Dave's Account Talk

[Dave M]

Let's compare funds for the year so far, that is, Jan and Feb. Just divide the price on Feb 28 by the price on Dec 30 and you get: G 0.7%; C 2.95%; S 5.6
%; I 6.1%.

So if I had been 100% invested in the C-fund since the start of the year, I would be ahead by slightly less than 3%.

By being diversified and capturing the rises in all three stock funds, I have beaten the C-fund using while only 65% of my capital. Are you reading Birchtree? My risk was 65% of yours and my gain was 144% of yours.

Dave

 

[Dave M]

I mis-calculated a little in the above; I included the match. Taking that away leaves ~3.9% instead of 4.25%. This is still above a 100C allocation.

Also, the fall at the end of Feb will just make Mar look that much better!

Dave

 

[Birchtree]

Apples and mangoes

DaveM,

Let's take it from yesterday back to January 31 - and see what things look like. I still have a hard time working with percentages - actually prefer the real numbers.

The G fund gained $.04
The F fund lost $.03
The I fund lost $.11
The S fund was zero sum
The C fund gained $.11

I do know that a higher percentage of a higher number means more money. Right? You had smaller percentages of smaller numbers therefore a little less money, right? Now I did have the unfortunate pleasure of doing some dollar cost averaging that adds to my bottom line for a few dollars more. I made 100% purchases at $13.74 (wish I had more of those), $14.01, and $14.02. The purchases made in January were $13.96 and $13.70 (wish I had more of those also). So fate treats me fairly well. Your system is the correct way to travel and this marathon race is just getting started - I usually start from the back of the pack and try not to trip over the falters. Keep up the good work.

Dennis

 

[Dave M]

FundSurfer's tally shows me at 3.44% while I estimate 3.9%. The difference is due to rebalancing I think. We will know more a month from now when statements are available, which is a move.

Birch, no fair cherry-picking. Take anything from Jan 31 it looks a lot worse than if you take it from Jan 27. (I am smiling.)

Hey, do well, my friend. The better you do the better I do, too.

Dave

 

[Rod]

hi dave, is anyone talking about a ROTH type option for TSP?
Congress passed legislation for ROTH 401(k)s that went into effect 1 Jan. 2006. this would be like a ROTH IRA were you pay tax now on your contribution and all the money in the account plus all the compounding would be tax-free at retirement. please help get the word out
THANKS Chris

Hi Chris,

I'm moving your question to the IRA forum since this is specific for Dave's account talk.

http://www.tsptalk.com/mb/showthread.php?p=39330#post39330

Thank you!

 

[mlk_man]

FundSurfer's tally shows me at 3.44% while I estimate 3.9%. The difference is due to rebalancing I think. We will know more a month from now when statements are available, which is a move.

Dave

Dave, you are correct. I can't track how your contributions are being distributed so I have you maintaining an allocation of 35G, 20C, 20S and 25I all month.

M_M

 

[Dave M]

It seems to me this question has been aired before -- How come the tracker's returns are different from the return calculated by the poster?

The tracker takes an allocation and sticks with it, in my case. When I rebalance to 35G 20C 20S 25I it does not count as a move, to the tracker. But every month contributions have been made and prices rise and fall. This results in a different share-count and so the percentage-change that I see is different from that of the tracker. For example, I added 300 shares to the G-fund on Feb 1 since the stock funds did so well that month. But the percentage remained 35G.

But enough. The screaming message from the tally so far is...what? I see the S-and I-funds on top. Therefore it is reasonable to conclude that those of us most heavily invested in the S- and I-funds did the best. This month the story is likely to be different. Maybe the C-fund will finally take off. That means those of us most heavily invested in the C-fund would do best in March. (So far the G-fund looks pretty good, this month.)

That analysis is practically the entire basis of my allocation. By being diversified among all the funds (except F) I will always participate in whichever fund happens to be doing best. It will keep me out of the Top 10 but also will keep me out of the bottom 10, too. I should always be in the middle somewhere.

That is where I fell, 27th out of 80 or so. That seems kind of high. But note the L2040 at 22nd. That is going to be my milestone. My goal must be to beat the top-performing L-fund or quit trying.

To do this I think I will have to increase my stock allocation. The L2040 has 15% in G+F, I have 35%. I will look closely at the end of the quarter. My inclination at this time is to increase each stock fund by 5, to 20G 25C 25S 30I. That would be a 23% addition to my risk, hmm...

Dave

 

[rokid]

Dave M,

Your analysis is right on. By being diversified you'll never be #1. However, you'll also never be #80. My personal goals are to be in the top 25 of TSP returns and to achieve a S&P 500 return with less risk (approximately a 12% return with a 10% standard deviation).

I ran my optimizer against your old and new allocations.

old: expected return - 10.9%; expected standard deviation - 11.5%
new: expected return - 12.1%; expected standard deviation - 14.1%

Hopefully, the return will be higher and the risk lower. Good luck!

 

[Dave M]

I have given the idea some more thought. My latest brainstorm is to have a little fun and make each of my fund allocations a prime number. That means 23G 23C 23S 31I.

The L2040 carries 10F. This is pure drag. Also it is about 42C which seems to me to be too large a weighting for any single fund, especially since the C-fund has been lagging for months.

This will increase my exposure by the ratio of (1 - .23) / (1 - .35) = ~18%. Multiplying my 3.4 percent two-month return on the Tally by 1.18 gives ~4% which exceeds the L2040's return of 3.8%. Therefore, all things being equal, the allocation above should put me ahead of the L2040.

Waddya think?

