Dave's Account Talk

[Dave M]

imported post

Q3 statements finally are in. Tomorrow I send a check for $700 to the Red Cross for Katrina relief.

5000 hits in the last 15 days.

Good luck everybody.

Dave

 

[Dave M]

imported post

Two days ago Key West suffered a Katrina-like backhand blow from Wilma whenthe Gulf of Mexico crossed over to the Atlantic side. In places it was chest-high. It drained away in a couplehours, being an island. It leftbehind hundreds of soggy homes and thousands of drowned cars. The same is true up and down the line.

In my case my home is dry but my car is toast -- my '93 Ford with 150,000 miles on it which I only drive to the grocery store, my semi-retired heap. My wife's place of business was flooded, stock a total loss and no customers anyway.

Oh well. A week ago I bought a new bicycle and once it is deliveredI will be pedaling in style.

http://www.giant-bicycles.com/us/030.000.000/030.000.000.asp?year=2005&model=11095

Dave

 

[Dave M]

imported post

I rebalanced today. A small amount of money left the G-fund and the C-fund, and entered the S-fund and I-fund, mostly thanks to Friday'sexcellent advance. I am once again 35G 26C 26S 13I. Once I get the confirm, I can calculate my performance for October.

Fridayshows the correctness of my strategy. Had I been cautious as I was in Q1, I would not have been invested and would instead have been on the sidelines waiting for the downtrend to reverse itself.I would have missed the 1%+ gain that we experienced. By going long and holding on, I have gotten all the gains there are to get. It is an act of faith that the ups will excede the downs, over time. So far so good.

Good luck everybody!

Dave

 

[Dave M]

imported post

October was not so good. The C+S+I all-funds index slipped 108 points from 4602 on 9/30 to 4494 on 10/31, a loss of 2.3%. My own portfolio slipped a net 1.2%, the difference being the G-fund mainly.

It is interesting to watch the movement of shares due to rebalancing. FromAug 9 toOct 31 over 600 shares have left the G-fund.This means that the portfolio has automatically purchased shares in the stock funds over time, accomplishing dollar-cost averaging. The reverse will happen when the market rises -- shares of the stock funds will be sold progressively. I am happy with the periodic rebalancing. I remain 35G 26C 26S 13I.

I took my new ride out to the sea wallfor tryouts, still practicing and adjusting. Fun!

Dave

 

[Dave M]

imported post

This month has been very encouraging so far. With just four more trading days in the month, we are pretty much assured of a couple percent gain no matter what happens.

On the 30th I will rebalance. Unless things change between now and then -- and why should they? -- I will increase my holdings and go from 35G 26C 26S 13I to 25G 30C 30S 15I for the final year-end rally.

If that holds up then for the final week I may go all-in! I actually have a chance to achieve my dollar-value goal for the year, which looked impossible during the summer.

Good luck everybody.

Dave

 

[Birchtree]

imported post

Dave,

Congratulations on finding your comfort level - now has dollar cost averaging been good to you - especially during that last October correction? Now you will begin to buy automatically all the way up - probably even catch a few short pull backs if the timing is right. I'll watch how you rebalance to go all in. Good purchasing to you.

Dennis

 

[Dave M]

imported post

I rebalanced; it will go into effect COB today. I decided to stay with 35G 26C 26S 13I and not increase my holdings, because things have been so iffy lately. When I get my confirm I will be able to evaluate the month. As of the 25th I was doing quite well but then came that 1% loss...

One thing is clear: the October down-turncaused me to buy more shares of the stock funds when I rebalanced at the end of the month. Thus I did better than otherwise inthe Novemberrise, because I had more shares. This month shares will flow in the opposite direction, locking in those gains. I will get the numbers in a couple of days.

Good luck everybody.

