Greetings, Dian. I want to ask, how large is a "large" inheritance? Anyhow:
1. Yes, pay off debt.
2. PRESERVATION of capital must be a chief concern.
-That means: lots of safe bonds or bond funds with regular dividends AND
-investing is SOME equities to attempt to keep up with inflation.
If you are well-enough-off, look into muni bonds, which would be tax free for you. If not so well-heeled, the no-tax feature will serve little purpose.
3. Decide how much you don't want to touch, in order to leave it for the generation behind you. Segregate that in an IRA, Roth or Trad. (I don't know the fine points well enough to recommend one type of IRA over the other, given your particular situation.)
Samples, to start the decision process:
BONDS: DODIX, MWTRX, maybe a bit of high yield, MWHYX. And a bit of EM debt: PREMX, MAINX.
Equity funds: MAPIX and/or MACSX. MAPOX (balanced fund with both stocks and bonds.) PRSVX, BERIX (the latter is also balanced.)
BREAK A LEG!

I also do a Yahoo portfolio as you have done. In it I have about a dozen ETFs that I use as tracking indicators for my open end funds. Like you, I have made some buy or sell decisions for that day based on the tracking indicator ETFs .
I also have a Yahoo portfolio with the top 10 holdings for each fund so that I can quickly switch to those and see how they are doing as well.
These two methods help me have a good sense of what the NAV is likely to settle at or around that day.
With a fund like PETDX that tracks an index my caution is to be sure that you are comparing apples to apples by choosing an ETF that tracks the same index. In PETDX's case it is the Dow Jones U.S. Select REIT Index (index ticker: DWRTFT). So I also use the DWRTFT ticker as a tracker. In REITS that's important because there is a world of difference between an index like the Dow Jones U.S. Select REIT Index which is comprised
of companies whose charters are the equity ownership and operation of commercial real estate and an index like the FTSE NAREIT All Mortgage Capped Index which could be tracked by the iShares ETF REM.
So, from this I hypothesize that PETDX's interests are (but held as derivates) seen in the DWRTFT's top 10 stocks:
Simon Ppty Group Inc New 11.71%
Public Storage 5.16%
Hcp Inc 4.87%
Ventas Inc 4.67%
Equity Residential 4.61%
Boston Properties Inc 4.19%
Prologis Inc 3.89%
Vornado Rlty Tr 3.75%
Avalonbay Cmntys Inc 3.38%
Health Care Reit Inc 3.25%
REM's holdings are quite different since its index follows the mortgage REITS:
ANNALY CAPITAL MANAGEMENT IN 20.62%
AMERICAN CAPITAL AGENCY CORP 18.53%
TWO HARBORS INVESTMENT CORP 5.56%
CYS INVESTMENTS INC 4.89%
STARWOOD PROPERTY TRUST INC 4.57%
INVESCO MORTGAGE CAPITAL 4.49%
MFA FINANCIAL INC 4.23%
HATTERAS FINANCIAL CORP 4.07%
CHIMERA INVESTMENT CORP 3.98%
ARMOUR RESIDENTIAL REIT INC 3.78%

Shareholder since April Fools 2011. This is getting too good to be true.
Hot hands have been known and shown to grow cold, a Heebner or
Bill Miller for example. Reversion to mean from a long run at the top
requires a similar run at the bottom. More has been lost chasing yield
than probably any and all frauds and scams combined, Madoff for example
or the entire highly rated toxic credit debacle. When LTCM enjoyed a stellar
performance besides attracting assets they attracted attention. Others wished
to know how they were vacuuming up nickels from around the world, what instruments
in which markets employing what strategies then reverse engineering them, crowding
out the profit opportunities.
~~~~~~~~~~
NEW YORK, July 27 (IFR) - The ongoing hunt for yield in a low-rate environment has renewed investor interest in battered non-agency residential mortgage-backed securities (RMBS), with secondary-trading volumes more than doubling in recent weeks.
