Dave's Account Talk

[Dave M]

Foward Ho!

So now the question is, "How confident are you, Dave?"

The Fed met and the world breathed a collective sigh, a gust, of relief. No one I saw heard or read expected the euphoria, the exuberence. Altogether the indices are back where they were a month ago, which means they are also back where they were around March 15th.

So we have made up about half of what we lost. What about that other half? I don't believe it was lost, as such. That is, it exists mostly on paper. For example I sold on May 15th, four days after my account peaked. When I sold I was well below that peak and so took a "loss." But when I sold I was also above where I was when I bought, so I actually made a profit.

In other words, there is a lot of money out there. Somewhere I read that $5 trillion left the market after absorbing a $2 trillion paper loss (as above). That leaves 3 out there somehere. Assuming half of it came back Thursday, in the quick-draw world of Wall St, we still have more to go. Maybe some is tied down in other investments now, but not much because look at real estate, the bond market, whatever -- no sign of large capital inflows.

Since the whole world seems to agree, I am joining the herd and will spit in the ocean in July. But I shall wait for the 5th. On Monday the 3rd I will put in an IFT. I will go in a step at a time. I feel no particular pressure so my thought is, weekly increments. By the end of the month I should be about 50% invested. This will also give the markets a chance to stabilize further, and maybe define the new trend, before I am committed.

I will post the move in other thread. Right now I'm thinking 7-7-7 CSI, and go from there based on performance.

Good luck everybody.

Dave

 

[Dave M]

So Where's The Performance?

I will be 67G 11C 11S 11I for this week. I'm still looking for some performance so I can discriminate between the funds. So far there is not much to go on so I will continue to steer the middle ground.

Good luck everybody,
Dave

 

[Dave M]

Q2 Statements Are In

Here are the data from my Q2 statement.

Change in NAV = 5.3%<br>
Contributions = 2.8%<br>
Earnings = 2.5%<br>
YTD = 14.6%, 6.2% contributions and 8.4% earnings.

For the year so far, the I fund has contributed about 60% of the total earnings, more than all the other funds combined. I consider the 2.5% gain for the quarter a minor miracle given that the all-funds index fell by about 1.4% from 5121 to 5051. Still, this was only about half of the gain I achieved in Q1, so I am looking for improvement here in Q3 to get back on track.

Good luck, everybody.
Dave

 

[Dave M]

The Last Four Quarters

Over the last year or four consecutive quarters, I have a change in Net Asset Value of 27.3%. Subtracting all contributions leaves 14.4% as market earnings.

NAV has averaged 6.8% per quarter, with earnings 3.6%.

Q1 '06 was outstanding with about twice the normal rate of gain. (This made up for Q1 '05 in which I lost an amount equal to the overage.) By smoothing that out I can come up with 2.5% per quarter as a more representative average earnings rate.

I have 8.3% for the first two this year but that should be reduced by a third as above, for a representative average of 2.8% per quarter since Jan 1, 06. This still puts me slightly ahead of the rate calculated above, 2.5%. It has been a very good year for me, so far.

Two percent this quarter, Q3 '06, will maintain. It would also put me at about 10.5% YTD on October 1st. Check back and see how I did.

Good luck everybody,
Dave

 

[Dave M]

Next Week

The prices for today's action have been posted. The C-fund wins the prize for the week so far. Therefore when I adjust my allocation tomorrow or Monday, I will be adding to the C -- 61G 17C 11S 11I looks good right now.

I will post the actual allocation in the other thread.

Dave

 

[Dave M]

Very Disappointing

Now is not the time to increase my exposure, I guess. So I will ditch the big losers and buy some C-fund. Maybe I ought to try the allocation 67G 19C 7S 7I. Hmm...

Dave

 

[Birchtree]

Why not try 67C and 19G? Snort.

 

[Dave M]

Quest For Higher Prices

Incurable, aren't you? I'm not playing catch-up, I'm still defensive and only looking for a piece of the action. So I went 67G 19C 7S 7I this morning. This allocation should damp out some of the mood swings plagueing us lately.

