amoeba's Account Talk

[nasa1974]

A B&H strategy can work in the right market. Remember the first two months of 2009 where pretty nasty. I mean 2009 had some great ups but some really bad downs but yet all 7 funds made money. Some more than others. I do not have as much information as JTH (great work by the way) but it appears that B&H could have some validity.


Here are the 2009 final numbers for the "<1% option" vs "Buy and Hold".
Each fund started 2009 with $100,000.00. The <1% started with GFCSI at 85,5,5,5,5. I am not an F fund fan so I kept the F fund always at 5%. You can make your own conclusions.

I posted this in my account on 1/4/10.


<1% $125,954.52 (GFCSI 40%, 5%, 19%, 18% & 18%)
80,5,5,5,5% $106,789.00 (GFCSI)
30,35,35% $127,529.20 (CSI)
G-100% $102,958.60
F-100% $106,537.82
C-100% $122,747.53
S-100% $131,737.79
I-100% $127,419.20

 

[nasa1974]

We can argue back and forth and post some pretty interesting facts to support our strategies.

But the long and short of it is with only 2 IFT's a month and a trading deadline of noon eastern most of us have been forced into being a B&H traders.

 

[JTH]

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.

Now you're just grasping at straws, it's like you're not even trying anymore. My work here is done, I have nothing I haven't already proven 7 ways from Sunday, yet you've attempted to prove nothing. Again for the third time I'll throw down the gauntlet "put up or kindly be quiet." Heck you can send it to me in an email, I'm getting hungry and waiting to eat someone's crow. I'll also extend that invitation to anyone else, but please be so kind has to not send me your personal information.

Oh well, I do my best to keep an open mind and try my hardest to help folks educate themselves, that's all I can do. Why I try I don't even know...

 

[jdphx]

Well I've learned a TON from MANY of you guys and gals!!!


The only thing I (and most?) care about is making $$$$

There are many strategies, and carefully worded reasonings,
supported by charts and numbers out the ying-yang!!

Almost to overload at times...

But we each need to take from here what is useful to YOU.
What strikes a chord with me, may not make a difference
at all to someone else.

Thanks to all.... keep the ideas coming. Share your knowledge,
your research, and even your gut instinct.

It will help some or many.


JD

 

[amoeba]

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.

Birchtree, what the heck are you talking about? Why would a bi-monthly paycheck change the number of shares? Why would the price be lower?
And why would that affect the result, namely that the simple 50/200 EMA crossover strategy outperforms buy and hold. Would being paid every day change the number of shares? No. All that bi-monthly contributions means is that you have a wee bit more fine tuning.

I'm not sure what I've learned from birchtree or, for that matter, others who never change their allocation. When the market tanks, they say it's going to go up. When it goes up, they think it will continue to go up forever. They point to the 30's-80's and say that the market will get 10% like it did before, even though it hasn't since.

I wonder how many people would be in this market if G-fund gave 6%. After the last decade, I don't think you would be alone.

 

[anthony]

I've already proven a DCA strategy isn't even as good as a simple 50/200 EMA cross over strategy.

JTH, I agree with you that the numbers are fair, but I would fall back on my earlier post. It is clear that most people on the board allow emotion to rule their trading and cannot even follow a simple 50/200 crossover system.

My proof is from the autotracker rankings and that does not even account for a single new share purchase on DCA, just pure B&H. Here's what I'm talking about:

2010: C Fund defeating 77% of the board.
2009: C Fund defeats 85% of the board.
2008: C Fund defeats 22% of the board.
2007: C Fund defeats 56% of the board.
2006: C Fund defeats 64% of the board.

The 2006-2008 numbers don't have as many participants or I'm willing to bet the C Fund would have done better then also.

Clearly some systems, even relatively simple ones, can work to help you do better than DCA or B&H. But, with the exception of 2008, the majority of us cannot follow such a system and therefore cannot do better than B&H or DCA B&H (I consider them different systems, but closely related).

A majority of us apparently dodged some of the crash with good timing, but since that point have failed on the upswing.

Why? I go back to my earlier assertion: we allowed emotion to rule our trading. EMA Crossovers, PMI Crossovers, B&H, DCA are all systems that are proven to work -- some better than others -- but you have to stick with the system and use it to silence emotion, panic, fear, exuberance, etc.

