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Or you can now use TapaTalk again!C Fund Allocations
- Thread starter zbwmy
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You have been 100% invested in the S&P 500 during one of the greatest bull markets of all time. Don't push your luck. Maybe it's time to do a little thing called...diversification. How about adding some G, F, S and I funds? What do you think?
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Actually I disagree. We've more recently been through a significant 3 year long bear market. It stands to reason that the next few years will be bullish. Virtually every economist, commentator, and layman agrees. I'm choosing to move my money around to try to maximize my gains. HOWEVER, if I were to just put it somewhere and leave it, it would be in the stock funds for the next couple of years and then I might diversify it as you say. IMHO.
Dave
- Reaction score
- 1,480
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[align=left]There are cylces to consider. I'm not going either way in this discussion but I thought I'd share this. I got it from an economic report from The Investment Couseling Firm of Wilmington Trust...
Table 1 contains statistics on the historical performance of various equity classes, including large cap, small cap, value, and growth. The data in the table are consistent with well known results about the long run superior performance record of small stocks and value stocks. During the 78 year sample period, small cap stocks produced a 1.9% annualized return premium over large cap stocks. Value stocks show superior returns relative to growth stocks, particularly in the small cap market segment. Small cap value stocks produced an annualized return of 14.1% versus an 8.9% annualized return for small cap growth stocks. Large value stocks also outperformed large growth stocks.
The historical evidence indicates that small stocks outperform large stocks and value stocks outperform growth stocks in the long run. This result is well known and its discovery is often attributed to Eugene Fama of the University of Chicago and Kenneth French of Dartmouth University.i Table 2 contains the performance of each equity category in the aftermath of the past six economic downturns. During the twelve month period immediately following the previous six economic recessions, small cap stocks have consistently outperformed large cap stocks, with a margin ranging from 0.9 – 32.2%. Value stocks also tend to outpace growth stocks. Only after the 1969/1970 recession did growth stocks perform better than value stocks.
Table 1. Historical Returns: January 1926 – December 2002
Annualized Return Standard Deviation
Large Cap10.2 21.9
Small Cap 12.1 35.1
Large Growth 9.3 21.1
Large Value 11.6 29.8
Small Growth 8.9 30.6
Small Value 14.135.1
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Small cap stocks have outperformed large cap stocks (measured by the Russell indexes) for the past four consecutive years (1999 – 2002). While this may seem like an extended run for small stocks, the five, seven and ten year trailing returns for large cap stocks continue to exceed those for small cap stocks, suggesting that the small stocks have further room to advance despite four years of excess returns.
tsptalk - Not shown: Small caps also outperformed in 2003 as well as in 2004 so far. Maybe we are coming near the end ofthe small capadvantage? I thought the rotation was starting last month but it turned around again.
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[align=left]Tom[/align]imported post
This is one of my biggest problem with the TSP funds. No value choices. How hard would it be to add alarge and smalldomestic value funds and an international large and small value funds?
Wheels - on a historical basis using past 500 earnings do you consider this index over or undervalued? Obviously, I see the index as slightly overvalued. That's not to say this thing can't run alot further. I will not call a top nor a bottom. I just think timing this thing on a daily/weekly basis is a losing cause. If the "pros" can't do it what makes you think you can? Also, just because everyone is saying we're in a bull market makes me more pessimistic.
zbwmy - how did you feel in 2000-2002 when your TSP C fund was getting slaughtered? Maybe you have a cast iron stomach and can take that volatility and think nothing of it. The average investor is better off diversifying and being able to stick to his/her plan IMHO.
Good luck. Toddimported post
I consider the market to be very slightly overvalued. That being said, I believed the market was overvalued in 1998 and it still went way up. I considered it to be undervalued in late 2001 and it still went way down. Earnings growth is pretty robust right now so I am comfortable with the bullish sentiment.
Tom is way more into this stuff than I am so maybe he can answer this but I'd be willing to bet that if you looked back 50, 60, 70 years and picked any10 year period, that a C type fund, or an S type fund, would have out-performed a diversified type fund.
As for timing the market, as I've stated in an earlier discussion, I'd prefer to just plant my money in one of the stock funds and watch it grow, but I think this will be a choppy year and I'd like to try to take advantage of that. I'm not naive, and I know it's difficult to succeed but so far this year I've done well. I'm around 6.5%. The C is about 1.1%, the S is about 4.5% and a diversified portfolio (20% in each fund) is about 2.1%. Of course, I've probably just jinxed my success by bringing it up.
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- 1,480
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Great discussion guys. Youhad me curious soI calculated the cumulative returns going back to 1988 up through 2003. Of course the S and I funds were not available throughout this period butthe indices were.
G Fund F Fund C Fund S Fund I Fund20% Each Fund
185.28% 239.06% 524.42% 499.20% 116.15% 311.69%
Two comments. The international fund did extraordinarilywell in the early and mid-eighties whichit is not included here. Also, the 1987 crash occurred shortly before these returns.
Tommansfield$
First Allocation
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you mean to say you have never moved your money out of this fund?
mansfield$
First Allocation
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I am just starting out and I know the the market change daily but where do I go to find out if I lost money one a particular day or is it gauged monthly:h
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- 1,480
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Just go to your account balance in the TSP your updated balance will be post the following morning at approximately 0600... (ie; close of trading on wednesday will be posted thursday am)Some people track their daily balance ...other than that I post daily percentage gains/losses ....just multiple the percent times your dollar value balance to find your gain/lossimported post
If you know the S&P 500 will outperform bonds, small caps, and international equities over the next 10 years, then you should stay fully invested in the C Fund.Since I can't predict the future,I'm diversifying across all of the funds - G, F, C, S, and I.In other words,I'mhedging my bets, hoping thatasset diversification and the non-correlation ofasset classes will result inrelatively high returnsata reasonable level of risk.
fuzzduzz
Market Tracker
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How much did you make from March 2000 thru October 2003??? That should convince you to learn how to read charts and move your funds around atleast once in awhile. While you were trying to get back to the level you were at in march 2000 (how long did that take?) the people who move their funds around were increasing their retirement funds not trying to get even.GGuest
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tsptalk wrote:
Tom, are these accurate percentages? The G fund is averaging over 12% a year? I've only been in the TSP funds a short time and I've never seen over 5%. Just curious.
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mlk_man wrote:
I believe they are. It's compounding that does that. It's like if you make 20% a year for 5 years...
$100 x 1.2 x 1.2 x 1.2 x 1.2 x 1.2 = $249
You made 149%, not 100% (20% x 5) as you might think
I could be wrong. Here's the file if you want to check the calculations. Let me know if you see a problem. Thanks...
[url]http://www.tsptalk.com/returns/Prior_Fund_totals.xls[/url]GGuest
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tsptalk wrote:
DOH! Must be Monday, didn't even think of the compounding.Similar threads
