Be sure to check the transcripts - good stuff from Steven Romick: http://wealthtrack.com/transcript_10-19-2012.php
On Fed actions - "feel it's really a snowball, gaining forces. ...that's the problem, is that the more money you throw at this problem...And yet the Fed’s goal is just to lift asset prices, with this idea that we’re going to have it all trickle down....I think it just erodes the confidence in fiat currencies. And I don’t honestly know how it ends. I really truly don’t. There's going to be unintended consequences. But I think a lot of people such as myself are very comfortable that we’re, sadly, on the wrong path..."
Positioning for Inflation v deflation
International - "We’re looking to have more of our capital invested overseas, and to be able to invest in other asset classes. So let’s take the overseas investment first. In our portfolio, we have about 21% of the portfolio is domiciled overseas. But more important than that, as I don’t really think that's as relevant as how much the revenues are being foreign sourced. And that's about half the revenues of our long equity book. "
Bonds - "high-yielding corporate bonds are so unattractive, and there really isn’t much distressed debt that exists out there at all....the amount of new corporate issuance that is triple C and not rated is at an all-time high."
He ends with Farmland - ? Where does that show up in his portfolio? He implys it is a substitute for gold. Is there a farmland REIT?

FYI;Regards,
Ted
http://www.wealthtrack.com/video_player-05.html

No new ideas here. I'm overweight flexible bond funds (FSICX, PAUDX), energy (IXC) and metals (XME) stocks.
I would like to hear opinions on foreign equities, in particular Europe such as in FSIIX. I sold to take a capital loss and just can't bring myself to buy back in. I parked that money in Muni bonds (FLTMX).

Reply to @Rbrt: well, that was a one day affair. but the current premium is tiny compared to the average over the last several years. one reason is the reduced distribution yield. the fund is not leveraged as you know and invest in many global high quality sovereigns and corporates. high quality nowadays doesn't pay -- the absolute yields are pathetic, hence the prudent decision to cut the distribution rate by a penny monthly. some CEF managers prefer supplementing lower coupons with the destructive return of capital. MH would not do that.

AllianceBernstein Funds:
https://www.alliancebernstein.com/CmsObjectABD/PDF/TaxGuides/2012EstCapGainsDist.pdf
TFS Capital Funds:
http://www.tfscapital.com/products/mutual/files/2012_Distribution_Estimate.pdf
IVA Funds:
http://www.ivafunds.com/sites/default/files/downloads/Cap Gains Estimates 102412.pdf
Invesco Funds:
http://www.invesco.com/pdf/IFCG-FLY-2-E.pdf?contentGuid=9c8738bd740ec210VgnVCM1000000a67bf0aRCRD

Reply to @Ted: Respectfully disagree with your characterization. I gather that the poster (OJ) is well north of the 70 year mark. At some point - depending on one's health, other assets, other income streams, etc. - capital preservation becomes paramount. The extreme cash weighting isn't what I'd recommend for the vast majority who frequent the board. However, not knowing all relevant details, I'd be loath to characterize the allocation harshly. Also, many count their emergency cash reserve as part of invested proceeds - which may skew the overall allocation in favor of cash. Also, many invested in RPHYX (as I think OJ is) count that as part of their "cash" position. The suggestion by OJ was on the heels of a Fed pronouncement that immediately jolted equities higher. I'd agree such occasions are opportune for those already considering selling. (FYI - OJ indicated some time ago he'd be traveling and not in a position to access Internet for several months.) Regards, hank

