New TSP Restrictions

[TSPking]

The proposed TSP restrictions announced by the Federal Retirement Thrift Investment Board can be summarized by:

Participants can make two (2) interfund transfers per calendar month. After that, they may only move money from the Fixed Income Index Investment (F) Fund, the Common Stock Index Investment (C) Fund, the Small Capitalization Stock Index Investment (S) Fund, the International Stock Index Investment (I) Fund, and the L Funds to the G Fund.

We will count the interfund transfer based on its process date, not the date the interfund transfer was requested.

If your first or second interfund transfer in a month moves money only to the G Fund, it still counts toward your two (2) interfund transfers per month limit.

I'm guessing that many investors who take an active role in their TSP may be affected by this. I doubt any effort to stop it will be successful since the supporting evidence of a need for change provided by the TSP Board suggests that the problem (excessive trading) is caused by a very small percentage of TSP investors.

Considering a monthly 2 trade limit, how will active investors achieve desired returns? I'm thinking a seasonal strategy with supporting historical data is a good option.

[Steve0]

Two transfers a month does seem restrictive, though I would probably rarely use more than that myself. I am not confident enough to try and time the market.

Better make those moves count and remember to change your allocations to the correct fund so you dont have to waist a move. I am guilty of that one.

[ZME_ARTCC]

I use a takeoff of the dollar cost averaging method of investing.
I use the delta i.e. BETA of the current market as a basis for the percent to add to or remove from the market.
If the average delta of the past three declines are say 5% then as the market declines from a peek I would invest 10% for the first 1% of market move. 20% for the next 2%. 30% for the next 3% and 40 i.e. all in after the next 4% drop. As you can see I rarely ever get 100% invested in the market.
I remove the money from the market in a reverse fashion. 4% up 40 % out and so on.
Do the math, I make half of the percentage change everytime.
The only exception is when the market is down more than 10%.
This rarely ever happens, so when it does, I am just stuck until it makes my target point.
When the market starts to drop, it is usually very rapid, happening in about 15 to 25 days.
Their restrictions will destroy my way of investing. I will now have to gamble when to make changes to my account instead of using a tried and true method that is used by many professsional fund managers.
I wonder if the GOOD O' BOYS bought Puts during this mess they have created.
Everybody here is afraid to make a trade, being scared of getting locked out of trading.
Maybe, the GOOD O' BOYS are trying to make that last big profit in the market before they are replaced by the new administration.

[TSPking]

ZME_ARTCC, welcome to TSP Center

Theres a strong effort to fight the restrictions at http://www.tspshareholder.org. They seem to have presented a number of well documented arguments that contradict the TSP Board's claims.

I'm interested in investment strategies that can be clearly defined as you've done. 2007 threw us a couple of curve balls. How did your DCA takeoff perform for 2007?

[ZME_ARTCC]

I was fully invested only once during 2007. Even at that I made 11.75% for the year.
My goal is to make 15% a year and this is the first year that I haven't made my goal since daily trading began.
I have a friend in Boston that has been doing a lot better than me, using the same system. He just uses a more aggressive approach. He is all in at a 5% drop. I am afraid he is going to get burned if we have a major correction.

Lookup DCA strategies on the web and play with some of the numbers. You will have to change the approch to percentages instead of dollars. Also lookup the Golden Ratio and how the market relates to it.

[TSPking]

Thanks for the information. I'm on travel until late this week. I'll be looking into this once I get back.