Investing For The Long Term: Dividend Growth Stocks Or S&P 500? [View article]
jdhd, you're right -- the key is that everyone finds an investing strategy that works for them psychologically and financially. For many people, asset allocation doesn't work psychologically, in which case it won't work at all. If you've found a strategy that works, that's fantastic. I wish you much success!
I'm really happy to hear that those dividend authors on Seeking Alpha have been so helpful to you. They are great people. For example, I didn't call this out earlier, but did you notice how the genesis for my article was a description by mbkelly about how he gives money to his grandchildren and educates them to be successful investors? I wonder how many kids wish they had a grandfather like that.
Why I'm Selling My Target Date Funds [View article]
Three potential problems with target funds:
1. Expenses are high, often because the target funds charge a wrapper fee and own other funds for individual asset classes which themselves charge a fee. So you're paying fees on fees.
2. If the funds hold cash, that will be a drag on your performance, and you're paying a steep management fee on the cash.
3. Target date funds from a single provider can't shop around for the best index funds for each asset class. So you get a sub-optimal set of funds inside the target fund.
Vanguard's Confusing Statements On Allocation [View article]
Hi Roger,
Here's the para from the Vanguard report's executive summary:
"We remain concerned that the currently low nominal yield environment will lead some to aggressively pursue higher nominal returns based on the thematic allure of either higher dividend yields (potentially comprising total return), higher economic growth (without considering market valuations), inflation protection (regardless of price), or alternative investments (without regard to cost or risk exposure). We believe that a balanced and diversifed low-cost portfolio can remain an extremely high-value proposition in the decade ahead."
Later on in the report, they clarify that their concern about allocating assets to faster-growth economies is *if* this is done without taking account of valuations. They argue that emerging market valuations are high relative to historic norms. And since valuations are a better of predictor of market performance than expected GDP growth, investors need to resist being drawn into those markets with the allure of high expected growth, because they're trading at higher valuations.
On a separate note, I think their caution about dividend stocks is important. They look at this primarily in terms of asset allocation (ie. dividend stocks shouldn't be confused with bonds), but I also wonder whether inflows into dividend stocks will lead to overvaluation and poor long term performance.
Dave, a warm congratulations on your 100th article!
Like Roger, my views aren't exactly captured in this, so here's a quick run-down which I hope may be helpful:
Principle long-term goal: To have enough money for your needs, specifically for retirement and major life expenses (such as sending children to college). It makes no difference whether this is achieved through portfolio income or realizing capital gains, as long as the goal is achieved.
Secondary long-term goal: To avoid emotional stress and worry about your financial situation.
Most proponents are: Investment professionals + individual investors, who can now build and manage their own diversified portfolios at low cost using index funds, including ETFs. Anecdotally, the response I got from the ETF Guide (http://seekingalpha.co...) was overwhelmingly positive, and was almost entirely from individual investors.
Role of investor: Active - to think carefully about which asset allocation best matches your needs and life stage, to find the cheapest index funds to implement your desired asset allocation, to minimize your tax liability by parking the right assets in the right type of account, and to rebalance your portfolio appropriately.
Pick stocks: No.
Role of "Value": Crucial as a means to achieve total return. The best way for individual investors to account for value is via portfolio rebalancing, which automates the process of buying asset classes when cheap and selling when expensive. US stock market declines are therefore a buying opportunity (via rebalancing). But so too are declines in other asset classes, such as bonds, REITs, and emerging market stocks.
How Ideally Finance Retirement? From portfolio income. As you reach retirement, asset allocation therefore shifts towards bonds and dividend stocks, obviously depending on the attractiveness of each at the time. The greater your total return by the time you retire, the more money you'll have to buy bonds and dividend stocks, and the greater your retirement income will be.
Role of dividends: In retirement - crucial, along with other income generating assets. Before retirement - only important if they result in a bigger after-tax nest egg by the time you retire.
Improving Your Return Profile With A Simple Momentum Strategy [View article]
Excellent article. I generally avoided momentum strategies until becoming aware of the data in articles like this.
