Part 2, continued from above, Fundmentals portfolio offering
FVALX, INTLX: These Forester funds have demonstrated the ability to limit losses by going to cash when conditions so indicate and they do so without worrying about whether they will fully participate in the recovery. Hence they fit the goals of this portfolio well. Forester was so successful with this simple strategy that FVALX became the only equity fund to have positive (albeit close to zero) returns in 2008.
Unfortunately, this brings in people who look at the rankings, see this fund at the top in 2008 and invest and get disappointed when the fund lags in a bull market.
This fund is chosen for the very strategy (that was incidentally vindicated in 2008) with the full knowledge that it will not necessarily be anywhere near the top in bull markets or even beat the index.
Alternative to FVALX is Amana Income AMANX which does not provide as much downside protection but has done well using a very conservative approach in value investing and keeping the volatility low but it will be slightly more volatile than FVALX. Another slightly higher volatile alternative is Yacktman fund (YACKX)
Alternative to INTLX is Sextant International SSIFX (coincidentally managed by the manager of AMANX) for similar reasons.
AMAGX: A very well managed Large Cap growth fund with a long history of good performance. The downside protection is also reasonable within its class even though there does not appear to be any capital protection strategies in place.
QRSVX: Not a well known fund but is one of the very few funds that is widely available without a transaction fee, has at least a 5 year history and has managed to limit downside in the bear market in the small cap category. The volatility is also kept low.
A better known substitute is Royce Special Equity (RYSEX) if available without a transaction fee. Newer Intrepid Small Cap (ICMAX) has done very well although its short history may be a concern as well as Pinnacle Value (PVFIX) if available without a transaction fee. Both ICMAX and PVFIX are low volatility funds and have capital protection as a goal of the fund to fit the goals of this portfolio well.
MAPIX: The only selection without a 5 year history but comes with a very strong pedigree from Matthews Asia that specializes in Asian funds. This fund has extremely low volatility, even lower than most domestic equities and has managed to deliver very good total returns with a combination of stocks, convertibles and preferred shares.
Alternatives would be either Matthews Asia Pacific (MPACX) at higher volatility with good downside protection or Matthews Asian Growth and Income (MACSX) at lower volatility but can potentially lose more money in bear markets.
BPLEX: An alternative investment fund that tries to get good returns in both bull and bear markets. A long-short fund that can be mistaken for another performance chasing choice because of its recent performance. But this would be a good choice even if its performance in 2009 was just average or even below average.
Looking under the hood shows this fund to be quite different from other long-short funds that try to use both long and short depending on the stock valuations. This fund seems to switch between a primarily long fund (but with short positions to hedge) with good stock selection or a primarily short fund (with long positions to hedge) depending on the macro market conditions thus minimizing individual stock market timing risks.
This is not different in strategy from Forester's philosophy except that its uses shorting rather than just go to cash and uses small caps rather than large caps.
So it does very well in longer bear or bull market years and lags during transitions but without losing much money. Unfortunately, none of the alternatives for this fund come anywhere close to it in performance as they primarily seem to depend on picking the right stocks to go long or short across all conditions rather than acting like a good long fund or a good hedged fund depending on macro conditions. It is a unique standout.
ARBFX: Another alternative investment fund which depends on arbitraging mergers and acquisitions by buying a company that is being acquired and often shorting the company acquiring. The risks for such funds come only if the M&A does not go through. The earlier you get on as soon as an M&A is announced, the riskier. This fund takes very little risks by waiting to get on and arbitraging just the last few months before an M&A. This keeps the volatility very low and the gains low as well.
An alternative is the similar Merger fund (MERFX) which has a disadvantage because of its size and so may not be able to move quickly in and out.
HSTRX: Hussman's conservative allocation fund is managed in a risk-managed fashion where the portfolio is continually and pro-actively positioned to address the current risk evaluation of the market. Unlike his strategic growth fund, this fund does not take any significant bets on equities and so any incorrect decisions in his strategy does not have as much of a downside impact unlike the other fund. This has allowed HSTRX to show very consistent and impressive performance over a long period of time with very little volatility.
MGIDX: Intermediate duration mortgage securities fund that manages to keep volatility low with good performance and uses shorting/options to achieve this. The ability to short or use options will make this fund able to provide downside protection and manage credit and interest risks, a good idea when mortgage rates are likely to rise in the future.
Alternative is PTMDX - PIMCO Mortgage-Backed Securities D which shorts even more aggressively.
PGNDX: A GNMA fund that manages risk via shorting while preserving the upside of a GNMA fund. Good due to the same reasons as MGIDX above.
Alternatives are non-shorting GNMA funds such as USGNX from USAA, VFIIX from Vanguard or BGNMX from American Century which may have more losses if the mortgage rates were to rise rapidly.
PTTDX: An intermediate investment grade fund that also manages risk via shorting and useful in an expected interest rate rising environment in the future. Low volatility.
Alternatives are non-shorting funds with low volatility THOPX Thompson Plumb Bond or CPTNX American Century Government Bond Inv WEFIX: A fund with the ability to move between short and intermediate durations based on market conditions and hence able to take advantage of the conditions better than a strictly short term fund. Does not use shorting.
Alternatives are USSBX from USAA, WEFIX Weitz Short-Intermediate Income, VFISX Vanguard Short-Term Treasury, PLDDX PIMCO Low Duration D. The last one from PIMCO does use shorting