Dave

 

[Dave M]

imported post

My confirm came in last night. On Oct 31 the C+S+I all-funds index stood at 4494; on Nov 30 it was 4656, for a gain of 162 points, or 3.4%. My portfolio rose by 2.4% on the total, about 3.5% on the amount invested. That was slightly better than the index because the I-fund didn't do much this month, and it is the smallest fraction of my total, only half-weight compared to C and S. Also I count the match as earnings and not contributions, heh.

In the rebalancing, about 150 shares went back into the G-fund, I-fundgot some shares,C- and S-funds shrank slightly. Remember my new money goes 40-40-20 CSI which complicates things.I start the month 35G 26C 26S 13I.

If December does what Novemder did,I will reach my goal for the year. Good luck everybody.

Dave

 

[Dave M]

imported post

Before noon tomorrow I will adoptthe following allocation 35G 20C 20S 25I.

I have decided that the preponderance of the evidence points to overseas markets continuing to outperform the US market.A case can be made for a falling dollar, too.

So I will increasethe I-fund from one-fifth of the total invested to two-fifths, while remaining 35% in cash. My contributions will go from 40-40-20 C-S-I to 30-30-40.Each month I will rebalanceto 35-20-20-25.

Here's to a prosperous New Year!

Dave

 

[Dave M]

imported post

For the year 2005 my account increased in value 15%. However my contributions amounted to 63% of this. My net earnings for the year were thus 5.5% on the total balance. This includes the gov't match which I count as earnings.

Considering how naive I was in the first six months of the year, this is okay with me. Now that I have myself properly orientated I think my results will be better in 2006.

Dave

 

[Dave M]

About a third of the 5.5% was the result of the match. Take that away and the actual increase outside of all contributions was about 3.3%. Is this in the middle of the pack, TSP-Talkers?

Here is a recap of my activities in 2005:

The first quarter was a disaster as I sold low, then lower, then lower, missing all the increases and catching all the downers. I ended the quarter minus 4%.

In Q2 I was very jumpy, in and out a lot, and gained some of it back. I ended the quarter down just 2%.

This is where I wised up. I quit jumping around. I chose a risk level appropriate to me, 35% cash and 65% equities. Then I allocated the 65% among the various funds based on a strategy of diversification -- in proportion of 2-2-1 C-S-I.

I entered Q4 up 0.7% and finished the year up 3.3%. Stready-as-she-goes had done the job.

For 2006 the only tinkering I have done is to increase the I-fund allocation so that now the funds are in proportion 3-3-4 C-S-I (instead of 2-2-1). Otherwise I plan to stay the course. The key is regular rebalancing back to 35-20-20-25. I do it monthly. (The L-funds do it daily, for comparison.) Rebalancing assures that earnings -- and hence risk -- will be in proportion to the given percentages.

By joining TSP-Talk last year I learned a great deal and inexpensively, too. My contribution for 2006 will be coming soon, Tom!

Dave

 

[Birchtree]

Double the pleasure

Dave-M,

Good to see you making upward progress - it don't hurt a bit to get those dollar cost average prices does it? Can you see the potential when you arrive at double your current asset base? If this bull stays on the snort you'll get there even quicker. Keep your strategy working. Take care.

ps. Could you lend me some of the G money you aren't using for the moment, providing you aren't going to spend it buying higher and higher.

Dennis- permabull #2

 

[Dave M]

Ah, my friend. The $$ is in cash in order to manage my risk. What use would you make of it, and what risk would you be taking with it? In essence you would be buying on margin, very very dangerous.

Fourth-quarter statements are in. I have to wait until I get back to the office to print it. Scanning it reveals that earnings were approximately equal to contributions. I am contributing the max plus catch-up, so I am happy.

It also looks as though January's earnings will be about the same as those for the entire 4th quarter, so I am even happier. In a few days I will rebalance back to 35G 20C 20S 25I and then we will know for sure.

Dave

 

[Dave M]

I printed up my statement and have had some time to go over it.

It looks like a 2.8% gain for Q4, which I count agency matching funds as earnings. For the year '05 the change in Net Asset Value was 15.0% of which 63% was my contributions and 37% was earnings. This gives 5.6% increase in NAV due to earnings.

