350Z's 2007 I Fund Thread

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I agree that it's nice to purchase the shares at a price lower than yesterday's prices, but I'm not sure if it could legitimately be called a rebate. Since Barclay's is now even with what the EAFE says, then we are really only buying in at the correct price. A great (and very lucky) move would be to sell out of I when they overprice an FV, then buy back in when they correct it.
 
Paladin said:
The way I look at it (which could be wrong) is as follows:

A. You hate to SELL the I-Fund on a day with a -FV. Why? Because TSP subtracts the FV and gives you less money. And since you sold, you will not be there to recoup the FV correction on the following day. Even if Barclays overestimates the FV, and even if they give it all back the following day, you lose it all because you sold and you're out.

B. The reverse tends to work when you BUY the I-Fund on the day following a +FV. You already know that Barclays has applied the +FV and therefore you are guaranteed to receive the full FV correction on the day that you buy. And since Barclays tends to overestimate the FV, you will likely get more of the FV correction than you deserve. It's a sure thing, a guaranteed rebate, regardless of what the OSM does overnight.

Case in point. Monday the USM rallied, causing a +FV of 28 cents. If you bought the I-Fund on Tuesday, you automatically received the -28 cent rebate. And since the OSM only went up 15 cents on Tuesday, the net result was that you bought in at a -13 cents (-0.54%) rebate. Since Barclays once again overestimated the FV, you got a great deal when you bought in and automatically received the inflated FV correction! :)
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I don't see this.
If you buy the I fund the day after an FV is confirmed (Charmed's hypothesis) you are buying into the post-correction price because by the time the FV is confirmed your IFT will be as of COB the following day, at which time the FV correction will be applied. Therefore, regardless of how far off Barclay's estimate was, you will be buying in at "even." (Unless, of course, another FV is applied.)
The potential application of charmed's hypothesis is that an FV suggests volatility, and (in a bull market) that will usually equate to big(ger) gains. Look again at the stats he posted. Most or much of the gains of all the equity funds could be realized if you simply limited your exposure to stocks to the days immediately following an FV. Something to consider, but not really a basis for a strategy.

OK, fabijo just beat me to the post, but now that I typed it all in, I'm posting it anyway.
 
Paladin said:
OK, upon further analysis I agree that you are only buying in at the correct EAFE price once the FV correction is applied. Forget the rebate idea. Like I said, I could be wrong...and I was. Thanks for straightening me out. :embarrest:
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Ok I know I'm a rookie and I'm definitly not a math junkie but...

I'd have to respectfully disagree with your reversal in opinion. If you time things just right, don't sell & Buy back to back or vice versa, then I see an advantage. I'd call that advantage a rebate.

But what do I know? This whole delayed IFT thing really screws up my fuzzy math. :rolleyes:
 
qibovin said:
The potential application of charmed's hypothesis is that an FV suggests volatility, and (in a bull market) that will usually equate to big(ger) gains.
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This is where it really might be considered a rebate to buy in at a day like yesterday. The U.S. markets suggested another move up after the close, so it looks like the OSM will continue the trend up today. Since we are buying into the internationals at the correct price, it seems like a sure bet against getting surprised by an unfair FV, while "guaranteeing" we are going to see some good upward movement.
 
What we saw from Charmed855's analysis was that the I-fund significantly out performed the US funds on day's following the FV correction (i.e. today, using Monday as the initial FV even though everyday has been a running FV for a week straight now, according to Greg).

Here we are, and were looking at a slightly higher opening in the US, but we are already seeing some nice gains (about half a percent from the OSMs).

Griffin said:
OK, so now that we got our -13 cents we are now even with the EAFE as it was around noon, and since we know we are just shy of .50% move since noon, it is likely we will see the OSMs open a little under .5% up.

I apologize for rehashing this, but I am trying to figure out if my logic behind the benefit of a post FV buy in is based in any kind of reality. We know Charmed855's analysis showed that it was effective. But why?
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Yesterday I may have touched on the reason. If your buying in on a post positive FV - your buying into a rally and because of the FV correction, your very likely to be buying the EAFE price (i.e. the noon price on that day) - but being that it is the day after the initial FV, your buying into the residual of the rally (most rallies have one strong day).

So think about the strategy like this (start in domestics and move to international following the FV). If you start out in the domestics, on day 1 your getting all of the US gains from day 1, on day 2 your getting all of the US gains from day 2, but then you in the internationals on day 3 and your getting the last half of the gains from day 2 and the first half of the gains from day 3 (assuming day three doesn't FV). Since we know rally's shoot up then loose momentum as they progress, by doing the roll over, your trading the second of day 3's gains for the second half of day 2's gains - which given the momentum loss principal, should be better.

Does this make sense?
 
Griffin said:
So think about the strategy like this (start in domestics and move to international following the FV). If you start out in the domestics, on day 1 your getting all of the US gains from day 1, on day 2 your getting all of the US gains from day 2, but then you in the internationals on day 3 and your getting the last half of the gains from day 2 and the first half of the gains from day 3 (assuming day three doesn't FV). Since we know rally's shoot up then loose momentum as they progress, by doing the roll over, your trading the second of day 3's gains for the second half of day 2's gains - which given the momentum loss principal, should be better.

Does this make sense?
Click to expand...

Yup, and you've pointed out this similar strategy for over half a year and I've been too mired in the day to day market details to step back and let it work. thanks for waking me up!
 
The Good.

Dollar falling off a cliff. OSM continues to rally. I fund must be up big time.:)


The Bad.

Dollar falling off a cliff. Yields shooting up. My guess is that it's because of the Chinese threat to dump our bonds. The last time they sold our bonds was back in early June. That caused yields to spike above the Feds fund rate. Which caused a sell-off in stocks. This is a serious threat.

I will take what I can get today and wait for a retest of the lows.
 
If this rally holds or climbs till the cut-off (1200 eastern time) then slowly loses steam over the next 4 hours it may be enough to cause -FV. Then if you get out you will be "losing" the correction the following day. But the risk becomes greater because of the USM sell-off affecting OSM's and dragging it down greater than the FV correction. Today is a good day to speculate it. What do you think? Will rally, fade, or flatline after the cut-off?
 
Dollar is getting killed by UK and EU. They have fed type meetings tomorrow I think. Are they going to raise rates? Dollar is back down to near 80 again. It may bounce tomorrow. Meanwhile great day so far today. Bloomberg has us up 1.4%
 
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