Birchtree's Account Talk

[Intrepid_Timer]

Birch’s investment conviction is that you cannot really time the market. Even timers agree to some extent. That is why CH found only 15 folks to track amongst all those that have participated in the AutoTracker – i.e. those that did ok in 2008 and well in 2009. And, I think CH is probably the first to recognize that those 15 aren’t doing too well this year.

So, while I agree with most that ugly tops and ugly bottoms can be spotted and avoided (to some extent) the noise in the middle has proven difficult to play. Birch elects not to do so. Those who elect to do so – and consistently do it well – will reap enormous benefit. Are there any amongst us

Well, I don''t think I'm doing TOO badly. Should be better though. As long as I'm beating the C fund over the long haul, I'm content........

2008: C fund- -36.99% Me- -17.03%
2009: C fund- 26.68% Me- 20.94%
2010: C fund- -3.68% Me- 7.79%

 

[Boghie]

Well, I don''t think I'm doing TOO badly. Should be better though. As long as I'm beating the C fund over the long haul, I'm content........

2008: C fund- -36.99% Me- -17.03%
2009: C fund- 26.68% Me- 20.94%
2010: C fund- -3.68% Me- 7.79%

And, Intrepid_Investor, if you maxed out (or at least increased) your contributions into C/S/I during our long dark economic winter you are worth lots more than the bubbas that stopped contibutions or moved their allocations and contributions to the Lilly Pad.

I was actually rather amazed that the math in my previous post worked out.

I always run to Birch's defense because he made me lots of money. Folks were bailing out from contributions or putting them into the 'G Fund'. He convinced me of the folly of such a move. Forever grateful. Plus, he has always been a straight shooter. I, personally, would want to know that he trades his TSP as part of a whole - and, thus, why he trades it this way. Otherwise, his aggressiveness is not understood and the reason hidden.

 

[Birchtree]

Warrenlm.

In the fall of October-November '08 I actually dumped in close to $800k into the market bottom using some extra credit I had available along with my CDs. I also invested profits from my selling my commodity stocks at the beginning of June. The credit has been paid back over the last 15 months or I would own even more stock. It was a risk well worth taking providing an opportunity to build income from dividends. I bought a 45 member stock portfolio of pure toxic waste at the time - banks, real-estate brokers, etc. This portfolio has been doing well off their bottom. Since June 26th '09 I've made 873 individual stock purchases for my oceanic account - where has the money come from? It comes from the value provided when using capital margin which in an 80% run bull market has been sweet. So lately I've given some gains back - but the shares remain intact to help boost the account when the bull resumes.

 

[Birchtree]

For all you drive by flame throwers it has been some interesting conversation over the weekend. Some have decided to question my money worth in a negative sense. I'm not involved in a popularity conest. Sugar and Spice will tell me that even negative attention is better than no attention - so you perps can just blow it out your ears. For clarification I've never said I have $1M in my TSP account that's why I call it my tugboat account. I will tell you that when this bull kicks back in I might achieve that level by the end of the year - with a little hope and charity. My outside oceanic account is still above the $2M mark at $2.5M - this is my long market value which means it is not all mine because I'm on margin. My equity position is over $1M even after the $538K hit I've taken in the correction. From the March'09 low I'm still up $756K working on million #2. I may not make my goal of 1000 buys since 6/26/09, but I'm at 873 with many still in the profit zone so there may be a chance. I'm satisfied with my positions and the income they produce. Where does the cash come from? I recently sold my BTH and NAV to raise cash and if I have to scarifice my lamb chop account that will also raise considerable cash. All this cash provides buying power. When the market regains its' loss of the last 5 weeks my margin will be kicking in for even more buying power and presently there is no cap regarding the depth I'm allowed in debt. My current portfolio of 319 stocks provides the collateral to borrow against. When the market goes up I have the advantage of leverage to make even more stock purchases - somewhat of a self perpetuating system. At the April highs I was $***K in my TSP. If you're feeling bad now there is no sense to add further pain. Any other questions? If interested I can give you every price I bought the C fund with my DCAs. Believe me they do add up quickly when the purchases are made on the bottoms and then back up the other side. You simply have to have faith in the strategy of throwing good money after bad down the well - that's how you accumulate shares. Right now is another golden opportunity to accumulate shares at the bargain levels - but if you don't want them don't blame me for your cowardice. Just blow hard. Snort.

