Back in the G Fund for Monday 4/12

tsptalk

Moderator
Staff member
imported post

I made my move back to the G fund for Monday.

Thanks to http://www.sentimentrader.comhere are some interesting stats about today's historical action.

"Only two times has the day before Good Friday gapped higher by 0.5% or more since 1986 (using S&P 500 futures), [as it did this morning]. In 1987, the gap was not closed that day, and we went on to enjoy a 1.3% gain on the day. The day after the holiday showed a loss of 0.5%. In 1993, the gap was closed that day, and the day ended up unchanged. The day after the holiday was up 1.3%, going against the norm of a weak close the day traders return from vacation.

Weakness on the day before Good Friday is unusual, and if we would happen to close negatively today, then in the past the day after the holiday was up 33% of the time, as opposed to 43% of the time if the day before the holiday closed positively. So, it looks as though unusual weakness before the holiday lead to a greater chance of weakness after the holiday as well."Thanks to http://www.sentimentrader.com

Some conflicting data but this year'smarket action has been closely following 1993's action. I don't like the idea of repeating thatyear's Easteraction. We need a strong day today!
 
imported post

I sure felt pretty good about our strategy this morning. The Dow was up about 70. This overbought condition may be too much for the market. The strong earnings reports couldn't hold the indices up.Anytime you think you know something, the market let's you know who is running the show. Another humbling day.It wouldn't surprise me to see nervous bulls taking more profitslate today before the long weekend. Ugh! :(
 
imported post

We are getting a bit of a reprieve here as the S&P is trying to climb back to even. I am getting less interested in this historical data but if we were to follow the similar pattern of 1993....

In 1993, the gap was closed that day, and the day ended up unchanged. The day after the holiday was up 1.3%, going against the norm of a weak close the day traders return from vacation.

...it doesn't look good for those of us out on Monday.
 
imported post

If we do see a strong Monday, it may be time, maybe past time, to take a look at the 1993 market action of the S&P 500 and Nasdaq. The economic situation was similar back then, and the market is closely following the action of the indices of 1993.

If you have an opportunity to look at a chart of the 1993 S&P 500 from January through April, you will see what I mean. Why would this be? Because when similar situations present themselves, people react in a similar fashion. It's like the put/call ratio I've talked about. When small investors get very bearish, it invariably means the market is due to rally. That has been true since they started keeping those stats.

Tom
 
imported post


Tom,

First of all, I love your site and what you’re doing here. Great Personal Service to complete strangers. My hat is off to you!!! I just wished it were around 14 years ago when I was handed this TSP account and nobody had a clue what to do with it!
I will absorb as much information from this site, you and fellow TSP Talkers and use it for my own personal gain and education. We all have the responsibility to limit our personal tax liability and maximize oursavings. I just hope I can contribute back in some form or another!


So may I throw my fears out into the Open! I know very little about the markets, but I understand one thing….. >Buy Low and Sell High< I look back one year ago when I had all my funds sitting in the G fund riding out the rough waters of the past couple of years and always wondering when to make a move or when the down times would be over.As I look back at one key thing stands out, we all feared and was unsure about going to war with Iraq and that fear to flight and not fight convinced me in March 2003 to go against the grain and jump with both feet into C,S, and I Funds just one week prior to going war in Iraq.I have not look back since then until this past Thursday and I'm sitting 100% in G for Monday.
I feeling real comfortable with all my funds secured and safe. Things are going poorly in Iraqright now and looking really bad for the USA. I fear the thought of just peering over the top of the nest! Watching all the bad news and footage from Iraq and the 911 hearings just rekindling those feelings I felt just before the Iraq invasion a year ago.
That right "FEAR" in my book equal's "Buy" again and come Tuesday I'm
back in 100% C, S, and I
I feeling RALLY Scared!...... and RALLY want to thank you Tom, for your wonderful service!!!

:D GTO
 
imported post

Thanks GTO! I hope I'm helping and not just being a lot of hot air.

