Yikes! All prior stock investing was in tax deferred accounts, so never worried about this cost basis stuff. Thats now changed with direct non-sheltered monthly investments into EXTAX at Manning and Napier with dividends and cap gains reinvested. Plan to leave account there. Will be my only account with them. No transfers, etc. Just new money going in.
To keep things simple will let it build to a certain level over 2-3 years and than stop making new investments. At a later date would begin to sell as money needed in retirement. Reinvest option could probably be dropped then for added simplicity.
QUESTION 1 Does this buy first/sell later plan simplify taxes any, or am I still looking at alota trouble down the road?
QUESTION 2 Regarding MSFs last post (directly above): Once you make an initial withdrawal, is the "average cost basis" of the remaining shares re-calculated for just what those remaining shares cost, or does the cost of shares you have already sold remain part of that average cost? Thanks

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, with a posting of our portfolio and returns.
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 fund. Gains or losses are computed from actual account values.
While looking around.....Well, we all know about the Bulls & the Bears. What about the Crabs and Pickles? The Crabs, being as in; the Hermit Crab. One may envision the Hermit crab doing its daily business at its beach side home; going "sideways" in its protective shell. Perhaps the broad markets going forward for awhile, eh? What about the "pickle"? That would be the various political and political related machines feasting at various tables of power and influence in the old D.C. town. The pickle being debt ceilings and budget cuts. OMG in the biggest way....as how could many consider spending less money OR forbid reducing hiring at many federal levels. Take about a big bummer/bad trip day/week/year. GEEZ, if this and related spending goes away; WHO or WHAT is gonna support the economy? Me thinks this would be Pimco's "new normal" in full tilt mode. Well, I sure don't have the answers, but the questions like you; and attempting to position portfolio holdings to move along with the bump and grind of the broad markets. One big pickle of a problem(s), in a multi-faceted situation.
Hey, this is it for today. Still recovering from a wonderful and long journey to and through the maze of sights and sounds at the annual, local 4 day hometown days/carnival. Lots of fun and a great unwind. The life juices were almost gone for awhile, as Mr. Weather gave us 88 degrees and high humidity; and I gave myself one too many "elephant ears". The recovery rate is much slower than when I was 15 years old....:):):)
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 THIS PAST WEEK:
NONE
BUYs THIS PAST WEEK:
NONE
Portfolio Thoughts:
Our holdings had a +.05% move this past week. A few months ago a poster noted that the old Funds Boat portfolio was not in line with market conditions. The poster was asked to please express what the market condition was, at the time. There was no reply. This house will never presume such a mix as we have is of value to anyone else; except for the ability to view and do you own head scratching and continued learning. I would wish for 12 other portfolios to be posted at least once a month to aid with our learning; but at the least you, the reader, are able to monitor a real portfolio as it wanders its way through the currents.
Obviously, the high yield/income, as well as equity funds had a face slap last week. We'll stay our course for now; but watching in a most serious manner. A side note should indicate that the old M* machine places our true HY/HI income bond holdings at about 43% of our total bond mix; so that you may have a more clear indication of the bond mix versus the percentages of fund name holdings below.
SO, the old Funds Boat being a pontoon type is big enough for an enclosed shelter on the main deck, is still able to travel in only 18" of water, is stable by virtue of its length and wide stance on two, large pontoons traveling upon the Great Lakes of investments. Hopefully, this type of investment craft will continue to serve us well as we wander the investment ports looking for the best temporary ports of call; as few of the ports could ever be considered permanent, including the large percentage of cash we are holding.
And yes, we are satisfied with our risk adjusted returns YTD. If the portfolio can pull a +10 to12% for the year; you will not hear any whining from this house.
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.
Good investment fortune to all in the coming months.
How our boat's cargo is doing:
Week: = +.05%
YTD = +4.86%
And the cargo is:
CASH = 15%
Mixed bond funds = 78.4%
Equity funds = 6.6%
-Investment grade bond funds 12.2%
-Diversified bond funds 18.5%
-HY/HI bond funds 28.8%
-Total bond funds 14.6%
-Foreign EM/debt bond funds 4.3%
-U.S./Int'l equity/speciality funds 6.6%
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
DGCIX Delaware Corp. Bd
FBNDX Fid Invest Grade
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
---Equity-Domestic/Foreign
CAMAX Cambiar Aggressive Value
FDVLX Fidelity Value
FSLVX Fidelity Lg. Cap Value
FLPSX Fidelity Low Price Stock