The distressed bonds have rallied this entire year, but recent suggestions that the US housing market might have reached a bottom sent real money accounts, such as pension funds and insurance companies, into the sector, analysts said, while fast money, or hedge fund accounts, joined in as soon as they saw the positive movements in price.
The distressed bonds have rallied this entire year, but recent suggestions that the US housing market might have reached a bottom sent real money accounts, such as pension funds and insurance companies, into the sector, analysts said, while fast money, or hedge fund accounts, joined in as soon as they saw the positive movements in price.
"There's a lot of action and activity that I'm seeing this week," said a hedge fund money manager on Friday. "I've been in this business over 20 years, so I've seen a lot of trading, but I haven't seen non-agency RMBS trade this well in a long time. This will be a long-term phenomenon."
CHASING YIELD
The bonds offered double-digit yields earlier in the year, but now offer approximately 5% to 9%.
Still, in such a low interest rate environment, such returns are attractive.
"More and more new investors are coming into the market who are now okay with the risks involved to achieve a 5% or 6% yield," said John Sim, the head of MBS research at JP Morgan.
"There's a new batch of investors that are coming in at a new yield target. And on the fast money side, hedge funds sense the price momentum, and figure they will take their price gains now. Many have started selling."
Price returns in weaker-credit RMBS such as subprime are up 15-20% on the year, Sim said.
http://www.reuters.com/article/2012/07/27/markets-credit-idUSL2E8IR9BA20120727
On such fund is Doubleline Total Return Bond (DBLTX). It is one of the best-performing bond funds and one of the fastest growing, according to a recent Wall Street Journal article. Manager Jeff Gundlach is among the foremost fixed-income practitioners. At his prior employer, TCW Group, he also had a stellar record. His success comes from a unique strategy: His savvy purchases of non-agency RMBS, which tend to be more risky than most, are blended with risk-free assets, U.S. government securities. As economic conditions change, he adjusts this mixture between the two classes.
http://news.morningstar.com/articles/perspectives/144355/buying-mortgage-bonds.aspx?CustId=&CLogin=&CType=&CName=&_LPAGE=/FORBIDDEN/CONTENTARCHIVED.HTML&_BPA=N
Long-Term Capital Management, the hedge fund founded by John Meriwether in 1994, used computers to detect very small and fleeting differentials in securities prices to make huge profits in global bond and derivatives markets in the late ’90s. Their profits were fleeting, too, though. Their computer trading algorithms were soon imitated by others, which required LTCM to seek out new methodologies and markets. Soon, such risk taking led to the fund’s downfall. In 1998, the New York Federal Reserve had to orchestrate a bailout.
http://www.bloomberg.com/news/2012-08-08/history-of-algorithmic-trading-shows-promise-and-perils.html
Continuing to hold rnsix, 20% of assets, but I don't expect the outsized contribution of outsized gains from the
run in the private label residential mortgage sector to be repeated.

Reply to @CathyG: Fidelity does not charge a fee for reinvestjng dividends. But there are always but's. First, I believe the default option is for the dividend to be deposited into your cash account (each brokerage account has an associated cash position). While looking at your account press on the 'Select Action' link and slide down to choose 'Update Accounts'. When that page opens select 'Dividends and capital gains.' A page will open with a table allowing you to choose how to handle these deposits for each security that you own that allows reinvestment in more shares. Press the appropriate button to make changes. Be aware that certain equities like a preferred stock don't allow reinvestment so you won't see choices/options for those.
Second, when reinvesting you dividends in additional shares you don't necessarily get the ex-dividend price. For example, if you own a $2 stock and they pay a $1 dividend you may not be buying more shares at a $1. Also, not all equities technically allow reinvestment of dividends in more shares. What Fidelity does is collect (buy) enough shares ahead of the ex-dividend date to parcel out to those shareholders who want additional shares. Whatever those shares cost will be your reinvestment price which may be higher or lower than you expect. Other equities such as certain MLP's and CEF's provide a discount to current shareholders when dividend proceeds are reinvested in additional shares. Bottom line it's like opening up a box of chocolates - you never know what you're going to get ahead of time down to the last $0.001 penny.