There's a paper about combining value and momentum strategies that's also really worth reading -- "Investing for the Rest of Us", by Victor Haghani http://www.haghani.com
Evidence of Seeking Alpha vs. Mainstream Media Research: A First-Hand Account [View article]
MKW, thanks for this comment - and your other outstanding comments. On the issue of economic analysis, we always welcome recommendations of people we should reach out to to become contributors, or articles we should highlight on our home page or as Editors' Picks.
We're nowhere near a point where we could go public, even if we wanted to. Our goal is to become a site that is a must-read for every investor, and generates meaningful reward for our contributors. In the short term, sharing revenue with contributors cuts our own revenue and profitability, but in the longer run we think that in partnership with our contributors we can do great things for readers.
Evidence of Seeking Alpha vs. Mainstream Media Research: A First-Hand Account [View article]
This is the comment Cameron replied to (written by user EE2):
"Seeking Alpha allows too many authors to publish articles that are written not based on current facts. Some of the recent SIRI articles are the perfect example...ie...using SIRI's smaller COH number in June 2010 rather than the more current COH number of SIRI of approx $500-$600M. How does that happen?
Also.....some 50-60 critical comments exposing the author and his article to his lack of research were deleted. How is anyone suppose to respect Seeking Alpha?"
We deleted this commenter's ID from the site, NOT because he criticized SA (that's why I've reposted the comment in full), but because he consistently wrote comments with ad hominem attacks on article authors, including abusing them personally.
For some reason, certain stocks - SIRI among them - attract people who leave abusive comments. SA's editors delete abusive comments and the IDs of commenters who are consistently abusive, because we care passionately that the discussion on SA should be respectful and civil, and genuinely helpful to investors. When Mercy writes in her comment above that "I could do without some of the profanity and name calling that often make their way into commentaries", this is what our editors combat by deleting abusive comments.
I've written this here to highlight the fact that we welcome criticism and open discussion of Seeking Alpha, and nobody should think that EE2's comment was deleted because it was critical of SA. Rather, we decided to remove his identity from the site because of systemic rudeness and continual ad hominem attacks on authors whom he disagreed with.
Seeking Alpha as a Predictor of Stock Movements and Earnings Surprises [View article]
David V.K and Charles,
Re-reading my earlier comment, I realize I sowed confusion by using the term "immediately actionable". I didn't mean "short-term"! Rather, since almost any article can be construed as being somehow useful to investors, "actionable" means:
1. The article is about a topic for which there is a publicly traded vehicle that makes it invest-able.
2. The comments made are material for the invest-able vehicle.
In this sense, these articles are more "immediate" - they have a direct bearing on an invest-able vehicle. David V.K's articles about dividend investing strategy are actionable in this sense, as are articles about stocks for long term investors.
In contrast, examples of articles submitted to SA which aren't actionable in this sense would include (a) articles about start-ups with no relevance to publicly traded stocks; (b) articles about economics or politics, such as certain areas of tax policy, which have no implications for any sector or the overall economy, nor any impact on any invest-able vehicle; and (c) articles about a tiny business line owned by a public company, which has no meaningful impact on its aggregate revenue and therefore its stock price.
When you read these examples, you might think: "Those actually sound interesting and useful". But if we flooded SA with those articles, we'd be a less useful site for investors.
We do try to encourage authors to join the dots for readers. For example, if the author of an article about the nuclear industry mentions some nuclear stocks or the nuclear ETF, that makes the article more helpful for readers who don't already know how to invest in the nuclear industry. (Can you name the nuclear ETF?!) It also means that the article will come to the attention of those readers who already own the nuclear stocks or ETF. That is good for the reader, and wins the author a larger readership.
Finally, Charles, you assumed that Seeking Alpha's policies are driven by short-term profit motives. Anyone who knows me and the SA team knows otherwise. I started SA as a hobby - to provide the site that I myself wanted to use. Our editorial policies are driven by a single goal: how can we be most useful to investors?
Seeking Alpha as a Predictor of Stock Movements and Earnings Surprises [View article]
Hi David,
Thank you for this thoughtful comment.