i reinvest in tax deferred and roth, and usually do not reinvest in taxable for above-mentioned simplicity of tax basis calculation. however, there are always exceptions. there is an aggressive frontier market fund that i reinvest - i let it grow organically without committing any more capital as it is very volatile, there are muni funds, and there is STD - Banco Santander, which has the benefit of a scrip dividend that is often taxed favorably.

I sold out of FAIRX, half about a month ago the remainder last week. Pay the capitol gains and move on. My remaining large caps are YACKX and EXHAX. I'm kind of neutral on Manning and Napier and am looking for another large cap to replace FAIRX.

Hi Equalizer,
Thank you for researching the calculation of correlation coefficients. I do it the old fashion way with a lot of error prone data entries and application of a statistical computer code.
If reliable, the Low Risk Investments Discovery Tool website that you uncovered will save me and other Forum members a considerable amount of time.
To verify the reliability of the Low Risk calculations, I compared computed results from three other websites for several mutual funds. The three alternate websites were Morningstar, WSJ/Lipper, and Yahoo Financial (powered by Morningstar so not an independent source). Here are some findings.
The standard deviation (volatility measure) values correlate tightly.
When adjusted for the number of data points used in the analyses, the correlation coefficients seem reliable compared to my earlier work. Some data set adjustments are needed. I used annual data over a 15-year timeframe; the most common data frequency is monthly data collected over 3 years. The correlation coefficients must be adjusted by the square root of the ratio of data points used in each analysis.
I am puzzled by the discrepancy in reported annual total returns. The Low Risk site consistently reports higher values contrasted to all other sources examined. Why?
Care must be exercised to assure that the annual returns are total in that they include both asset capital appreciation and reinvested dividends. These sites recognize that distinction. Also care must be exercised to distinguish between average annual returns and compound return. These outfits acknowledge that crucial difference.
Of course. in my labor intensive effort, I may have made a data entry error, but the sites are automatic and should be free of that issue.
I do not have a firm answer to the “why” question.
One possible speculation is that the Low Risk site calculates total return by computing additional shares at each distribution release, and then assumes that the final number of shares were active for the entire study period. That’s wrong and will overestimate returns. That’s a guess on my part.
So the correlation coefficients seem reliable for a 3-year period using monthly inputs. The annual return data is highly suspect.
I hope this helps.
Best Wishes,

Thanks to all who commented.
bee: I think I will discuss the portfolio construction in a separate thread. There are some fairly specific personal circumstances that have influenced my decision-making. I am still working on how to talk about the issues in a way useful to other people without disclosing more than I really wish to. Stay tuned.
paule, hank: Your choices sound appropriate for your situations. I appreciate the perspectives.
Maurice, VintageFreak: Thanks for the experience-based comments. I do want to keep things as simple and clear as possible. In years near historical averages for the portfolio, a significant portion of the gains will need to come out as income. In years with outsized gains, it is likely these will be unevenly distributed among the funds and I may not want to "buy high" by reinvesting automatically . Finally, since some of the funds are in fact allocation funds, the managers are already making rebalancing choices -- automatic from my perspective. So enough is happening automatically within the funds already. Making deliberate choices about what to do with those gains would seem to be the right way to go.
gfb

