DakotaKid's Account Talk

[DakotaKid]

I've been on the Autotracker for a few years, and been reading and following certain people's threads for a number of years. I am now finally ready to try to contribute to the pool, hence starting this thread...

As with many people, I did ok before the Board started limiting the number of IFTs I could make in a month. After that change, I've been getting killed. I've come to realize that the primary reason for this is fear. I've become very conservative and keep most of my assets in the "G"arage. I hoarde my 2 IFTs waiting and waiting and waiting for that perfect opportunity to get in. The result? I missed most of the decline of late 2008, which I was very happy about. 2009? Missed most of the gains. Why? Because I was waiting for that perfect buying moment. I would read info everyday, info that made me think that a correction was just around the corner... so I'd stay out of the market, certain that when I got in, the market would correct and I'd be screwed. So I thought I was smart and I waited for that imminent correction to get in... and waited... and missed most of the 2009 year.

So here's where I'm at right now. I've decided that with the ridiculous 2 IFT limit that has been imposed upon us, Birchtree is actually on to something, to a degree. (you have no idea how it pains me to say that) While I don't agree with 'ol Birchtree that a 100% allocation 100% of the time is the way to go, I'm delving into the possibility of playing a percentages game by trying to keep some of my gains and minimize some of the loss, and am wondering whether anyone else has looked into this and, if so, what their thoughts / findings have been. I've been working on an excel spreadsheet for a few weeks now off and on, and found it's incredibly complex.

If anyone has any thoughts / input / advice on this, it would be greatly appreciated. Here's where my train of thought is right now:

For now, I'm going to follow the S&P 500 (hereafter referred to as Stocks) closing price because it's easy to access, the C fund and S fund (somewhat) loosely follow it, and the Board can't manipulate it (I fund anyone?). So my current parameters are: At any given time, my allocation is 100% stocks. If the Stocks increases by A%, sell M% (small profit, take some off the table). If the Stocks decrease by B%, buy N% (small correction, increase my risk). If Stocks decrease by C%, sell 100% (catastrophic loss, or steep decline - get the hell out). If at 0% exposure and Stocks increase by D%, buy 100%.

I've been backtesting this from the beginning of 1998. It's a level that's slightly below where we are now, so I can see what kind of overall return I'm getting.

Again, any advice / input would be greatly appreciated. If others have attempted something similar to this and found it unsustainable, please let me know. I may not listen, but it may help me know when to call it quits if it doesn't work.

Thanks,

DakotaKid

 

[Birchtree]

Never be afraid of a little pain and don't ever listen to Betula papyrifera.

 

[DakotaKid]

Huh... Only one comment? I'm surprised that I'm potentially the only one that's tried this. I worked quite a bit on it this weekend and am pretty much done. I'll post the results of my backtest today or tomorrow when I get time.

 

[akpackfan]

One problem I see is that with our IFT cutoff time the market could be up then so you move some to G to lock gains only to have the market reverse in the afternoon and close down. So now you've locked in a loss or the opposite could happen and you end up buying in on an up day. These would be the exact opposite of your intent and it's not a rare occasion that it happens.

 

[nnuut]

One problem I see is that with our IFT cutoff time the market could be up then so you move some to G to lock gains only to have the market reverse in the afternoon and close down. So now you've locked in a loss or the opposite could happen and you end up buying in on an up day. These would be the exact opposite of your intent and it's not a rare occasion that it happens.

IFTs are effective at the CLOSE of business the day that it's requested, so they efffect the next days earnings.

 

[DakotaKid]

Agreed. I've taken that into account. I've done my backtesting in such a manner that if today triggered a sell, the actual sale takes tomorrow's price into account, not todays. Believe me, when I caught that mistake (using the same day's trigger for the sale or buy), that was a blow that took me a while to work around. Any system is going to have that problem to some degree. And with this, there will be some gains missed and some losses taken for it to hit the buy and sell points. That's a given that's true with any system out there. The reason I'm doing this is the same reason Uptrend does his, or Coolhand his, Ebb his, etc. I want to take the emotion out of this because, in conjunction of only 2 IFTs, it's limiting me. It's keeping me out of the game because I don't know enough / have time to read charts, reports, opinions, etc. I don't know the other's parameters, so it's hard for me to trust their systems. It'll be hard enough to trust this, but at least I know the parameters I've set up.

Anyway, thanks for the feedback. I'm sure it will be an evolving process.

DakotaKid

 

[Elgallo]

If your screen name truly reflects your age e.g. you are a young person just starting or have 20+ years to retirement then you have time on your side and time helps to mitigate the risk to a certain degree.

You may be being way too conservative.

"ol BT" as you referred to him as, and I for that matter, are older dudes. BT's retired and I'm 3 years away and we are both what I would consider fully invested.

Stocks are on sale as far as I'm concerned so if you are young I'd be buying them like there no tomorrow.

The market is not nessarily all about today, i'ts about the tomorrow's way down the road.

Good luck Kid!

 

[DakotaKid]

I try not to date myself, but compared to you guys, I suppose you'd think me young. I'm in my mid-thirties, and have 9 years in the fed so yes, I do have a while to go. Not as long as you'd think tho, as I have a mandatory retirement age in my profession. My screen name simply reflects that I grew up in the Dakota's, and that I like sunflower seeds...