Hi Accipiter,
Thanks for ringing my bell. I recalled and found the FA archives link I had in the pc favorites list.
>>>>>matt, is this the portfolio mix you have on paper ???Posted by: Fundmentals
Date: November/December 2009
Subject line: Model portfolio design
Body of post:
I am sure many of you have come across the situation of a friend or a family member clueless about investing ask you to help them with a stash of money. The real-life requirements are usually "simple":
1. "Want your help to make some money. I can lose money all by myself"
2. "I can put it in the market for 5 years. Can leave it there longer if it is making money but not if it is losing money"
3. "Don't ask me to do anything more than once a year"
The following portfolio is designed specifically for people that are not
(a)expecting to beat the market
(b)don't want the portfolio to go down much (likely to panic and sell at the bottom if they went down 10% or more)
(c) would like some decent gains - more than what they can get with money market funds, CDs or even just bond funds without which they will not take the risk of investing at all and
(d) don't want to fiddle with it more than once a year.
The Portfolio
Domestic Equity:
5% Forester Value (FVALX) - Large Value
5% Amana Trust Growth (AMAGX) - Large Growth
5% Queens Road Small Cap Value (QRSVX) - Small Value
International/Global equity:
10% Forester Discovery (INTLX) - World Allocation
10% Matthews Asia Dividend (MAPIX) - Diversified Asia/Pacific
Alternate investments:
10% Robeco Long/Short Eq Inv (BPLEX) - Long/short equity
10% Arbitrage Fund (ARBFX) - Merger/arbitrage
15% Hussman Total Return (HSTRX) - Conservative allocation
Bonds
7.5% Managers Intermediate Govt (MGIDX) - Mortgage securities/Govt
7.5% PIMCO Total Return D (PTTDX) - Intermediate Investment Grade Bond
7.5% Weitz Short-Interm Income (WEFIX) - Short-Intermediate Term Investment Grade Bond
7.5% PIMCO GNMA D (PGNDX) - GNMA
Backtested performance
If portfolio invested on 1/1/2008, results as of 11/13/2009:
Total return: +15.05%;
2008 Performance: -4.79%
2009 YTD: 20.84%
Portfolio X-Ray:
Stocks 52.3%; Bonds 38.1%; Cash 9.6%
Stocks US 56.00%; International 44.00%
US equities
Large cap 27.4%; Mid cap 22.8%; Small Cap 49.8%
US equities
Value 36.9%; Blend 53.0%; Growth 10.1%
International equities
Europe 24.1%; Pacific 38.5%; Canada 18.9%; Emerging Markets 18.5%
Bonds
Taxable 78.70%; Uncategorized 21.30%
Credit quality High 78.7%; Uncategorized 21.30%
Duration Medium 20.2% Low 58.5% Uncategorized 21.3%
Costs: Portfolio average 1.72%
Portfolio construction notes:
The portfolio is constructed to solve a basic flaw in traditional portfolio construction. Diversification using high volatility equity funds (even index funds with market volatility) results in deep losses during bear markets as most such equities become correlated and go down together.
Just depending on bond allocation to reduce losses requires primarily allocation to Treasuries as it is the only type of asset that can be depended on to show negative correlation with equities in bear markets. But unlike in the past, Treasuries starting with the current situation of low interest rates cannot be expected to provide much gains going forward so the portfolio may turn out to be too conservative or too aggressive based on what happens in the market regardless of how much is allocated to Treasuries.
As a solution, portfolio picks only funds designed with a strategy to reduce/minimize losses during long bear markets and has some capital protection goals in place. The overall volatility is reduced by depending on each fund to reduce its own volatility rather than depend on lack of correlation to reduce the volatility.
Note that this is not the same thing as picking funds with the highest returns in either bear or bull markets or both. Nor are the returns attributable to some fantastic market timing in picking which stocks to buy and when to sell.
In fact, most of these funds will likely not consistently appear in the top 10% of their class except occasionally. But all of them will have shown the ability to limit losses by reacting to long-drawn down market conditions and make decent gains in long-drawn up market conditions.
In other words, the only market timing they will show will be in recognizing long bear markets as in recognizing the difference between 2008 and 2009, not what happens month to month. None of them try to time tops and bottoms.
Methodology
Portfolio Requirements:
1. Capital protection and lack of volatility extremely important. No long periods of losses. No "wait for 10-20 years or more" excuse for losses.
2. Asymmetric behavior - as much of the upside as possible, as little of the downside as possible
3. Simple portfolio with high quality no-load funds widely available in the main brokerages
4. Only annual tune-ups
5. Total return more important than income
6. No assumption of bull/bear markets for the portfolio as a whole, no forecasted assumptions of economy or any other indicators, doom/gloom predictions, etc.
Concrete requirements:
1. Not more than 12 funds.
2. No single fund with less than 5% allocation or more than 15% allocation
3. Portfolio must be diversified but not necessary to cover all asset/fund classes. Only asset classes that have shown consistent returns without long loss periods and small drawdowns. Riskier assets only within risk-managed funds.
4. No assumptions of correlation or lack of correlation between asset classes going forward but no gross overlaps between funds. Some overlap is fine.
Screening criterion for funds:
1. No-load, ER less than or equal to category average, been in existence for at least 5 years.
2. No losses in 3, 5 or 10 yr (if available) rolling periods (amazing how many asset classes or funds drop out here)
3. Manager has been around for at least the category average
4. Minimum initial purchase not more than $3000 (i.e., minimum not more than $60k portfolio)
5. Best 3 month performance must be better than worst 3 month performance over its lifetime (amazing how many funds you lose with this criterion)
6. Best volatility-adjusted performance (3-yr and 5-yr) in class, not necessarily the best returns.
7. Volatility of each fund on its own must not exceed 10% of total stock market index, total bond index or balanced index as appropriate.
8. Lowest volatility to break a tie all else remaining the same.
9. No bias towards active or passive funds as long as the above criterion are satisfied
10. Allocation percentages based entirely on relative volatility-adjusted returns (3-yr and 5-yr), no ad hoc allocation decisions. Individual fund notes:
end of Part 1