Piggy-backing on this thread to add some fund investment related articles....
Royce Funds - Exploring Global Small-Caps
Indonesia and Malaysia: Uncovering Quality in Southeast Asia
http://www.roycefunds.com/News/global/2011/0523-indonesia-malaysia-uncovering-quality-in-southeast-asia.asp
=====
Dividends Make a A World of Difference in Global Markets
http://www.roycefunds.com/News/Commentary/2011/0515-david-nadel-global-dividends.asp
=====
Global Fund Leaders Rack Up Big Gains
http://www.onwallstreet.com/ows_issues/2011_5/global-fund-leaders-rack-up-big-gains-2672890-1.html?zkPrintable=true
=====
Weird Science - May 2011
Nuveen Tradewinds, David Iben
http://www.nuveen.com/Home/Documents/Default.aspx?fileId=53168
Excerpts:
Investors are feeling confident again. And why not, the Fed has fixed the game for us. And yet, we all intuitively know that using hocus pocus and other weird science to fix the game can't work for an extended period. The Piper will call. For over two years now, these Commentaries have suggested that the government's attempts to: borrow our way out of debt; spend our way to fiscal order; and "print" our way to prosperity; will prove to be a short-term positive for common stocks and commodities, bad for cash, and disastrous for long term bonds. We hereby strongly reiterate our negative view of long term bonds, and believe that it is noteworthy that Warren Buffet and "Bond King" Bill Gross have been publically espousing similar views.
{...}
Is inflation good or bad for stocks? Yes-is our answer. Stocks represent ownership claims on businesses, many of which possess real, tangible wealth. As people continue to lose faith in our eroding, irredeemable, paper currencies they will continue to invest in perceived stores of wealth, including common stocks. There is a reason that Mr. Buffett bought a railroad at a premium valuation to what he might have paid in the past. Lubrizol appears to be even more of a stretch. He is increasingly vocal as to his concerns about cash.
Another wonderful attribute of stocks-many companies offer diversification across countries, currencies and businesses. This benefit cannot be overstated.
{...}
But, to finally get to the point of all of this build up, the public has once again stampeded into the stocks of their favorite companies, without regard to price. We believe that this has created a dangerous "Contemporary Nifty-Fifty."
{...}
With that in mind, Tradewinds continues to hold a portfolio of businesses that tend to meet the needs of the world's growing population, have a competitive advantage over other companies, and are expected to sustainably do so in the future. As always, Tradewinds insists that our stocks trade sufficiently below our estimate of their intrinsic value.
{...}
When discounting future cash flows, the "value" of that cash at the time it is received in the future should be in the forefront of peoples' minds. Fiat currencies and bonds are somebody's liability. Governments' ability to make good on these obligations is imperative. In light of the current, precarious situation of most issuers of paper currency and sovereign bonds, Tradewinds prefers to own good business franchises and tangible wealth.

Please read the prospectus first. The name itself holds little value.
In the past when the yields of typical real estate funds exceed 5%, it is better to be held them in tax-deferred accounts for tax consideration. Today the dividend component of the real state fund's total return has changed. The yield is much lower, say 1.38% such as Fidelity Real Estate Investment fund (FRESX), and most of the gain comes from capital appreciation. Thus I would consider to use it in taxable account.
The other fund that Catch mentioned, Fidelity Real Estate Income fund, FRIFX, has a much large income producing component (bond), and it yield 4.86%. Again for tax consideration, I would use use it only in tax deferred account.

Following with interest as recently started periodic contributions to non-retirement mutual fund account. Opted to reinvest dividends/cap gains for max growth. Assumed custodian would compute a cost basis for tax purposes. Appears correct based on linked article, however, method of computation may not favor all. Was advised by my own custodian, they do the computation provided there have been no changes of ownership/registration or other extenuating circumstances.
Relevant excerpt: "Most reputable mutual fund companies will provide cost basis information for you when you sell your shares -- averaged according to the Single Category Method."
http://www.fool.com/personal-finance/taxes/2005/06/03/tax-rules-for-selling-mutual-funds.aspx