Good luck. This has been a great debate!

 

[anthony]

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.

Well, not all of us. Military goes in once, on the first only.

Also, I don't think you'd get twice as many shares. The contribution amount would just be split in half if you contribute twice a month.

Last, nice chart, but $10K is too high a monthly number. I believe max contribution without matching is $16,500/year or $1375/month. Or military at $45k/year with CZTE time.

 

[Minnow]

My proof is from the autotracker rankings and that does not even account for a single new share purchase on DCA, just pure B&H. Here's what I'm talking about:

2010: C Fund defeating 77% of the board.
2009: C Fund defeats 85% of the board.
2008: C Fund defeats 22% of the board.
2007: C Fund defeats 56% of the board.
2006: C Fund defeats 64% of the board.

The 2006-2008 numbers don't have as many participants or I'm willing to bet the C Fund would have done better then also.

Mind if I chime in here? Now remember when and what happened when the IFT limits were imposed? Not saying that I or anyone else has a better chance of beating the C fund but using the past 5 years only tells half the tale. That imposed 2 IFT limit has a large sway over how this message board worked and the autotracker results themselves.

Different strokes for different folks, but I was a lot more loosey goosey when I had unlimited IFTs. I actually felt safer with them.

 

[anthony]

using the past 5 years only tells half the tale.

The tracker only goes back 5 years.

That imposed 2 IFT limit has a large sway over how this message board worked and the autotracker results themselves.

How many trades do you think you might make in a year on a 50/200 EMA crossover system?

I'll save you the work ... 8 ... since 1985! But those 8 would have dodged two crashes.

Even if you go to a 20 crossing 50 system, I bet 2 per month gets the job done.

While 2 IFTs have constrained the savvy investors, I think they have made smarter, more cautious investors out of the huddled masses. If I had more of them, I'd just use them to DCA in smaller increments.

By the way, amoeba thanks for hosting this exchange!

 

[Birchtree]

A twice/month contribution does allow an investor to buy many more shares - especially in a bear market. The C fund price on 1/2/08 was 16.32 and on 3/5/09 was at 7.93. That's a nice drop over 15 months buying all the way down and accumulating more shares as the pain level elevates. This strategy does require courage and a certain degree of faith in the capitalist system. Then you get the blessing of buying all the way back up to 14.14. I made my last DCA purchase on 2/16 at a price of 12.77. So I've already missed some opportunity to the upside to buy more - but my existing shares will hold me well. The C fund price on 3/5/10 was 13.54. If I recall the C fund dropped through the 13 range to the 11 range in one week - now that was opportunity.

 

[Minnow]

While 2 IFTs have constrained the savvy investors, I think they have made smarter, more cautious investors out of the huddled masses. If I had more of them, I'd just use them to DCA in smaller increments.

By the way, amoeba thanks for hosting this exchange!

I'd say that savvy investors, or for that matter, any "true" investors don't need IFT's. They can simply change their DCA allocation or strategy, while remaining "invested."

My goals and everyone else's goals with the TSP are different. Each and every one. I would never presume to give any opinion as to which one is "right" because timeframes and goals differ from individual to individual. On top of that, life circumstances change -- sometimes in the matter of a couple of days and sometimes over the span of years -- sometimes for better and sometimes, unfortunately, for worse. That can and often does have some bearing on how people allocate their money.

I preferred having unlimited IFTs. That's all I'm saying. If your strategy works for you then super and keep up the good work. I am still trying to adapt and overcome not having unlimited IFTs. I'll be OK, I have goals with the TSP and with other investments and I'm still on track and I hope you are too.

I agree, thanks for hosting a good discussion Amoeba.

 

[amoeba]

1. Anthony's thinking about 2008:

"A majority of us apparently dodged some of the crash with good timing, but since that point have failed on the upswing."

well, perhaps another couple characteristics of buy-and-holders are their short memories and "glass-half-full" optimism; I remember seeing a whole bunch of double digit losses, and knife catching that year. I suppose you could think you dodged the crash by doing nothing at all too, and just buying and holding.

But, to me, dodging would consist mainly of being out of the market (a very few others, with mystical power, were able to time the market and beat the G-fund, I think you could count them on two hands, at most). That's what I did - mainly. And my share of knife-catching as well.