As you point out, there's a continuum of how actionable articles are. It stretches from articles that explicitly state their investment conclusions for stocks or ETFs, all the way to economic or political commentary that has no investment implications. The goal of Seeking Alpha is to help people invest, so we know that we don't want to be publishing largely academic articles with no relevance to investors. But there are many articles in the middle of the spectrum that are helpful for investors, with varying degrees of how immediately actionable they are. Sometimes we draw the line at the wrong point on the continuum; that's why we value this sort of input from you and OT.
On the issue of most investors accessing information via portfolios and quote pages: that's not based on market research, but hard data from our own site stats and the traffic to our site from partners. Our Investing for Income section gets a lot of traffic, so your articles receive good exposure even when they are not tagged with stock tickers. But even within that section, articles get more exposure when they are also ticker tagged.
So when our editors suggest that authors specify impacted stocks or ETFs in their articles, they are trying to help our readers find actionable ideas, and help authors get the exposure they deserve.
Seeking Alpha as a Predictor of Stock Movements and Earnings Surprises [View article]
Old Trader and David van Knapp,
I can assure you that we're definitely not "starting to go towards more a "stock tip" site, rather than accepting articles that deal with "big picture" economic analysis"!
One of the goals of the recent changes to the site's navigation was to provide more prominence to the Macro View section: seekingalpha.com/dashb... Also, we consistently feature big picture analysis on the home page, and that won't change. So I hope it's clear that we're absolutely committed to "big picture" analysis.
Our recent letter to contributors addressed two different issues. First, readers come to Seeking Alpha to think about investment decisions. If, after reading an article, you think "Yes, but I have no idea how to translate that analysis into practice", the article hasn't helped you to invest. In contrast, if articles explicitly spell out actionable investment implications, that makes them more useful to investors. This applies no less to articles about the "big picture" than to those about investment strategies, or individual stocks or ETFs, and is the difference between Seeking Alpha and non-investing sites about economics or politics.
The second issue was about readership. We wanted to help authors understand why, in some cases, they might be getting consistently fewer than the 5,500 views that the average exclusive article gets on SA. The number of readers on the Seeking Alpha homepage and the main "dashboards" (Long & Short Ideas, Investing for Income, ETFs & Portfolio Strategy and Macro View), is significant. But in finance, most people find articles by checking their portfolios or looking at quote pages. That means that if an article doesn't spell out actionable investment implications for any stocks or ETFs, and therefore isn't tagged with them, it won't be discovered by most readers.
For us, this poses a serious problem: It means that outstanding authors who may write valuable articles about general investment strategy without mentioning high profile stocks or ETFs get a smaller than average readership. I particularly like Roger Nusbaum's work, for example, and he suffers from this problem on our site.
What are we doing to address it? First, we use the homepage and editors' picks to get these articles in front of readers. Editors' picks are highlighted on each dashboard, and there's a link to them on the homepage. Second, the lower section of the new homepage does a better job of displaying articles by people you are "following". I now see Roger's articles whenever I visit the homepage. But in aggregate, the exposure provided in this way is still less than that provided by quote pages and portfolios.
I hope it's helpful to share our thinking in this way. We very much view Seeking Alpha as a work in progress, and greatly value suggestions and input from our contributors and readers.
The Most Important Investing Themes of the New Decade [View article]
Roger, totally agree with you about population aging - that's why we set up a section on Seeking Alpha for Demographics (seekingalpha.com/tag/d...). The most obvious sector to benefit from this is healthcare and pharma, with ETFs like (VHT), (XBI), (XLV) and (XPH). The problem is that the pharma companies are facing patent expirations and weak new product pipelines. In that light, it's worth looking at the generics, like (TEVA), on which there's a good article by Chuck Carnevale seekingalpha.com/artic... .
Why Broad-Based Index Funds Are Still the Wrong Tool [View article]
Hi Roger,
First off, thank you for your smart and thought-provoking views, and the care you show in responding to people. You're a class-act, as they say.
There seem to be two powerful but separate arguments in what you're saying:
(1) Investors should hold diversified portfolios, and the broad indexes like (SPY), (EFA) and maybe (EEM) are too correlated with each other. So investors should look for asset classes which are less correlated, and that requires using narrower indexes or other instruments.