Hi Skipper,
Congratulations on your recent retirement. I’m sure you and your wife will enjoy it for many happy and hopefully prosperous years.
Congratulations also on your current financial status; it seems that you have prepared well for that retirement.
You have already received some excellent suggestions relative to completing your portfolio. In particular I would endorse and encourage the advice to get your wife involved in the understanding and execution of your retirement portfolio. This need not be a time consuming or complex process, especially since it appears that you have already endorsed an investment approach that favors an infrequent trading policy that uses passively managed mutual fund products.
I recommend that you offer your reluctant wife an introductory investment book that might whet her financial appetite. Two candidate books that conceivably could satisfy that mission are Burton Malkiel’s “The Random Walk Guide to Investing” and Daniel Solin’s “The Smartest Investment Book You’ll Ever Read”. Both books are clearly written, provide simple, excellent discussions of the investment process, and are breezy reads. An added benefit, is that each volume is under 200 pages long so they are not intimidating.
You appear to have made your top-tier asset allocation decision with your current equity/bond mix. You have partially implemented that strategy with cost containment Vanguard holdings for one-half of your portfolio. Your choices are excellent.
Given what I perceive as your broad asset allocation policy and your investment philosophy, I too see no need to hire an investment advisor. Any potential value-added must be measured against the sure increase in cost of implementation and recurring cost. History suggests that the incremental cost penalty of such a decision is not likely to be rewarded with any excessive returns. Advisor ability to forecast market movements are just as cloudy as yours. Also, by avoiding an advisor, you will not be exposed or encouraged to increased trading frequency pressures beyond your comfort zone.
How about your baseline total portfolio construction?
If you have no special market insights or strong investment preferences of prejudices, I would suggest that you expand your portfolio positions to more or less capture the global marketplace capital distribution with Index products from Vanguard whenever possible.
I have taken the liberty to deploy your current positions as a firm starting point, and postulated that you wish to retain them. I have augmented that portfolio with additional holdings such that the total adds to 100 %. I assume you have some cash holdings such that you will not be forced to enter the market during any substantial market downturns. The average of these downturns is like two and one-half years.
Here is my proposed portfolio with a few comments that justify each position.
(1) Vanguard Total Stock Mkt (VTSAX) – your core equity position
(2) Vanguard Total Bond Mkt (VBTLX) – your baseline longer duration bond position.
(3) Vanguard Total International Stock Mkt (VGTSX) – your core foreign holdings, mostly in developed economies.
(4) Vanguard Small Cap Value Index (VISVX) – diversification into a class that potentially enhances portfolio returns that reflects the Fama-French small value factor findings.
(5) Vanguard REIT Index (VGSIX) – diversification into commercial property assets.
(6) Vanguard Emerging Markets Index (VEICX) – more foreign exposure into less developed foreign markets.
(7) Vanguard Inflation Protected Securities (VIPSX) – Inflation insurance.
(8) Vanguard GNMA Inv (VFIIX) – diversification into the housing sector.
(9) Vanguard Short Term Investment Grade Corporate Bonds (VFSUX) – Short duration bonds that are relatively insensitive to Interest rate movements that serve to act like a second cash reserve cushion.
I propose a 60/40 equity/fixed income mix, mostly guided by your present asset distribution. I assume you are comfortable with your present positions so I kept the holdings, but I did alter some of the percentages. I attempted to minimize actions on your part, but some trading activity is required.
Here is a provisional asset allocation using 9 mutual fund entities. ETF products are easy substitutes if you prefer.
(1) VTSAX –- 30 %
(2) VBTLX – 20 %
(3) VGTLX – 10 %
(4) VISVX – 10 %
(5) VGSIX – 5 %
(6) VEICX – 5 %
(7) VIPSX – 5 %
(8) VFIIX – 5 %
(9) VFSUX – 10 %
There are a zillion equally attractive alternate portfolios. This portfolio has very low costs. It also offers sufficient diversification such that portfolio volatility is probably one-half that of an all-equity portfolio without significantly sacrificing expected annual returns. This portfolio should deliver fewer negative annual returns than a more aggressive portfolio which should allow you to sleep better at night. Also this type of portfolio demands less monitoring which should permit your family more free time to access attractive retirement options, like extensive world travel
Over the next five to ten years, you should address asset allocation adjustments as your lifestyle, the economy, and investment opportunities evolve. Given the steady eroding impact of time, it is likely that your portfolio will require a more conservative asset allocation. An adjustment to the 50/50 or even the 30/70 equity/fixed income mix might be dictated by conditions.
These adjustments should be made deliberately and incrementally. Do not rush to judgment. In most scenarios there is no need to hurry.
I hope this candidate portfolio helps you and your wife just a little bit.
Best Wishes,
MJG