I know you're trying to be helpful Elgallo, but I can't in good conscience put my money 100% in stocks and forget it. That worked back when TSP investing only happened once a month and you had to wait either 15 days or 45 days for your trade to go through. I understand that I will benefit from high risk because of my retirement horizon. However, I'm not willing to ride the market down during a correction if I can help it. It just doesn't make sense no matter what Birchy says.

I was one of the "guilty" 3,000 that got the infamous letters. I was a "day trader", and I was pleased with my results. What I was trying to say in my previous post is that because we're limited to 2 IFTs now, I've become too greedy, or maybe protective, with my IFTs. I find myself wanting to save them in order to make the "perfect" trade or, at a minimum, not buy at the top and be forced to sell in a correction and waste my IFT. That's not how I want to trade.

So this system that I've been working on is designed to keep me exposed during an upswing, gradually reducing my risk as the markets climb, but also to protect some assets during a downswing. I will also buy back in during a correction unless we correct too far, at which point I will go park park in the G fund.

The point of my first post was to say that I am working on the system that I described. I'm looking for input from anybody that has worked on / thought about doing the same thing, or would like to discuss it to try to help me refine it. While I appreciate your advice, I'm not interested in just complacently sitting in stocks.

DakotaKid

 

[DakotaKid]

Crap. My laptop appears to have died... with everything on it....

 

[coolhand]

Crap. My laptop appears to have died... with everything on it....

I know that feeling.

 

[airlift]

My son's computer lost everything last week, and he has no information back-up system. Is there a commercial outfit who can retrieve the information from the hard drive? How much can this be expected to cost?

 

[JamesE]

No disrespect to Ebb, Uptrend or any of the other "timers" here, but you might want to consider their returns or tracker positions vs staying put in stocks, especially at your age. I've only got 6 years to go and I'm trying to make all the money I can, especially right now in this environment. My 12 month PIP ending 3-31-10 is 40.4%, with staying invested, and I'm sure there's a bunch of folks higher than that.

 

[Elgallo]

My PIP 53.6%

DK: I'm not saying go 100 CSI and forget about it. One must continue to pay attention to the financial/economic contitions at the moment and WHY they exist.

I consider myself more a buy and holder than not, and I do from time to time generate cash by taking small proifits and or redirecting contributions. Then I wait for dips and buy them.

Good Luck to you.

 

[JimmyJoe]

Dak,
I'm a shallow victor with my earnings but I'm happy. Soon you will make so much in the tsp and stocks you'll be able to buy 10 laptops and pay easily for their servicing. I think by looking at others in the auto tracker and considering your own state of affairs, you'll find that 'almost' perfect investment strategy. Much luck to you me amigo!

 

[DakotaKid]

With no disrespect intended, what you're returns in 2008 and 2002, JamesE and Elgallo? If you missed most of those corrections, then I congratulate you. But if you absorbed most of those losses, then you're just starting to break even now ref 2008. I think we just have a core difference of opinion regarding the markets. Some are Buy and Holders, some aren't. More power to both sides, let's just all make money!

Regarding my laptop... I'm at a loss. I tend to think I'm pretty computer savvy, but this one has me stumped. It's hard to know where to start when it just sits there and doesn't even attempt to power up (yes, it's plugged in! :toung. I'm hoping the hard drive is still viable, but we'll see. Going to take it in to a computer shop today and cross my fingers....

 

[JamesE]

With no disrespect intended, what you're returns in 2008 and 2002, JamesE and Elgallo? If you missed most of those corrections, then I congratulate you. But if you absorbed most of those losses, then you're just starting to break even now ref 2008.

Unfortunately, 2008 "woke me up" so to speak. I'll never let that happen again. That's why I watch real closely now. All I'm saying is that it's better to be invested than not. I only take a couple of breaks a year, and seem to make bad trades on some of those.

 

[JimmyJoe]

To avoid the pitfalls of 2008 again, I now institute a 'stop' of a certain percentage loss, and get out to save my earnings. I will not tinker with and hope for a better day during what I perceive to be a graduated fall similar to that of 2008. There are many in the tsp auto traders and auto trackers who went through 2008. Watching them and their moves will help give me a clue next time. Watching the winners of the auto tracker also helps me gain money in the market. Following Tsptalk is great for my portfolio.

 

[DakotaKid]

Ok... so I got my hard drive recovered, which is a good thing. The motherboard on my laptop is what failed.

I'm doing some more work on this system, and have reached a dilemma. Which is the more correct way to calculate a yearly gain or loss: 1.) (end of year value - beginning of year value) / beginning of year value, or 2.) the sum of the daily gains and losses for the year? These yield two completely different numbers, and I can see the argument for each. Personally, I tend to think the sum of the daily gains/losses is more accurate.... thoughts?

 

[DakotaKid]

Any thoughts on the previous post?

 

[Silverbird]

If you stayed in the market with the same percentages the whole year, then use year/year.

But if you changed your percentages and made losses and gains, you need to do the sum of gains and losses.