amoeba's Account Talk

[Birchtree]

The important fact to remember when an investor decides to DCA into a downtrend is that you will cause yourself pain. You must be able to absorb that pain because every time you make a purchase buying more shares they will probably be devalued on top of what you already own and reduce your gains - however if you know a better day is coming there is nothing like buying on the bottom - and a U bottom is always preferable. There is no sense in having a big run up in share prices if there are no shares participating - TSP is a fiduciary account and designed to supplement retirement. It takes a working lifetime to build a substantial balance with payroll contributions and TSP provides an efficient and cheap way to increase that balance beyond contributions with active management. DCA is always the best approach as Anthony described. I'm doing that now with my recent purchases of MEE - buying cheaper and creating pain - but I see their problems as an opportunity to increase my share position for a greater profit down the road. Be in to win.

 

[nasa1974]

I agree Birch. You need to be in to win, but you also have to have money to make money.

 

[JTH]

Lord knows I love & respect all of you, so please take my annoyance with a grain of salt.

It's one of those "put up or shut up" moments. The tracker proves B&H DCA doesn't work, let's see some account balances that prove otherwise so we can put this tired dog of an argument out of its memory.

We can go back and forth on this and we already have more times I care to remember. I'll just simply state the DCA works better in an outside account such as a ROTH IRA where you have more control over your options. However, I'll also say this is the TSP world where we have 2 IFTs, 1 day where your contributions drop into you’re the account with the fund of your choice, and a 1200 noon cutoff to contend with. I'll also agree there are plenty of folks here (including myself) who made trading mistakes from 2007 to today. But this is a small slice of time and many of these traders have learned valuable lessons that will benefit them for the next 20 plus years.

When I think of DCA, I think of my kids asking for 100 dollars and me giving it to him without asking what it's for. If you don't respect the proper allocation & timing of your money, your money will disrespect you. Lastly I realize one of Birchtree's main DCA points is how percentages don't reflect the true balance in your account. That's all fine and dandy but we measure each other's performance based on percentage NOT account balance. So if someone want to make this argument, then I challenge them to show us proof we can all agree on. Proof being your account balance from Sep 2007, to Mar 2009, to today.

 

[Birchtree]

JTH,

Should I go to the G fund and wait for you to catch up.

 

[Elgallo]

I'm one of those dreaded BH'ers. CS and I only 30-40% each +/- with a tad of cash 2-5% at times in G to buy dips over and above my DCA each PP. I generally do not trade these funds very much at all as I have had this allocation for quite some time.

Currently the difference amounts to 5% of my current balance. So I guess your are generally correct in your assertion i.e. I am down 5%, however if a 5% loss over two years seems to much to bare then maybe the market isn't a place to be. And BTW we are just beginning to recover from the WORST economic catastrophe since the depression.

By continuing to buy at what only can be considered rock bottom prices has help mitigate most but not all losses and I accept that as a consequence of the game I am participating in.

My balance is in the top 3% of this board as evidenced by a recent poll in another thread and my recent PIP is 54%.

I think I'm doing OK for a neophyte BH'er, and I am really not sure I could do better considering the constraints placed upon us by the TSP board. BTW I have been in the TSP game since 1987 or so, and am 3 years from retirement.

 

[OBGibby]

I'm a B&H'er and have no regrets. Proud and faithful DCA'er. My money, my rules...

 

[Minnow]

My money, my rules...

That's really the bottom line, isn't it?

 

[JTH]

JTH,

Should I go to the G fund and wait for you to catch up.

Alright smart azz, short answer is no. We are clearly in an intermediate & long-term uptrend. Now don't go making me dig up yet another one of my threads proving a blind dart-throwing monkey can beat buy and hold. If it makes you feel better, my Dad is a blind DCAer and I promise you he hasn't recovered prices since the 2007 peak. Again I say to everyone in this Forum, the tracker is the only agreed upon proof of TSP performance among our peers. The difference and profit from the 2007 peak to the 2009 March is huge and there is a lot of missed potential profit. The question becomes did you live up to your potential?

 

[nasa1974]

This is getting fun. :laugh: Just remember to be civil with each other and lets thank amoeba for hijacking this account.

 

[amoeba]

hear ye, hear ye, the voice of reason speaks!