(2) You're not optimistic about the broad US equity market for the foreseeable future, so if investors want to grow their portfolios, they'll have to seek alpha (no promotion of this site intended!) in narrower asset classes and individual stocks.
My personal view is that (1) is absolutely correct. But (2) may be harder. In another article you published yesterday, you pointed out how hard it is to pick stocks (seekingalpha.com/artic...). Is it definitely easier to pick asset classes? My guess is that few people would have predicted the massive outperformance of US small caps at the end of 2010, or the poor performance of China last year, eg. (FXI).
Perhaps the right approach here is to reap the benefits of asset class granularity via rebalancing, rather than trying to pick asset classes. You can get greater granularity by breaking the broad indexes into sectors, styles or (as you've advocated) countries. The downside is that narrower ETFs tend to have higher expense ratios.
I haven't found much literature about rebalancing. I tried to think about the advantages and risks of this strategy here, but it's fairly rudimentary: seekingalpha.com/artic... and seekingalpha.com/artic...
Buying Equities: Rethinking the ETF Frenzy [View article]
Elliot,
Re. "I find that good funds tend to remain good, as long as the manager is not changed." Do you remember the enormous fanfare when Bill Miller beat the S&P 500 for the 10th straight year? It was almost unheard of. (He then took such a beating in the downturn that he underperformed the S&P on a trailing 10 year basis by a wide margin).
If you're right that picking winning mutual funds is relatively easy, then most mutual fund investors should themselves beat the indexes over extended periods. But the data I cited in the link shows that's not the case.
You didn't address the point about survivorship bias. Many academics have done serious work on mutual fund returns. I'd respectfully submit that your quick Morningstar survey isn't a serious challenge to their findings.
How Much Money Do You Actually Need to Retire? [View article]
David,
We haven't decided yet how it will be integrated into the main navigation. The natural place for it might be under Investing for Income (seekingalpha.com/dashb...), but it won't surprise you to know that many people are interested in generating income from their portfolios who are not in or near retirement.
Long & Short Ideas isn't the right place either, as this area really isn't about stock picking.
Perhaps we need to rethink the main navigation more fundamentally. Any suggestions?
On a separate note, when going back to tag articles with "Retirement", I was really struck by how outstanding the coverage is, from people like you, David Van Knapp and Roger Nusbaum. Sometimes I wonder if you realize how enormously appreciated you are by the people who read your work.
How Much Money Do You Actually Need to Retire? [View article]
BTW, if there are any articles already published on SA about retirement that you don't see in this list (seekingalpha.com/tag/r...), please let me know by leaving a comment below.
Investing For The Long Term: Dividend Growth Stocks Or S&P 500? [View article]
I'm really happy to hear that those dividend authors on Seeking Alpha have been so helpful to you. They are great people. For example, I didn't call this out earlier, but did you notice how the genesis for my article was a description by mbkelly about how he gives money to his grandchildren and educates them to be successful investors? I wonder how many kids wish they had a grandfather like that.
Why I'm Selling My Target Date Funds [View article]
1. Expenses are high, often because the target funds charge a wrapper fee and own other funds for individual asset classes which themselves charge a fee. So you're paying fees on fees.
2. If the funds hold cash, that will be a drag on your performance, and you're paying a steep management fee on the cash.
3. Target date funds from a single provider can't shop around for the best index funds for each asset class. So you get a sub-optimal set of funds inside the target fund.
Vanguard's Confusing Statements On Allocation [View article]
Here's the para from the Vanguard report's executive summary:
"We remain concerned that the currently low nominal yield environment will lead some to aggressively pursue higher nominal returns based on the thematic allure of either higher dividend yields (potentially comprising total return), higher economic growth (without considering market valuations), inflation protection (regardless of price), or alternative investments (without regard to cost or risk exposure). We believe that a balanced and diversifed low-cost portfolio can remain an extremely high-value proposition in the decade ahead."