2. I considered the 50/200 strategy myself; earlier this year; but didn't have the conviction to stay in. Right now - we are in a domestic market that overshoots, and when it corrects - it undershoots; the I-fund seems to have some sort of knee-jerk reflex - that could be taken advantage of (bad news/good news reactions that don't really matter beyond the day).

3. Everything in the last ~18 months is all messed up fundamentally by too much government intervention. It is almost as if - it is becoming a fundamental item itself; i.e., if there is a pending downside, we expect the government to again step in and "do something" (namely, throw money or some new freeloader/loan application liar of stated income-er/oh woe is me-er program to keep 1-2 million people in homes who should never qualified and should give them bank to the bank). But no. Sheila Bair knows better. Doesn't matter that the last 3-4 programs didn't work.

Investors just continue to believe that kicking the can down the road, with money, and dole programs, is the answer - - - when it is the problem.

But no matter - if you all believe it, and will put your money where your mouths are (i.e., toss money into equities no matter what); then so will I, for the moment. My finger remains on the button, however.

 

[amoeba]

IFT $$$ goes into the pot!!! April fireworks????

boy-O-boy:

If this website is any indication; there's a whole buncha side-liners moving in at COB today. Just an insight on my current 1/3's strategy (30% I,S, and C)

I'm keeping an eye on share price - and noting the currency-based fluctuations in the funds; the even allocation will allow me to bail on individual funds if they reach target triggers; right now, with the return lag in the I relative to the C and especially S, I'm hoping that one will get ~+2% this month, maybe less with the others. I've got to be cognizant of downside targets (obviously, for selling only after the 2nd IFT, or risk waiting till next month.

Again, while some think greed is good, caution is not necessarily bad. Depending on how oil and other commodities behave in the next few weeks, the Fed comments could indicate interest rate hikes (even though they said the contrary very recently). And there are other factors.

For example, domestically, I think the housing market still weighs heavily; especially with expiration of the 2nd incentive program 4/30. My state, California, is floating bills and decrees to initiate its own 2nd program the day the Fed program expires; and wave taxes on short sale forgiven loan balance (not that the state can afford any of this, but since it doesn't have any money, reducing taxes is one way to dig a bigger deficit hole). Sheila Bair has a seemingly endless parade of ideas to kick the can down the road, ranging from free money, to 60 year loans (ummm, who lives that long?).

Stay tuned for a potential fireworks show later this month. Based on the above, moves could go either way.

 

[Boghie]

The AutoTracker might be fun, but it really isn’t the end all be all for statistics. Maybe some are becoming a bit conservative because they are nearing retirement. Maybe some are becoming more aggressive because they realize they are young and have no real holdings to lose. Lots of things affect ones allocation and aggressiveness.

Anyway, DCA and 'Buy and Hold' are two very different topics.

Case in point. I reduced my DCA from May 2007 through September 2008 to pay off credit card debt. It took some shots to the old noggin by BT to give me the liquid courage to bump my contributions. That move has dramatically affected my bottom line. I purchased a significant number of equitY shares at extreme sale prices – including ‘C Fund’ shares at prices never before offered. Now those $8 shares are worth $14 – and growing. But, you had to DCA in the teeth of fear.

The topic of managing your holdings is a bit different.

If you ‘Buy and Hold’ and DCA and don’t worry about two year returns you are in good shape. The DCAs will buy you a significant holding in securities when they are on sale. Those equities appreciate as the value goes up. When the market fully recovers you will have many more equity shares than you would have if the market hadn’t crapped out. But, that is why you must hold if you are a ‘Buy & Holder’. You have to own the shares when they recover. If you bail out in a panic you have lost the shares required to reestablish your account balance. That is why BT is probably in very good shape in his Tugboat Account.

Now, if you can avoid part of the 10%+ corrections, and be in for part of the 10%+ booms you will do better – obviously. That is what this discussion is about. There are many systems out there and they all work in some markets and not so well in other markets. However, can you actually work a technical system in a two trade/month environment? How many technical traders are able to get into and out of the swingers club without getting busted by the IFT limit? I think it is possible and the technicals can support a move. Conversely, there are many traders out there who watch the basics - thus, the edge is muted.

Finally, anyone with assets in equities has to accept fluctuation – or you will sell at the panic (and folks like Birch and I will steal your lunch) and buy in elation (where the swingers will sell you swamp land in the everglades). Selling equities after a 2% drop is a certain way to an ‘Alpo Meal Deal’ retirement.