As part of my Large Cap Value portion of my portfolio I have a small position in CAMAX and have noticed the extreme volatility of its NAV compared to other Large Cap Value funds such as FVALX or YACKX. Wondering if anyone employs a strategy where you pair an aggressive fund like (CAMAX) with a less aggressive fund like (FVALX or YACKX). This would not only help keep one "in" the market but, but also allow that part of one's portfolio (Large Cap Value) to be positioned more appropriately to market risks and conditions.
Charting these two funds together over the past year provides what I would call reallocation signals from one fund to the other. Using Yahoo finance's 1 year chart:
http://finance.yahoo.com/echarts?s=FVALX+Interactive#chart24:symbol=fvalx;range=1y;compare=camax;indicator=dividend+volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
CAMAX's Sept 2010 NAV moved steadily upward while consistently exhibiting a (+/-10%) NAV price volatility. By March 2011 CAMAX was performing 60% better than FVALX. Over that same time frame FVALX price volatility was a mere (+/-2%)...very stable. For three months (Mar-Apr 2011) CAMAX's NAV moved sideways still experiencing the same +/- 10% volatility. Changing the chart to a six month time frame shows this momentum change pretty clearly. This would have been a signal to reallocate some of CAMAX's over performance back into the stable performing LC Value fund like FVALX.
By August CAMAX had lost almost all of its over performance compared to FVALX. From August 1 - August 10th FAVLX's NAV dropped (-5%) compared to CAMAX's (-30%)...one really bad week that owners of CAMAX wished they only owned FVALX but, my point here is that both funds have a purpose in one's portfolio.
By charting these two funds together an investor could have reallocated CAMAX's over performance (gains) back into the more stable FVALX in March, April or May and would now being preparing to reverse this process...moving gains back into CAMAX at a lower NAV. Since CAMAX's August 8th low it has outperformed FVALX by as much as (+20%) and as little as (+5%).
Almost makes me want to trade in and out of these two funds to capture the trading range between the two waiting for the overall market to show a clear direction up or down.
Any comments would be appreciated.
bee

Howdy,
Gold just broke through 1900 in London on global economic issues. It's at 1901, silver 42.85, platinum 1883 and palladium 763 with gold being the leader today. Note that the gold/XAU ratio is an extrememly high 8.53 as bullion is diverging from the miners. Gary always talked about looking for divergences to watch for opportunities. For the record, a ratio this high is a signal to buy mining stocks - or at least overweight miners vs. bullion in your holdings.
The gold/silver ratio is 44.36 with an historic range of between 15 and 20 . . .but it's down from 80 . . .
A ratio this high is STILL a signal to overweight silver relative to gold. BTW, the XAU is at 222.79.
Bloomberg News
http://www.bloomberg.com/news/2011-09-05/gold-climbs-a-3rd-day-as-u-s-europe-economic-concerns-drive-haven-demand.html
Last Haven Standing - Shiff
http://www.gold-eagle.com/editorials_08/schiff090211.html
I like some of Shiff's stuff but not all. Sums up a bunch before slamming Gartman for call a top in gold. feh. Most everyone has either denied or called a top or a bubble. Warren had a gob of silver back in the beginning but sold very early on and missed 90% of the gains. By this I mean that with a low around $4, he still sold around $10 or so, if I recall correctly and so more than double his money. That's great. Silver is currently at $42. Let's admit it, everyone has made mistakes, everyone. I've made some real idiot moves (e.g. Palatin Tech ) - we all have. We just have to try and learn and not do it again.
Can We Trust the Gov't Stats on the Economy - Dorsch
http://www.gold-eagle.com/editorials_08/dorsch083011.html
Hell, if you ever look at shadowstats.com, I believe we've actually been at zero real growth since the dot.com meltdown in 2000. Check the alt data tab. Unemployment is ~22% and inflation is now ~12%.
http://www.shadowstats.com/
I'd be very, very careful good people. Very careful.
and so it goes,
peace,
rono