Later on in the report, they clarify that their concern about allocating assets to faster-growth economies is *if* this is done without taking account of valuations. They argue that emerging market valuations are high relative to historic norms. And since valuations are a better of predictor of market performance than expected GDP growth, investors need to resist being drawn into those markets with the allure of high expected growth, because they're trading at higher valuations.
On a separate note, I think their caution about dividend stocks is important. They look at this primarily in terms of asset allocation (ie. dividend stocks shouldn't be confused with bonds), but I also wonder whether inflows into dividend stocks will lead to overvaluation and poor long term performance.
- David
Asset Allocation 'Vs.' Dividend Growth Investing: A Handy Comparator [View article]
Like Roger, my views aren't exactly captured in this, so here's a quick run-down which I hope may be helpful:
Principle long-term goal: To have enough money for your needs, specifically for retirement and major life expenses (such as sending children to college). It makes no difference whether this is achieved through portfolio income or realizing capital gains, as long as the goal is achieved.
Secondary long-term goal: To avoid emotional stress and worry about your financial situation.
Most proponents are: Investment professionals + individual investors, who can now build and manage their own diversified portfolios at low cost using index funds, including ETFs. Anecdotally, the response I got from the ETF Guide (http://seekingalpha.co...) was overwhelmingly positive, and was almost entirely from individual investors.
Role of investor: Active - to think carefully about which asset allocation best matches your needs and life stage, to find the cheapest index funds to implement your desired asset allocation, to minimize your tax liability by parking the right assets in the right type of account, and to rebalance your portfolio appropriately.
Pick stocks: No.
Role of "Value": Crucial as a means to achieve total return. The best way for individual investors to account for value is via portfolio rebalancing, which automates the process of buying asset classes when cheap and selling when expensive. US stock market declines are therefore a buying opportunity (via rebalancing). But so too are declines in other asset classes, such as bonds, REITs, and emerging market stocks.
How Ideally Finance Retirement? From portfolio income. As you reach retirement, asset allocation therefore shifts towards bonds and dividend stocks, obviously depending on the attractiveness of each at the time. The greater your total return by the time you retire, the more money you'll have to buy bonds and dividend stocks, and the greater your retirement income will be.
Role of dividends: In retirement - crucial, along with other income generating assets. Before retirement - only important if they result in a bigger after-tax nest egg by the time you retire.
Improving Your Return Profile With A Simple Momentum Strategy [View article]
There's a paper about combining value and momentum strategies that's also really worth reading -- "Investing for the Rest of Us", by Victor Haghani http://www.haghani.com
Evidence of Seeking Alpha vs. Mainstream Media Research: A First-Hand Account [View article]
We're nowhere near a point where we could go public, even if we wanted to. Our goal is to become a site that is a must-read for every investor, and generates meaningful reward for our contributors. In the short term, sharing revenue with contributors cuts our own revenue and profitability, but in the longer run we think that in partnership with our contributors we can do great things for readers.
Evidence of Seeking Alpha vs. Mainstream Media Research: A First-Hand Account [View article]
"Seeking Alpha allows too many authors to publish articles that are written not based on current facts. Some of the recent SIRI articles are the perfect example...ie...using SIRI's smaller COH number in June 2010 rather than the more current COH number of SIRI of approx $500-$600M. How does that happen?
Also.....some 50-60 critical comments exposing the author and his article to his lack of research were deleted. How is anyone suppose to respect Seeking Alpha?"
We deleted this commenter's ID from the site, NOT because he criticized SA (that's why I've reposted the comment in full), but because he consistently wrote comments with ad hominem attacks on article authors, including abusing them personally.
For some reason, certain stocks - SIRI among them - attract people who leave abusive comments. SA's editors delete abusive comments and the IDs of commenters who are consistently abusive, because we care passionately that the discussion on SA should be respectful and civil, and genuinely helpful to investors. When Mercy writes in her comment above that "I could do without some of the profanity and name calling that often make their way into commentaries", this is what our editors combat by deleting abusive comments.
I've written this here to highlight the fact that we welcome criticism and open discussion of Seeking Alpha, and nobody should think that EE2's comment was deleted because it was critical of SA. Rather, we decided to remove his identity from the site because of systemic rudeness and continual ad hominem attacks on authors whom he disagreed with.