Thanks, Catch. He's a fee-based planner who charges 1.5 percent of assets under management. His firm is based locally with his name and is affiliated with UBS Financial Services. The account would be a "UBS Strategic Advisor Acccount." A model portfolio he suggests included funds from a variety of families such as Templeton, Lord Abbett, First Trust, Loomis Sayles, Janus, Miller, and he tells me they have access to most mutual funds. He spent a lot of time with me on issues like risk tolerance and investment history, mainly my Vanguard 401K which was mostly equities for many years. Told him my main goal is capital preservation with moderate risk, whatever that means. Also told him I never wanted to go through another 2008 again with 45 percent loss. I could probably tolerate 10-15 percent downturn but not a whole lot more at this stage in my life. Thanks again.

Greg, I have struggled with this problem since I retired. Since I do not need the income or capital gains to live, I decided to continue with reinvesting the capital gains and dividends and let the account grow.
paule

In previous portfolios I have worked on I have mostly been interested in long-term gains in nontaxable accounts. I have focused on total return, reinvested capital gains and dividends, and viewed transaction costs in rebalancing as a short-term tactical issue not worth extensive planning effort.
Currently I am building a taxable portfolio the main purposes of which are capital preservation and generating a modest stream of income. Should I be thinking about the reinvestment options any differently? I have seen both of the following positions advocated:
1) Look only at Total Return. Reinvest capital gains and dividends. Sell assets to generate income as necessary. Periodically buy and sell assets to rebalance.
2) Take all gains and dividends as cash in your sweep account. Take income from sweep account money market account as necessary. Reinvest selectively at scheduled rebalancing time.
With 1), it seems to me you get the maximum proportion of the total return of your investments, but lose something on transaction costs. This choice is also compatible with a loose rebalancing discipline. With 2), you fail to get the benefits to returns of reinvesting, but save money on transaction costs. Choice 2 is compatible with a strict rebalancing schedule (so that you don't let cash build up excessively), or a with a desire to gradually increase the cash stake.
Currently, I am splitting the difference and reinvesting capital gains while taking the dividends as cash. But I have no real rationale for this. It's more like I am using the two choices as "anchors" and making the comfortable choice right in between.
How do you folks handle this rather simple procedural issue?
gfb

I think there are very few alternative funds that have a consistent long-term track record with their strategy (whether it be long/short, whatever, although some specific strategies do have off years.) A lot of market neutral funds have not done well for the last couple years - even the one most highly regarded in the category, the Highbridge Statistical Market Neutral fund.
NARFX was really a fund that a lot of people were excited about. Additionally, NARFX doesn't bill itself as Market Neutral (although it falls into that M* category); it's actually an "absolute return" product: "...intended to provide protection of capital in declining stock and bond markets and to participate in appreciating stock and bond markets."

Also, I'm not sure if this was mentioned recently in this forum about Janus Contrarian fund but here it is.....
Janus Capital Group Inc. (JNS), the Denver money manager struggling with client defections, will absorb the hedge fund founded by Dan Kozlowski as he returns to the company to lead an expansion in alternative investments.
Kozlowski, 39, who left Janus in 2008 to found Plaisance Capital LLC, will continue to run the Chicago-based hedge fund while replacing David Decker as manager of Janus Contrarian Fund (JSVAX), the firm said today in a statement. Decker, 45, is leaving June 30 to start an independent asset-management firm, according to the company.

