Wednesday, September 1, 2010

General TSP Discussion.

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SgtWs

Wednesday, September 1, 2010

Post by SgtWs »

Important for Today - Employment Numbers......out at 8:15 am EST. That report is expected to show that the private sector added 17,000 new jobs last month, compared to 42,000 in July. Another employment-related number will come at 7:30am ET, when Challenger, Gray, & Christmas issues its monthly report on planned job cuts.

TSPKing Interview
I wanted to start by saying that TSPKing kicked tail on the radio last night. He came off as honest and sincere in his quest to help others achieve their goals by providing this forum and I applaud him for that. Congrats and great job! If each of the 1,800 members here spread the word to 5 friends about TSP Center then the site would balloon to almost 10,000 members over night!

There was one item covered during the interview last night that really go my interest. TSPKing mentioned the "Seasonal Strategy" they developed for the site and the returns you would of made by following. I found this fascinating. I've heard him mention it before, but I have never checked it out myself - until now.

Here is the link: http://tspcenter.com/seasonal.php

TSP Center Seasonal Strategy

Seasonal TSP Calculator Most Federal Employees keep their TSP money in the G Fund or other fixed allocation. Some do much better by either applying investment strategies or hiring professional help. The difference could be over $1,000,000 for an average Fed retirement.

Based on 2009 end of year figures, buy and hold strategies have resulted in:

• Approximately 6% G Fund average rate of return over 20 years • Approximately 7% F Fund average rate of return over 20 years • Approximately 11% C Fund average rate of return over 20 years • Approximately 6% S Fund average rate of return over 20 years

• Approximately 16% average rate of return over 20 years using example Seasonal Strategy:

Using a remarkably simple and unscientific formula of seasonal moves between the G, F, C and S Funds, the rate of return averaged in excess of 16% over 20+ years. This strategy is based on only six allocation moves per year:

• January 100% F Fund
• February 100% G Fund
• March - May 100% C Fund
• June - October 100% F Fund
• November 100% C Fund
• December 100% S Fund

What kind of returns can knowledgeable people get? Play and watch FantasyTSP™ to find out. Learn and make money for your own retirement. Use the TSP Center Seasonal Calculator to see how a consistent seasonal allocation pattern over the years performs vs. buy and hold.


F Fund - I saw this from Behind The Money, By John Melloy, Executive Producer, Fast Money

http://www.cnbc.com/id/38934870

Analysis from one Wall Street strategist shows that the pace of money flowing into bonds is faster at this stage than the infamous Dot-Com bubble of the late 1990s. And that’s not necessarily bad news for those Treasury investors.

Almost two years into the bond flight, about $550 billion has poured into U.S. bond mutual funds and ETFs, according to BNYConvergEx Group Chief Market Strategist Nicholas Colas. Using inflation-adjusted figures, investors had put $499 billion at this same stage of the Internet bubble. Colas selected December 1996, the month of Alan Greenspan’s “irrational exuberance” speech, as the estimated start of the bubble in equities. For bonds, he uses the collapse of Bear Stearns in March 2008.

"We all know bubbles can last longer than anyone thinks possible, and the money flows give us a sense just how much more cash may be waiting in the wings,” said Colas, in a note to clients today. “In total, U.S. equity stock funds logged some $840 billion in new capital from Greenie’s warning to the peak of the NASDAQ, and over $1 trillion before money actually stopped flowing into stocks. So that $550 billion in new bond fund money may have some more company soon, if the 1990s period is any guide."

Government bonds will have their best month in three years this August as prices surged and yields fell. The 2-year Treasury yield hit a record low this month of below a half percent and the 10-year yield touched a 19-month low, illustrating just how much aversion to riskier asset classes there is right now.

"Out of everything that could be a bubble, bonds could be the one that lasts the longest,” said Guy Adami, managing director for Drakon Capital and a ‘Fast Money’ trader. “Japan had a bond bubble for 20 years.”

Treasuries got a boost this month after the Federal Reserve began using money from its maturing mortgage portfolio to purchase Treasuries, a move which further spooked the equity markets about just how bad the economy must be. The central bank has not restarted a formal second quantitative easing program of Treasury purchases using new money, however.

The rate strategy team from RBS called for a correction in the bond bull market yesterday, citing how overcrowded the trade has become and Fed Chief Bernanke’s failure on Friday to explicitly say from his Jackson Hole, Wyoming retreat that round two of quantitative easing is definitely in the cards.

Treasuries have been “overbought for weeks and in dire need of a ‘long squeeze’,” said Bill O’Donnell in a note to RBS clients.

Corrections are indeed a hallmark of any bull or bubble. The bigger question is, will investors see the same magnitude of wealth destroyed as they did from buying and holding tech stocks into 2000?

Not if they hold these bonds to maturity and the U.S. can still pay its bills they won’t. “Bond investors in the current environment can at least retort that they will, eventually, get all their money back,” said BNY’s Colas.


The F Fund may or may not be in a bubble, but look at that baby go!....................


