Are Target Funds Unsafe - Post Q.E.?
It's a what-if? sort of question. What if rates stay down or trend only slightly higher, despite no QE? look at other countries response to tepid economies. My experience as professional advisor (25 yrs) tells me the future is unknowable and diversity is good. Make alternative choices- they all won't work wonderfully, but some will.
"Making these difficult portfolio decisions for you is the point of Target-Date Retirement Funds.  You pick a date at which you're going to start needing to withdraw the money, and the company managing the fund slowly turns down the aggressiveness of the fund as the target date approaches.  Typically you would pick the target date to be around, say, your 65th birthday.  Many mutual fund companies offer a variety of funds to suit your needs. Your desire to never ""have to recover"" indicates that you have not yet done quite enough reading on the subject of investing.  (Or possibly that your sources have been misleading you.)  A basic understanding of investing includes the knowledge that markets go up and down, and that no portfolio will always go up.  Some ""recovery"" will always be necessary; having a less aggressive portfolio will never shield you completely from losing money, it just makes loss less likely. The important thing is to only invest money that you can afford to lose in the short-term (with the understanding that you'll make it back in the long term).  Money that you'll need in the short-term should be kept in the absolute safest investment vehicles, such as a savings account, a money market account, short-term certificates of deposit, or short-term US government bonds." "This company was a reputable rating agency for many years. See Weiss Research website, ratings section for a very different perspective on Martin Weiss's work than the websites with which he is now associated. I checked both links provided, and agree with the questioner in every way: These appear to be highly questionable investment research websites. I use such strong terms based on the fact that the website actually uses the distasteful pop-up ploy,  ""Are you SURE you want to leave this site?"" Clearly, something changed between what Weiss Ratings was in the past (per company history since 1971) and what Martin Weiss is doing now. Larry Edelson seems to have been associated exclusively with questionable websites and high pressure investment advice since 2007. From 1996 through the present, he worked as either an employee or contractor of Weiss Research. Let's answer each of your questions.  On June 22, 2006, the Commission instituted settled administrative   proceedings against Weiss Research, Inc., Martin Weiss, and Lawrence   Edelson (collectively, “Respondents”) for violations of the Investment   Advisers Act of 1940 in connection with their operation of an   unregistered investment adviser and the production and distribution of   materially false and misleading marketing materials. Full details about Weiss Ratings operations, including its history from 1996 through 2001, when it operated in compliance with securities laws, then from 2001 through 2005, which was when the SEC filed charges for regulatory violations, are available from the June 2006 U.S. SEC court documents PDF. Finally, this quantitative assessment, ""Safe With Martin Weiss? (December 2010) by CXO Advisory (providers of ""objective research and reviews to aid investing decisions"") for its readers concluded the following: In summary, the performance of Martin Weiss’ premium services in   aggregate over the past year is unimpressive. The study methodology was good, but I recommend reading the article (I posted the URL) to fully understand what caveats and assumptions were done to reach that conclusion." In my experiences most hedge funds won't have a benchmark in their mandate and are evaluated based upon absolute returns.  Their benchmarks are generally cash + x basis points.  So, no attribution and no IR.  No experience at all with CTA's though, so not sure how things are there. Vanguard has a lot of mutual fund offerings.  (I have an account there.)  Within the members' section they give indications of the level of risk/reward for each fund. Thanks for the huge insight. I am still a student doing an intern and this was given as my first task, more of trying to give the IA another perspective looking at these funds rather than picking. I was not given the investors preference in terms of return and risk tolerances so it was really open-ended.   