20 DEC - 24 DEC

[Safetyguy]

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I'm still nervous about the I fund but I can't deny that it has performed well this week.

Regarding the I fund’s performance, the dollar's fluctuations obviously have an impact on the fund's value. The dollar's current weakness has led to the I fund's good showing. Remember, a weak dollar means that the I fund shares you hold (which are presumably valued in foreign currencies) will be worth more “lower value” dollars as the dollar drops compared to foreign currencies. HOWEVER, we mustn’t forget our investing fundamentals here – are the foreign stocks that make up the I fund performing really well or is the rise we have been seeing just due to the dollar dropping? I dunno but I will look into it.

US currency is probably stretched for the short-term,but how low can it go? If it goes to $1.40 to the euro, we can invest appropriately. If the buck drops to a $1.80/euro there are bigger problems that I don't even want to think about. Late-comers to this I fund rally could be buying BOTH an overbought set of global stocks (as covered by the I fund portfolio) AND an oversold US dollar. What this means is that a combination of a dollar rally in conjunction with a fall* in foreign stock prices would aggravate and accelerate losses in the I fund’s share price.


* It is worth noting that EFA is heavily weighted to Banks & Financial Services firms. If Greenspan keeps increasing interest rates “at a measured rate” as promised, other central banks could follow suit. Yield curves around the world would flatten and flat yield curves cut deeply into bank and brokerage profits.The I fund share price would drop like a rock.

 

[puertorico]

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smedlap Thank u gentleman

Not to chevy I-fund for me in the bounce get lucky again

Hey folks

A friend of mine talk me that, take an eye in january he hear
a rumor that january market will go down the hill.So let see
if some body has any information about it.The guy who talk
to me, he call him self as a market master It's funny but he
is very good .Three month ago he recomment me to stay
put 10-c 30-s 60-i unstil the rest of the year.And he advice
me to not put all in one basket, can be to dangerous if I dont
have a cue of what I'm doin.so at last he advice me again
not to get to cue on january.I respect him a lot. I'm not in his
level of knoledge about market.He don't guarantee what he
said but he will take some out of the tablejust in case.


It jus a rumor ,not panic ok let find out
That's all folk

 

[coolhand]

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Safetyguy wrote:

Remember, a weak dollar means that the I fund shares you hold (which are presumably valued in foreign currencies) will be worth more “lower value” dollars as the dollar drops compared to foreign currencies.

This is true, however I'm not sure what your thought is here. Are you saying that as the dollar drops in valuean investor in the "I" fund would be exposed to a greater risk of loss in the eventual event that the dollarstarts to recover?
If so I would say yes, but if an investor can recognize when to sell off those shares they can avoid a lot of pain. If my investing strategy was buy and hold I would avoid the "I" fundright now.

HOWEVER, we mustn’t forget our investing fundamentals here – are the foreign stocks that make up the I fund performing really well or is the rise we have been seeing just due to the dollar dropping?

In general, I do not believe they are performing particularly well. But as the dollar drops in valuemany foreign stocksappear to bea better value asthose currencies are rising against the global standard, namely the dollar. Our twin deficits are not helping. Fundamentally, risk is increasing in terms of US investments by foreign inflows. And then there is the global imbalance. US consumers continue to spend, spend, spend while saving very little. In Euroland and Asia the opposite is happening. They are sitting on huge amounts of savings and consuming much less than we are. It is possible that if they start consuming more we could see a shift in market dynamics. In that case, those markets may becomethe catalyst that drives the global market instead of the US.

US currency is probably stretched for the short-term,but how low can it go? If it goes to $1.40 to the euro, we can invest appropriately. If the buck drops to a $1.80/euro there are bigger problems that I don't even want to think about.]

No doubt, a drop beyond $1.40/euro would make many more nervous than they might already be. It is important to note that our weak dollar policy is an attempt to reduce our trade deficit. By making our products cheaper on the open market we can export more. That's great for those businesses that compete globally. Unfortunately, some foreign markets are pegged to the dollar (China being a primary one) and is making it difficult for our administration to achieve their goal of increasing exports.

Late-comers to this I fund rally could be buying BOTH an overbought set of global stocks (as covered by the I fund portfolio) AND an oversold US dollar. What this means is that a combination of a dollar rally in conjunction with a fall* in foreign stock prices would aggravate and accelerate losses in the I fund’s share price.

