day trading vs hold steady

[coolhand]

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Please forgive my ignorance here Rokid, (I'm not near the math wizard you are) but I just can't see a 16.81% total return with these numbers.

The highest return is 18.5% (about 1/3 of portfolio) and the lowest returnis 3.8% in the "F" fund (a quarter of the portfolio). The "C" fund is only 8.6% and it is almost a quarter of the portfolio as well.

With half this portfolio (F and C) showing a roughly 6.2% return, how does the other half boost you up to almost 17% :??

Maybe I just don't have all the information. I'm not trying to challenge your position (well, maybe I am), just trying to understand it.

 

[Guest]

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rokid wrote:

My buy and hold Quicken 2004 IRR year to date: 16.81%

AllocationYTD Returns

F Fund 25.0% 3.8%

C Fund/Fidelity Spartan (FUSEX) 23.6%8.6%/8.6%

S Fund/Fidelity Low Priced Stock (FLPSX) 32.6%14.8%/18.5%

I Fund/Fidelity International Diversified (FDIVX)18.8% 16.98%/15.9%

The excess return is due to dollar cost averaging, i.e. buying low with new money during the first half of the year.

My son's buy and hold Quicken 2004 IRR return starting5/18/2004 (new William and Mary graduate :^), Vanguard 2045 Fund: 22.46% (life cycle fund).

If you're doing better, great job and congrats. If not, consider strategic asset allocation, dollar cost averaging, and buy and hold.It works!

mlk_man's new system for the year -TSP: 43.98%, IRA: 414.28%Sorry, just had to throw that out there...........

 

[coolhand]

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Here is my YTD totals as reported in M$ Money.

G - 5.31%

F- 5.04%

C- 13.35%

S - 19.14%

I - 24.25%

Total YTD - 14.22%

I was buy and hold up until spring this year then began more of an asset allocation strategy and now more of a day trade stategy. I was in and out of funds all year so I can't really say what the annual allocation might be, but these numbers are computed by the software.

My total, on the surface without crunching numbers, seems inline with those of the funds.

Your thoughts please .

 

[rokid]

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CoolHand,

Actually, I was initially surprised at the returns, i.e. how could my return be higher than just the sum of percentages of the overall fund returns? I suspected the Quicken performance report had a bug. However, I double checked the numbers and they compute.

Conclusion: The overall posted fund returns, e.g. 3.8% for the F Fund, are calculated from the opening fund price of the year. However, since I boughtnew shares throughout the year,I bought at different prices than the Jan 2 price - higherand lower. Therefore, the annualized returns for those particular shares werehigher or lower than thefund's posted return. Since the market was so choppy at the beginning of the year, I,apparently, bought a lot of new shares atlow prices.

In addition, I rebalanced my portfolio several times during the year (sold shares in funds that were doing well to buy shares of funds that were doing poorly to keep my allocation percentages constant). Rebalancing has the effect of market timing, i.e. buy low, sell high - eventually.

One of the reasons I posted my return was to demonstrate this interesting dollar cost averaging, rebalancingeffect. Finally,the 16.8% return is a calculated/projectedannual return. Depending on what my funds due during the next few weeks, it could turn out to be higher or lower for 2004.

Hope that helps. I'm still trying to figure this investing out. It's pretty complicated.

 

[rokid]

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M_M,

You might want to double check your TSP numbers. I ran your posted account transactions (6/14-11/30)through Quicken and got a very differentreturn.

 

[rokid]

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CoolHand,

Looks like you're pretty good at market timing.:^

 

[Spaf]

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rokid

Trading vs holding

There are arguements pro and con!

Trading requires knowledge and personal accountability!
Holding requires relying on others per say!

Hey it's your retirement. This is America, your choise!

Rgds Spaf

 

[rokid]

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Spaf,

I'm only interested inthe investing approach provides the best results. It's not amatter of taking or not taking responsibility, i.e. it's not a "values" thing. It's a matter of which approach, i.e. buy and hold or market timing,provides the best results.Both approaches require research, analysis, evaluation of risk vs. return, and decision making.

The best financial minds in the world claim it's not possible to beat the market on a consistent basis. Perhaps they're lying. Perhaps they're confused. However, except for Warren Buffett, I haven't seen anything to convince me that they are wrong. I'm still looking.

You're right, it's my retirement. Fortunately, I'm CSRS. :^

 

[Guest]

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rokid wrote:

M_M,

You might want to double check your TSP numbers. I ran your posted account transactions (6/14-11/30)through Quicken and got a very differentreturn.

rokid, you have to read the fine print..........I said my system, which is why I started a new account. I believe my old system would be up around the 30% mark.......stay tuned......... the market gurus ARE wrong,you can beatthe market consistently. :^

I'll post my IRA return in 3 months or so, just you know I'm not talkin' out my ..........