I am new to the site, but am a long time (+30 years) mutual fund and stock investor (in the last 10 years). I'm 59 and retired last December. My wife is also retired.
I have been invested in PETDX for nearly three years now. It represents about 5% of my total portfolio and helps fills my REIT slot in my asset allocation strategy along with the stocks RSO and NCT. It exposes me to the Dow Jones U.S. Select Real Estate Investment Trust (REIT) Total Return Index which it tracks. I use RWR are a daily tracking ETF for how PETDX is going to do and it mirrors pretty well. I can also check RWR's holdings easily to see how the individual REIT stocks are doing.
I understand PETDX as much as one can without being in the offices with management day to day, in that I grasp the tools they are using and how the fund works. I answer a ton of questions about it on other investment sites because most people simply look at the top 10 holdings and think it's a bond fund.
Others have explained it well. I would add a couple of things that I don't think have been mentioned about PETDX although I may have missed them in my reading here.
First, sometimes there is concern expressed that the large dividend payouts erode the NAV. I am a strong advocate for giving great weight to total return. PETDX doesn't pay a distribution based on ROC, but an earned dividend and an end of the year capital appreciation and end of the year supplemental dividend when appropriate. That high dividend payout does have some tax consequences which is why I keep my PETDX in IRA and Roth accounts. But I don't worry about NAV erosion. If it was paying ROC, I would be concerned. In my view PETDX simply gives me its earnings.
At the same time dividends are not consistent. So retirees or others who are looking for predictable income might be disappointed. In 2008 and 2009 and most of 2010 it didn't pay a dividend as the NAV fell. But in the past three years I've seen my initial investment more than triple.
I view PETDX as an excellent vehicle for me to be able to "own" the Dow Jones U.S. Select Real Estate Investment Trust (REIT) Total Return Index with higher risk and the opportunity for higher reward (and higher loss).

Hi bee,
You have come up with some good mechanisms that seem to provide you with meaningful information as an aid to reconfigure your portfolio and reposition it from time to time. I think this is important as an investor develops skill.
I have shared over time a few mechanisms that I use myself. Interstingly, my systems, were showing utilities were overbought and materials, energy and commodities were oversold a month or so ago. And, sure enough about a month later utilities are retreating and the others I just mentioned have had some nice upward gains.
For the past running thirty days, utilities are up about 2.0%, materials are up about 3.3%, energy is up about 9.4% and diversified commodities are up about 7.4%. So, it has been beneficial from me, thus far, to have reduced my allocation to utilities and raise them to these other sectors.
I feel investors that are willing to devote a little time and develope some mechanisms that are capable of providing beneficial information that they can govern off of could improve the performance of their portfolio simply by moving around about 10% to 20% of the assets within their portfolio. I call these flux assets that I move around, ballast. I try to keep this ballast in the faster market currents wheather it be cash, fixed income, equities and or other type of assets such as commodities ... or a combination of them.
I have linked one of the sites below that I have often used in the past to provided me with information to help me position this ballast within my portfolio. Now, I still reference Ron Rowland's Leadership strategy site; but, I am now using my own systems more and more as I gain confidence in them.
For those interested here is the link to his site.
http://investwithanedge.com/leadership-strategy
Thanks bee for stopping by and making a comment on my post. It is indeed appreciated. I wish you the very best with your own investing endeavors ... and, thanks again for sharing your mechanisms. Perhaps, some will find favor in them.
Best regards,
Skeeter

Reply to @MaxBialystock: "Mostly, conversations about the economy and money in general are deliberately kept apart from ethical considerations."