Certainly possible.A dramatic reversal may notbe the most likely scenario. There are negative implications tomore countries than the US should this happen. We are the catalyst driving the global economy right now. Asia is loving it. They are export driven countries (who stay competitive in spite of a weak dollar). Europe on the other hand is suffering from a strong Euro and has not yet gotten its collective act together, but I think they are moving in the right direction. Supposedly, our twin deficits along with John Snow talking down the dollar are preventing a dollar rally. It seems to me we should see a rally coming if this is true.

* It is worth noting that EFA is heavily weighted to Banks & Financial Services firms. If Greenspan keeps increasing interest rates “at a measured rate” as promised, other central banks could follow suit. Yield curves around the world would flatten and flat yield curves cut deeply into bank and brokerage profits.The I fund share price would drop like a rock.

Like a rock? Perhaps, but I have a hard time seeing quarter point increases causing a violent reaction.Our administration is also trying to keep our economy moving. Too much ofan increase in interest rateswould eventually stall that effort. The fedknows that. It is a balancing act. Our prime lending rate isstill in negative territory so we can continue to raise rates "measurably" as AG says, without causing too much pain andkeeping inflation in check.

To be sure, this topic is much more complicated than the above dialogue conveys. I am not sure of anything with regard to the weak dollar. There are too many variables involved. Great comments Safetyguy :^. It will help keep us all thinking.

 

[smedlap]

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Coolhand,very well articulated with a fine mind. Safyman - thanks for your comments. My 2 cents - Japan yen will continue to drop. Euro will go faster to 1.4 to the dollar before the EU makes an attempt to intercede. I expect it to rise quickly as the market opens next week as Europeans remain on holiday skiing. Can't muster organized support or votes an prefer to vacation vice work. Global companies listed under EFA "are" excellent selections even if their foreign country GDPs and growth rates (less China and an improving Japan) are in the soup. This is why I fund has generally tracked S when the dollar did not fluctuate, and both led C fund. There are precarious waters in front of us probably 5 weeks out so we all need to be alert to make sure we as a group - are safely on the beach, and not trying to make the last play of the day! At least informed. My sack is full already, so I am already very appreciative of the site contributions and am prepared to run (in 5 weeks)!

 

[Safetyguy]

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Coolhand -- it looks like we are sort of on the same wavelength.

In today's Wall Street Journal, there is an interesting article about the amount of money that is going into foreign stock mutual funds. (12/24/04 page C1 Column 2, "Dollar's Pain Turns out to be Investors' Gain"). If you get the WSJ or can read it somewhere (it is available on-line with a subscription too) it is worth a single sitting read.

One interesting sentence in the article, "Over the past three years, the Morgan Stanley Capital International Eurpoe, Australasian, and Far East Index, or MSCI EAFE Index , of selected stocks has averaged a 0.8% annual gain in local currencies, but that jumps to 12.4% once translated into U.S. Dollar terms, according to MSCI."

I probably will get back into the I fund (maybe up to 30%) at some point in the next few weeks but I want to seereal strength in the EAFE markets and/orreasonable assurance that the value of greenback will stay down.

Are these similiar to your thoughts?What about everyone else?

 

[coolhand]

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smedlap wrote:

There are precarious waters in front of us probably 5 weeks out so we all need to be alert to make sure we as a group - are safely on the beach, and not trying to make the last play of the day! At least informed. My sack is full already, so I am already very appreciative of the site contributions and am prepared to run (in 5 weeks)!

I agree smedlap! :^I'm not sure about the timeline, but I know we have to monitor the global marketplace carefully. You have done well with the "I" fund my friend. More aggessive than myself, but I'm learning. As I becomemore knowledgable I'll make more aggressive moves (not that I'm conservative).

 

[coolhand]

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Safetyguy wrote:

Coolhand -- it looks like we are sort of on the same wavelength.

In today's Wall Street Journal, there is an interesting article about the amount of money that is going into foreign stock mutual funds. (12/24/04 page C1 Column 2, "Dollar's Pain Turns out to be Investors' Gain"). If you get the WSJ or can read it somewhere (it is available on-line with a subscription too) it is worth a single sitting read.

One interesting sentence in the article, "Over the past three years, the Morgan Stanley Capital International Eurpoe, Australasian, and Far East Index, or MSCI EAFE Index , of selected stocks has averaged a 0.8% annual gain in local currencies, but that jumps to 12.4% once translated into U.S. Dollar terms, according to MSCI."

I probably will get back into the I fund (maybe up to 30%) at some point in the next few weeks but I want to seereal strength in the EAFE markets and/orreasonable assurance that the value of greenback will stay down.

Are these similiar to your thoughts?What about everyone else?

