As I think about it, my prior message was perhaps too cursory. While I owe LOL no more than to lower my boxers so he has a clear shot, it might be helpful to others to set out my reasoning on both my purchase and sale of DODBX (and OAKBX).
I originally purchased OAKBX in June 2001, when I switched jobs and needed to rollover my 401k. The ongoing tech stock collapse convinced me that a 100% stock position was probably unhealthy for my net worth and I thought a balanced fund would help remedy the problem. I ran a number of screens, read many prospectuses and concluded that OAKBX and DODBX were the best choices in actively managed funds (an alternative index possibility may have been a blend of VGTSX and VBMFX). At the same time, I had a roughly equivalent amount of taxable funds to invest. I was tempted to put it all in OAKBX, because it had been outperforming DODBX over the most recent year (2000 - 19.9% v. 15.1%). However, I thought that maybe Oakmark had just had a recent run of luck and the situation might reverse, as it had in 1999. So I put the taxable money in DODBX.
Over the market decline beginning on 9/11/01 and through March 2003, OAKBX outperformed DODBX in excess of 10%. During the subsequent bull market, DODBX outperformed slightly in 2003, 2004 and 2006. OAKBX was slightly ahead in 2005. Yet the lead built up by OAKBX during the 2001-2003 down market kept it well ahead in the aggregate. Still, I wanted to see if that was just a fluke.
In 2007, DODBX started to falter, largely because they were more heavily in financials. OAKBX outperformed by 12.0% to 1.7% that year. And in 2008 YTD, OAKBX has outperformed DODBX -16.7% to -32%.
In total, since I purchased both in 2001, OAKBX is up 20% and DODBX is down 25%.
Now that I have been through an entire cycle with both, it appears that the system used by Oakmark provides better results. And now that I have gathered a nest-egg and am closer to retirement, I also find that I am more interested in preservation of what I have during down markets than blazing performance during up markets. For that reason, I decided to move the taxable funds to OAKBX. It was a decision that I thought about for over a year before finally pulling the plug.
Tax loss harvesting also played a part, as I now have a capital loss built up in the DODBX position. If the holdings were reversed, such that OAKBX were in the taxable account and DODBX in the IRA, the decision would have been harder. I also want to use a small amount of the cash to fund our Roth IRA's for 2008 (after 10 years, we are finally eligible for a Roth again -- woo hoo!), which are in VGSIX (although it is down 30% YTD and 46% over the last 2 years, we need more exposure to REITs in our asset allocation).
Am I chasing performance? Perhaps, but I know of no better way to pick mutual funds than to observe them over a full market cycle and see which works better. In my individual stocks, I generally follow a Benjamin Graham value-stock approach. I am a very infrequent trader and am generally content to stick it out through bear markets. However, I have yet to figure out how to use the same approach with mutual funds, so I must of neccessity rely somewhat on performance history.
I am keeping my position in DODFX, so I do not dislike Dodge & Cox per se.