Dave

 

[Spaf]

Dave, I think you got a good idea. Especially to stay away from funds that are a drag.

On entry I go on least risk: 50G 20C 20S and 10I. Once those numbers have some profits, I add to them on strength. Last week 100% strength was 25C 35S and 40I.

I like keeping 20% in reserve, and I'm not a big fan of the I-fund so I may go 30C, 30S, and 20I.

I generally put some paper stops in on the C-fund [$SPX]. 1% Alert and 2% Trail.

CMF money flow was decreasing. Don't know why the money is coming out??

MACD is increasing. And a watch of the Histogram will spot trends.

The STO gets unreliable when it gets high, until it breaks.

The RSI is near over bought, but in a bull run it could stay high.

Gas is high. It has to be greed and spring break!

Take care my friend. Rgds.......... .............Spaf

 

[Dave M]

The Prime Allocation

I put in for 23G 23C 23S 31I today after 12N so it should go into effect with tomorrow's close.

Yes, they are all prime numbers, heh. Is it unique? No! 17G 23C 23S 37I is legal. Maybe next quarter that will be the way to go.

Q1 is shaping up to be one of my best quarters yet and I have high hopes for Q2. In a few days we'll see how I did relative to the L2040, my new benchmark. I have the feeling that I slaughtered it in March so for the quarter as a whole it will be close.

Good luck everybody!
Dave

 

[Dave M]

Q! Estimate

Q1 '06 will easily be my best quarter yet.

I estimate 2.2% for March. Adding 4.2% for Jan and 0.0% for Feb I get 6.4% for the quarter. In terms of dollar-value, it is 20% higher than my previous best, Q4 '04.

I know, the numbers on the monthly tracker will not match this. There was over $5000 in contributions during the quarter, the account was rebalanced monthly, and I count the match as earnings. The tracker will give me 1.8% for March and 5.3% for the quarter/YTD I think.

The L2040 looks to be up 5.8% for the quarter, just dividing the prices and discounting compounding. Here's hoping the new allocation closes the gap.

Good luck everybody,
Dave

 

[Dave M]

Q1 Results

With the statement it is easy to calculate.

The change in NAV was 8.7%, one-third of which was contributions. The market gain was 5.6%.

The all-funds index went from 4741 to 5121, an 8.0% increase. My 5.6 is 7/10 of that. I was 35G.

The increase in my account was equal to my net pay for the same period. My future-self made as much as I did. Cool.

For Q2 I have allocated 23G 23C 23S 31I.

Dave

 

[Dave M]

New Allocation For May

I have moved some out of my worst-performing asset and put it into my best-performing asset. For May I will be:

17G 23C 23S 37I.

Tentatively I have decided to do this every month. The presumption is that the coming month will correlate with the last month. The allocation will reach an equilibrium condition or it will be forever in catch-up mode. We'll see.

In any case ya gotta love the I-fund.

Dave

 

[Birchtree]

What's love got to do with it - a second hand emotion

DaveM,

You are experiencing trepidatious love of the I fund at 37%. I am on the other hand experiencing what is known as bodacious love of the C fund at 100%. Isn't love grand? Have you been following my flames with my nematode nemesis - it's basically childish. Take care.

 

[Dave M]

I Hate Nematodes

They get in my houseplants.

In order to get set for the first of next month I had to re-allocate before the end of this month. I assumed the S-fund would climb slightly, today, because as of yesterday the G-fund was doing slightly better for the month of April. We shall see.

Oh, I also re-allocated my contributions to the above percentages. That way I can see at a glance how I'm doing, over at TSP.gov.

Dave

 

[Dave M]

Tally

Now that I have my Q1 statement, I can tell exactly how much is contributed pay period, by myself and by the agency which I can now account for.

That makes it easy to see that the account earned 2.0% in April, with a change in Net Asset Value of 2.9%.

YTD the change in NAV is 11.9% with earnings of 7.7%. Earnings and contributions are in the ratio of 9/5, familiar to weathermen. I am contributing in degrees centigrade while the account accumulates in degrees Fahrenheit. *smile*

From TSP.gov the ratio of the L2040 on Apr 28 and Dec 30 is 7.7%. Factor in contributions (which would add to the basis) and that might climb to 8%.

So I have just a short way to go to be able to say I am beating the L2040, which is my benchmark.

Good luck everybody.
Dave

 

[Dave M]

The High Tide Line

Some month of May, eh? Everything was going so well. On the 9th my account peaked at a very handy 9.9% YTD according to Rokid's chart, coming in just ahead of the L2040.

That was a Tuesday. Then came Wednesday Thursday and Friday, wham! After Friday's close I had seen enough and put in my order. It went through Monday. I actually made a little money in the I- and G-funds since my last purchase/rebalance on Apr 28th. The net loss was 0.6%.

Since then the drop has been precipitous. We have seen big rebounds after big drops this year. How likely is that? I may give it the rest of the month to settle out, I'll see how it goes.

Good luck and be safe out there.

Dave

 

[Dave M]

Today is the day many of us will make a decision. Do we get back in?

Asia is looking positive in the early going, commodities are not skyrocketing. Maybe today we will get a little more upward vertical motion. If the planets align, I will make a trade before noon today.

Whenever, I will ease back in over a period of time and gradually work down to my baseline of 17% cash (G).

Dave

 

[Dave M]

It looks like most of the shakeout is complete. That is, the big drops have ended and we're seeing occasional rising tendencies. I bought a few shares today -- in effect tomorrow -- so I will soon know for sure.

71G 7C 5S 17I, yes they are all primes!

Dave