Far, far, far to many cases of oil+water don't mix. (see Bain Capital)

Reply to @msf: some of these are traded at unsustainable preimums; at least one going through the rights offering; several return capital to shareholders thus losing over 70% of their NAV during recent years to support the unreasonable distribution yields. I suggest to anyone interested in closed end funds, to move slowly and get educated before any significant investment. for full disclosure, i've been investing into cef's since 2008, moving very slowly and making a mistake or two, but generally successfully. i think it is a very rewarding market due to limited liquidity and various discount opportuities -- but requires much attention and discipline.

Reply to @MaxBialystock:
Why the switch to quarterly distributions, and why have they shrunk?
To take the second question first: the transition to quarterly distributions was this year, and the capital gains are still distributed only annually. So there haven't yet been any capital gains distributions made since the transition to compare with prior distributions. The size of the income distributions seems in line with the older ones (which were just annual), i.e. 16c for half a year, vs. 0-30c per year in the previous three years.
As to the first question, aye, there's the rub. This is a completely different fund than it was last year. Last year (through Sept. 30th), it was Dynamic Infrastructure Fund. You will notice no Canada in its name, and in fact its March 31, 2011 Semiannual statement shows only 25.3% investment in Canada (that's less than it had invested in the US). And despite the fund's fact sheet saying that it was formerly benchmarked against the S&P/TSX Global Infrastructure Index (implying some connection with Canada), the benchmark index has no TSX in it, and the prospectus compared its performance to "Standard and Poor's Global Infrastructure Index" (no TSX).
The fund was changed to an equity income fund, thus the change to quarterly distributions. Why the fund made the change? Who the heck knows? Here's everything the fund wrote about the reasons to the shareholder in the proxy statement

The Dynamic Infrastructure Fund (the "Fund") currently concentrates, that is it invests more than 25% of its assets, in the infrastructure and infrastructure-related industries. The fund wishes to no longer concentrate its investments in this manner. ...
Currently, the Fund invests, under normal market conditions, at least 80% of its assets in infrastructure and infrastructure-related industries. If the proposal is approved by the shareholders, the Fund will not concentrate its investments in any one industry. However, the Fund will focus on Canadian equity securities in the energy, real-estate, and infrastructure sectors. ...
The ... Board of Trustees ... recommend that you vote in favor of the proposal. The reasons for their recommendation are discussed in more detail in the enclosed Proxy Statement under "Board Approval and Recommendation." ...
BOARD APPROVAL AND RECOMMENDATION OF THE PROPOSAL
The changes to the Fund's name, investment objective and investment strategy described in this Proxy Statement, including [the various terms] were approved by the Board of Trustees ... on July 21, 2011. In reaching their decision to change the Fund's fundamental investment limitation on industry concentration, the Trustees reviewed information about the change and its expected impact on the Fund. The Trustees considered, among other things, whether the change would be in the best interests of the Fund and its shareholders.
Based on the foregoing, the Board of Trustees recommends that Fund shareholders vote FOR approval of the proposed change to the Fund's fundamental investment limitation on industry concentration as set forth in the Proposal above.

Emphasis in original. So why did the fund change completely? Because, for some unstated reason, it was in the "best interests of the shareholders."
I would take a much closer look at what's going on here - what the fund held, what it holds, how meaningful any figures are, and the transparency of the management before jumping in to this.
As to the fund's classification - there's a basic problem classifying single country funds when there are only a couple of funds that focus on that single country. Not a specific M* problem. But since this fund was a global/international fund for most of its existence (until under a year ago), the classification would appear to be correct in any case.

This all-cap fund focuses on Canadian businesses. Excellent performance since inception in 2009 with low volatility, high alpha, and high Sharpe. Portfolio focus is real estate and energy. OK expense ratio after waivers through early 2013. A no load, no fee offering at Schwab. The portfolio managers are Oscar Belaiche and Jason Gibbs. Mr. Belaiche is senior member, and he has been with the Fund's subadvisor, GCIC US Ltd., since inception. GCIC is a subsidiary of DundeeWealth Inc., specifically for its Dynamic Funds line-up. DundeeWealth is owned by The Bank of Nova Scotia.