My reasoning is not complicated. World markets are vacillating due to geopolitical events and the I-fund has suffered a lot lately. The latest incremental rise in interest rates seems to have suppressed the S-fund. Our domestic economy seems to be chugging along nicely so it looks like the C-fund is the best place to find positive results. Also when there is a slide, C-fund slides the least.

Did I mention that the I-fund produced 60% of my market gain over the last four quarters? It would seem advisable to have some money, at least, in that fund.

Good luck, everybody.
Dave

 

[Dave M]

July

July was another month like June: lots of big movements both ways but little or no change in the end. There is money to be made by the swing-traders but it takes a special skill and lots of luck. Lacking both, I shall abstain as usual.

For the month as of Friday I estimate I had lost a total of $48. This is zero to several decimal places, percentagewise. Therefore my YTD figure remains at about 8.4%, which will show as 8.2% on the local tracker.

That is a real nice number, but it was all made in the first four months of the year. For May, June and July I gained less than 0.5%. I am grateful not to have suffered any significant losses during these difficult months, however the trend indicates that 2006 has cooled off a lot.

It still looks like a good time to be only partially invested. The earnings news is mixed with some sectors, like energy, doing well and others, like construction, beginning to hurt. The interest rate/currency wars continue, with competitive revaluations by the central banks. The geopolitical worries proliferate. We await a series of disasters, natural or man-made.

In other words I see downside pressure on all sides. I am being patient and careful this summer; perhaps by October things will change.

This week I will receive a contribution. On Friday I will evaluate, but my intention at present is to rebalance to 67G 19C 7S 7I which I will post in the other thread at the time. I don't expect skyrockets in August; I'll be delighted to net another 1/2%.

Good luck everybody!
Dave

 

[Dave M]

Well, the 31st turned me around. The G-fund paid a penny! That turned my -$48 into +$45 for the month, hey hey hey.

My contribution arrived yesterday, we had a little positive action today, and we inch closer to next week. I am still leaning toward getting out Friday morning. We have the Fed meeting, a hurricane, high oil, make your own list. Nnuutt, I may join you in the G-fund!

Dave

 

[nnuut]

Good, the more the merrier. It's lonely and broke down here!

 

[Dave M]

Damaged Not Broken

I saw no reason to wait for 1145 AM to pull the trigger, and went 100G this morning already.

Today's very positive action -- if it holds to the close, still distant -- sort of takes the wind out our sails for next week: this is the bounce that would have come after the FED pauses, should it do so.

So, I shall take a wait-and-see attitude. Will the gamblers win? Stay tuned.

Good luck everybody!
Dave

 

[EW_ret]

Dave, I like your IFT moves because they are aligned with my conservative stance. I rarely move more than 60% into equities, and went to 100% G on Wednesday. Do you perform your own technical analysis in determining the unusual fund allocations? It appears you are using some prime number sequence over the last quarter, but you remained in a fixed fund allocation in the first quarter of this year.

I'm awaiting a big market correction that's suppose to happen over the next three months. Are you expecting a market correction which completes the 4 year market cycle? Some say we already had this correction the last few month. Others say we are about to enter a big bear market cycle lasting ten years.

I'm not going to chase this market up at this point. My strategy is to wait for a pullback below 1250 in S&P 500 before moving a small amount from G to equities (20-40%). If the S&P 500 should move below 1200, I would increase my equity position further (45-70%). If it should go below 1160 I would then increase the equity position (75-90%). I hope it does not fall below 1200.

 

[Dave M]

Not At All

Technical analysis? No, not at all in the sense you are suggesting. I go by feel notwithstanding my scientific background.

2005 was a learning year for me. Q1 '05 I lost my shirt by trying to be smarter than the market. When I looked back, I saw that I did best by setting my allocation and not messing with it. The reason? By timing I missed too many of the up-days; the only way to get them all was to remain invested. The strategy was based on the assumption that the total up would out-weigh the total down. In Q3 '05, Q4 '05 and Q1 '06 I sat tight and did very well.

