Dave's Account Talk

[Birchtree]

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The problem with the I fund is not oil, but rather monetary policy from the BOJ (Bank of Japan). Remember Japan has a 21% position in the I fund - UK has 22%, and the other countries are all slowing their economic base. When we expand they will expand - they are all export type economies - but Japan remains the laggard, acting like a drag chute on a race car - slowing things down.

Japan has been in a 15 year period of economic malaise. The BOJ has been overly tight on their monetary base. Japanese housholds and businesses have a demand for cash after years of decline in land prices, a falling Nikkie and no inflation - in fact deflation - at the cosumer level. In the spring of 2001 BOJ announced their quantitative monetary policy easing program. It was all talk and very little do. It was expected that BOJ officials would alter expectations concerning the wisdom of holding cash through it's quantitative easing program by creating positive rates of inflation. They did not try hard enough - real growth in Japan remains anemic and inflation is stuck around zero. Unfortunately, it appears that expectations about the value of holding cash have not been modified. Remember our Fed went to 40 year lows of 1% to prevent deflation in this country.

 

[Birchtree]

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BOJ today is still in the process of tightening and there is a reason for this continued action. If the BOJ ever decided to participate in the process of erflation - they would need to allow the yen to find its equilibrium level, which means allowing the yen to devalue. Here is the crux of the matter - why their growth averages 2% on a year to year basis - a tepid pace that spells intermittent periods of recession and deflation ahead. If the BOJ would expand their monetary base and buy up government debt and target a 2% to 3%, or some other positive rate of inflation they would experience growth that would help households and companies.

However a cheaper yen would mean foreign capital inflows as US and Chinese investors and businesses rush in to purchase Japanese real and financial assets. Remember in the 80s when they were here buying up everything they could. Since the Chinese currency is pegged to the dollar, both US and Chineseinvestors would be like kids in a candy store with lots of money. That has been the nub of the issue for the past 15 years. Japanese officials are afraid to straighten out their economic mess because it would mean allowing the yen to find its own level, which in turn would mean a flood of foreign monies pouring in to scoop up undervalued assets.

 

[Birchtree]

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Japan has manned the battle stations for 15 years to minmize foreign investment inflows. Remember when one dollar could buy 270 yen in 1982? Now it can buy only around 107. Japan wants a strong yen to keep foreign investment out and seems willing to indefinitely make the trade-off of remaining in or near deflation and stifling their economic growth with inadequate money supply growth to achieve that.

Japan is the problem - not the price of oil. Japan will not adopt a monetary policy that is conducive to faster economic growth which would pull in more imports. Likewise it will not adopt a tax policy that is conducive to economic growth and more imports.

The Nikkei stock index reached a peak monthly value of 38,134 in December 1989 before declining to 7909 in March 2004 - iys 1982 level. That equity decline is a useful proxy for Japan's economic deterioration from an economic powerhouse to an economy depending on exports to the US and emerging-market economies for its growth. Again, Japans's economic growth has been anemic since 1990- averaging approximately 1.5% per year. while inflation, as measured by the CPI, has averaged about zero. The I fund will lag in performance as a result of Japan - I would only accumulate it while waiting for tomorrow.

 

[Birchtree]

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Wonder Woman,

Show our friend DaveM that you are not trepidatious - be bodacious. Go 100% C fund and the sooner the better - you will get right. The key is the Fed and interest rates - they have paused - only they aren't saying anything. The bond vigilantes are setting policy for the Fed - they don't see inflation. Best Regards

Permabull#2

 

[Guest]

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Birchtree wrote:

Wonder Woman,
Please use a larger font when you post - I can hardly see what you wrote.

To the oil question in a moment - but first let me say that in my account talk I mentioned to participants I gave up $138,000 in my private account from 3/7 to 4/20 and no one has yet decided to try and put my feet to the fire.

Please use a larger font when you post - I can hardly see what you wrote. That is so strange because what I see my font is equal or larger than what I see in your post. However, I know what I am doing wrong and will adjustment. Thank you......
To the oil question in a moment - but first let me say that in my account talk I mentioned to participants I gave up $138,000 in my private account from 3/7 to 4/20 and no one has yet decided to try and put my feet to the fire.
Birchtree, you are in a class of your own - no comparisons possiblle!!

Thank you for your responses.

 

[Birchtree]

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Wonder Woman,

With the TSP contributions opening up in the future for more appropriations possible - there will be many others over time in the same league. That is what makes this country so darn great - we all have opportunity presented to us, the market is a very nice equalizer. Even my cat could make money, if I wanted to get out the pistols and trade with abandon - but I'm just darn lazy. She would provide excellent advice, similar to Yogi and Chicken Little - no I mean better advice. C'mon get right on the trend and get right on the choice. You know you are and can be bodacious. Heck, even someone else I know has gone 3%C and 2%S-now that's progress. Now the renegade has arrived.