Here is link to Fund's website:

Performance Summary (from Morningstar): DWGIX has outperformed Canadian S&P and Foreign Large Blend indices, with a 19% annualized return, and it has done so with a smooth ride. It is up 8.4% YTD.

Sector Weightings (from Morningstar):

Top Holdings (from Fund fact sheet):

Investment Strategy (from Fund prospectus): The Fund invests, under normal market conditions, at least 80% of its assets in the equity securities of companies located in Canada. The Fund invests primarily in dividend or distribution paying Canadian equity securities and real estate investment trusts (“REITs”), as well as in other types of Canadian equity securities, including limited partnerships. In addition to its Canadian equity investments, the Fund may also invest in other foreign and U.S. companies of any size, including small and mid capitalization companies, as well as in U.S. While the Fund will not concentrate its investments in any one industry, the Fund will focus on equity securities in the energy, real estate and infrastructure sectors.
The Fund evaluates an equity security’s potential for capital appreciation, employing a Quality at a Reasonable Price (QUARPTM) philosophy and uses strict fundamental analysis and due diligence measures to assess potential investments. In conducting fundamental analysis of companies that are being considered for purchase in the Fund, the management team evaluates the financial condition and management of a company, its industry and the overall economy. The team may 1) analyze financial data and other information sources, 2) assess the quality of management, and 3) conduct company interviews, where possible.
The Fund invests in businesses with sustainable cash flow distributions, dominant positions in their respective industry sector, and management that holds a significant equity stake.
Bottom-line: DWGIX currently enjoys a 5-Star Rating at Morningstar. The Fund's size is small compared to most other DundeeWealth Dynamic Funds offerings with only $4.2M in assets. Suspect it will not stay small for long, as it is hard not to be attracted to this fund.

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 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..... A recent post noted that while another's portfolio was tilted towards growth; our portfolio was inclined towards income. Our house views whatever investment sectors lead to growth of one's portfolio during any period, is growth; regardless of what investment vehicles drive the journey. The answer is no; our house is not invested for income; although the bond portfolio would suggest such actions. Whilst I was in 7th grade (same time the pencil was invented) my chosen science project was farm crop rotation and the resulting benefits. Five sheets of paper represented a 5 year period of crop rotation, with color schemes indicating which crop type was in which location for each year. Michigan's soils and climate allow for many of the staple grain crops to be rotated: corn, spring/winter wheat, soybeans, barley, etc. Many other crops are also planted, and within the staple group there are still more varieties. Aside from these crops are the numerous speciality crops of vegetables, fruit crops and sugar beets. The crop combinations reminds me of one's choices today for investment vehicles. A recent answer from a friend indicated he was invested in several bond and equity index funds via his adviser. I asked, "What type/style are these index funds?" He didn't know the answer, but thought it was a good question to ask, with an explanation. We related the question with a similar answer of; one owns a car or a truck. But, what type of car or truck? Is your car a Camaro ZL-1 or a Fiat 500? Not unlike a crop farmer, we investment farmers seek one thing, too; and that is growth from whatever style of investment suits our tolerance for risk vs the reward. Crop farmers and we face similar uncertainties. Farmers dealing with unknown forward weather conditions, and we deal with unknown forward monetary situations. We do have one large advantage over crop farmers. They are placed into the buy (plant) and hold (hopefully harvest a growth) of the crop; while we may plant our monies when and where we choose; as well as harvest a profit as dictated. So, the next time someone thinks you are an income investor based upon your holdings, you may note to them that you are indeed a growth investor; regardless of the investment crop types you have planted. We're all really growth investors, eh? Always attempt to be prepared to rotate those crops for your risk/reward farm!
