So I'm totally new at this and just transferred my funds 100% to S a few days ago. It seems to be taking a bit of a dive today. What advice do you guys have about when to decide to jump ship and when to ride out a stock? I would imagine it has to do with knowing whether its a short term slump or the start of a downward trend. what signs do I look for?

Macbeth. Many things should be considered including your age, time to retirement, willingness to accept risk, etc...

If you are new to investing, you may wish to consider the L Funds which TSP provides for an unmanaged approach to retirement planning.

I would say don't invest in anything if you don't understand it. Do some research first and and at least understand what the different funds track, etc.

If you don't understand exactly what you are doing, sooner or later you will get burned. Park your money in the G Fund for now and try to learn how to make good investment decisions. Whatever system you come up with, test it, test it, and test it again on historical data.

_________________
Disclaimer.Not a registered investment advisor. Does not provide any individualized advice. Past performance is not necessarily indicative of future results.Future accuracy and profitable results cannot be guaranteed.©2009-2010 Peaceful Gains,LLC.

re: What advice do you guys have about when to decide to jump ship and when to ride out a stock?

Depends on how much risk your willing to take. Lets say you have 15 years of gov't service left before your eligible to retire and you stay vested in the S Fund, make bi-weekly contributions to the S-Fund and it declines 40% in 2010. Are you comfortable with that 40% loss knowing that you have 14 more years to recoup the loss?? Ordinary most people would be comfortable with this level of risk given the time horizon. However, don't forget that the 08-09 Bear Mkt wiped out 10 years worth of S&P Gains. Factor that in and the 14 years doesn't look so grand anymore.

What I'm getting at is you need to set your own level of risk. For myself, if I had five months or fifty years of gov't service, I would still set my stop loss at -5%.

Thanks for everyone's advice. I'm ok with taking a fair amount of risk, especially now when I don't have much in my retirement account (I'm only 24) just yet. I want to learn how to read the market and make good decisions like most people have said. Does anyone have 2-3 good suggestions on books I could read that would help me out here? I understand what each of the funds follows, but not how to read the market and make educated guesses on which direction things will go, so I guess that's the most important thing for me to learn right now.

I hesitate to post any more to give advice because my return the last two years really stinks. Maybe best advice is to do opposite of me HA! I got practically no gain last year by being too conservative, jumping out everytime the market went down a hair. But the TSP accounts are not nimble enough to dodge the 3 and 4 day trends. Furthermore, the TSP trading limits on unrestricted IFTs hinder trading that much greatly. So I have changed to a longer term strategy for this year. What I am doing now is each morning I plot the previous close price of each of the indices for C, S and I against their 66-day exponential moving averages (EMA). I use http://bigcharts.marketwatch.com/ (free site) to do this. The indices are C = SP500, S = DWCPF, and I = EFA. If the price drops below the 66-day EMA for a fund, I'm out to the G-Fund. Otherwise, I'm in. I would put a maximum of 40% in I fund and 30% in C and or S. Watch it like a hawk or it will punish you if you skip a day. Right now all 3 are a good 5% above their 66-day EMAs. Eventually, they will dive down to below the 66-day EMA and I will sell about 5% below the high point (like Jeffvan1 says above), but in the long term (6 months to a year), I will make some money. I hope. One thing I know is I will not lose 66% in some 2008-like crash because I will be safely in the G Fund. BTW, 66-days is just 3 months, nothing magic about it. You could use another number of days. Good luck.

Sounds like pretty sound advice. I'm currently using http://www.tspfundtracker.com/ to keep track of funds over time and google finance to watch the during the day on my desktop while I work. Neither keeps track of the moving average, so your site might help me with that.

You said what your signal is to sell, and I think its a pretty sound one from the other things I've looking at. What signals do you look for to buy? A few days of the fund trending back upward? It breaking back above the 66 day EMA?

Actually, google finance does have the EMA on there.

Actually, google finance does have the EMA on there. I'm looking at the historical data and it seems as if your strategy of selling once the price actually drops below the 66 EMA would hurt you, wouldn't it? It might save you from losing a ton in crashes, but in the short term (6 months), it seems like it would hurt you.

The way I'm figuring it is that looking at the S fund, last time it went below the 66 day EMA in late November, you would have sold. but then it bottomed out less than a day later barely below the point you sold at and then it went on to gain about 10% between then and now, which you would have missed a big part of depending when you buy back in.