I can not and will not offer any prediction based upon what I think I see for any trends, either fundamental or techinical. The best this house can do is to attempt to keep both feet in different waters for the best end result; with the full attention still being capital preservation and to stay ahead of the inflation "creep". If adjustments are needed; perhaps will be good enough at catching and making a required change.
The markets at times, reminds me of being at a marina. I don't need to see or feel the wind in my face; but only to hear the sound of the riggings on the sailboat masts and whether or not; and/or how hard is the sound. No sound, an occasional clang, clang-clang or hard and continous clangs. This tells me about how disturbed the waters are; causing the boats to rock at the surface.
And retirement, well one may be retired from "work"; but if we get the average life span, one surely can not retire from protecting and growing the investments; lest one runs out of MONEY, eh?
So, we're really in the same boat. You're attempting to grow your monies for retirement and we have to grow/maintain our monies near retirement and in retirement.
Regards,
Catch

Howdy,
Again, a thank you to all who post the links and also 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 retirement, capital preservation and to stay ahead of inflation creep; if and when it returns. 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..... I find a much too full weekend period, and will only state that looking at last week's market moves and some of the futures area this Sunday evening; that I still don't find a defined market; as to where the big money may run to next. Me brain cells are too tired.
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
SELLs/BUYs THIS PAST WEEK:
NONE
Portfolio Thoughts:
Our holdings had a -.2% move this past week. And yes, we are satisfied with our risk adjusted returns YTD. If the portfolio can pull a +10 to 12% for the year; you will not hear any whining from this house. (This sentence was from an April write; and I/we suppose a +5% for the year may now look good, too !) Our portfolio is at - 2.2% from the high point in mid-July. A brief note: Some of the bond funds are behaving much weaker than we expected. Perhaps this is just a lag in this area from what continues to appear a lack of conviction in many market sectors. Heck, maybe we should just move 50% of the monies into a few long bond funds and find what happens.....:)
Good investment fortune to all in the coming months.
The old Funds Boat may make 5% or 25% this year. I expect some rough waters, changing winds and opposing currents; causing the most serious attention being given to a firm hand upon the rudder control. (April report text)
The immediate below % of holdings are only determined by a "fund" name, NO M* profile this week
CASH = 8.3%
Mixed bond funds = 81.8%
Equity funds = 9.9%
-Investment grade bond funds 18.6%
-Diversified bond funds 18.5%
-HY/HI bond funds 25.8%
-Total bond funds 14.6%
-Foreign EM/debt bond funds 4.3%
-U.S./Int'l equity/speciality funds 9.9%
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 Fed High Income
DIHYX TransAmerica HY
DHOAX Delaware HY (front load waived)
---Total Bond funds
FTBFX Fid Total
PTTRX Pimco Total
---Investment Grade Bonds
APOIX 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
TEGBX Templeton Global (load waived)
LSBDX Loomis Sayles
---Speciality Funds (sectors or mixed allocation)
FCVSX Fidelity Convertible Securities (bond/equity mix)
FRIFX Fidelity Real Estate Income (bond/equity mix)
FSAVX Fidelity Select Auto
FFGCX Fidelity Global Commodity
FDLSX Fidelity Select Leisure
FSAGX Fidelity Select Precious Metals
RNCOX RiverNorth Core Opportunity (bond/equity)
---Equity-Domestic/Foreign
CAMAX Cambiar Aggressive Value
FDVLX Fidelity Value
FSLVX Fidelity Lg. Cap Value
FLPSX Fidelity Low Price Stock

Reply to @johnN: Thanks, John. I am keeping my gold exposure to low % of Portfolio totals. But even that percentage has certainly helped my total Portfolio gains so, at least for now, I am happy with having what I have in this. I just haven't experienced the ups and downs of gold (or any investments for that matter) except for the last year so I didn't know if the recent strong fluctuations were normal during stress periods, or something I should worry about.

http://www.bloomberg.com/news/2011-08-26/gundlach-s-doubleline-waits-to-buy-until-everyone-in-fear-adds-to-cash.html
Gundlach's DoubleLine Will Hold Cash Until Everyone in ‘Fear'
Bloomberg, Aug 26 2011
Jeffrey Gundlach’s DoubleLine Capital LP is favoring cash over almost all investments including corporate bonds, wagering that relative yields will widen even after expanding to the most since October 2009.
“I want fear,” Gundlach, the founder and head of Los Angeles-based DoubleLine, said in an Aug. 24 telephone interview. “I want to buy things when people are afraid of it, not when they think that it’s a gift being handed to them,” he said of speculative-grade bonds.
Some of DoubleLine’s funds, which usually don’t hold any cash, currently are allocating 15 percent, said Gundlach, who managed the top-rated intermediate-term U.S. bond mutual fund for 15 years.