 

[Guest]

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Seriously Birchtree, if I went 100% C since I began losing $$ in Jan. I would have lost 3.95%. I guess your reasoning is the future returns. I've told you before I can not risk losing more at this time!

 

[Guest]

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And before you tell me how much C Fund has gained in May >

 

[Birchtree]

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Wonder Woman,

OK, peace be still. I hope you are at least dollar cost averaging. Stay away from the I fund unless you want to dollar cost average there - the Japanese are so slow.

 

[Guest]

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[Dave M]

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Dave's Diner is flourishing I see.

WW I have no idea what oil will do, on its own or in relation to the I-fund.You flatter me.All I meant by my remark was, do not lose confidence.

Dave

 

[Spaf]

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Dave please excuse me for entering your account talk. I would like to address some of Wonder Womans concerns.

Pyriel please delete this post so that it remains Dave's account talk thread. I tried to find an account talk thread for Wonder Woman, but I couldn't find one??

WW....please, if you will, start an account talk thread for your self! Or, join us over at market talk, whichever.

WW.... you can PM or e-mail me. We can get you out of that hole and set you on your way. No guarantee. But, You will feel a lot better.

Been there, done that. I am serious, I need a new boat.....on a mission!!!

Rgds, Thanks Dave! Spaf

 

[Guest]

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Dave M wrote:

Dave's Diner is flourishing I see....... Dave

So What's for Dinner, Dave?

Spaf said we weren't suppose to be posting here. Sorry, I didn't realize that - thought 'account talk' vs. 'account' was ok. I will PM you Spaf. Thank you for your generous offer.

 

[pyriel]

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Yup, that is why we have an account talk... Spaf, are you offering your service to make us $$$? Is this going to be different than what you are posting? Can you get me in on it too? I need some $$$? Lots of it.

P.

 

[Show-me]

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Me too, me too! I've never owned a boat!

 

[Dave M]

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All are welcome, come on in for a cup of coffee. We need a place to go on days the market is closed -- anybody else feeling the withdrawl?Chess boards are available. Remember to tip the staff generously!

Dave

 

[Spaf]

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I understood it to be Dave's account talk. Where we talk about good old Dave! I think I should be in another forum. What I'm telling WW is not confidential. I will share anything (well almost anything) with others. I didn't want to fill Dave's section up with "other stuff"

Let me find a more appropriate forum and I'll be back!

Spaf

Couldn't find anything specific!

Maybe Tom could make a fourm for this?

In the interim I'll go to Day to Day Market Talk: Market Trading / The Best Trader is U

Hows that? We are running!

 

[smedlap]

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Buying back military time. well stated. What most do not understand is the longer one delays, the greater the compounding of annual interest on interest to the point where when one ends ones career, the bill is so significant that some cannot pay the bill for the credit. It is just the opposite of what we are involved in in TSP - compounding to our benefit!!!!!!!!!!!!!!!!! One cannot imagine the difference and I suggest anyone in this situation should "pay themselves first" as as fast or early as possible!

 

[Dave M]

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Well, in my case I waited thirty years! But I had only two years service, and they paid me squat, and they compute your liability on only a fraction of your earnings, so itcost me under $600 for the two years. Cheap.

Since I plan to retire with 25 years, the two additional years work out to an increase of 27/25=1.08=8% in my basic FERS annuity.It won't take long to recoup the six hundred.

Dave

 

[Dave M]

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Down, up, up, down, it was a short week but a volatile one. We closed on Friday at 4271, up 10 basis points from last Friday's close of 4261 in the C+S+I all-funds index.

The index represents a simple measure of how an investment spread evenly across all three funds is doing. It made a recent bottom on May 13 at 4112. That means Friday's 4271computes to a 3.8% increase in the last three weeks, (4271/4112 = 1.038), a solid performance. A close this coming Friday June 10 of 4325 will continue the trend line.

This makes three straight up-weeks, and 4 out of the last five. It means buy-and-holders now have a little headroom, and can afford to wait out the small-scale wiggles. SPAF, youridea of a stop-loss is a good one, and now we can set one that makes sense and leaves us in positive territory -- we don't have to bail at the first sign of trouble in order to preserve evanescent gains.

We're only looking for 15 basis points per week in each of the funds, average, over time. Good Luck!

Dave

P.S. I am holding 75G 5F 10C 10S, considering adding 5I to the mix.