Tom
banana.gif
 
imported post

My question to you is those of us comming up on 15 years are entitled to a $30000.00career bonus is it smart to take it and put it in tsp for growth or not take it and stick with the 50% retirement.

Rick :^:v
 
imported post

I'm new to tsptalk and have been watching things during the past month... really enjoy this site as I'm learning a bunch. Got to ask what $30,000 bonus are you referring to in your question? Greg
 
imported post

Ditto, I have 14 years and some change and never heard of any bonus. All my coworkers got a pin.

Bob
 
imported post

The $30,000 payment at year 15 is an early retirement payment for those who choose to accept it. The payback is that you agree to accept Redux rather than High Three as your retirement plan in the military.

My two cents is that there is probably a really good reason why the government is offering an early payment option. That good reason is that they will likely save money by getting you to accept redux. Any money they save is money you lose.

I'm certainly no expert but haveskimmed a study on this subject that concluded the best option is to let the government keep their 30K while you remain in High Three for retirement.

I'll poke around my email folders and see if I can find the study I mentioned. I think the GAO did it, but am not sure.

Lumpy
 
imported post

Welcome to all the new members here!

I am going to let our military members have a go at that question. I have heard it asked before but i just don't know enough about it.

Tom
 
imported post

tsptalk wrote:
I am getting less interested in this historical data but if we were to follow the similar pattern of 1993....

In 1993, the gap was closed that day, and the day ended up unchanged. The day after the holiday was up 1.3%, going against the norm of a weak close the day traders return from vacation.

...it doesn't look good for those of us out on Monday.

This post is talking about the Thursday before and Monday after the Easter holiday.
Just like this past Thursday, the Thursday prior to Good Friday in 1993opened up strongly, then gave all the gains back to end the day basically flat. The Monday following Easter, normally a bad day, was up 1.3% in 1993. Today we are up nicely. Very similar action. The 1993 chart shows this year is following 1993 pretty closely.

If anyone has a chart of 1993 they want to email me, I will post it here. Please don't take it from a website for I won't be able to post it. Preferably from some charting software.

Thanks,
Tom
 
imported post

I found the files concerning the military retirement choices. I've zipped them and attached them here for all concerned. The analysis was actually done by CNA vice the GAO. Hope this helps and I'll now abandon this tangent.

Lumpy
 
imported post

New guy here...am new to this TPS stuff but like what I see here on the site. Just want to say "THANKS" for alot of good info.

Semper Fi
 
imported post

alright greg the csb is of course a bonus its a 30,000 lump sum after tax its around 21500 unless in the gulf og course now the down side from my studies im one of my commands financial secialist and we studied the good and the bads the goods are 30000 dollars this could be a lifestyle change for a house downpayment or invest to a business. The down side you only get 40% retirement after 20 and the normal 2% cola you get when u retire drops to 1% with a 1 time catchup at age 62 so if you can invest it wisely and make the difference in the long run then its a great deal but if u blow it your shooting yourself in the foot.



Rick
 
imported post

Newport News Daily Press
February 13, 2004

Military Update

$30,000 Knife Has Careerists Cutting Their Own Retirement

By Tom Philpott

Career counselors advise against it. Financial experts say it’s a poor deal. Economists estimate that a typical enlisted member with 20 years of service will cut the lifetime value of his or her retirement by $309,000.

Yet about half of military careerists, as they enter their 15th year of service, have been drawn to a $30,000 cash bonus and voluntarily trade away a far more valuable slice of future retirement benefits.

They do so by electing to shift retirement plans, from ``High-3’’ to the less generous ``Redux’’ formula with its side offer of instant cash.

If a business scammed military people this way, Congress would hold hearings and force executives to end their sting operation. But it was Congress that designed this scheme. And considering the goal - to save billions of dollars that otherwise would go to a new generation of retirees -- the scheme is brilliant.