I agree with Shostakovich, a good fund for the right investor. If you want to be invested in the stock market but are looking for the least amount of volatility and capital preservation is foremost of priorities, Forester funds are the way to go.
I don't plan on buying the Forester fund, but I have gone to other funds that have the 'capital preservation' mind set. ARIVX being the latest of my additions. I've gone to funds that have risk conscious management. Funds like ARIVX, YAFFX, FPACX, PRPFX, HSTRX that allow me to sleep better. Of course these funds aren't immune to losses, but histrically they have out performed in bad times and done better than peers over market cycles.
So, bottom line, I think Forester is a good addition if you want to be invested in stocks but also want a conservative fund to help you sleep at night.

A few various notes/theories:
1. Many people are stunned by the difference in returns from gold vs. gold stocks. You are looking at an instance where irrationality is pretty remarkable in terms of gold stock valuations. It just depends how long the irrationality takes to reverse (or if it does?)
2. There were a number of discussions earlier this year about hedge funds shorting gold stocks and going long gold.
3. The Jim Rogers theory: if you want a commodity (whether it be gold or whatever), invest directly in it - stocks (moreso these days) are too carried around by whatever the market is doing and it's too difficult to pick the right play to take the best advantage of a particular commodity.
4. People just wanted the physical, they did not want a miner who could be subject to bad weather, technical problems, higher costs, bad hedging/management, yadda yadda yadda. This is why I continue to recommend Toqueville Gold (TGLDX); certainly voaltile, but John Hathaway is the best manager in the sector.
5. There seemed to be a point where gold started to look like it was taking on a monetary vector a month or two ago (which goes back to the line from JP Morgan: "Gold is money and nothing else."), and that may have added to gains. People who don't want to be in the dollar, but the world can't pile into the Swiss Franc and other currencies have problems, too - so...? This can also be filed under loss of confidence (in the system, currencies, governments ability to handle economies, etc.)
6. Maybe declining production? (I don't know, I haven't really looked at that - all I know is supply is gaining a bit over 1% a year, last I heard.)
7. Something worse than anyone is publicly aware of is brewing under the surface. (see: http://www.zerohedge.com/news/bank-america-cds-hits-escape-velocity)?
Again, I stress diversification in terms of investing in commodity, commodity-related or "real asset"s. The precious metals are fine, but agriculture is also something I'd highly recommend looking at.
Additionally, the Midas fund you have appears both leveraged and aggressive; if things are going well for the sector, it has the potential to outperform. In a situation like this, it can end up at the back of the pack - it was at the bottom of the category in 2008 and was near the top in 2009. Again, I'd recommend the Toqueville fund for a smoother (by comparison) holding.
Also, to add: the article portion of this summarizes my thoughts pretty well (although I don't think this ends with deflation):
http://finance.yahoo.com/blogs/daily-ticker/gold-rallies-money-flees-leveraged-financial-system-dempsey-182933547.html

Its interesting how many retail investors are following a similar strategy, shifting from low-risk funds to "alpha" funds. I'm one of them.
Flexibility lets us feel more in control, (hopefully) mitigating downside risk. Capital preservation lets you sleep well at night.