How many routinely beat the ‘C Fund’
As Anthony pointed out, few have done so.

 

[amoeba]

Please tell me. Inquiring minds want to know.

The AutoTracker might be fun, but it really isn’t the end all be all for statistics. Maybe some are becoming a bit conservative because they are nearing retirement. Maybe some are becoming more aggressive because they realize they are young and have no real holdings to lose. Lots of things affect ones allocation and aggressiveness.

Anyway, DCA and 'Buy and Hold' are two very different topics.

Case in point. I reduced my DCA from May 2007 through September 2008 to pay off credit card debt. It took some shots to the old noggin by BT to give me the liquid courage to bump my contributions. That move has dramatically affected my bottom line. I purchased a significant number of equitY shares at extreme sale prices – including ‘C Fund’ shares at prices never before offered. Now those $8 shares are worth $14 – and growing. But, you had to DCA in the teeth of fear.

The topic of managing your holdings is a bit different.

If you ‘Buy and Hold’ and DCA and don’t worry about two year returns you are in good shape. The DCAs will buy you a significant holding in securities when they are on sale. Those equities appreciate as the value goes up. When the market fully recovers you will have many more equity shares than you would have if the market hadn’t crapped out. But, that is why you must hold if you are a ‘Buy & Holder’. You have to own the shares when they recover. If you bail out in a panic you have lost the shares required to reestablish your account balance. That is why BT is probably in very good shape in his Tugboat Account.

Now, if you can avoid part of the 10%+ corrections, and be in for part of the 10%+ booms you will do better – obviously. That is what this discussion is about. There are many systems out there and they all work in some markets and not so well in other markets. However, can you actually work a technical system in a two trade/month environment? How many technical traders are able to get into and out of the swingers club without getting busted by the IFT limit? I think it is possible and the technicals can support a move. Conversely, there are many traders out there who watch the basics - thus, the edge is muted.

Finally, anyone with assets in equities has to accept fluctuation – or you will sell at the panic (and folks like Birch and I will steal your lunch) and buy in elation (where the swingers will sell you swamp land in the everglades). Selling equities after a 2% drop is a certain way to an ‘Alpo Meal Deal’ retirement.

How many routinely beat the ‘C Fund’
As Anthony pointed out, few have done so.

1. Whether or not they both steal my lunch, Boghie and Birch are entirely different investors; Boghie was over 45% in G fund five times in the last year, and under 10% an equal # of times. Birchtree never touched 20% G once during that period, or for that matter, in the prior two years. He does tiny moves (5-10%), if anything at all. Birchtree is a buy and holder, plain and simple.

2. Selling in a panic being bad? That depends. As I said earlier on this topic - I sold in the panic of 2001, after the peak of 1400+, rode it down to 1039, and put my target at 1,250 - thinking if it ever dead-catted to that point I would never see it again. Well - 1,247 was close enough and I dumped 100% of my C-fund for F (my recollection is that it performed well the next couple years). That was 9 years ago.

We still haven't seen it. So as far as holding shares for "when" they will recover, that's a big assumption. "When" could be never.

3. Accept fluctuation? Yes. I do. But acceptance meaning buying and holding? no.

4. DCA is essentially irrelevant. DCA is the new allocation. All that changes when you conduct an IFT. It is a tiny amount of money.

5. IFT limit? Sure. I've been "busted" (and you told me so) - but I still made 1% that month - nothing compared to you - but the next time I bail with a profit and the market tanks; I could cut losses. So true - cut gains, and cut losses. Fact is - one does have to try to anticipate the down moves, as the downward slope is much steeper than the upward one, at least recently. There is more time to move in, provided there were more IFT's to do so, but there aren't.

Case in point is this week; I averaged in with my two IFT's balancing the first on an extreme F-fund low reading with the surprise monday C-fund high share price; the second, was booking the small F-profit and going essentially all in. I had thought about overweighting I-fund based on the cycle between EFA and SPY (plot these, in the short term, and you will see that they spread apart and come back together, last wednesday was an extreme spread), but I didn't have the gutz. 30% was as much as I could take - figuring the worst I could come out of it would be -1% on a huge move down.

