ebbnflow's Account Talk

[James48843]

I said it before, and I'll say it again.

There are MINIMAL costs associated with trades, when you are talking about the actual trade.

Here is what happens- ALL ELECTRONICALLY:

1. Everyone out there logs in and makes their IFT request, with a noon cut off.

2. Shortly after noon, the computer determines the amount of shares that the system needs to purchase or sell to cover everyone.

3. At 2:30 in the afternoon, the message is sent electroincally to "buy" or to "sell" X-number of shares of stocks top balance what that day's orders are for.

4. The trades are executed by the end of the day (4 o'clock), except for certain "I" fund shares. The "I" fund shares have to be purchased or sold in overseas markets overnight.

the total costs for the actual trades is miniscule.

The ONLY cost, that DOES make an impact, has to do with the "I" fund, and the fair value ratings. Barclays has to gamble and guess at the FV amount, in order to try and align as closely as possible between the close of US markets, and the opening of foreign markets.

And if Barclays gets it wrong, it could cost.

Last March, in a single day, Barclays' "guessed" wrong on the FV amount on one single day. they were off by 8 million dollars of value that day.

However, it went "in their favor" by eight million dollars, not against them by eight million dollars. So the entire costs of trading for ALL the funds for the whole year up to that point, was compensated out in a single day, in a single transaction, that went in the TSP holder's favor.

And afterwards, the thrift Board talked about that day, and how it could just as easily go WRONG and against them, if Barclays guessed the wrong way on a FV day.

And THAT is what triggered that whole discussion about makign people pay for IFT's, in an effort to keep them from moving money around.

It's not the cost of trading-

It's the risk of guessing wrong by Barclays on the I fund FV, that has them nervous.

If no body moves, then there is no risk of a wrong guess.

If everybody moves, and the FV guess is wrong, then it COULD cost some money.

But right now, that hasn't happened. And the TSP has the LOWEST costs of any fund anywhere in the world. period.

JUST SAY NO TO USER FEES!

 

[SkyPilot]

I said it before, and I'll say it again.

There are MINIMAL costs associated with trades, when you are talking about the actual trade.

JUST SAY NO TO USER FEES!

Do you have a number for "minimal cost"?

And thank you for persistently stating the information below. It seems we are trained sheep who are willing to accept "fees" because we "must owe them". I guess it's sadly become to easy to accept what we are told we must have.

Next up... Hillary Care

 

[GUCHI]

I saw in the washington post where the TSP board just purchased new computer equipment to replace overloaded and out dated ones. it was in tuesdays news. i tried to cut and paste it to our mb but was unable. maybe someone can help here and get the article posted to the mb. sorry for my sorry computer skills !!!

tnxs

 

[qibovin]

3. At 2:30 in the afternoon, the message is sent electroincally to "buy" or to "sell" X-number of shares of stocks top balance what that day's orders are for.

So this is where that sell off comes from in the last half hour.The whole market already knows where "we" are going, collectively.

However, it went "in their favor" by eight million dollars, not against them by eight million dollars. So the entire costs of trading for ALL the funds for the whole year up to that point, was compensated out in a single day, in a single transaction, that went in the TSP holder's favor.

So really, those who were on the short end of the I move that day paid for everyone else's moves for the year. Well, I don't see what the problem is. Not only is the "fee" in essence being assessed already. It is also being targeted toward those who are making the moves--perhaps a little "over-equitably" if anything. Welcome to Animal Farm.

 

[tspgo_com]

I said it before, and I'll say it again.

There are MINIMAL costs associated with trades, when you are talking about the actual trade.

..

Thank you James for taking the time to explain. I am not sure I understand the math. If we get a (+ or -) FV and it is reverse the next day, where would the loss (or gain be) if their guess is wrong?.

I appreciate very much your contribution to all us here.

God bless you!

 

[qibovin]

Thank you James for taking the time to explain. I am not sure I understand the math. If we get a (+ or -) FV and it is reverse the next day, where would the loss (or gain be) if their guess is wrong?.

