ContrarianJeff's Account Talk

[Steadygain]

Based on sentiment studies, I have continued to be bullish on the markets. (I've also been fairly successful at getting out at the right times.) Three things concern the bull in me right now: 1) extremely low volume on this ride up from the March lows: 2) AAII sentiment is incredibly high (the number of bearish investors is at a point that has often immediately preceded a drop); and 3) the VIX is dropping into an area that has often marked intermediate highs for the indexes (this shows a great deal of complacency).

http://stockcharts.com/h-sc/ui?s=$VIX&p=D&yr=0&mn=8&dy=0&id=p33737730460

Any thoughts?

Unfortunately I'm more a gut instinct individual, yet on the whole that has done me very well. My gut feels like we should have one more decent drop - but looking at the 4 or 5 year charts - that should take us to the bottom. We do not need to go very low to have achieved close to a 20% drop THERE IS NO WAY I SEE US GOING BELOW THAT. On the whole I see a lot of consolidation going on at this moment but the TRILLION DOLLARS that's going to move the Markets to a sustained BULL are probably waiting for the last drop. That's how I'm guaging my TSP for now.

 

[ContrarianJeff]

Good thoughts. I'm not a bear, but I also think we're going to have another decline. I would be surprised if the S&P easily broke thru 1410 and remained above that level for long. I see a decent pullback is pretty close at hand.

 

[ContrarianJeff]

Moved from 100% G to 100% F. I've been in cash for a while, and I still think the market will make another move down before resuming a sustained move up. Right now, the bond market looks oversold and sentiment is too bearish. AGG is on strong support in the area from 99.75 to 100.20.

 

[Guest2]

Moved from 100% G to 100% F. I've been in cash for a while, and I still think the market will make another move down before resuming a sustained move up. Right now, the bond market looks oversold and sentiment is too bearish. AGG is on strong support in the area from 99.75 to 100.20.

Just wondering, have you taken note that the AGG is down -.68% YTD,
while the (F) Fund is still up +1.14% YTD. Thats a large difference and I
call that an overpayment within my tracking. Overpayments need to be
paid back, so one of two things need to happen.

1) The AGG will out perform the (F)
or
2) The (F) will under perform the AGG

Somehow or somewhere, that translates into .22 tsp cents
or a whopping 1.85% difference while comparing the funds.

Any thoughts you'd like to share concerning the above would be deeply
appreciated.

 

[ContrarianJeff]

The difference between the year to date returns on the F fund and AGG is attributed to the fact that the AGG is an ETF that pays out a monthly cash dividend equal to the yield (averaging about 0.37% per month this year). So, it doesn't show up in the price of AGG. The F fund, on the other hand, includes the cumulated yield in its price. Multiply 5 months (Jan thru May) times 0.37 percentage points and you get 1.85%--which is the difference you came up with.

 

[Guest2]

The difference between the year to date returns on the F fund and AGG is attributed to the fact that the AGG is an ETF that pays out a monthly cash dividend equal to the yield (averaging about 0.37% per month this year). So, it doesn't show up in the price of AGG. The F fund, on the other hand, includes the cumulated yield in its price. Multiply 5 months (Jan thru May) times 0.37 percentage points and you get 1.85%--which is the difference you came up with.

Thanks Bro, So if I got you right, its the Dividends. So when I look at the
YTD comparison on the TSP Site: http://tsp.gov/rates/returns-tsp.html
and I see a 0.13% difference between the LBA Index and the (F) Fund,
the AGG, being a ETF, pays out a dividend which is reflected in the price.
Where the actual LBA Index does not. Did I get it, or am I still a mess ?
By the way, thanks for helping me understand.

 

[ContrarianJeff]

No problem! It sounds like we both enjoy learning about this stuff. I'm not sure about the difference between the LBA and the F fund. Unlike the AGG, the difference would not be attributed to a dividend payout. There is such a small discrepancy between LBA and the F fund that it is probably just based on a slight difference in how the bond index funds are calculated (some use a "sampling" approach, while others actually track thousands of securities)--or maybe it's a difference in their calculation of fees.

By the way, the AGG got hammered again today. This is why I can't stand this 2 trade per month rule. In my private account, I can take my lumps, sell AGG and go cash while I wait for what looks like a bottom in the equities. But with the TSP, I have to decide to either continue taking losses in the F fund until equity markets bottom, or I have to commit to going to cash for the rest of the month with no possibility of investing in equities. Ridiculous. That's why I have and will continue to take out the maximum amount of loans from my TSP and invest it in my private brokerage account.

 

[luv2read]

This is why I can't stand this 2 trade per month rule. In my private account, I can take my lumps, sell AGG and go cash while I wait for what looks like a bottom in the equities. But with the TSP, I have to decide to either continue taking losses in the F fund until equity markets bottom, or I have to commit to going to cash for the rest of the month with no possibility of investing in equities. Ridiculous. That's why I have and will continue to take out the maximum amount of loans from my TSP and invest it in my private brokerage account.