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 - 2.3% through + .9%, avg. = - .02% YTD = +10.5%
--- Int'l equity - .9% through + 2%, avg. = + .96% YTD = +7.3%
--- U.S. eq. sectors - .1% through + 2.3%, avg. = - .04% YTD = +9.7%
--- U.S./Int'l bonds - .9% through + .4%, avg. = +.08% YTD = + 3.2%
--- HY bonds + .2% through + 1.5%, avg. = + .73% YTD = + 8.7%
An Overview, M* 1 Week through 5 Year, Multiple Indexes
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:
NONE
Portfolio Thoughts:
Our holdings had a + .57 % move this past week. Sidenote: The average return of 200 combined Fidelity retail funds across all sectors (week avg = + .26%, YTD + 8.48%). The equity markets still appear a bit on edge; so our portfolio will stay in place for now. NOT SURE why the European markets popped so much on Friday. Perhaps there is some good inside private info finding its home. Our portfolio obtained much of its return this week, from the high yield and emerging markets bond areas. There were a number of large swing days for pricing in some bond sectors; further indicating the head scratching between the equity and bond kids. Two year Spanish bond yields moved down quite a bit, which indicates to this house that the "powers" may be attempting to stabilize this short term borrowing area and hope things settle down enough to buy time for the 10 year Spanish bond which keeps bumping around 7%. A country today can not afford to operate with a 7% yield on a 10 year bond. I 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, TIP, 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.
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 .... + .33% week, YTD = + 7.89%
PRPFX .... + .02% week, YTD = + 2.71%
SIRRX ..... + .17 % week, YTD = + 4.67%
TRRFX .... + .42% week, YTD = + 7.16%
VTENX ... + .29% week, YTD = + 6.64%
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 16% 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.

In several previous post I refernced capital formation was seeming hard to come by. I have linked below a chart I recently came across on the Crossing Wall Street site that shows that the S&P 500 Index over the past twelve years has only a 1.6% annualized return with dividends reinvested. Seems CDs, a no risk investment, would have been a better option.
In addition, if one were to consider inflation at 2% per annum, then the index becomes a net loser to inflation.
No wonder, money seems to be leaving the market. You just can not park it there ... forget about it ... and, come back another day. Seems some sort of investment strategy that centers around an entry and exit point(s) would have made a net loser a net winner. Perhaps there is something to exiting when the price line moves below the 200 MAD line and then returning when the price line moves above the 200 MAD line. Something to think on.
http://www.crossingwallstreet.com/archives/2012/08/sp-500-total-return-index-6.html
Good Investing,
Skeeter

Reply to @catch22:
Hi Catch,
Thanks for your thoughtful contribution.
Your recall that David Swensen is a reluctant trader and typically recommends very rare portfolio rebalancing is spot on-target. In another lecture at Yale, Swensen advised a Robert Shiller student class that assessing a mutual fund manager based on a single quarterly performance record was “ludicrous”. I specifically put ludicrous in quotation marks because that was his exact word choice and it impressed me.
Swensen often impresses me; that is probably why he is one of my investment heroes. Relative to other portfolio managers, he trades rather infrequently, and when he does adjust his holdings, it is done incrementally. That’s a nice fit with my portfolio management philosophy.
I suppose that is one of the reasons why I like Swensen; we share some common operational rules. The behavioral wizards observe that we all exhibit a confirmation bias; although I attempt to battle that disability, I too am guilty of falling into that Siren’s song trap.
But I also respect Swensen’s frankness and honesty. When he initially attempted to write an investment book for individuals, he recognized that private investors do not have the resources to duplicate his institutional strategy because of time horizon, goal, and research constraint disparities. He completely rewired his “Unconventional Success” book accordingly. In that book, Swensen essentially endorsed a Lazy-man portfolio, rather passive Index approach for private investors. That recommendation dramatically departs from his institutional asset allocation which is dominated by alternate (hedge funds, timber, venture capital) investment categories.
While preparing my reply to you, my thoughts shifted to a one-on-one meeting I held with a financial advisor a decade or so ago. She offered two distinct selling points to justify her extra 0.50 % fee above other management costs. She had assembled a list of superior portfolio managers who would specifically be selected for separate parts of my portfolio. She would review them on a monthly basis and replace poor performers if they failed to satisfy benchmarks either in a single or in two consecutive quarters. Swensen would not be comfortable with that hurdle.
