CORRECTION & POSITION:
I recently mentioned selling out of hedged stock equity funds, but I did not in fact sell out of TFSMX which is a 161% long, 61% short small and mid cap fund. Partly this is because it is closed to new investors and will likely remain that way for a long time. Secondly I have a feeling that small caps, both US and ex-US, will do relatively well. I have been adding on weakness to VSS (ex-US small caps) and VBK (US small cap growths).

I also still do like PIMCO's PFATX which captures the value of Rob Arnott's RAFI index over the SPX. However, a lot of PFATX's gain depends upon their bonds held as collateral. Bonds are long overdue to top and are falling off this past week, so I want to see how this develops.

For the past three years I have kept a lot of funds in fairly short term bonds as a substitute for money market funds as yields plunged nearly to zero. Over the past several months I have gradually sold them off, the last of which was the Vanguard Limited Term Muni Fund VMLUX with a current duration of ~2.5 years and a current distribution yield of 2.3%. I finally sold off all of this fine fund the week before last. A one percent increase in interest rates would crater the fund price 2.5% and that's over a year of interest, so it was time to go totally to money market funds. I could be wrong and rates could fall off again, but I feel safer in cash, gold and a few funds and ETFs until the showdown on the Potomac is clearer.

I did let the rest of the hedged class go last week primarily in view of their bias toward value in a market where value is largely absent and likely to remain that way until the QE folks go broke or quit vountarily.