Most pay experts can’t say enough bad things about Redux and the Career Status Bonus (CSB). Military leaders are more constrained. After all, the honey trap is legal. Also, for many careerists, the typical $22,000 (after taxes) is so timely for buying a home or paying off crushing debt, that it just feels right. There often are better alternatives, however.

Congress devised CSB, ironically, while doing a great favor for the same service members it entices, those who entered after July 31, 1986. These members got stuck under Redux, a cheaper retirement plan passed during the Reagan administration. By 1999, fearing lesser benefits would cause retention and morale problems, Congress moved these members, and future entrants, under High-3, a far more generous plan.

For a 20-year career, High-3 pays an annuity equal to 50 percent of average basic pay over the member’s three highest earning years. Redux pays only 40 percent of the three year average after 20 years’ service.

High-3 protects annuities with annual cost-of-living adjustments that match inflation. Redux COLAs are a full percentage point below inflation with a one-time catch up in at age 62 but then COLA caps resume.

Worried about the cost of shifting all future retirees to High-3, Congress borrowed an incentive idea used successfully in the post-Cold War drawdown. It would offer former Redux careerists, in their 15th year of service, a cash bonus payable immediately to shift back to Redux.

The first group eligible to make the choice entered their decision window in 2001 and most began taking the cash. The Defense Department set up a website to explain plan features and show the dramatic differences in lifetime benefits. Calculators there allow comparison of early and lifetime benefits under both plans, by plugging in assumptions about inflation and return on investment [ www.dod.mil/militarypay/retirement ]

The Center for Naval Analyses recently updated its report, ``The Retirement Choice,’’ which all but tells careerists not to accept the Redux/CSB offer. An E-7 who retired at age 38 would see retired pay reduced by $309,000 under Redux, even with the bonus, CNA said. An O-6 who retired at 50 after 26 years would lose almost $312,000.

``We’re hopeful that, by providing information on how much this cash-out will cost in smaller, future retirement income, we can help service members make more informed decisions about which plan to select.’’

CNA suggested that the $30,000 be viewed as a kind of nightmare loan, far more damaging to fiscal health than a mortgage, car loan or even credit card debt.

``The $30,000 has a rather peculiar payback scheme,’’ the report said. ``The service member pays nothing until retirement, pays quite a bit from the beginning of retirement until age 62, and then continues to pay back smaller amounts over the rest of his or her lifetime.’’

Despite all the warnings, $30,000 remains a powerful lure.

From July 2001 through December 2003, almost 11,000 Air Force members entered their 15th year of service under High-3. Sixty-percent of them came out with cash but stuck under Redux. The ``take rate’’ has been 63 percent for Air Force enlisted, 33 percent for officers.

Forty-five percent of sailors and 12 percent of Navy officers have shifted to Redux. The Marine Corps take rate has been 20 percent for officers, 43 percent enlisted. A third of eligible Coast Guard members are electing Redux and the bonus. Army data were not available.

In the winter issue of ``On Watch’’ magazine, published by the Fleet Reserve Assocation, Frank Welch, Master Chief Petty Officer of the Coast Guard, said Redux should be renamed ``Reduces.’’ Careerists, he said, need to ``do the math.’’

The $30,000 is enticing particularly for grades E-5 and E-6 who feel they need the money now, for a home, education or to pay off debt.

``They are more concerned about today than tomorrow,’’ said a pay official.

Officers electing CSB more often want to invest it, believing they can get returns to make up for lower annuities. That’s a significant challenge.

More than 95 percent of bonus takers order a lump sum. Two- to five-year installments also are available to reduce the tax bite or to allow more effective use of tax-deferred options like a Thrift Saving Plan. The TSP for federal civilians has been open to military savers since 2002.

If accepted while the service member is in a combat zone, this and other bonus money is tax exempt. Even so, said an official who advises on the retirement choice, Redux/CSB usually is the option to avoid.

``You can only tell people, `This is not a good deal,’ ’’ said a Pentagon pay official. ``If they still choose it, well, [in their mind] they’re better off.’’
 
Back
Top