 

[Birchtree]

Warrenlm,

I forgot to mention that I made 432 individual purchases on the bottom period of 2008 when they were giving away everything and I was the fool doing the shopping - getting all I could. Oh I'm so darn greedy when the value stinks. When this bull resumes I'm going to be set for a very long time - but I'll continue to accumulate for the next generation in my family.

 

[Birchtree]

Boghie,

Thanks for the support. Can you believe I had over 900 views over the weekend - now that's drama. I think we should all be prepared for an explosive move off our current capitulation bottom. I need to go check and see how many dividends will hit today to be reinvested. Always buying even when it's raining - that's how money grows. And those bubbas are still on the wrong side. "In the week ended May 26, U.S.-focused funds saw $13.4 billion head out the door and international funds lost $3.9 billion - the largest outflows in each category since the week ending March 11, 2009, according to the Investment Company Institute." And you know what happend next - an 80% run. Setting up for another I think.

 

[JTH]

I keep looking for you on the tracker but I can't find you? It takes a while for the page to load so I can scroll that far down...:cheesy:

 

[Birchtree]

Stay on that lily pad and you'll feel the breeze when I blow past - it'll feel like a truck or a bus. Good to have you back - are you now bearish or bullish. It's time to hold your nose.

 

[Birchtree]

Jimmy Joe,

I would be interested in hearing about your real-estate holdings. When I mention the sum $2M I'm talking about the gains my oceanic has the possibility of making after 93 weeks off the March lows. At week #59 off the March '09 low I had a gain of $1294K. Now I'm at week #65 with only a gain of $756K. So at week #93 I still plan to be back at the $2M mark - time will tell. You have to set goals and stay disciplined even when the herd is on the run - I always play on the tracks in front of the train - and I'm not changing horses in the middle of the stream. I have built a substantial base of 319 individual stocks and last Friday it was difficult to even find one that was to the upside - but when the bull kicks the portfolio it's all green usually. How much will I have invested when this bull ends several years from now - multiple millions would be my guess. I know the potential a bull creates after having ridden many over the years. I can still smell the sweetness of the superlative bull manure. "Investors still scarred by losses in late 2008 and early 2009 seem to have been spooked by a price correction and a spike in stock-market volatility last month, as concerns about European sovereign debt, the so called flash crash, geopolitical tensions in the Korean penninsula and the growing troubles surrounding the oli spill in the Mexican Gulf roiled the markets." To me this is a wonderful wall of worry necessary for a continuation of the bull market - no bubbas wanted for the participatory ride to the next higher high.

 

[Boghie]

Birch,

I think the issue with most readers is that they haven't been able to separate your TSP assets from your other holdings. Obviously, I wasn't able to either. Regardless, if your TSP holdings were less than $1 mil on 2008/01/01 than recovering to that lesser amount is even more probable given your potential DCA amount.

I had much the same result - but, a little trading saved me a penny or two in 2008 so I am now rather well endowed, yuk, yuk.

The concern here seems to be that you would trade your TSP account different if that was your single holding. I think that is a reasonable concern. But, you do call your TSP your Tugboat account. Me thinks that makes it rather clear.

My concern is your margin. But, that is really not my concern - it is yours

 

[Birchtree]

I've only told one member what my TSP balance was at the April high. I very seldom discuss that balance for fear of retribution. Those that are confused are confused for a reason - you can't purchase individual stocks in TSP. All you can do is IFT here and there and I do list my strategy of why I'm 60C and 40I - they just need to look. I don't play with ETFs so there is no reason to frequent ETFTalk. Most of this negative noise will pass when the new members fade - and I've seen many fade over time. It's not my problem.