Seeking Alpha as a Predictor of Stock Movements and Earnings Surprises [View article]
Re-reading my earlier comment, I realize I sowed confusion by using the term "immediately actionable". I didn't mean "short-term"! Rather, since almost any article can be construed as being somehow useful to investors, "actionable" means:
1. The article is about a topic for which there is a publicly traded vehicle that makes it invest-able.
2. The comments made are material for the invest-able vehicle.
In this sense, these articles are more "immediate" - they have a direct bearing on an invest-able vehicle. David V.K's articles about dividend investing strategy are actionable in this sense, as are articles about stocks for long term investors.
In contrast, examples of articles submitted to SA which aren't actionable in this sense would include (a) articles about start-ups with no relevance to publicly traded stocks; (b) articles about economics or politics, such as certain areas of tax policy, which have no implications for any sector or the overall economy, nor any impact on any invest-able vehicle; and (c) articles about a tiny business line owned by a public company, which has no meaningful impact on its aggregate revenue and therefore its stock price.
When you read these examples, you might think: "Those actually sound interesting and useful". But if we flooded SA with those articles, we'd be a less useful site for investors.
We do try to encourage authors to join the dots for readers. For example, if the author of an article about the nuclear industry mentions some nuclear stocks or the nuclear ETF, that makes the article more helpful for readers who don't already know how to invest in the nuclear industry. (Can you name the nuclear ETF?!) It also means that the article will come to the attention of those readers who already own the nuclear stocks or ETF. That is good for the reader, and wins the author a larger readership.
Finally, Charles, you assumed that Seeking Alpha's policies are driven by short-term profit motives. Anyone who knows me and the SA team knows otherwise. I started SA as a hobby - to provide the site that I myself wanted to use. Our editorial policies are driven by a single goal: how can we be most useful to investors?
Seeking Alpha as a Predictor of Stock Movements and Earnings Surprises [View article]
Thank you for this thoughtful comment.
As you point out, there's a continuum of how actionable articles are. It stretches from articles that explicitly state their investment conclusions for stocks or ETFs, all the way to economic or political commentary that has no investment implications. The goal of Seeking Alpha is to help people invest, so we know that we don't want to be publishing largely academic articles with no relevance to investors. But there are many articles in the middle of the spectrum that are helpful for investors, with varying degrees of how immediately actionable they are. Sometimes we draw the line at the wrong point on the continuum; that's why we value this sort of input from you and OT.
On the issue of most investors accessing information via portfolios and quote pages: that's not based on market research, but hard data from our own site stats and the traffic to our site from partners. Our Investing for Income section gets a lot of traffic, so your articles receive good exposure even when they are not tagged with stock tickers. But even within that section, articles get more exposure when they are also ticker tagged.
So when our editors suggest that authors specify impacted stocks or ETFs in their articles, they are trying to help our readers find actionable ideas, and help authors get the exposure they deserve.
Seeking Alpha as a Predictor of Stock Movements and Earnings Surprises [View article]
I can assure you that we're definitely not "starting to go towards more a "stock tip" site, rather than accepting articles that deal with "big picture" economic analysis"!
One of the goals of the recent changes to the site's navigation was to provide more prominence to the Macro View section: seekingalpha.com/dashb... Also, we consistently feature big picture analysis on the home page, and that won't change. So I hope it's clear that we're absolutely committed to "big picture" analysis.
Our recent letter to contributors addressed two different issues. First, readers come to Seeking Alpha to think about investment decisions. If, after reading an article, you think "Yes, but I have no idea how to translate that analysis into practice", the article hasn't helped you to invest. In contrast, if articles explicitly spell out actionable investment implications, that makes them more useful to investors. This applies no less to articles about the "big picture" than to those about investment strategies, or individual stocks or ETFs, and is the difference between Seeking Alpha and non-investing sites about economics or politics.