I have tried mapping out a "risk shift" strategy rather than a "sell" strategy with respect to the holdings in my portfolio. Would welcome comments.
This "de-risking" has required me to first assign a risk tolerance (that I am comfortable with) to all of my holdings. The categories of risk tolerance are as follows:
cash/cash equivalent...0% -3% downside risk due to currency devaluation and inflation (we'll ignore institutional financial strength...staying solvent)...I am presently using PONDX as my cash position and try to maintain 10-20% allocation with respect to my overall portfolio. This is where I look for cash when I look to buy "things on sale". I also have a small amount (5%) of Gold/Silver using CEF. Just an insurance policy on fat tail risk.
Low...3% - 10% downside risk...I place funds like PRPFX = Permanent Portfolio and TGBAX = Templeton Global Bond Fund as well as a whole host of Total Return / Income Funds like PTTDX, TGMNX, or USAIX. These are the anchors. They are added to when I look at my overall allocation. I try to maintain a 30-50% allocation in these funds
Moderate...10% - 20% downside risk...Many of my balanced/dividend/defensive funds fall into this category...MAPIX = Mathews Income, PRWCX=T Rowe Price Capital Appreciation, and OAKBX = Oakmark Fund. Also, PRHSX, VGHCX, GASFX, and CSRSX are some others I also include in this category. I consider these part of my core holdings that I add to when I have profits. In a downward trending market I try to de-risk my higher risk investments into these moderate risk funds. This keeps me somewhat in the market eliminating some of the market timing issues. I am never very good at spotting the exact bottom or top. So (risk shifting) into these moderate risk investments seems helpful when the market goes against me. This collection of funds could represent 20-40% of my portfolio.
High... 20% - 33% downside risk...These are primarily equity funds that I own to follow a trend, and add some alpha. I have owned CAMAX, HRVIX, MFCFX, USAGX, PRMSX, VWO, VDE, VIT, VHCOX, PRMTX, MATFX, MSMLX, WAEMX, etc. This is the set of investments that I am monitoring and trying to upgrade...improve upon. When they hit the negative 20% level or move upward a positive 10% they become candidates to "de-risk". Some in this category are doing very well such as USAGX and I may consider taking profits some are not and I may reduce my exposure to them temporarily. Cash elsewhere in my portfolio allows me the ability to add to these funds when they are trending upward. When these funds are out of favor they could stay out of favor for sometime. I look to shift some or all of these holdings into a Moderate or low risk investment. I am willing to monitor them from a de-risked position. This category of funds could make up 5-20% of my overall portfolio.
Extreme... 33%- or more downside risk... I have very small speculative position in RIMM (Research in Motion)...I have lost 55% so far this year with RIMM. I own FAIRX and have suffered a 29% loss in value with this fund. I planned on holding both of these 3-5 years but I will continue to monitor them closely and make regular "gut checks". In good times I would like to see 20% plus gains here before I de-risk some profits. These holdings could be represent 0 - 15% of my overall investments. They are small positions that I am willing to be patient with. I also find them to be my biggest learning experiences.
As I said earlier, I am not very good at timing the market at the tops or bottoms so periodic de-risking an investment that is trending above or below your tolerance threshold might be worth considering.
Comments welcome...
bee

Reply to @CathyG:
Hi Cathy. I guess you should be cautious of every investment, but imho the Yacktman funds have demonstrated an ability towards capital preservation well beyond the average large cap fund. Heck, even with holdings in Newscorp (and how could an investor foresee the London newspaper scandal?) and HP, his funds have held up "much" better then his peers or the benchmark S&P 500 over the last 3 months or year-to-date... #1 in it's category over the last 3 months.
I'd be more worried if he was loading up on financials ala Berkowitz.

Volatile stock market to leave lasting scars on fund investors' psyche
http://seattletimes.nwsource.com/html/businesstechnology/2015951294_fundoutflows21.html
Making sense of advice from Wall Street professionals
http://www.stltoday.com/business/local/article_7de2dc3f-33a7-549c-a67d-0d02e56c4ca8.html
Don't panic in reaction to stock market swings
http://www.latimes.com/business/la-fi-investor-tips-20110821,0,89683.story
retirement savers who did not blink saw big gains
http://www.marketwatch.com/story/retirement-savers-who-didnt-blink-saw-big-gains-2011-08-18?siteid=nwhpf
pimco diversified income bet big on EM bonds
http://www.kiplinger.com/columns/value/archive/pimco-diversified-income-bonds-emerging-markets.html
wallstreet bully
http://www.theetfbully.com/2011/08/last-week-in-review-etf-news-and-blog-posts-to-8212011/
be like buffett - buy fears
http://finance.yahoo.com/banking-budgeting/article/113363/be-more-like-buffett-barrons?mod=bb-budgeting&sec=topStories&pos=5&asset=&ccode=
gold could be over-priced
http://www.marketoracle.co.uk/Article29994.html