In Q1 I suffered a 4% loss, so in the last three quarters I gained almost 10%. Three-fourths of that was in Q3 and Q4, which is when I switched to a buy-and-hold strategy.

In a few days January will end, and I will rebalance to 35G 20C 20S 25I. As of today the C-fund and the G-fund are lagging so they will receive some shares.

It also looks as though January will have earnings equal to those for the entire year '05, or nearly so. The question will be, What would happen if I retreated to the G-fund for the rest of the year? If I make 5% in January, then another 5% from the G-fund would yield around 10% for the year, or about twice my earnings from all of last year (5.6%).

But would it get me sufficiently close to my dollar-goal for the year? I want a total increase of $40,000 for the year '06. I'll be contributing around $20,000 so I should be able to work it out on that basis.

We had plenty of downs as well as ups in Q3 and Q4, so the solid performance builds confidence in the allocation. Right now my feeling is to let it ride.

Dave

 

[saturneptune]

Dave,
Does the S and I fund at record levels, and the C fund near that influence your allocation decision above at all? I guess I am just a little leary being 2 years from retirement. Thanks

 

[Birchtree]

Easy Rider

Saturneptune,

With two years to retirement most logical folks would advise you to stay safe and comfortable in the G fund where you are currently sitting. If you have never experienced the power of a true bull move then you won't mind missing the opportunity to make some large bills in preparation for retirement. Dave-M has a solid allocation and will continue to make gains even in some down moves - but I feel a long lasting and powerful price advance is in the process of building momentum - you shouldn't miss the opportunity to benefit. Dave is thinking 10% would be fine but 35% could be divine - and it may happen, but you must be in to win.

Dennis - permabull #2

 

[saturneptune]

Dennis,
Thanks for the advice. It does give me more confidence. I will probably let the TSP set after I retire in some type of mix, so not sure when Ill take it out. Thanks again

 

[Dave M]

S-N, I have 4 or 5 years to go. But the $$ isn't going anywhere. Like you, I plan to keep it in the TSP. This could amount to a decade or more, so I don't think I'll ever go completely into cash; we need inflation-protection.

As to your question regarding current pricing, the allocation is designed to take advantage of increasing prices. Prices are increasing. I am getting earnings. The allocation is working.

The allocation also is designed to offset falling prices through the use of the G-fund. If the stock funds are steady or slightly lower, I will lose nothing. If they fall somehat, my pain will be a fraction of Dennis'.

So the short answer is, no. The change in price is more important than the actual price. Canyadigit?

Regular rebalancing assures that the portfolio's components remain in...balance. This is the sine qua non of the strategy.

Dave

 

[Dave M]

I received my IFT this evening. For the month of January I saw a 4.2% increase with a change in NAV of 4.75%. That's not chopped liver, it was a very good month.

I had rebalanced to 35G 20C 20S 25I. Money flowed into the G-fund, the C-fund was nearly unchanged, and the S/I-funds lost some. This means it is unneccessary to think about retreating to the G-fund with my gains -- it is happening automatically, I just bought 300 more shares of it. My downside risk has diminished.

Good luck everybody.
Dave

 

[Dave M]

February is in the can. I initiated my IFT for the month yesterday (after 12N), knowing it would go into effect today, so I already have my confirm. I have rebalanced to 35G 20C 20S 25I.

For the month earnings were positive but negligible, percentage-wise. It looks a little better if I end the month of January as of the close on Friday the 27th since there was a big surge on the last couple of days of that month.

But for the quarter, which accounts for all that, I stand ahead by 4.25%, including the gov't match but excluding my own contributions; there has been a 5.63% change in NAV overall. Nice, for two months. You can't do that in the G-fund.

On my IFT, since share prices changed so little over the month, the share-count in each fund also changed little. Each fund incremented upward in proportion to my contributions, which are in line with my allocations.

Here is to a profitable March. If we make 2% more I will have one of my better quarters.

Dave