for bullion you buy in the form of jewelry – don’t buy designer brand names, just go the purest you can afford.
With gold, platinum and palladium, you can buy 1 ounce ingots or rounds and fractional sizes, such as1/2, 1/4, and 1/10 ounce sizes. With silver you can buy ingots and rounds in 1, 10 and 100 ounce sizes. The one caveat with buying plain bullion ingots or rounds is that they should be stamped and marked as to weight, fineness, etc. Indeed, you’re better off going with one of the major producers such as Engelhard, Johnson-Matthey, or Credit-Suisse as these are easier to sell. Also, as with most things, there are volume discounts meaning the more you buy at one time, the cheaper (closer to spot) they are on a per ounce basis.
You can also buy actual bullion coins issued by many countries. These include the U.S., Canada, Australia, South Africa and many others. Bullion coins will have a greater premium over the spot price, but because they are ‘official’, they can be much easier to sell. Bullion coins come in two basic varieties – Proof and Uncirculated. The former are special coins made for collectors and carry an even higher premium than uncirculated. They make great gifts, but are a terrible way to buy bullion. Bullion coins should be the uncirculated variety. Gold and platinum can be had in 1, 1/2, 1/4, and 1/10 ounce sizes while silver come in the 1 ounce ‘silver dollar’ size. In this category, the we have both the American Eagle and Buffalo series in the U.S. offering. While these have a higher premium than some of the other national offerings, they’re extremely fungible.
Lastly, you can buy ‘junk’ U.S. silver coins. These are dimes, quarters, and half dollars from 1964 or earlier when they were 90% silver. These are normally sold either circulated or uncirculated and by the ‘face value’ of the coins (e.g. $50, $100, $1000).
As for futures, they’re a subject beyond my understanding, and can be very complicated. I would suggest that this is NOT an arena for the novice.
Web sites of interest are:
www.gold-eagle.com - great commentary
www.kitco.com – current spot prices
www.apmex.com – good source for buying bullion in its various forms
Note that these are all sites that are bullish on gold and the precious metals so their commentary may be biased.
Ronald V. Overton
2010 Wacousta, MI

Reply to @Shostakovich: "now he's will to suspend the reinvestment of cap gains and income distributions for existing shareholders."
I didn't even notice that.

Every once in a while, Bruce does some weird stuff. First, there was fund bloat extraordinaire all while Bruce rationalized his pre-2008 media overexposure as "an efficient way to communicate with shareholders". Then, there was Bruce's stupendously fraudulent business partner who ran off Fairholme's crack analytic staff. And let's not forget early FAIRX letters where Bruce solicited ideas from investors. Now Bruce is will to suspend the reinvestment of cap gains and income distributions for existing shareholders?
Makes a shareholder wonder...

Expense Ratios: Class I = 0.76% Class N = 1.01%
Fund is co-managed by Bonnie Baha and Robert Cohen.
Per the prospectus, Mr. Cohen has been a Portfolio Manager of the Adviser since July 2012. Prior to DoubleLine, he was a Senior Credit Analyst at West Gate Horizons Advisors (and its predecessor entity, ING Capital Advisors) since 2001.
Anyone interested?
http://www.sec.gov/Archives/edgar/data/1480207/000119312513024208/d440347d485bpos.htm

Hi Catch 22,
The distribution is different form the yield which is computed form interest and dividend income only as the distribution factor considers all where it be interest, dividends, capital gains or return of principal. I have linked its distributions as noted by Yahoo Finance ... notice they average .0875 per month.
http://finance.yahoo.com/q/hp?s=AZNAX&a=02&b=1&c=2007&d=00&e=27&f=2013&g=v
In addition, you can find more informattion about this fund through the below link. Just scroll down to the distribution yield area. For 2012 it paid out $1.05
http://www.allianzinvestors.com/Products/pages/244.aspx?ShareClassCode=A
Hope this helps.
Skeeter

Howdy Skeeter,
You noted:

AZNAX, I own this fund because it kicks off a good distribution of 8.75 cents per month per share. At it current nav of $12.17 this equates to an annual distribution factor of 8.67%.

The following yield is indicated. I apparently had too much food at lunchtime; but I am trying to tie the 8.67% annual distribution in with the 3.51% yield. Is the 8.67% number combined with or into capital gains distributions or?