Howdy,
NOTE; back to the original format for this; so that new folks who visit this write, may know more about the reason(s) for the holdings.
Again, a thank you to all who post the links and also 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 retirement, capital preservation and to stay ahead of inflation creep; if and when it returns. 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..... I won't attempt to add anything to the numerous posts of the past couple of weeks; as these have been a lot to chew upon and I will presume most folks here have read the posts. I will be most curious as to what words or lack of words are expressed by Mr. Bernanke at the Jackson Hole summit this next week. The Fed can still fiddle around with which duration Treasury bonds it chooses to help "adjust"; but their influence is limited by "all in the global market place" who really "decide" what the yields should be, associated to all other risk in the world markets. I can not speak for others here at MFO who I know also live in Michigan; but our portfolio and related thoughts about any forward growth in the U.S. economy is still tempered from many years ago (1985 ish) and viewing (then) the slow unwind of the manufacturing sector in this state. Not unlike other states with a variety of large and small industry; the unwind continued with the closing of the 1,000's of many small machine and parts vendor businesses. Of course, all of this small and large company unwind affected the many businesses that benefited from the highly paid employed. Many of these small business operations have been closed for years. Related to this; and something that still makes me point at the tv (beginning in Dec 2008 through yesterday, Aug 19) to tell them they don't "get it" are the commentators who continue to compare today to the recession period of the early 1980's. Friday, Aug 19; on Charlie Rose's program, a Mr. Ip (the Economist Magazine) stated that the economy came "roaring" back in 1982; after the various experiments with monetary policy. Well, YES; but that is not where the economy is today !!! The manufacturing/industrial/middle class base is NOT even similar to 1982. My thoughts to these folks, including Warren Buffett (a most fine and knowledgeable person); is that this comparision is totally invalid, and perhaps from whatever life experiences shaping their viewpoints along with too much time with "data" and too little time with the "real folks world" has perverted their thoughts and that they may be caught in the; "they don't know, that they don't know." This syndrome, among many other problems has and is a most apparent problem in DC. Someone/some folks are wrong about the state of the economy; and I hope it is not this house. OK, enough jabber from this fella today; as I have rambled enough through the past week in the threads here.
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
SELLs/BUYs THIS PAST WEEK:
NONE
Portfolio Thoughts:
Our holdings had a -.01% move this past week. And yes, we are satisfied with our risk adjusted returns YTD. If the portfolio can pull a +10 to 12% for the year; you will not hear any whining from this house. (This sentence was from an April write; and I/we suppose a +5% for the year may now look good, too !) Our portfolio is at - 2% from the high point in mid-July. Obviously, the cash and some bonds are supporting the loses in the equity/high yield/income bond sectors. I will still maintain, as noted several weeks ago here; that a -25% in any of the broad indexes may be as low as the hedge funds, big traders and the machines may be able to tolerate; before buying again. Some sectors have already hit or are near the - 25% pull back. I can envision the "algos" set in the machines for the - 25% BUY signal. We continue to hold our equity positions, as the % vs the overall portfolio totals is low enough to not completely kill our monies invested; and any loss taken now with a sell; may be selling near a short term bottom. We may, however; sell into a short term equity rally. I/we, at this house; are surely not in a postion to "guess" where the equity markets are headed at this time.
Good investment fortune to all in the coming months.
The old Funds Boat may make 5% or 25% this year. I expect some rough waters, changing winds and opposing currents; causing the most serious attention being given to a firm hand upon the rudder control. (April report text)
The immediate below % of holdings are only determined by a "fund" name, NO M* profile this week
CASH = 8.3%
Mixed bond funds = 81.8%
Equity funds = 9.9%
-Investment grade bond funds 18.6%
-Diversified bond funds 18.5%
-HY/HI bond funds 25.8%
-Total bond funds 14.6%
-Foreign EM/debt bond funds 4.3%
-U.S./Int'l equity/speciality funds 9.9%
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 Fed High Income
DIHYX TransAmerica HY
DHOAX Delaware HY (front load waived)
---Total Bond funds
FTBFX Fid Total
PTTRX Pimco Total
---Investment Grade Bonds
APOIX 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
TEGBX Templeton Global (load waived)
LSBDX Loomis Sayles
---Speciality Funds (sectors or mixed allocation)
FCVSX Fidelity Convertible Securities (bond/equity mix)
FRIFX Fidelity Real Estate Income (bond/equity mix)
FSAVX Fidelity Select Auto
FFGCX Fidelity Global Commodity
FDLSX Fidelity Select Leisure
FSAGX Fidelity Select Precious Metals
RNCOX RiverNorth Core Opportunity (bond/equity)
---Equity-Domestic/Foreign
CAMAX Cambiar Aggressive Value
FDVLX Fidelity Value
FSLVX Fidelity Lg. Cap Value
FLPSX Fidelity Low Price Stock

Reply to @MikeM: Hi Mike, Thank you for the words. Someimes, I wonder if "some" investors figure the cost of trading in and out of securities from taxation on the profits and the associated trading cost. A lot of my invested assets are held in a taxable account so I have to consider these things before making short term moves, although I do make them from time-to-time. This is one of the reasons I lean towards the good dividend paying stocks and mutual funds of same. In this way, when the market pulls back, I look at it as a buying opportunity to buy more of them. I have found that over time many of the stocks I own have increased their dividends paid. That is something that I have yet to discover with my fixed income assets. The bottom line though is that by taking at total return approach to investing when the dividends are grown over time and is also complemented with some capital appreciation on the assets held is a good way to offset inflation through a simple and conserative approach.
Many seasoned investors know that historically stocks go soft in the summer months and this is a good time to add to ones favored positions. This is what I have been doing over the years ... accru cash and then deploy it when there are good buying opportunities. Many times when some investors are selling, when the markets are depressed, I am buying ... and, when the markets are peaking and they are buying and feeling good about it I am trimming some positions back, booking the profits and then accruing cash to deploy later.
I also employ a seasonal strategy that calls for one to increase their equity holding during the fall on into spring. Then one trims the allocations back at the beginning of summer and then to start over again to load equities again towards fall. Recently it seems the loading part has now started earlier during mid to late summer. At least it has form my experience over the past couple of years.
Thanks again for the comment. It was indeed appreciated.
Skeeter

APPLX is fine, but personally I fully am a fan of Steve Romick and FPA Crescent is the fund I'd recommend - Romick is both shareholder-friendly (conference calls) and I'd compare him to Yacktman as a manager who's able to deploy capital and also know when to de-risk. FPACX can also hedge and has the flexibility to take on distressed debt and other assets.