She and her partner, an economist with impressive academic credentials, would assess the overarching economic environment monthly, and would make adjustments that would reflect that review on a semi-annual basis. Economists are notoriously poor trend forecasters. They tend to be overly linear and do not include enough feedback loops in their analyses.
I did not buy into their program. Their decision time scale was wrong for me; it likely would have been wrong for Swensen too.
As the California professors said in their landmark research paper “Frequent Trading is Hazardous to Your Wealth”.
Best Wishes.

Dear Skeeter: I own several stocks mentioned in the article for both capital appreciation and income from there dividends.
Regards,
Ted

The article linked below is by Seeking Alpha. It convers why income investors should be seeking out and buying good dividend paying stocks over lower yielding treasuries. I know most of the stocks and stock mutual funds that I have have owned provided me with good capital appreciation which can be harvested. With this, one captures both the dividends and capital apprecation as income, currently at favorable tax rates. If valuations should decline from a market decline I have found the dividends somewhat soften the downward movement as the good dividend payers seem to fall less than the market as a whole.
I hope you enjoy and find value in the read.
http://seekingalpha.com/article/764121-income-investors-should-still-be-buying-equities?source=feed
Good Investing,
Skeeter

Hi bee, happy monday
I still kept the same individual muni portfolio, no changes. I think the biggest concerns are raising capital gains taxations next year. I suspect interest rate won't be raised until 2014 or 2015, which is a nice environment for Munis/bonds. Otherwise if you put $$ in munis better returns and CDs, but slightly higher risks; you have to choose your own best ones. For instance I've bought SJ arpt muni bond [cusip 798136TS6] few weeks back, ratings AA and yielding ~ in the 5.5%s tax free, can't really get a better deal out there. The problem is I don't know if I will live until 2031 when the bond mature
I think you may need a mixture of muni etfs/bond funds + some individual bonds in your portfolio because you cannot control what the managers do w/ the ETF/funds+ NAV; you don't really care what the market does w/ individual bond [just hold it until it mature and let's not hope it won't bankrupt till then].

Thanks John,
I get my exposure to Munis at USAA with USTEX and USBLX in my taxable accounts. The first, USTEX, holds strictly Long Term munis and its NAV is at a 52 week high. The second, USBLX, provides a monthly tax exempt distributions but also holds 30-40% growth stocks (mostly LC) for long term capital appreciation. I like both in my taxable account.
The comment section of your linked article offered this screener for those interested in CEF:
http://www.cefconnect.com/Screener/FundScreener.aspx
Also mentioned in the comment section is the fact that proposed tax changes maybe one reason that there is still a net increase into munis.
Raising Interest rates and bankruptcy are two dynamics to monitor in this investment space.
Would love to hear from others who utilize munis

Hello Heatbob and others,
I had lightened up on commodities, energy and materials awhile back and went heavy into utilities (16%). I recently cut utilities in half and I am now increasing my allocation to commodities, energy and the materials sectors.
If one were to check the broad sectors of the S&P 500 Index for the past 52 weeks the two most underperforming sectors are materials and energy. I have linked below a sector tracking chart for your easy reference. Select the time period you wish to view and watch how the sectors move around as a diferent time period is selected. I figure, a sector that has trailed the others for 52 weeks, from my thoughts, most likely has been oversold and now offers good value.
http://www.sectorspdr.com/sectortracker/
Anyway, that is how I am playing it.
Have a good day ... and, "Good Invesitng."