Q2 this year the strategy faltered but I got out on May 15th with minor losses. Since then I have been trying to protect my YTD gains, pure and simple. I am still waiting for the time to put it in and let it ride. All the gyrations keep putting me off.

I am conservative only comparatively. I have a specific dollar-goal in mind, to reach in 2010 when I retire. So long as I am on track, and I have it all graphed out, I am happy.

My risk tolerance is about 67%; I'll always keep some back. (When I was up to 85% I was being very bold.) I will spread it among the funds so that whichever does best, I have a piece of it. Once I stabilize, I will merely rebalance monthly. This assures that earnings will be in proportion to the allocation, and is the heart of the thing. And yes, for fun I use prime numbers. Do you think I should revert to perfect squares? (1,4,9,16,25, etc.)

You are already retired, yes? That makes it important for you to protect yourself. In my case, the TSP is about half my nest egg, very important for me. BTW, I see you over at fedsoup occasionally. Thanks for reading.

Dave

 

[EW_ret]

Re: Not At All

I am conservative only comparatively. I have a specific dollar-goal in mind, to reach in 2010 when I retire. So long as I am on track, and I have it all graphed out, I am happy.

My risk tolerance is about 67%; I'll always keep some back. (When I was up to 85% I was being very bold.) I will spread it among the funds so that whichever does best, I have a piece of it. Once I stabilize, I will merely rebalance monthly. This assures that earnings will be in proportion to the allocation, and is the heart of the thing. And yes, for fun I use prime numbers. Do you think I should revert to perfect squares? (1,4,9,16,25, etc.)

You are already retired, yes? That makes it important for you to protect yourself. In my case, the TSP is about half my nest egg, very important for me. BTW, I see you over at fedsoup occasionally. Thanks for reading.

Dave

Yes, I retired from the US Navy under the CSRS last September. I've become quite conservative in my investing. It started when my retirement date was about six months away.

I have most of my assets at Vanguard. I am now sitting at 40% Stocks, 12% Bonds, and 48% Cash for all my accounts. I await the markets to drop before moving to a allocation of 60% Stocks, 30% Bonds, 10% Cash. This is the target allocation of my investment plan. I did an IRA rollover in April 2006 from TSP to Vanguard with about 80% of my TSP funds. I kept a small amount in my TSP account to play the markets. I agree with you that moving funds frequently hurts your return, but I enjoy the excitement. I recommend to everyone still working to just invest in one of the Lifecycle funds and forget about it. The majority of federal workers don't have the time to manage their accounts.

Yes, I frequent the FederalSoup forums. That’s where I first heard about TSPTalk. I try to help those with retirement questions if I can.

 

[Dave M]

Rollovers

Before I joined the federal service I opened an IRA. Since contributions to a 401 at work meant that contributions to an IRA were no longer tax-deferred, I quit contributing to it a long time ago. Thus it has been sitting there quietly accumulating since about 1985 -- a T-bill and some mutual funds.

I, too, planned to roll my TSP into the IRA at some point. But then, the TSP is so easy, and so inexpensive, and gives such good results, that now I am not so sure. I may just close out the IRA, take the cash for my first year's living and traveling expenses, and let the TSP cook. The balances will be in 10-1 ratio in 2010, approximately.

So anyway, are you happy you flipped it? Maybe playing with the residue is what makes you happy?

Dave

 

[Dave M]

A Non-Move

Today I bought an imaginary 10,000 shares of I-fund. D

 

[Birchtree]

You are too timid - 30,000 would set you straight. And you'll be there someday. Good to know you and your style.

 

[Dave M]

A tenner is my present limit. I came oh, so close to making it real today, based on the false down-move due to the terrorists, which will correct itself tomorrow. It will, won't it?

Dave

 

[Dave M]

Edging Back In

I'll give it a try this coming week. 79G 7C 7S 7I at today's close. D