 Yield as of 11/30/2012  
30-Day Yield  3.51% 

Thank you for your time and efforts,
Regards,
Catch

Do you get those periods where you just don't want to "play investments"? Or perhaps just become plain disgusted with the whole messy world of investments? Or whatever other reason(s) may come into place.
Well, now; no one has to reply to the questions above, but these may be some areas we all travel from time to time.
'Course, if one doesn't want to play investments at some point in time; this would also presume that one's investments are currently in some mode of market exposure, eh? What in the world would you do about that?
Where and what to shuffle; and why?
We have central banks playing race to the bottom for interest rates to "stimulate or force" investors to go play in shark (big money houses) infested waters. Reportedly the big players have at least 70% of the market action; and are not really always paying attention (i.e.; JPMorgans London whale trader) to where the monies may be playing. One may suppose that if I were a psychopathic minded person in charge of a large money operation and knew that I had the full faith and butt-coverage of any ill fated investments from a government organization; I too would have little concern of where the monies may be playing, eh?
With the U.S. population at about 315 million today; perhaps the best experiment would have been to place real money into the hands of the population. Would this be any less of a grand monetary experiment versus the current policies? Over the past 4 years, every citizen would have received about $15,873 (based on a $5 trillion number) or $3,970/person/year. For 2013, and the reported $1trillion of bond purchases to take place, the number would be $3,175/person. Better yet, the monies would be taxed; but the taxes wouldn't be paid (depending upon the tax bracket) until the next calendar year. A one year float for an individual or family of the monies. 'Course not all of the money would be spent properly; but this is no different than current policies; but at least the individual(s) would decide for themself, eh?
Bank of Japan does a full Ben Bernanke/Mario Draghi move.....official statement, Jan. 22, 2013
BOJ, governor statement, Jan. 25, 2013
The news reports have changed quite a bit since August of 2012. There are less and less "official" and "reported" stories about the ills of the financial systems that still remains. Did all of the problems just go away? I think not.
Who/what is playing a game with this?
The long and drawn out circumstances; many of which have been discussed here, are still in place. Many of the common citizens of Europe and the U.S. have no more money in their pockets today, versus 2008. Have the large banks of the world become more stable with the quality of their reserve holdings? Find an official, current and truthful report and it may be discussed properly.
What are the true values of anything into which we invest? Perhaps our house should just grab the best 10 balanced/flexible funds, and let the money ride upon the high crest of the "funny money" and hope to also retain our mental balance at this house, at the same time. :)
It is not only that too much debt (bonds) continues to be issued in all forms by those needing to raise cash; but that the cheap and easy money continues to feed investment fires in many places. Is an indicator such as VTI worthy of a 12.3% increase since mid-November of 2012, with about 1/2 of this since Jan. 1, 2013? Five year and 52 week highs may be found looking over any equity investment fence one chooses to view from. Are these highs for real reasons; or just too much electronic money needing a good home for a few months at a time. Is the Federal Reserve, as has been noted from time to time, actually playing in equity indexes in an attempt to paint a brighter picture in this all important area of market psychology; that all is well or better or healing?
This house really does not like the smell in many areas. Easy to say and note to just watch and move away from something when the investment is no longer producing; be it income or capital appreciation or both. Easy thoughts, but a tougher action to command.
The wayback machine finds my recall of some of my generation and their perceptions of reality or not, with the use of certain "recreational" drugs. Not much difference in this current investing world; except the drug is now information and/or the lack of straightforward information and what to do with same; and at the same time, be in place among the players who really control the strings from which our house's investment puppet dangles.
The games and big players in the market place are not new, of course; as such actions would follow as far into the past as one could find recorded evidence. At some point in time, in the past; the "salt" markets were manipulated for gain. But, the rules, regs. and size of the game today is beyond any historical levels during this house's investment life span. This is the most troubling aspect today, in my humble opinion.
As noted a few weeks ago; our house will have much less time for several months going forward, with which to stay in the loop of current monetary events. While some of our bond holdings may maintain some forward value; the alternative at this time to smooth into a decent return for this year via a blend into some equity sectors is not favorable at this time; in our opinion. While some individual investors may indeed run back into the equity market at current price levels; we are not comfortable with adding monies at this point. 'Course, this may just be a 30% year for the SP-500, without much of an unwind period. If this is the case, our portfolio will not have much of a positive shine for 2013.
Our bond fund mixes are both up and down, resulting with a +.44% YTD. 'Course, some captial is being preserved; but capital appreciation is missing from many bond funds that have anything to do with investment grade. And yes, it sure is tempting to look at the equity side for the past 6 months and just get the itch. Heck, our 529 account using 50/50 of VBMPX and VITPX is + 5.2% YTD. Hopefully, the big kids won't be too nasty; if/when they choose to unwind some of the equity sectors.
Okay, enough from me today, about all of this. The writing helps to "de-funk" the attitude.
Take care of you and yours,
Catch

Hi PhilPil,
On your rebalancing inquiry: This is a reduction in equity only and I am not trying to rebalance each fund held.
Rebalancing is very simple as I reduce my position in some or eliminate the entire position. Take the Growth Area, Domestic Large Mid, it use to have six funds in that area. In a prior rebalance, I eliminated AMCPX when I reduced equities that I held in my 401k. This go I’ll be getting into some of the other areas although I’ll be giving AGTHX a sizable lick since it is one of my larger positions; and, it will get trimmed but not eliminated. Most likely, some funds in the Growth & Income Area will get trimmed too; but, we will have to get to 1575 to 1600 in the near terms before I venture into this area.
I listed the A share class for each fund owned which is ok for me tracking what I have. However, in my 401k, for instance, I hold other share classes for the respective funds listed, I think most of them are R shares.
I’ll do most of the rebalance process in the 401k and my IRA as this will avoid paying taxes on the gains harvested. I do like making the health savings account grow. So, I most likley will not be doing any reductions or cutting its sole holding which is a balanced fund.
It is really not that hard to do ... The hardest part is to pick the funds to trim from or even eliminate. And, I have already selected AGTHX to reduce its size as it is the largest position in the Growth Area, Domestic Large Mid.
Skeeter