Last week Annaly Capital’s CEO Wellington Denahan-Norris (who this week replaced the late Michael Farrell who tragically passed away), said some very interesting comments to Bloomberg on the state of the risk markets. After discussing the impact of the Fed buying Agency MBS she said:
“It’s not just at the mortgage REITs where the returns in this market are being put under assault, It’s the general global landscape where you have an incredible mispricing of risk that’s being delivered at the hands of academics at the central banks of the world.”
Worst fear #1--an unforeseen sharp rise in interest rates resulting in principal losses to fixed income allocations (bond funds.)
Worst fear #2--financial repression/negative real return/negligible yield on any better credit quality/shorter duration asset continuing on and on and on for years.
Either scenario equates to a damned whether you do or don't costly outcome for those who saved instead of spent, the flip side regression to mean for fixed income funds which have enjoyed decades of gains in addition to yield.
Fidelity Floating Rate and RPHYX are held as interest rate risk hedges. A doubling of precious metals exposure from 5% to 10% (gold, silver, mining shares and funds) was done through spring and summer to hedge against the rash actions of poison Ivy League economics PhDs.
http://www.realclearmarkets.com/docs/2012/10/Population delusions 121007 great disorder.pdf
So I keep wondering to myself, do our money-printing central banks and their cheerleaders
understand the full consequences of the monetary debasement they continue to engineer?
Inflation of the CPI might be a consequence both seen and measurable. A broad inflation of
asset prices might be a consequence seen, though not measurable. But what about the
consequences that are unseen but unmeasurable – and are all the more destructive for it? I feel queasy about the enthusiasm with which our wise economists play games with
something about which we have such a poor understanding.
My point is to show that money operates in many social domains beyond the
financial, and that tying currency devaluation to social devaluation might have some merit.
-Dylan Grice/SocGen
Money doesn't talk it swears.
-a different Dylan

Hey Scott
Here are a few ideas that I like ;
1-OAK: Oaktree Capital Management
http://brooklyninvestor.blogspot.com/2012/04/oak-oaktree-capital-management-ipo.html
2-Loews Corp
http://brooklyninvestor.blogspot.com/2011/10/loews-corp.html
3-Leucadia -luk
http://brooklyninvestor.blogspot.com/2012/09/leucadia-fmg-note-resolution.html
4-GLRE: David Einhorn
http://brooklyninvestor.blogspot.com/2012/05/glre-david-einhorn-at-book.html
These are all long term investments and are not meant for a quick trade.
I do own a few of them (OAK,LUK,GLRE) and I intent to buy some more.
Good luck to all
Turtle.

Catch, think I'm getting somewhere with this puzzle. From Investopedia
http://www.investopedia.com/terms/h/haircut.asp
Definition of 'Haircut'
1. The difference between prices at which a market maker can buy and sell a security.
2. The percentage by which an asset's market value is reduced for the purpose of calculating capital requirement, margin and collateral levels.
Investopedia explains 'Haircut'
1. The term haircut comes from the fact that market makers can trade at such a thin spread.
2. When they are used as collateral, securities will generally be devalued since a cushion is required by the lending parties in case the market value
---
I've gathered elsewhere that if a trader takes a "haircut" that's not good. So having alota hair on it probably implies a safer trade.
ALSO: "Tail Risk" http://www.investopedia.com/terms/t/tailrisk.asp
ALSO: "Long Tail" http://www.investopedia.com/terms/l/long-tail.asp
ALSO: "Fat Tail" http://www.fattails.ca/
Well, that oughta cover it pretty well. Your expert obviously understands haircuts & tails very well.
I'll bet he eats, breathes & dreams this stuff! Take care.

Howdy,
A thank you to all who post the links, start and participate in the many fine commentaries woven into the message threads.
For those who don't know; I ramble away about this and that, at least once each week.
NOTE: For those who visit MFO, this portfolio is designed for near retirement, capital preservation and to stay ahead of inflation creep. This is not a buy and hold portfolio, and is subject to change on any given day; based upon perceptions of market directions. All assets in this portfolio are in tax-sheltered accounts; and any fund distributions are reinvested in the funds. Gains or losses are computed from actual account values.
While looking around.....Mixed Bag of Thoughts.....If we periodically need an excuse related to investment decisions; this study Memory and Doors may cause one to consider staying put in one room for a time period, during crucial investment thinking sessions.
A recent post Bond Funds, Total Return or Equity Hedge?
brought forth fewer responses than I expected. Our house will answer with "Total Return"; as that is always our goal, from whatever market sectors we may use. The original question is in place with the basis thought that the majority of investors have been equity investors for several decades. The new question may be whether this will be the case with new and current investors today. Equity investments surely will not disappear; but will this sector draw and continue to hold the most money?
Lastly, the most common proposition of bonds being used as an equity hedge; may become, "equity investments used as a "bond holdings hedge". All of us have our investment holdings placed, based upon whatever we perceive to be the best place for our money, set within our own risk and reward scale. In one fashion or another, we all have some form of a long/short, equity-income, balanced, flexible or other style of investing when looking at the overall portfolio holdings in place. We manage the managed funds, or at the very least; manage the passive or index holdings of our portfolios. We've all placed our investment mix to form a style box of one type or another, eh?
The data/numbers below have been updated.
As to sector rotations below (Fidelity funds); for the past week: (Note: any given fund in any of these sectors will have varing degrees of performance based upon where the manager(s) choose to be invested and will not directly reflect upon your particular fund holdings from other vendors.)
--- U.S. equity - 1.78% through + 2.2%, week avg. = + .36% YTD = + 15.5%
--- Int'l equity - .33% through + 2.5%, week avg. = + 1.06% YTD = + 13.4%
--- Select eq. sectors - 2.9% through + 3.9%, week avg. = + .51% YTD = + 15%
--- U.S./Int'l bonds - 1.7% through + 0.0%, week avg. = - .31% YTD = + 3.48%
--- HY bonds + .09% through + .50%, week avg. = + .33% YTD = + 11.77%
A Decent Overview, M* 1 Month through 5 Year, Multiple Indexes
You may consider our portfolio to be quite boring, but you may be assured that it moves and bends each and every day; from forces beyond our control.
I have added a few blips related to our portfolio and market observations at the below SELLs/BUYs and Portfolio Thoughts.
SELLs/BUYs THIS PAST WEEK: = Reduced our holdings in FINPX, with the proceeds added to FRIFX and PONDX.