 

[Birchtree]

I have recently mentioned a three frame strategy as a family unit. My wife has a defined contribution plan with over 26,000 shares of an SPX index fund - and we are not moving it. The S&P 500 is ready to start out performing the market going forward in this bull market. I don't like the small cap arena so I'm partially in the I fund for my TSP. Why would anyone of sane judgement want to own that fund is the question. I'm concentrating on the potential earnings of the lage cap companies that make up this fund - the dollar is only a secondary consideration. Concentrate on earning that will derive from their exports to the Asian economies - I'll wait.

 

[JTH]

Stay on that lily pad and you'll feel the breeze when I blow past - it'll feel like a truck or a bus. Good to have you back - are you now bearish or bullish. It's time to hold your nose.

I felt froggy so I jumped into the F-Fund, as for my outlook, it's dire, but neither a Bear nor Bull be. Price is all that matters, if price resumes the upswing, I will be the first to jump all in. If it makes you feel better, I'm still building a base in my ROTH IRA so I have no problems with a DCA in that account.

OBTW Bulkowski posted a study showing that even buy & hold beats DCA. I know you had to have seen it, but in case you didn't here it is
Does Dollar Cost Averaging Work?

Friend, I'll gladly wager you a TSP coffee cup that you won't be passing me on the tracker this year, are you up for it?

 

[sdouglas3]

I have recently mentioned a three frame strategy as a family unit. My wife has a defined contribution plan with over 26,000 shares of an SPX index fund - and we are not moving it. The S&P 500 is ready to start out performing the market going forward in this bull market. I don't like the small cap arena so I'm partially in the I fund for my TSP. Why would anyone of sane judgement want to own that fund is the question. I'm concentrating on the potential earnings of the lage cap companies that make up this fund - the dollar is only a secondary consideration. Concentrate on earning that will derive from their exports to the Asian economies - I'll wait.

Hey Birch,

Not to question your thoughts above. But, if the the C-Fund goes up then doesn't the S-Fund follow? Has there ever been a situation when that doesn't happen? Or, is it a matter of risk vs. the gain derived from the fund?

Thanks Birch, I always appreciate your input.

Steve

 

[Birchtree]

Sectors in the markets travel in cycles - the small cap sector is coming off a ten year outperformance - prior to that the large caps outperformed for a five year period. The small caps will still show gains but the large caps will move higher over time and for how long is the question. You may not recognize this transition initially but I believe it is time for the C fund to be liberated for 120 reasons. I even have my daughter at 80% large cap funds in her new Roth 401K plan with 20% in a lage cap world fund. In 2003 the small caps led to the upside and then began to cool somewhat in 2004 and 2005 - this same thing could happen again. Haven't you noticed the big hits the S fund has been taking. I'll take my pain in the C and I fund, thankyou.

 

[Birchtree]

I noticed today that MCC on CNBC has got the chill on....anyone else seeing nickles?

 

[PCRit]

Birchtree,

Good call on the S Fund, it will almost always do best coming out of a recession (as it did in 2003, loved that year, I road S and I up to over 45% gains that year!). Conversely, S gets killed when stocks are heading down in a recession (as they are now). But in a sustained, growing economy, the C Fund will do better, as you said. Problem is, it doesn’t look like a growing sustained economy at the moment, either here, or abroad. The numbers just aren’t there…yet.

 

[Birchtree]

You have to invest ahead of the numbers - that's why many missed the rally off the March '09 lows - that's also the reason many missed the rally off the March '03 lows and why so many professional investors missed the 1982 rally off the August lows. I prefer to bleed while I wait for the next leg up. Keep watching the train loadings and the Baltic dry index - the economy is indeed in a 'Goldilocks' type slower growth cycle and that means the bull will run a marathon. Actually if I recall the March '03 low was a higher low than the October '02 low - that adolescent bull ran for years. I believe the mega trend secular bull is about to kick in for a very nice run right up to Dow 13,000 before resting to eat.

 

[Boghie]

Birch,

The thing that will bite us in the a$$ isn't standard capitalist economics...

It is The Black Swan flapping about up there.

This is ugly, very ugly...

When a Keynesian condemns government spending you have problem.

 

[Birchtree]

I have a lot of wall flowers waiting for a chance to become roses - I can't just ignore their hopes and dreams. Ugly can be a blessing when the time is right. Turn out the lights and they all look the same - beauty is only skin deep.