My thoughts are indeed similar. The WSJ is something I do not currently have access to (unless the library has it). There is so much information on the internet that I am avoiding paying for anything. That and what I learn on this website from others really serves me well. I will say however, thatIbelieve the WSJ to be agood source of information.

30% "I" fund is the most I have held at one time. I can't complain that I'm not currently invested in it though.Up until acouple weeks ago I had exposure to it ever since I started investing in the TSP. I did very well with it. Now I'm looking for a good entry point (near term) again. Don't know if I'll get it. I'm hoping next week.

 

[tsptalk]

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puertorico wrote:

A friend of mine talk me that, take an eye in january he hear
a rumor that january market will go down the hill.

Thanks PR! I plan to be very careful in January. I mentioned that last year I got burned by being too defensive too early last January. I will lighten up some initially and get even more defensiveon stocks if I see any signs and I hope I'm not making the same mistake again.

 

[Guest]

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puertorico wrote:

Not to chevy I-fund for me in the bounce get lucky again

Puertorico, or should I say "Bounce Meister", what's your next move on the I fund, now that the Christmas weekend is over?

 

[puertorico]

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from 60-c 30-s 10-i today ,

to 30-c 40-s 30-i for tuesday.

10-I Today
30-I Tuesday
50 or 60-I Wed, depend ontuesday's dollar vs euro before deadline

Everyday dollar vs euro can changes how I get on i-fund

When I like to be in I-FUND is when dollar get to 1.340 or more
then the dollar will fall next day half ,and then to the bottom.
It happen two times in the las two week.I dont know in the future will.

Chaplain dont follow me I dont want tofeell guilty ok..I Dont think
is a big deal...

 

[smedlap]

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Take a rest puertoroco. Stay put in I fund minimum - 30%. it is up 0.5% today. You're exhausting me with your trades. Take some easy money and rest more. You did well last week! :^

 

[puertorico]

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smedlap one week for me ,the other week is for u okhalf and half :^

U take care the i-fund rallies and I take care later in the rebound.

 

[Guest]

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puertorico wrote:

Chaplain dont follow me I dont want tofeell guilty ok..I Dont think
is a big deal...

Hey, I want to run with the Big Dog! Don't be modest...you got the juice at the moment! Happy New Year. 100% I until the dollar finds some traction... I interpret the US stocks to be out of steam. Maybe play I and G until we get to middle of Jan. Will change my mind tomorrow .

Happy New Year!

 

[puertorico]

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100% I-fund = system-trader, chaplain and smedlap

dollar down euro up that means $$$$$$billetes$$$$$$$$ in I-fund:^.

 

[coolhand]

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Chaplain wrote:

Will change my mind tomorrow .

Happy New Year!

Hey, that's how I feel .

 

[coolhand]

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puertorico wrote:

dollar down euro up that means $$$$$$billetes$$$$$$$$ in I-fund:^.

You're doing great puertorico! :^I'm hoping it continues for awhile longer yet.

 

[coolhand]

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smedlap wrote:

Stay put in I fund minimum - 30%. it is up 0.5% today.

Hey smedlap,

I'm with you. Went 50/50 si today. woof!

 

[smedlap]

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Hi guys. We'll, I was lucky. Somewhat though as I played what I saw to be thebest hand right now. Tom is doing a great job forcasting. Things just didn't turn out right today for the C and S. I do not know why yet. Have to study the data. I fund (lagging) had too much of a spread to catch up to C and S and it is loaded with excellent companies so don't go just go on poor foreign country GDP. I do believe the S will recover. My last comment is S&P 500 fair valuefor Dec 31has beenpegged at1225. As Tom has projected S and I should do better. I think there has been a lot of early jumping (pressure) to get rid of dollars before it really dropped. It is probably oversold but that will not change for a while as Europe and Asia are either out skiing or cleaning up. Our prayors go to all in the Asian beach areas that lost sooooooo much.

Still 100% I fund. Plan remains to play I or S until the last week of January. Have to study early January also. Do not believe C fund to be oversold with 1% gain still achievable as a benchmark. Good luck chaplain, Puertorico, coolhand and Rob. Teknobucks added some good info on currency this weekend. Chaplain, you had your hands full I believe:^ Waiting for Tom's assessment and TSP to update everything!

 

[Guest]

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smedlap wrote:

Our prayors go to all in the Asian beach areas that lost sooooooo much.

Well said, and Amen.

 

[Guest]

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Aother strong dayfor the I fund?

Associated Press
Dollar Slips to New Low Against Euro
Tuesday December 28, 8:29 am ET

Dollar Slips to New All-Time Low Against Euro, Which Rose to $1.3643 in Thin Trading