The time before that it went below the 66 day EMA was in late October. You sell then, but it bottoms out a week later only 1-2% lower than where you sell then goes onto gain about 4-5% before it starts toward that October drop. I'd imagine you wouldn't have bought back in that soon after selling and you would have missed those profits.

I'm completely new to this, so I may not be looking at it right, but it looks like your strategy causes you to sell low and buy high, which is the opposite of what you want. Would perhaps actually buying once it drops below the 66 day average be a good strategy since it seems to bounce back and go up right after? It would open you to huge drops of course if you buy and it keeps plummeting. It seems you'd have to analyze the strategy and see how often each would occur and historically what the net gain/loss would be. I'll have to look at other funds and see if this aplies to them as well.

I'd like any and all feed back on this if possible, I want to know what the flaws in this thinking are so i can learn.

If you keep doing that (double-checking advice people give you, instead of blindly doing it) you will have much success, I predict.

@JayJ

I'm curious. Why a 66 Day EMA ???? Have you considered a 20/50 Day MA ????

Macbeth,
I should have clarified that my current plan involves buying and selling as close to the 66 day EMA as possible. The only problem with this is the TSP IFT limit of 2 unrestricted IFTs per month. If the price dances around the 66 day EMA a few days, then I could get stranded out of the market until the next month arrives. That situation has not happened very much in the past. But if it does this year, you can be sure that the market will go up at least 10% while I'm trapped out of it. Your analysis is correct in many respects. My plan can and will result in small losses from time to time. I am hoping that it will result in larger gains as well. I am eligible to retire now and what I can not accept at this time of life are large losses. I don't have years to recover from a mistake. Last year I used a shorter EMA, I think it was 20, and I often delayed a day before IFT. That system proved to be a mistake, because the market was too volatile last year, forcing me to sell (taking the small loss) too many times, cancelling out my gains. So I have made an adjustment, as I have described. One thing you will note as you make IFTs is that there is a 1 day delay due to having to buy or sell before noon in order to get todays closing price rather than tomorrows. In regard to another remark, you talk of buying low and selling high. The problem is, what is low and high - ie compared to what? It is OK to buy high and sell even higher. It is bad to buy low and sell even lower. At some point you have to decide to cut your losses before you are irrepairable harmed. My point last year was too conservative. I have relaxed it some.

beafet-
You are correct I should not have posted. We are only 2 weeks into 2010 and already I have sunk to #107. I have no trphies like Jeffvan1. Macbeth should instead pay attention to 12%ayear, who is able to know exactly which two days within the last 14 to be in the market. I surely can't do that. I was only trying to be helpful, but no one should listen to me.

Jeffvan1-
I posted above "BTW, 66-days is just 3 months, nothing magic about it. You could use another number of days." I looked back 5 to 10 years and found that using 66 day EMA during that time would have protected me from huge 2008-like drops, kept me in the market during uptrends even though it was very volatile (+/- 5% daily fluctuations), and produced few in/out/in/outs like Macbeth describes above.

Good luck to all in 2010.

1. You are not the only one eligible to retire. What are you going to do with your TSP Account? I plan to open a self-directed brokerage account and throw the whole thing in there. Then I will monitor the top performers on this site and also read my Ebb guy's advice. I believe that by using comparable ETFs I can get out of them when a bad day looms and then move proportionately back into them when the sun comes back out. That should beat the TSP program because I eliminate the 2 trade rule. What do you think?

2. Why not follow me and reset your fantasy tsp account? If you didn't read it there is a whole posting that went on forever about the pros and cons of doing so, but in your case I believe it would be wise to reset, get back to terra firma, and work on positive gains rather than playing catch-up.

3. Remember, just because you retire does not mean you cannot continue to increase your TSP account whether you stay in the tsp or get out as I plan to do. The key is your attitude and your approach.

4. Did you read the article in thebonddad blog.com about some of the people leaving the work force planned it that way rather than losing their job? Interesting.

What about the system proposed by TSPKing? Did you not read it? I mean it takes up 3/4's of the front page and just doesn't want to go away, you know? Why not try his system and see how well you do, without all the constant monitoring. I thought feds had real jobs and didn't have time to look at this stuff during work. Or you could follow Peaceful or any of the top return fantasy players. Imagine what your account would look like if you had had a 74% return in 2009? In other words keep it simple!