FRTIB is trying to force the L Funds on us. I believe in the long run a majority of members will give up trying to make a profit with 2 IFT's per month and join an L fund out of desperation and annoyance.

 

[ContrarianJeff]

FRTIB is trying to force the L Funds on us. I believe in the long run a majority of members will give up trying to make a profit with 2 IFT's per month and join an L fund out of desperation and annoyance.

You may be right. Maybe "giving up" is exactly what the board wants TSP investors to do. The 2 IFT's/month rule really handcuffs folks like me who are interested in the markets and (so far) have been able to consistently beat the markets by moving in and out. I find myself paying very little attention to my TSP account (and paying more attention to my brokerage account) because there's little I can do to boost my TSP returns. Why bother looking at it when I can't make changes?

 

[Silverbird]

However, if you were parked in any of the L funds since the beginning of the year, you would be pretty ticked by now (the higher the L year the worse it would be); this was about the worst time to advertise a mixed fund as a safe parking lot.:nuts:

 

[ContrarianJeff]

However, if you were parked in any of the L funds since the beginning of the year, you would be pretty ticked by now (the higher the L year the worse it would be); this was about the worst time to advertise a mixed fund as a safe parking lot.:nuts:

Yep--the "safe" L2040 is down 5.7% for the year, while the "risky" S fund is only down 3.8%. At the same time, my account, the riskiest of all in the board's eyes--with my insane 2 IFT's per month, is UP over 4%.

 

[luv2read]

Yep--the "safe" L2040 is down 5.7% for the year, while the "risky" S fund is only down 3.8%. At the same time, my account, the riskiest of all in the board's eyes--with my insane 2 IFT's per month, is UP over 4%.

Actually the L 2040 is the riskiest of the L Funds, having the largest % of the I Fund of all the L's; the L Income is the "safe" fund.

 

[nasa1974]

FRTIB is trying to force the L Funds on us. I believe in the long run a majority of members will give up trying to make a profit with 2 IFT's per month and join an L fund out of desperation and annoyance.

That means we just have to get smarter. The L funds will do me no good. I would like to retire in about 4 years and would like to increase my TSP. Not watch it do much of nothing like it did the first 19 years. But two IFT;s will make it harder. So that means I have to get smarter. Actually the market needs to settle down and get out of this day trader mentality and back to the swing trader comfort zone. There I go rambling again. Anyway GL to all of us. May the force be with you.

 

[luv2read]

Exactly...L funds will not do a thing for those of us within 5 years of retirement. Boomers with 1-5 years to go will have to work an additional 5 years if we max out TSP and the catchup 50 no matter which way you go. So I've reduced my contributions to matching, maxed out Roth, and put the balance that would have gone into TSP in private trading accounts that return better than the G. I can always increase my TSP contributions when the market settles down and it looks like they will give a better return than the private accounts.

 

[Fivetears]

I once read where a guy's plan of attack on this board was to just shoot for 12% a year / 2% a month. Seems do-able on two trades if one can fend off the deadly sins. I'm just not real good at dealing with sin.

 

[ContrarianJeff]

Has anybody heard talk about the "Hindenburg Omen" initiating at least 2 (and, depending on how you track it, maybe 3) signals in the last week? A signal occurs when at least 2.2% of stocks are hitting 52 week highs at the same time that at least 2.2% of stocks are hitting 52 week lows. In other words, there is extreme divergence. The signal gives off a lot of false positives, so it's predictive power is questionable. But, and here's the interesting part, every major market crash in the last 30 years has been preceded by a Hindenburg Omen signal. As I said, the signal has been triggered twice in the last week.

 

[Corepuncher]

Has anybody heard talk about the "Hindenburg Omen" initiating at least 2 (and, depending on how you track it, maybe 3) signals in the last week? A signal occurs when at least 2.2% of stocks are hitting 52 week highs at the same time that at least 2.2% of stocks are hitting 52 week lows. In other words, there is extreme divergence. The signal gives off a lot of false positives, so it's predictive power is questionable. But, and here's the interesting part, every major market crash in the last 30 years has been preceded by a Hindenburg Omen signal. As I said, the signal has been triggered twice in the last week.

Royal Bank of Scotland agrees: http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/18/cnrbs118.xml

 

[ContrarianJeff]

Triple witch option expiration is hitting the markets hard. It's also hitting sentiment hard. I smell fear, and that's bullish for us contrarians. I think we're getting near an intermediate term bottom. I am probably early (I usually am), but I'll take my chances. I've been out of the market for a while and am now ready to jump back in. 100% S-fund as of COB today.

 

[luv2read]

that's quad witching.

 

[Fivetears]

There are 4 witches today. I don't think they ride in until around 2:00pm EST