I own RIT Capital Partners on the LSE and consider it a long-term holding.
A recent update from an article in the Telegraph:
http://www.telegraph.co.uk/finance/personalfinance/investing/8698751/Shield-your-portfolio-from-stock-market-falls.html
"Lord Rothschild, the chairman of RIT Capital Partners, the investment trust, said he had anticipated this kind of market turmoil and had already positioned the fund to withstand it.
"In June last year I said we had more to worry about than at any other time in my 50 years of working in the City," he said. In his recent annual chairman's statement he wrote: "The risks ahead are glaring and global." This week he reiterated that these risks remained. "Few people listened at the time – now they are," he said.
To reduce the trust's exposure to risk, he put about 10pc in gold, avoided being fully invested in equities but increased exposure to big, US-listed global stocks. "We'll stick with that," he said. "We are concerned about inflation over the longer term. We don't own any bonds."
Jardine is only available to the retail investor in the US pinks, as I don't believe there's a retail broker that offers access to the Singapore market. Both Jardine Matheson and Jardine Strategic are publicly traded and there is both a foreign ordinary share (ending in "F") and ADR (ending in "Y" for each. Some brokerages may not offer trading in both shares of each.

Scott,
Have you found a way of investing in Jardine Matheson or RIT Capital Partners without investing in pink sheets, which have historically low trading volumes ? Apparently Etrade and Scottrade are two brokerages that have direct access to overseas stock exchanges including the LSE. Thanks.
Kevin

Jardine Matheson is one of a number of similar conglomerates in Asia, some of which have been around for many decades (such as Jardine.) Swire and Hutchison Whampoa are other examples. Swire is interesting (in that it owns Cathay Pacific and a Coca-Cola Bottler that covers a good portion of Asia and some of the US). Genting Berhad is also of interest, with its resort properties in Singapore and soon the US. Given its holdings though, Genting is particularly tied to the swings of local economies.
Jardine has a pretty fascinating history and (I thought) appealing mixture of businesses - there is both Jardine and Jardine Strategic, and Jardine Strategic owns a 20% stake in Rothschilds Continuation Holdings, which is the financial holding company of the Rothschilds.
"Until 2008, the only non-family interest was Jardine Matheson, a hong which holds the other 20% of Rothschild Continuation Holdings. The stake was acquired in 2005 from Royal & Sun Alliance through the Jardine Strategic subsidiary, which specializes in leveraging stakes to protect family owners.[7] Jardines acted as Rothschilds' China agent from 1838 onwards" (http://en.wikipedia.org/wiki/N_M_Rothschild_&_Sons)
longer Bloomberg article on the relationship between the two companies -
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=apHai5xmbq9s
Jardine Strategic owns the majority of Jardine Matheson and Jardine Strategic is part of Jardine Matheson. As noted, "It (Strategic) in effect owns its own corporate parent, enabling the Keswick family to control the group without providing a majority of the capital. This expertise in protecting family owners was shared in 2005 when it took a 20% stake in Rothschild Continuation Holdings, a major merchant bank." (http://en.wikipedia.org/wiki/Jardine_Strategic_Holdings)
Jardine chair Sir Henry Keswick is also listed as a director of Rothschilds Continuation Holdings. Jardines is really a dynasty - I think - in the old-fashioned sense, which I found appealing.
The two biggest parts of Jardine are majority-owned subsidiary Dairy Farm (a massive group of retail operations, ranging from 7-11's to hypermarkets to restaurants to a few IKEA stores and Hong Kong Land (50% owned by Jardine). There's also Mandarin Oriental hotels, among other subsidiaries. If one digs in the reports, Strategic also holds some small investments in other companies, such as Tata Power (to use an example from last I looked, things may have changed.) Jardine Pacific is another interesting part, containing all non-listed businesses, such as various operations at Hong Kong airport.
Additionally, the whole thing rests on whether one believes in the continued rise of Asia over the next decade or two (and as I've said, I believe that, although I do believe there will be problems along the way.) If not, then something like Jardine would be of no interest.
Again, this is a stock, so it is certainly a risk and one *MUST DO THEIR OWN RESEARCH*. I wanted to own an EM stock or two for the long-term (5-10 years+) and Jardine was the most appealing that I found.
In terms of Asian-centric funds that would be comfortable holdings for the long-term, the search - I think - starts and ends w/Matthews Asian Growth/Income (MACSX) and Matthews Asia Dividend (MAPIX.) I'd recommend the great majority of people - especially more conservative investors or those nearing retirement - interested in EM stick with funds instead of specific stocks, and particularly the Matthews funds listed above.
The Pimco EM Multi-Asset fund has not released holdings yet, but my guess is that it looks like an EM-focused version of fund-of-funds (and some other stuff) Pimco Global Multi-Asset.