The second issue was about readership. We wanted to help authors understand why, in some cases, they might be getting consistently fewer than the 5,500 views that the average exclusive article gets on SA. The number of readers on the Seeking Alpha homepage and the main "dashboards" (Long & Short Ideas, Investing for Income, ETFs & Portfolio Strategy and Macro View), is significant. But in finance, most people find articles by checking their portfolios or looking at quote pages. That means that if an article doesn't spell out actionable investment implications for any stocks or ETFs, and therefore isn't tagged with them, it won't be discovered by most readers.
For us, this poses a serious problem: It means that outstanding authors who may write valuable articles about general investment strategy without mentioning high profile stocks or ETFs get a smaller than average readership. I particularly like Roger Nusbaum's work, for example, and he suffers from this problem on our site.
What are we doing to address it? First, we use the homepage and editors' picks to get these articles in front of readers. Editors' picks are highlighted on each dashboard, and there's a link to them on the homepage. Second, the lower section of the new homepage does a better job of displaying articles by people you are "following". I now see Roger's articles whenever I visit the homepage. But in aggregate, the exposure provided in this way is still less than that provided by quote pages and portfolios.
I hope it's helpful to share our thinking in this way. We very much view Seeking Alpha as a work in progress, and greatly value suggestions and input from our contributors and readers.
The Most Important Investing Themes of the New Decade [View article]
Why Broad-Based Index Funds Are Still the Wrong Tool [View article]
First off, thank you for your smart and thought-provoking views, and the care you show in responding to people. You're a class-act, as they say.
There seem to be two powerful but separate arguments in what you're saying:
(1) Investors should hold diversified portfolios, and the broad indexes like (SPY), (EFA) and maybe (EEM) are too correlated with each other. So investors should look for asset classes which are less correlated, and that requires using narrower indexes or other instruments.
(2) You're not optimistic about the broad US equity market for the foreseeable future, so if investors want to grow their portfolios, they'll have to seek alpha (no promotion of this site intended!) in narrower asset classes and individual stocks.
My personal view is that (1) is absolutely correct. But (2) may be harder. In another article you published yesterday, you pointed out how hard it is to pick stocks (seekingalpha.com/artic...). Is it definitely easier to pick asset classes? My guess is that few people would have predicted the massive outperformance of US small caps at the end of 2010, or the poor performance of China last year, eg. (FXI).
Perhaps the right approach here is to reap the benefits of asset class granularity via rebalancing, rather than trying to pick asset classes. You can get greater granularity by breaking the broad indexes into sectors, styles or (as you've advocated) countries. The downside is that narrower ETFs tend to have higher expense ratios.
I haven't found much literature about rebalancing. I tried to think about the advantages and risks of this strategy here, but it's fairly rudimentary:
seekingalpha.com/artic...
and
seekingalpha.com/artic...
Buying Equities: Rethinking the ETF Frenzy [View article]
Re. "I find that good funds tend to remain good, as long as the manager is not changed." Do you remember the enormous fanfare when Bill Miller beat the S&P 500 for the 10th straight year? It was almost unheard of. (He then took such a beating in the downturn that he underperformed the S&P on a trailing 10 year basis by a wide margin).
If you're right that picking winning mutual funds is relatively easy, then most mutual fund investors should themselves beat the indexes over extended periods. But the data I cited in the link shows that's not the case.
You didn't address the point about survivorship bias. Many academics have done serious work on mutual fund returns. I'd respectfully submit that your quick Morningstar survey isn't a serious challenge to their findings.
How Much Money Do You Actually Need to Retire? [View article]
We haven't decided yet how it will be integrated into the main navigation. The natural place for it might be under Investing for Income (seekingalpha.com/dashb...), but it won't surprise you to know that many people are interested in generating income from their portfolios who are not in or near retirement.
Long & Short Ideas isn't the right place either, as this area really isn't about stock picking.
Perhaps we need to rethink the main navigation more fundamentally. Any suggestions?
On a separate note, when going back to tag articles with "Retirement", I was really struck by how outstanding the coverage is, from people like you, David Van Knapp and Roger Nusbaum. Sometimes I wonder if you realize how enormously appreciated you are by the people who read your work.
How Much Money Do You Actually Need to Retire? [View article]