http://www.sec.gov/Archives/edgar/data/1045487/000104548711000015/jaf0524.htm
As stated in the Supplement dated March 1, 2011 to the Prospectus dated November 1, 2010 for the James Advantage Market Neutral Fund (the “Fund”), the Board of Trustees of the Fund has concluded that it is in the best interests of the Fund and its shareholders that the Fund cease operations. The Board has determined to close the Fund and redeem all outstanding shares on June 28, 2011.
Effective May 24, 2011, the Fund will no longer pursue its stated investment objective. The Fund will begin liquidating its portfolio and will invest in cash equivalents such as money market funds until all shares have been redeemed. Any capital gains will be distributed as soon as practicable to shareholders and reinvested in additional shares, unless you have previously requested payment in cash. Shares of the Fund are otherwise not available for purchase.
After May 24, 2011 and prior to June 28, 2011, you may redeem your shares, including reinvested distributions, in accordance with the “How to Redeem Shares” section in the Prospectus. Unless your investment in the Fund is through a tax-deferred retirement account, any redemption is subject to tax on any taxable gains. Please refer to the “Dividends and Distributions” and “Taxes” sections in the Prospectus for general information. You may wish to consult your tax advisor about your particular situation...

A few notes:
1. You cannot open a foreign market IRA (an account to invest directly in foreign markets), as far as I'm aware. Investing directly in foreign markets (London, etc) has to be within a separate, traditional account. That may not be the case across the board with all services, but that is what I was told. Do you have an account that can invest directly in foreign markets?
2. Many of the alternative funds are not income-heavy and have made little or no distributions. However, this certainly can vary.
3. Many of these funds do not have US "pink sheet" versions and are only available if you invest directly in them on the London Market. A handful have pink sheet versions.
4. If you invest in the pink sheet versions of these funds, the issue is that there is VERY, VERY little volume or interest. The last time that the RIT Capital Partners pink sheet version was traded was 5/5/11. The last time that the Dexion Absolute pink sheet version was traded was ... nearly a year ago. There will often be a large spread between bid/ask, as well. On their home market, many of these trade not only more heavily, but daily. Your broker may charge an added fee for any pink sheet "foreign ordinaries" (symbol ending w/F), as well. In my experience, the broker does not inform of the fee until after purchase.
5. This is my first year investing in these sorts of funds, so have not encountered a tax period with these yet.

I've been told that one cannot open (at this point) a foreign market IRA.
Whether or not that's "across the board" I don't know, but that's what I've been told. I don't expect sizable returns from Allblue; I expect consistent year/over/year good or bad yearly absolute NAV price returns of the high single digits/low double digits. Additionally, given the flexibility of the fund and its balance between traders and computer-driven trading, I believe it certainly has the potential to fare well and be more nimble during more volatile periods (which it did in 2008.) BH Macro is another fund to look into, as well. I would definitely not look at Bluecrest or BH (or some of the other, similar funds) as replacement funds for stock funds. I would look at them as replacement funds for alternative funds in the US. There are other funds that would be comparable to a stock fund; Bluecrest and BH would be alternatives.
The issue with the Cambium fund is that it's great on paper, but it's a matter of how well its managed, as well as the global timber outlook. The fund has really not done well over the last few years, but is also trading at a substantial discount to NAV (I believe it is a substantial %) So, it depends whether value can be unlocked, similar to other land discussions (St Joe, etc.) However, the global nature of this is what I find interesting and the straight-up/pure play timber aspect (as well as water rights, etc.) However, whether or not it will ever find a way to unlock that value is the question. If it ever actually did, you have an investment trading at a large discount to reported NAV. If not, then, not.
Good article on Bluecrest that discusses aspects of the fund, including the risk management: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aXhE4PJs604c
A review of Allblue: http://www.hedgefundsreview.com/hedge-funds-review/profile/1648874/allblue-bluecrest-capital-management
Overall, I think it's great what's available in London (and there was an article in the WSJ the other day about how they're thinking about putting more restrictions about managed futures funds in the US - somehow I doubt more alternative investments will be made available in the US), but again, I just stress keeping foreign market investments towards the more established and doing research for those who decide to look into it.

