Greetings all - long time observer and user of TSP seasonal strategy and asking this great community for advice and input on some thoughts I concluded recently.
*Disclaimer: Not asking for financial advice, more so looking if there is a blindspot I am not seeing or the opposite of confirmation bias (Not having the data of the 1980's does not leave a warm and fuzzy for my idea)
Scenario: My TSP strategy has been great and have maxed out contributions sometime ago and started to contribute to a Roth IRA and originally set it and forgot it. However it finally clicked the TSP funds correlated to ETFs that my brokerage had so recently started to use a similar strategy as my TSP with some attempts to avoid wash sales. So far so good but that started me on a path of being highly aggressive and ok with taking some risks. I set a pretty high goal for the future and can see a potential path to it as I have some option trading knowledge (basic) and looking to combine that knowledge and using my strategy to potentially make more gains by buying calls with the same expiration as my strategy. There are only have a few solid times during the year the risk is potentially worth it based on the high mean and low SD. Also can use to hedge at times. Understanding history doesn't predict the future but based on the hours and hours of number crunching of trends and probability overlayed onto conservative strike prices in the option chain combined with if current events do not drastically oppose those trends, I am thinking of looking at an upcoming fund (with high volume) and making a calculated risk and worse case be prepared to cut losses early or roll the position for another December shot.
So I am looking for a vector check on my thought process because if cannot be that easy. In conversations with others about this sometimes lend to "if it were that easy, everyone would do it" and my only response have been most people don't have the stomach for option trading or don't want to take the risk.
My thoughts often lend toward "Fortune Favors the bold" type of mantra but not sensitive to criticisms so please poke holes in my "logic." It might save me from an upcoming disaster lol.
Vector Check
Moderator: Aitrus
Re: Vector Check
I have done extensive backesting in various strats from TSPCalc (and also personal strats too). TSP funds and regular funds to not correlate well enough to get similar results. Here are just a few reasons why:truth2432 wrote: ↑Fri Nov 10, 2023 10:17 pm Greetings all - long time observer and user of TSP seasonal strategy and asking this great community for advice and input on some thoughts I concluded recently.
*Disclaimer: Not asking for financial advice, more so looking if there is a blindspot I am not seeing or the opposite of confirmation bias (Not having the data of the 1980's does not leave a warm and fuzzy for my idea)
Scenario: My TSP strategy has been great and have maxed out contributions sometime ago and started to contribute to a Roth IRA and originally set it and forgot it. However it finally clicked the TSP funds correlated to ETFs that my brokerage had so recently started to use a similar strategy as my TSP with some attempts to avoid wash sales. So far so good but that started me on a path of being highly aggressive and ok with taking some risks. I set a pretty high goal for the future and can see a potential path to it as I have some option trading knowledge (basic) and looking to combine that knowledge and using my strategy to potentially make more gains by buying calls with the same expiration as my strategy. There are only have a few solid times during the year the risk is potentially worth it based on the high mean and low SD. Also can use to hedge at times. Understanding history doesn't predict the future but based on the hours and hours of number crunching of trends and probability overlayed onto conservative strike prices in the option chain combined with if current events do not drastically oppose those trends, I am thinking of looking at an upcoming fund (with high volume) and making a calculated risk and worse case be prepared to cut losses early or roll the position for another December shot.
So I am looking for a vector check on my thought process because if cannot be that easy. In conversations with others about this sometimes lend to "if it were that easy, everyone would do it" and my only response have been most people don't have the stomach for option trading or don't want to take the risk.
My thoughts often lend toward "Fortune Favors the bold" type of mantra but not sensitive to criticisms so please poke holes in my "logic." It might save me from an upcoming disaster lol.
1. G fund. This fund by law cannot lose value. The best comparison would be to a money market fund...however, the return is higher for the G Fund. If you have a broker such as Fidelity, Vanguard or Robinhood that offer higher rates on their money market funds, then you are closer to the G Fund...but still not exactly right (technically money market funds can lose money too!).
2. TSP pays dividends at different intervals during the year. While normally this wouldn't make a difference, this means that you might happen to leave or be in at a different time for your ETF. If you know how dividends work, this could impact your returns quite a bit.
3. It's difficult to replicate all of the indices that are used by the TSP. Specifically the S Fund, of which only one other fund tracks the same index (DWCPF) and that's FSMAX from Fidelity. I think the Fidelity Fund, however, does a better job with the index than the TSP, although you have to buy and hold for at least 30 days.
So, my point is that this system doesn't correspond well to regular investing.
As of now, I'm working on backtesting 2000 to 2003 using one of the strats. I would prefer to also do something with the 90s, but that's not easy at all as most of this is done manually (and the S Fund's index is not available prior to 2003). Fun stuff.
Re: Vector Check
As with all stocks/investments there is risk. Options trading is probably one of highest risks...there is money to be made and lost and you can lose a lot of money very quickly if things take a turn so you have to stay on top of it and know what you are doing. Too risky for me but I do like using covered calls to make some extra $$ on stock I own in a couple of accounts with a broker
Fund Prices2024-04-26
| Fund | Price | Day | YTD |
| G | $18.21 | 0.01% | 1.36% |
| F | $18.63 | 0.27% | -3.10% |
| C | $79.85 | 1.02% | 7.38% |
| S | $78.29 | 0.78% | 1.55% |
| I | $41.48 | 0.50% | 3.22% |
| L2065 | $15.89 | 0.80% | 5.08% |
| L2060 | $15.89 | 0.80% | 5.08% |
| L2055 | $15.89 | 0.80% | 5.08% |
| L2050 | $31.87 | 0.68% | 4.13% |
| L2045 | $14.54 | 0.64% | 3.94% |
| L2040 | $53.14 | 0.60% | 3.78% |
| L2035 | $14.04 | 0.55% | 3.58% |
| L2030 | $46.78 | 0.50% | 3.41% |
| L2025 | $13.02 | 0.29% | 2.45% |
| Linc | $25.43 | 0.23% | 2.10% |