Portfolio Thoughts:
Our holdings had a + .09 % move this past week. If one viewed the market data between the Friday's of Oct. 12-19, the numbers would indicate a so-so market in equity and bond sectors. The fact that large swings in both some equity and bond sectors had taken place between Monday and Friday of the week ending Oct. 19 would not be evident; but there were some very big swings in closing out the trading week. Most equity sectors ended the week in the positive, while many bond sectors were negative in returns. We'll continue to watch; but do not have plans at this time, to enter into equity areas.
Sidenote: The average return of 200 combined Fidelity retail funds across all sectors (week avg = + .40%, YTD + 12.4%). b> Still plodding along, and we will retain the below write from previous weeks; as what we are watching, still applies.
--- commodity pricing, especially the energy and base materials areas; copper and related.
--- the $US broad basket value, and in particular against the Euro and Aussie dollar (EU zone and China/Asia uncertainties).
--- price directions of U.S. treasury's, German bunds, U.K. gilts, Japanese bonds; and continued monitoring of Spanish/Italian bond pricing/yield.
--- what we are watching to help understand the money flows: SHY, IEF, TLT, TIPZ, STPZ, LTPZ, LQD, EMB, HYG, IWM, IYT & VWO; all of which offer insights reflected from the big traders as to the quality/risk, or lack of quality/risk; in various bond sectors.
The Funds Boat is at anchor, riding in the small waves, watching the weather and behind the breakwater barrier. To the high praise of MFO and the members, it is very difficult to find a topic to note here that has not been placed into the discussion boards. Excellence, as usual.
I have retained the following links for those who may choose to do their own holdings comparison against the fund types noted.
The first two links to Bloomberg are for their list of balanced/flexible funds; although I don't always agree with the placement of fund styles in their categories.
Bloomberg Balanced
Bloomberg Flexible
These next two links are for conservative and moderate fund leaders YTD, per MSN.
Conservative Allocation
Moderate Allocation
A reflection upon the links above. We attempt to establish a "benchmark" for our portfolio to help us "see" how our funds are performing. Aside from viewing many funds within the balanced/flexible funds rankings (the above links), a quick and dirty group of 5 funds (below) we watch for psuedo benchmarking are the following:
***Note: these week/YTD's per M*
VWINX .... + .37% week, YTD = + 9.80%
PRPFX .... - .14% week, YTD = + 6.73%
SIRRX ..... + .04% week, YTD = + 6.07%
TRRFX .... + .24% week, YTD = + 10.11%
VTENX ... + .12% week, YTD = + 8.96%
Such are the numerous battles with investments attempting to capture a decent return and minimize the risk.
We live and invest in interesting times, eh? Hey, I probably forgot something; and hopefully the words make some sense. Comments and questions always welcomed.
Good fortune to you, yours and the investments.
Take care,
Catch
---Below is what M* x-ray has attempted to sort for our portfolio, as of June 1, 2012---
From what I find, M* has a difficult time sorting out the holdings with bond funds.
U.S./Foreign Stocks 1.9%
Bonds 93.9% ***
Other 4.2%
Not Classified 0.00%
Avg yield = 3.72%
Avg expense = .55%
***about 18% of the bond total are high yield category (equity related cousins)
---This % listing is kinda generic, by fund "name"; which doesn't always imply the holdings, eh?
-Investment grade bond funds 28.2%
-Diversified bond funds 22.4%
-HY/HI bond funds 14.5%
-Total bond funds 32.4%
-Foreign EM/debt bond funds .6%
-U.S./Int'l equity/speciality funds 1.9%
This is our current list: (NOTE: I have added a speciality grouping below for a few of fund types)
---High Yield/High Income Bond funds
FAGIX Fid Capital & Income
SPHIX Fid High Income
FHIIX.LW Fed High Income
DIHYX TransAmerica HY
---Total Bond funds
FTBFX Fid Total
PTTRX Pimco Total
---Investment Grade Bonds
ACITX Amer. Cent. TIPS Bond
DGCIX Delaware Corp. Bd
FBNDX Fid Invest Grade
FINPX Fidelity TIPS Bond
OPBYX Oppenheimer Core Bond
---Global/Diversified Bonds
FSICX Fid Strategic Income
FNMIX Fid New Markets
DPFFX Delaware Diversified
LSBDX Loomis Sayles
PONDX Pimco Income fund (steroid version)
PLDDX Pimco Low Duration (domestic/foreign)
---Speciality Funds (sectors or mixed allocation)
FRIFX Fidelity Real Estate Income (bond/equity mix)
---Equity-Domestic/Foreign
NONE outright, with the exception of equities held inside of some of the above funds.