It's one of those "put up or shut up" moments. The tracker proves B&H DCA doesn't work, let's see some account balances that prove otherwise so we can put this tired dog of an argument out of its memory.

We can go back and forth on this and we already have more times I care to remember. I'll just simply state the DCA works better in an outside account such as a ROTH IRA where you have more control over your options. However, I'll also say this is the TSP world where we have 2 IFTs, 1 day where your contributions drop into you’re the account with the fund of your choice, and a 1200 noon cutoff to contend with. I'll also agree there are plenty of folks here (including myself) who made trading mistakes from 2007 to today. But this is a small slice of time and many of these traders have learned valuable lessons that will benefit them for the next 20 plus years.

When I think of DCA, I think of my kids asking for 100 dollars and me giving it to him without asking what it's for. If you don't respect the proper allocation & timing of your money, your money will disrespect you. Lastly I realize one of Birchtree's main DCA points is how percentages don't reflect the true balance in your account. That's all fine and dandy but we measure each other's performance based on percentage NOT account balance. So if someone want to make this argument, then I challenge them to show us proof we can all agree on. Proof being your account balance from Sep 2007, to Mar 2009, to today.

JTH has just written the magna carta of posts.

1. where's the beef in DCA? We hear all this boasting, and no proof...and....I couldn't care less about anything except the TSP account.

2. % not true balance being fine and dandy? you betcha. The simplest way of think of this is if you lose 40% of $1,000 bucks in one year, let's just say birchtree's money, in 2008, and he had $600 bucks left, let's say he walloped the whole forum with 60% the next year. Hmmm, what does he now have? $960 bucks. not $1,200.

So go put some sugar on those brussel sprouts and have yourself a nice chaw.

3. ONLY 2007-2009? I'd be more generous (2000-2010) but 07-09 is a relevant snapshot of the fundamentally changed international market, buoyed by factors which previously never existed; massive government stimulus, long periods of low interest rates and cheap credit, more massive stimulus, and now, high unemployment (in my opinion, the key reason that inflation is kept low, at least recently).

The feeling that, after each swing, we have now returned to the past, when markets went up 10% a year ad nauseum, is precisely the reason that this market will cycle again, and again, and again.

 

[amoeba]

This is getting fun. :laugh: Just remember to be civil with each other and lets thank amoeba for hijacking this account.

Blimy - I've just been accused of hijacking my own account talk thread?

Well - not that anyone noticed, I just went 90% in; looking for a swing out of bonds and back to equities, pending settling of concerns over greece, and magnetism towards round numbers - probably somewhere just short of 1,200 S&P.

G-5
F-5
C-30
S-30
I-30

My rank has fallen to #226, but I am still beating both G and F for the year and month, and positive this week in spite of a badly timed first IFT when a whole bunch of people bought in monday for reasons unknown to me.

 

[Birchtree]

I like that move - now you'll make money. The question becomes can you hold it during the next consolidation and put the remaining 10% back to work on the bottom - DCA type strategy. I have confidence you'll find success.

 

[amoeba]

I like that move - now you'll make money. The question becomes can you hold it during the next consolidation and put the remaining 10% back to work on the bottom - DCA type strategy. I have confidence you'll find success.

Just because you said so, I think I'll do the exact opposite, that is, leave it in 2 days, make my 1 percent and let you dredge the bottom of the next cycle.

Thanks for the input.

 

[Birchtree]

Here's an old note of mine I think from business insiders. "Just a few months ago, experts were saying it would take years for ordinary people to recover the losses they suffered from the horrific stock market decline at the end of 2008 and beginning of 2009. But a new study from Fidelity indicates that many ordinary investors are quite well - as long as they didn't panic and kept putting money into the market. How is this possible? Mostly because the huge fall in the stock market created a buying opportunity of a lifetime. Investors who continued to contribute to 401(K) accounts and TSP were able to buy stocks and mutual fund shares at very low prices. When the market rallied, the returns pourd in. It all goes back to a basic rule of retirement investing - it must be viewed as a long-term venture and should not be tinkered with in a reaction to short-term market disruptions. And don't knee-jerk react and make decisions, you'll regret in the depths of crisis times."