M_M

 

[coolhand]

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rokid wrote:

CoolHand,

Conclusion: The overall posted fund returns, e.g. 3.8% for the F Fund, are calculated from the opening fund price of the year. However, since I boughtnew shares throughout the year,I bought at different prices than the Jan 2 price - higherand lower. Therefore, the annualized returns for those particular shares werehigher or lower than thefund's posted return. Since the market was so choppy at the beginning of the year, I,apparently, bought a lot of new shares atlow prices.

I agree that adding new shares changes your return value, but doesn't the software take all that into account?How else can it compute a total? My individual values change as well as the overall YTD total.

Honestly, I still haven't figured out all the report metrics in my own software. Some still don't make sense to me, but I haven't taken the time to dig. I think it's because MS is notorious for releasing softwarecomplete with bugs. I racked my brain enough with Word and Excel only to find out that a known bug is causing my anguish.

 

[Guest]

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Cool,

Send me your file in the e-mail section.

I will fix it for you.

Great! I can finally use my PhD in math!

Bill



coolhand wrote:

rokid wrote:

CoolHand,

Conclusion: The overall posted fund returns, e.g. 3.8% for the F Fund, are calculated from the opening fund price of the year. However, since I boughtnew shares throughout the year,I bought at different prices than the Jan 2 price - higherand lower. Therefore, the annualized returns for those particular shares werehigher or lower than thefund's posted return. Since the market was so choppy at the beginning of the year, I,apparently, bought a lot of new shares atlow prices.

I agree that adding new shares changes your return value, but doesn't the software take all that into account?How else can it compute a total? My individual values change as well as the overall YTD total.

Honestly, I still haven't figured out all the report metrics in my own software. Some still don't make sense to me, but I haven't taken the time to dig. I think it's because MS is notorious for releasing softwarecomplete with bugs. I racked my brain enough with Word and Excel only to find out that a known bug is causing my anguish.

 

[mbehr55]

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Here's another "market timing" stategy for the TSP.....Use the allocations in http://www.401Khelp.com and the timing signals under Hotline in http://www.fundadvice.com. Someone who likes to backtest these things can do the math. Both sites are related to a guy named Paul Merriman.

I don't really want to "day trade" my TSP but I sure want some market signals to tell me when to move money around to limit my losses.:s

 

[rokid]

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FYI.

"The best plan, for most of us, is to commit to buying some index funds and do nothing else. Benign neglect is the secret to long-term investing success. If you change your investment policy, you are likely to be wrong; if you change it with a sense of urgency, you're guaranteed to be wrong." --- Charles Ellis author of "Winning the Loser's Game".

 

[mbehr55]

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No more staying steady for me. I don't like the losses. Even Fundadvice.com's hotline signals are now too slow for my taste. I'm trying to determine which ETFs best mirror the TSP funds and then use Technical Analysis for buy/sell signals. If this works then I should catch most of the upturns and miss most of the downturns.

 

[rokid]

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mbehr55 wrote:

I'm trying to determine which ETFs best mirror the TSP funds and then use Technical Analysis for buy/sell signals. If this works then I should catch most of the upturns and miss most of the downturns.

If you can do that, you'll beat the overwhelming majority ofWall Street professionals and prove all of the academic experts wrong.

Good luck!:^

 

[Spaf]

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mbehr55 wrote:

I'm trying to determine which ETFs best mirror the TSP funds and then use Technical Analysis for buy/sell signals. If this works then I should catch most of the upturns and miss most of the downturns.

IJR is close to S. IVV is close to C, AGG is AGG, and EAF is close to I. HOWEVER, ETFs come from brokers and they make $ on the ask and the bid.

See http://www.Barchart.com for a technical analysis of exchange traded funds.

Rgds Spaf

 

[tsptalk]

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rokid wrote:

"The best plan, for most of us, is to commit to buying some index funds and do nothing else. Benign neglect is the secret to long-term investing success. If you change your investment policy, you are likely to be wrong; if you change it with a sense of urgency, you're guaranteed to be wrong." --- Charles Ellis author of "Winning the Loser's Game".

That last sentence is the key. Bailing out of stocks at any cost when they are falling or buying a euphoric buying frenzy is part of that guarantee and why I am a contrarian.

 

[DrD]

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One additional factor to consider if you are still investing in the funds, as opposed to just managing a fixed balance, is the dollar cost averaging effect. As prices drop, you are buying more shares. This can be a small effect if you have been in the market for a while and the size of your contributions is small relative to your overall holdings, or very large if you have only been in for a short time.

Best wishes
DrD

 

[rokid]

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Periodic rebalancing provides a somewhat similar effect, i.e. buy low, sell high, anditworks for fixed balance accounts.

 

[Mike]

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Has anyone figured out what the "ideal" frequency of rebalancing is? With TSP, you could technically get away with doing it daily.

BTW, effective tomorrow, I will be switching my TSP account to asset allocation mode. I just need to figure out what percentages to set it at (I will be at least 90% equities).