Reply to @TheShadow: Looks like ARIVX will be seeing a large short-term capital gain distribution, around 5.69% of its current NAV. Something to note for tax planning.

Aston Funds (ASTON/River Road Independent Value Fund):
http://astonfunds.com/shareholders/distributions-capital-gains

Calvert Funds:
http://www.calvert.com/newsArticle.html?article=19862&source=RSS:+
Calvert Funds (revised):
http://www.calvert.com/newsArticle.html?article=20042&source=RSS:+
Diamond-Hill Funds:
http://www.diamond-hill.com/documents/FG/dhill/MF/3306_YTD_Capital_Gain_09302012.pdf
Waddell& Reed Funds:
http://www.waddell.com/NetCommon/MutualFunds/pdf/cap_gain_estimates_wra.pdf
Heartland Funds:
http://www.heartlandfunds.com/individual-investors/Heartland-Funds-Account-Resources/Heartland-Funds-Tax-Information.htm
Pioneer Funds (Pioneer Fund has a really big payout) (revised 11/12/12):
http://us.pioneerinvestments.com/misc/pdfs/taxcenter/capgains12_nov.pdf
DWS Funds:
https://www.dws-investments.com/EN/docs/products/2012-Estimated-capital-gain-distributions.pdf

I think this weeding-out is healthy.
Let's face it, most ETFs and Mutual Funds (and I suspect Hedge Funds) are just asset collectors, like Ed Thorpe warns...few have an edge against the market.
The only thing they will guarantee is a management fee and/or a percentage cut of any gains.
Thanks Ted for sharing.

Turner Funds:
http://www.turnerinvestments.com/index.cfm/fuseaction/content.page/nodeID/40e0afc4-60c9-4da8-99e4-cfd60425c58b/
Selected Funds:
http://selectedfunds.com/estimated_capital_gains
Principal Funds:
https://www.principalfunds.com/investor/aboutus/news/article-101512-Capital-Gains-Estimates.htm
Fiduciary Management Funds (FMI):
http://www.fiduciarymgt.com/fmifundsestimated-distributions/

I should elaborate. My father is 87 years old. While I know that sounds old, he's really in pretty good physical shape, and expects to be around for a few more years. He wants an investment that does not vary much in price, and gives a good solid dividend yield that also does not vary much. In other words, no "dividend surprises". He owns a lot of stocks, and tries to avoid the ones that announce dividend reductions (and subsequently get hammered on their share price as soon as trading opens up the next day). He'd prefer 90% of the management effort be put into a steady price and reliable dividend, and only 10% be put into capital appreciation. "Equity income", with emphasis on the "income".