 

[Elgallo]

Here's an old note of mine I think from business insiders. "Just a few months ago, experts were saying it would take years for ordinary people to recover the losses they suffered from the horrific stock market decline at the end of 2008 and beginning of 2009. But a new study from Fidelity indicates that many ordinary investors are quite well - as long as they didn't panic and kept putting money into the market. How is this possible? Mostly because the huge fall in the stock market created a buying opportunity of a lifetime. Investors who continued to contribute to 401(K) accounts and TSP were able to buy stocks and mutual fund shares at very low prices. When the market rallied, the returns pourd in. It all goes back to a basic rule of retirement investing - it must be viewed as a long-term venture and should not be tinkered with in a reaction to short-term market disruptions. And don't knee-jerk react and make decisions, you'll regret in the depths of crisis times."

BUMP there it is!!!

 

[amoeba]

I'm one of those dreaded BH'ers.

---

My balance is in the top 3% of this board as evidenced by a recent poll in another thread and my recent PIP is 54%.

I think I'm doing OK for a neophyte BH'er,

---

.

Intrigued by elgallo's claim about being in the "top 3% of this board" and being a buy and holder:

The way this website determines return ranking is by joining the autotracker. However, elgallo is not on it.

 

[Elgallo]

That's true amobea, I'm not on the auto tracker, but you can take it to the bank the #'s are the real deal Lucile!

I'm not seeking a ranking at all I just commented to the effect that my balance was within those perameters.

 

[merlin]

DCA does work, and it works for one simple reason. DCA eliminates emotion.


Bottomline: Emotion is the enemy of the investor. Whatever method you use to destroy that emotion will help set you up for success, whether it's a backtested system, buy-sell technical signals, or DCA. For the less educated investor (probably most of us), DCA is the simplest and least emotion-based system out there.

I tend to agree. But it was exciting when we had more interfund transfers. It was easier t omake move when needed. Just to difficult now. I find it very difficult DCA once retire.

 

[JTH]

Here's an old note of mine I think from business insiders. "Just a few months ago, experts were saying it would take years for ordinary people to recover the losses they suffered from the horrific stock market decline at the end of 2008 and beginning of 2009. But a new study from Fidelity indicates that many ordinary investors are quite well - as long as they didn't panic and kept putting money into the market. How is this possible? Mostly because the huge fall in the stock market created a buying opportunity of a lifetime. Investors who continued to contribute to 401(K) accounts and TSP were able to buy stocks and mutual fund shares at very low prices. When the market rallied, the returns pourd in. It all goes back to a basic rule of retirement investing - it must be viewed as a long-term venture and should not be tinkered with in a reaction to short-term market disruptions. And don't knee-jerk react and make decisions, you'll regret in the depths of crisis times."

Let's all understand one thing here. Since the 2007 peak volume has dried up and investors are hesitant to come back into these markets. Hedge funds want your money and one of the best ways to get the money they once had, is to tell you buy & hold works. I've already proven a DCA strategy isn't even as good as a simple 50/200 EMA cross over strategy. Here's one of my post from a previous thread, go ahead, crunch the numbers yourself to find out the truth. Or just post your balance and put me out of my misery, I'll be happy to eat your crow...

Link

Great points everyone. I've been hearing only about 3% of folks are able to consistently beat the bull markets and half of that is by luck. However, with some simple long-term timing, you can easily beat the markets in the long run.

I've already said a straight buy & hold during 2000-2009 would yield you a 3.5% 10-year gain, if you IFT'd 10,000 on the first day of each month.

As an example, a 50/200 EMA crossover would yield a a 34.02% 10-year gain with a 3.4% yearly average. That slaughters buy & hold, and protects you during the Bear markets.

Now let's take it 1 step further using the same EMA crossover, only this time, I'll exit the markets completely during sell signals, save up the money (on the sidelines), then throw it all in on the buy signals and at the beginning of each month. I'll use the same 10,000 a month strategy I used before.

That would give you a 53% 10-year gain with a 5.3% yearly average. That's a total investment of 1.2 mil with an ending balance of 1,847,180.62 million over 10 years and I didn't even count the earnings you made while you sat in the G-Fund for 4.5 years.

 

[Birchtree]

JTH,

Those are nice numbers - only we contribute twice a month. That would mean twice as many shares at lower prices - not the same as you indicate. Keep trying though.