That didn't happen, and now, once again - I'm sitting near the top of my April target (0.75-1.00%, I'm at +0.94%). And it's the first week of March. And I can't even buy more IFT's if I wanted to. Am I resistant to bail? That's a tough question: see #5, below, for the consequences.

5. Relatedly, consider the period of time that C-fund has been above the 20 DMA. if you look at the SPY chart since the March 09 bottom, you will appreciate that we are now CLEAR OF THE 20 DMA FOR NEARLY 2 MONTHS.

That has not happened AT ALL since the March 11, 2009 bottom. Not even close.

Technically, the market is overextended and not due for a pullback, but overdue. Even for the period immediately after March 11, 2009, the price touched the average line at least a couple times in the next 4 months.

But consider that we are not AS far above the 200 DMA as we were Sept-Dec 2009. Then, as you know - the market corrected - significantly.

And that's what I want to avoid.

We are in the clouds. When will we see the ground again? Please tell me. Inquiring minds want to know.

Oh, by the way my rank jumped 12 spots to #214.

 

[amoeba]

big cap earnings early in week may be telling

Alcoa and CSX, in particular (after the bell Mon and Tue):

anyone care to venture a guess?

A beats with strong guidance forward on either or both could extend the rally straight up to through wednesday. Wouldn't it be great to book a ~5% profit in 3 days? It could happen. Or. It could go the other way.

If anyone has the goods on these earnings, and guidance, and knows of any crud in there - I sure would like to know in advance of the IFT cutoff(just post it here on my account talk, I won't tell anyone else).

There may even be some selling if there is the slightest bit of apprehension in the guidance. I am considering letting it ride for another day, maybe a couple days....but jeepers.....what the flip has been going on the last 6 weeks?

 

[amoeba]

Well - no one posted anything on alcoa; their stock is up; and therefore I'm expecting a "beats" after the bell and a big day tomorrow. Volume right now is exceptionally light. I did put a 6% move back to G-fund (total 11%), and loaded up 1% more on I fund. Current allocation

G-11
F-4
C,S- 27 each
I-31

No issues expected w/ majors earnings or guidance this week, CSX, INTC, etc - so letting it ride....probably through at least thursday now.

Not that anyone listens....but alot of this is just a reflection of past government stimuli....and not real economic growth; but if you don't care at the moment then everything is a "buy", until you do care. Or the government stimuli ends. Or China revalues. Or war. Or something else. But for now, the plane is flying high.

 

[anthony]

1. Anthony's thinking about 2008:

"A majority of us apparently dodged some of the crash with good timing, but since that point have failed on the upswing."

Just to clarify, all I mean by that statement is it was the only year on the tracker where more people beat the C Fund than got beat. Definitely some big negative numbers in there regardless. And I agree the AutoTracker is for fun and it's a rough estimate at best.

Also, I will acknowledge that I only recently have become more of 'born again' DCAer. My record shows that I have not historically bought and held. That saved me in 2008, by keeping my losses to -6% (reality with DCA; -10% on the tracker). That also cost me in 2009 by restricting my gains.

The number one point I'm getting at is there is a correlation between experience, understanding of markets through study, and ability to follow market trends to allow you to buy low and sell high. The more simple the system the better, and I think for less experienced investors a DCA system is one of the most simple, emotionless ones available.

Thankfully we have sites like TSPTalk, filled with analysis from guys like Tom, or links to 'good read' articles from friends to help us less experienced types stay in touch and increase our understanding of markets, and thereby hopefully increase our returns.

Good luck!

 

[Scout333]

Also, I will acknowledge that I only recently have become more of 'born again' DCAer. My record shows that I have not historically bought and held. That saved me in 2008, by keeping my losses to -6% (reality with DCA; -10% on the tracker). That also cost me in 2009 by restricting my gains.

Anthony, Found DCA'ing to be very efficacious in bear market times. i.e. When you expect really hard times in the market and pull majority out of stocks and don't know exactly when to jump back in. A little hard to do with only two IFTs but if employed you can allocate bi-weekly contribution amounts gradually into the market or use the < 1% method. 2008 was an excellent example. Not so great in bull market times when we should be substantially all in anyway. Just my 2 cents.

 

[amoeba]

well crap:

AA missed (9 cents excluding 1-time charges); guidance OK; tomorrow will likely be a downer, hard to say how much....some better results by other bigs this week would help.