Thanks scott, Kenster, as always.
scott, gotta tell ya, very much appreciate your perspectives on future banking (I agree), the way you articulate importance of education (for the masses) in investing, independent perspectives on funds, the desire to make tough decisions, and having open and healthy debate.
Trust you will announce on MFO when you decide to seek political office. Seriously.
In The Little Book of Economics, by Greg Ip, 2010, he describes that a nation's productivity is dependent on three things: people, capital, and ideas.
I see a healthy BAC, C, WFC, MS, and GS as providers of capital. But I think you are warning that their ultimate health is dependent on structural changes in the macro economic framework of our nation.

Today - Oct 15
http://www.marketwatch.com/story/citigroups-results-buoy-financial-sector-2012-10-15
Citigroup’s results buoy financial sector
NEW YORK (MarketWatch) — Citigroup Inc. shares extended earlier gains Monday, up nearly 5% as the company reported better-than-expected financial results for the third quarter, sparking gains in financial stocks and a modest advance for the broader market.
The results, and the market move higher, came as welcome relief as investors look to recover from the worst week of trading since June.
Citigroup’s third-quarter net profit fell 88% to $468 million as the company (C +4.45%) took charges tied to the value of its debt and the sale of a stake in its brokerage joint-venture, but core revenue in its main businesses continued to improve.
Nomura Securities analyst Glenn Schorr told clients that there were signs of “mostly progress” for Citigroup in its quarterly results.

Retirement is a place far away for many investors. Today's 30 year old likely has few thoughts about being older someday, or having a plan that far into the future. However, many of us here; have "been there, done that" and know how fast the clock of life moves along. At the very least, even a most modest investment plan into a balanced investment (50/50 equity-bonds), until a younger investor gains more knowledge; would be a prudent choice with a percentage of one's income. Several factors are in place today regarding "retirement monies".
1. traditional defined benefit pensions continue to be removed in the private sector,
2. and are being replaced by defined contribution plans (the individual retirement plan);
3. which leaves Roth IRA's as another choice to build a retirement portfolio.
This is not all inclusive, by any means; but indicates how much an individual will be on their own to establish a retirement plan. The next 20-40 years of retirees will find a much different monetary picture versus today's retiree's.
Aside from your own plan, you should help others you know to understand the future ramifications. First, an emergency money fund; then investments. Start and continue learning about establishing sound household budgets, as well as investing principles. The young ones today need to understand the value of time upon the compounding of their investment returns; as with every day that passes, will be the loss of this one time event that the clock of time will continue to erode.
Lastly, and this will not apply to all households; is the value of your own skills and time related to investments. When one saves money via their own skills, this too is a form of investing; or at least saving money that may be invested.
I have always been inclinced toward the technical side of life. I have earned a good living from these skills. These skills and desire have always been present in daily life, too; related to repairs/maintenance around the house and all related. I have paid myself a very substantial wage from some of this work by eliminating "outside labor", which is generally half of the cost of many repairs. A bonus being that I learned while doing, too. A plumber in our area will need $100 just to arrive at the house; and then the hourly rate and parts clock begins to run. While there may be some who will not be home owners in retirement; for those who are, what you used to "take care of" around the house will find a time when you can not or choose not to be the "fix-it" person. All of this will add up to lots of little piles of expense, that can become a large pile of money flows that will require spending retirement monies that may not have been in the original budget. In spite of the tv and print ads; you may have to postpone that retirement vacation to Bali !!!
For the young ones, don't forget to value your "D.I.Y." time; but also don't forget, that this will end at some point in the future.
Depending upon individual circumstances, of course; there are a larger number of retiree's today who also did not plan on the kids returning home to live, or perhaps monetarily bailing out their children. Things change, eh? One can attempt to prepare; or just say "to hell with it" and take the trip to Bali. To each, their own direction.
Hopefully, others may add some thoughts to this vast area of consideration.
Regards,
Catch

Quaker Funds (including former Penn Avenue Event Driven fund investors):
http://www.quakerfunds.com/performance/tax/2012distributions
SSGA Funds:
http://www.ssgafunds.com/library-content/public/Cap Gains Estimate - 08 fiscal 10.08.12_final.pdf
Mainstay Funds(including Mainstay Marketfield Fund):
http://www.nylinvestments.com/public_files/MainStay/PDF/Home/MSSR06-10-12.pdf
Vulcan Value Partners:
http://vulcanvaluepartners.com/uploads/file/Capital Gains/MF Estimated Cap Gains 2012.pdf
Tweedy, Browne Funds:
http://www.tweedy.com/resources/library_docs/general/2012 Estimated Distributions 09-30-12.pdf