However, thanks so much for the quick response. At least now I have a better idea of what I am going to deliver or at least try to show to the IA. A target date fund is NOT a world market index. There is no requirement that it be weighted based on the weights of the various world stock markets. If anything, historically (since the invention of target date funds), a 2:1 ratio is actually pretty low. 6:1 is, or was, probably more common. Just a token amount to non-US investments. "Stay away from leveraged or synthetic ETFs. This answer talks about why leveraged ETFs are dangerous. There are numerous articles to be found by searching for ""leveraged etf"". My answer to this question links to one of the more accessible explanations I've read." I work for a hedge fund, not wealth management, but I assume that client information is treated similarly. Misplacing it is a huge deal. The company will probably need to formally investigate it and inform all the clients involved. Even if they can prove that no one looked at the information it's going to make clients question the company's procedures. I could see it being a firing offense,depending on how many clients were affected and the nature of the data. Sorry if that's not what you wanted to hear. "My gut is to say that any time there seems to be easy money to be made, the opportunity would fade as everyone jumped on it. Let me ask you - why do you think these stocks are priced to yield 7-9%? The DVY yields 3.41% as of Aug 30,'12.  The high yielding stocks you discovered may very well be hidden gems. Or they may need to reduce their dividends and subsequently drop in price.  No, it's not 'safe.' If the stocks you choose drop by 20%, you'd lose 40% of your money, if you made the purchase on 50% margin. There's risk with any stock purchase, one can claim no stock is safe. Either way, your proposal juices the effect to creating twice the risk.  Edit - After the conversation with Victor, let me add these thoughts. The ""Risk-Free"" rate is generally defined to be the 1yr tbill (and of course the risk of Gov default is not zero). There's the S&P 500 index which has a beta of 1 and is generally viewed as a decent index for comparison. You propose to use margin, so your risk, if done with an S&P index is twice that of the 1X S&P investor. However, you won't buy S&P but stocks with such a high yield I question their safety. You don't mention the stocks, so I can't quantify my answer, but it's tbill, S&P, 2X S&P, then you." I would also consider unnecessarily complex investment strategies a big warning sign as they can easily hide poor investment advice or a bad strategy. This is especially the case when it comes to retail investment as complex strategies can have so many moving parts that you, as someone with a day job, can't spend enough time on it to keep an eye on everything and you only spot issues when it's too late. Other bugbears: "Possible but very unlikely. Money market funds invest in high grade liquid assets and the primary goal is not to lose money. I have not been able to find an example of a Vanguard money market fund ever ""breaking the buck"" and having the value of a share go below a dollar. It is possible that this could happen in the event of a large scale financial collapse, but even then I would call it possible rather than likely." "Use VTIVX. The ""Target Retirement 2045"" and ""Target Retirement 2045 Trust Plus"" are the same underlying fund, but the latter is offered through employers.  The only differences I see are the expense ratio and the minimum investment dollars.  But for the purposes of comparing funds, it should be pretty close. Here is the list of all of Vanguard's target retirement funds. Also, note that the ""Trust Plus"" hasn't been around as long, so you don't see the returns beyond the last few years.  That's another reason to use plain VTIVX for comparison. See also: Why doesn't a mutual fund in my 401(k) have a ticker symbol?" "@Alex B's answer hits most of it, but leaves out one thing: most companies control who can own their non-public shares, and prohibit transfers, sales, or in some cases, even ongoing ownership by ex-employees. So it's not that hard to ensure you stay under 500 investors.   Remember that Sharespost isn't an exchange or clearinghouse; it's basically a bulletin board with some light contract services and third-party escrow services.   I'd guess that many of the companies on their ""hot"" list explicitly prohibit the sale of their non-public shares." "Yes, in my humble opinion, it can be ""safe"" to assume that — but not in the sense that your assumption is necessarily or likely correct. Rather, it can be ""safe"" in the respect that assuming the worst — even if wrong! — could save you from a likely painful and unsuccessful speculation in the highly volatile stock of a tiny company with no revenue, no profits, next to no assets, and continued challenges to its existence: ""There is material uncertainty about whether the Company will be able to obtain the required financing. This material uncertainty casts   significant doubt about the Company’s ability to continue as a going   concern."" As a penny stock, they are in good company. Still, there are a variety of other reasons why such a stock might have gone up, or down, and no one [here] can say for sure. Even if there was a news item, any price reaction to news could just amount to speculation on the part of others having enough money to move the stock. There are better investments out there, and cheaper thrills, than most penny stocks." Mutual funds and pensions aren't likely to be too badly hit, as they are largely buy and hold organisations with low turnover of positions which is inherently difficult for hft to exploit. same with index trackers. These guys are exploited most by shower systematic traders thatare themselves exploited by hft. as an aside, finance is also strangely incestuous - pension funds often invest in hedge funds, that themselves often invest in hft.