Skeeter
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An update July 28, 2012
I thought I'd give an update on my recent redution to utilities, from 16% down to 8%, and with this I have, within the past three weeks or so, begun to increase my holdings in the energy, materials and commodities sectors. As of the July 27th market close, for the past 30 days utilities are up 3.5%, while the S&P GSCI is up 11.2%, my energy move is up 10.1% and my materials move is up 2.7%. So, as one can see based upon review of the gains overall this has been a positive move and the only one I have trailing so far is the materials move and it is trailing utilities by less than one percent. Within the portfolio I have not yet fully position all of the money yet as I am averaging in. My plan is to increase each area by about 2% and that would take enegy from the 10% range to 12% range, materials form from the 5% range to 7% range, and diversified commodities from the 3% range to 5% range ... and, with the other two percent left over ... cash to my pocket with some of it to pay taxes on the gains I have harvested.
In short words, I sold off some of my utilities that I felt had become expensive to purchase and were now overbought; and, with the sale proceeds I have begun to purchase assets that I feel have been oversold by investors and now would offer me a better opportunity for gain(s) going forward. When I loaded up on utilities I felt they had been oversold ... and, while I held them I collected good dividends as I waited for their appreciation in value. Same here with this recent move ... I'll collect a good income stream while I await appreciation.
My late father taught me through simple childhood lessons to position some of your invested assets to allow for market movement. And, most of all, be willing to take advantage of fear as it will not last forever. Buy when the markets have been oversold and be willing to sell some off when the market has become overbought. Utilities were oversold when I bought them and now from my thoughts they have become overbought ... So, I sold some of them off. Still, I am 5% overweight utilities (8%) as compared to the S&P 500 Index weighting (3%) ... and, within the Defensive Area I am also plus five percent over the Index. In addition, I am underweight the Sensitive Area with the exception being in communciation services where I am carrying a double weight; and, I am overweight the Cyclical Area through overweights in real estate and materials sectors.
Have a good weekend ... and, I wish all "Good Investing."
Skeeter

Reply to @hank: Absolutely, and I think stuff like this is also going to be an increasing issue.
http://www.zerohedge.com/news/why-corporate-balance-sheets-just-dont-matter-new-zirp-normal
"By now everyone knows that Chesapeake is a slow motion trainwreck: whether it is internal management issues, which eventually will culminate with the long overdue termination of the company's head (something the company had much control over and could avoid, but didn't, and should result in the sacking of the entire board for gross negligence), or plunging gas prices (something it had far less control over, but could have hedged properly, yet didn't), what is absolutely certain is that the firm's cash flow just isn't what it used to be. In fact, according to some, it is quite, quite negative. ***What, however, people do not know is that under ZIRP, when every basis point of debt return over 0% is praised, and an epic scramble ensues among hedge for any yielding paper no matter how worthless, the balance sheets of companies just do not matter.*** In other words, for companies that have massive leverage, high interest rates, negative cash flow, which all were corporate death knells as recently as 2008, the capitalization structure is completely irrelevant. We said this a month ago when we cautioned, precisely about Chesapeake, that "to all those scrambling to short the company: beware. CHK has a history of being able to fund itself with HY bonds and other unsecured debt come hell or high water. If and when the stock tanks, the short interest will surge on expectations of a funding shortfall. Alas, courtesy of the Fed's malevolent capital misallocation enabling, we are more than confident that the firm will be able to issue as much HY debt (unsustainably at 10%+, but that is irrelevant for the short-term) as it needs, crushing all short theses. What this means, simply, is that anyone who believes traditional fundamental analysis will and should work in the CHK case is likely to get burned." Sure enough, we were again proven right: Chesapeake just announced, following today's epic drubbing, that it is refinancing its secured debt facility (with its numerous restrictive covenants) with $3 billion in brand new Libor+7.00% unsecured paper (courtesy of Goldman and Jefferies). In doing so, CHK just got at least a one year reprieve."

Good article about investors jumping into hot funds late and than selling after a bad year & missing out on reported gains. My experiences would verify that - but rare as mostly prefer to grind-it-out with funds held 10 - 15 years. On the flip-side, some successful "momentum" investors make a mint jumping on funds & trends early than bailing before the inevitable fall. Nice if you have the skills and stomach. Would appear from article this number is small. Might, however, make the case for "fund-of-funds" or allocation types - less likely to give a bone-jarring ride in either direction.