Image

My take: I currently have 50% of my assets in the F Fund and will stay with it until that 9 day moving average crosses through that 20. Once that happens I am out!

Let's Play Worse Case Scenario

Let me start off by saying I'm not really as pessimistic as I might sound in this posting. Its just that doom and gloom are what's hot right now, so I thought this little exercise would be fun, entertaining, and hopefully educational. But I need your input.

We've printed a lot of money lately. Now I'm not here to argue whether it was right or wrong, but in my experience I have found that a majority of the population cannot adequately describe to you what money is and what makes it have value. Its always useful to step back and think about what money really is. It isn't an end in and of itself; it is a unit of exchange printed by the government. It can be exchanged for something else later on.

But what would we, as TSP investors, do if all at once......?

A) All the money we've printed causes rampant inflation making the G Fund a bad place to be (we lowered rates which put more money into circulation. When there is more money in circulation, people have more money to spend, stimulating goods and services, but also running risk of inflation) - G Fund loses value........or rather the purchasing power of your dollars would be eroded by rampant inflation - don't want to be here............

B) So to combat a surge in inflation the Fed raises rates to reduce the supply of money in the market - F Fund, already in a HUGE bubble starts crashing down, and foreign investors refuse to buy more debt because fears over our ability to pay it off - can't stay there.......

C) Raising the rates causes the market (C, S, and I Fund) to tank (people will be spending less and stocks generally go down once rates go above the 6% range) - Opps! Better run! - But where to?

BINGO! Your shafted which ever way you turn!

Could this really happen? What would we as TSP investors do?

I would love to hear your thoughts on this?

While I'm speaking of inflation, here are some interesting charts........

Here is a look at our recent inflation rates since 1990..............(Click on the charts for a clearer picture)

Image

And now here is a look at our long-term historical inflation rates............

Image

Do we really know what were doing?

Image

blakeh02
Posts: 82
Joined: Wed May 13, 2009 3:25 pm

Love the pic

Post by blakeh02 »

Thats a pretty honest interpretation IMO

SgtWs

Private Sector.....

Post by SgtWs »

Breaking news: Private sector cuts 10,000 jobs in August...........

User avatar
flight23
Posts: 1342
Joined: Mon Jul 26, 2010 10:47 am

Post by flight23 »

^ So isnt that a really bad thing?

Here is why the "news" is complete BS, two headlines, SIDE BY SIDE on the front page of Google Finance this morning:

US futures point to higher opening after ADP report International Business Times
DJIA Futures Slip After Private Payrolls Drop by 10,000 Schaeffers Research
@GlobalCollapse on Twitter
http://twitter.com/#!/GlobalCollapse

User avatar
flight23
Posts: 1342
Joined: Mon Jul 26, 2010 10:47 am

Post by flight23 »

Wow much larger gain today than I expected...
@GlobalCollapse on Twitter
http://twitter.com/#!/GlobalCollapse

visual
Posts: 27
Joined: Thu Jan 07, 2010 12:46 pm

Post by visual »

I am thinking taking a loan out of my tsp at 2.5% and shorting this market. Has anyone tried this before? What are the cons?

SgtWs

It is up......

Post by SgtWs »

It is up, but will it hold in three days from now?

SgtWs

visual

Post by SgtWs »

Visual....Just be careful. Unless you've got experience with it, shorting is a rough game to play.

User avatar
UwshUwerME
Posts: 85
Joined: Fri Jul 09, 2010 2:55 pm

One Day Late

Post by UwshUwerME »

Because of our trading rules, I was hoping to have this rally yesterday to cut my losses in August and still have my three trades in September. Oh well, I'm happy with 3.5% in one day. Good to see you again, my darling G-Fund.

JayJ
Posts: 300
Joined: Wed Sep 17, 2008 6:47 am

Post by JayJ »

Please let us know when that 9 day crosses the 20 day on the F fund. I use different EMA intervals.

SgtWs

Certainly......

Post by SgtWs »

Will do. I started using the 9/20 MAs some time ago when I was an active participant in Rev Shark's site. That was the norm there and I just kinda stuck with it.

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Fund Prices2024-03-28

FundPriceDayYTD
G $18.15 0.05% 1.05%
F $19.08 -0.06% -0.74%
C $82.21 0.11% 10.55%
S $82.43 0.30% 6.92%
I $42.57 -0.24% 5.95%
L2065 $16.38 0.02% 8.37%
L2060 $16.39 0.02% 8.38%
L2055 $16.39 0.02% 8.38%
L2050 $32.73 0.01% 6.95%
L2045 $14.91 0.02% 6.58%
L2040 $54.38 0.02% 6.22%
L2035 $14.34 0.02% 5.79%
L2030 $47.67 0.02% 5.38%
L2025 $13.15 0.03% 3.43%
Linc $25.61 0.03% 2.82%

Live Charts

Pending Allocations

Under development. For now, you may view Pending Allocations by going to "fantasy TSP" and selecting "Leaderboard sort" of "Pending Allocations".