The question that investors need to ask themselves is do you want to target relative or absolute returns? If one is happy with relative returns and style box investing, perhaps you will be better off with a passive approach. I am no longer content with relative return victories. If the market is down 40% again at some point (a real possibility) I am not going to be satisfied that I am down 30%. Passive strategies are great in up markets because they produce positive returns. When I believe the wind is at our back and stocks and bonds are cheap again I will be happy to re-adopt a passive approach. All evidence is that the wind in going to be in our face in the years ahead (at least on a secular basis), not at our back. Further, style box, or relative return investing does not account for the notion that you could be entirely removed from an asset class, or invested in another. For example. let's say a large cap growth fund was down 5% when the market was down 2%. But at the same time, high yield bonds produced a return of +6%. Were you better off becuase you only lost 2% vs. 5%, or worse off because you missed out on +6%. A passive investor would argue that this is proof you can't beat the market. I would argue that you missed an opportunity.
One more thing I would like to point out is the definition of risk. Do you define risk in terms of volitility or loss of capital. I believe most individuals define risk as a loss of capital. They should also define it as a loss of purchasing power, but that is not easily comprehended by the typical investor. Let's say one invested with a concentrated stock manager that modestly trailed the index after 10 years, but didn't lose money in any year while the market had some significant down years. Without knowing the future, would you be more comfortable knowing that your manager was managing your downside even if it cost you modest returns in the end? It's like buying a put option on your index portfolio. Is it worth the cost of insurance to know your downside is limited? I would think most investors would say that the risk protection and peace of mind is worth the cost of a modest reduction in returns. And don't ever forget what happened in Japan (market down 75% after 20 years) or the US for 20 years after 1929. It can happen again and I am pretty sure Gene Fama will not be writing us a check to cover our losses if it does.
Sorry for my ramblings and hope they were somewhat clear. There is certainly more than one way to succeed as an investor. One's decisions become more significant each year that passes. The number gets bigger and there is one less year to accumulate assets. I think there are going to be some excellent opportunites with great risk/reward trade-offs in the years ahead and I want to protect my capital to take advantage if and when they do arise. The current market and economic imbalances are great. In economics, imbalances must be corrected. It can be gradual or abrupt (like 2008) but they must correct. I am not predicting a market crash, but the risks are elevated due to these imbalances. 60/40 portfolios will not hold up well in that environment (and imagine if it comes along with rising interest rates next time!). I am confident that Harry Browne's Permanent Portfolio will hold up relatively well however the following is what I will be investing in, although there will soon be a reduction to some of the Pimco funds due to their use of derivatives and better options.
Core Fixed Income
12%- FPA New Income (FPNIX)
6%- Franklin Adjustable Rate US Govt. (FAGZX)
Flexible Core
6%- Caldwell & Orkin
9%- Hussman Strategic Growth (HSGFX)
6.5%- FPA Crescent (FPACX)
6.0%-PIMCO Global Multi asset (PGAIX)
6.5%- Leuthold Core (LCORX)
5.0%- Pimco All Asset All authority (PAUIX)
Hedged Equity
6.0%- Gateway (GTEYX)
Market Neutral
5.0%-AQR Diversified Arbitrage (ADAIX)
5.0%- Driehaus Active Income
5.0%- AQR Managed Futures (AQMIX)
5.0%- Pimco Unconstrained (PFIUX)
Long Term Themes
2.0%- SSgA Emerging Markets. Recently reduced exposure to
emerging markets
Opportunistic
4.0%- S&P 500 Dividend Aristocrats ETF
5.0%- Osterweis Strategic Income (OSTIX)
6.0%- Doubleline Total Return (DBLTX)

Third Point is available in pink sheet form, as is BH Macro (although not the other BH products - Global and Credit Catalysts.) Additionally, a few of the other funds are also available in pink sheet form (RIT Capital Partners), but they rarely trade. Some of the absolute return products (at least that I've seen) look nice in theory, but took an equity market-like drop in 2008. Some other absolute return products may fare better. I particularly like RIT Capital Partners (which I own) as a long-term holding (with its mix of stocks, private equity, hedge funds, "real assets" and currency management), but the US version really rarely trades at all, and has a large spread between bid/ask. I also own Bluecrest Allblue. While I was initially very excited by the London market offerings (and still think it's great what's offered there) I decided to keep it to a couple very different funds that I felt comfortable with as long-term (3-5 yr) holdings.