I appreciate very much your contribution to all us here.

God bless you!

This is extremely simplified because there are hundreds of individual stocks, but say Barclay has 1 M shares of "I" at $10@ and they "guestimate" (by applying an FV to "account for" large movement in the USM after the OSMs closed) that it'll cost $11 to buy them overnight when the OSMs open, but it actually winds up costing $12/share, they're still obligated to buy them for their shareholders, but they have to "eat" the $1 M. This could happen in reverse to make them a profit if they "overguestimate" which I think they tend to do. Likewise, they could lose or gain money if they had to sell at a difference as well.

 

[ebbnflow]

Just moved over to the G-fund. The last time I tried to pick up the G-penny even though I had a green signal from the F-fund, the F-fund paid out seven F-pennies!

 

[ebbnflow]

Check this out from Bloomberg:

http://www.bloomberg.com/markets/etfs/etf_about.html

...

5. How much is invested in ETFs?

Assets in exchange-traded funds more than quadrupled in the past five years to $350 billion as of Sept. 30, 2006, according to Washington-based trade group Investment Company Institute. ETF assets will probably rise fourfold to $1.4 trillion by 2011, according to estimates by Financial Research Corp. of Boston.

6. Who are the major sellers of ETFs?

Barclays Global Investors, the asset-management unit of Barclays Plc in London, is the biggest seller of exchange-traded funds, with a 59 percent share of U.S. ETF assets as of September 2006, according to State Street Corp., which tracks ETF flows. Barclays manages about $214 billion in ETF assets. State Street, based in Boston, is the second biggest seller of ETFs, with about $91 billion in such assets.

7. What are some of the biggest ETFs?

The three biggest exchange-traded funds as of September 2006 were the $57 billion S&P 500 SPDR, managed by State Street; the $31 billion iShares MSCI EAFE, managed by Barclays; and the $18 billion Nasdaq-100 Trust, managed by Bank of New York Co., according to data compiled by State Street.

-------------------------------------

Is there a conflict of interest here?

 

[Remo]

Hey Ebb,

Are today's I fund gains contrarian or is it the weakened dollar causing joy across the pond?
Remo

 

[fabijo]

How is it costing thousands?

I have been searching for just such documentation, but so far have been unable to get these numbers. The only figures that show up are related to gains or losses due to Fair Value, but not for IFTs themselves

Here are the trading costs as of July this year:

F Fund $209,994
C Fund -$19,536
S Fund -$208,716
I Fund $2,707,434

As you can see, the only real cost is the I Fund (and that amount is only .03% of the money traded, which was $9,124,146,415). They can easily make it up because they know how many orders are made by 2pm. If they want to screw us, they can adjust the FV to help pay for the trade. In a sense, they already are charging us for IFTs into and out of the I Fund by playing with FVs. They actually are making money on the C and S Funds so far.

Here's a quote from them, which is exactly what James said:

Trading costs in all but the I Fund remain minimal. I Fund
trading costs tend to be higher because Australasian
markets close before BGI receives our order for the day,
and the trades are executed the following morning. In
times of greater volatility, this execution lag can result
in large negative or positive trading costs. Year to date
trading costs are greatest for the I Fund.

I got this information here (attachment to July Meeting Minutes):
http://www.frtib.gov/FOIA/MM-2007Jul-Att2.pdf

These costs happen because they are buying and selling stocks and futures in an attempt to match each index's performance daily.

 

[airlift]

Fabijo came up with invaluable data that can pack a big punch in our argument against the unfairness of trading fees. A good spokesman is needed to articulate the argument at the right place and time. Thanks Fab!

 

[fabijo]

The big problem I have with these reports is that it only lists the trading costs associated with the F,C,S,I Funds, but makes no mention how much of those costs occured because of IFTs or because of L fund daily rebalancing. For all we know, most of the costs could be from the L funds doing their rebalancing game.

If that is the case, then we may be looking at an increase in costs. They are pushing legislature that makes the default allocation for new employees to be in an age appropriate L Fund, instead of the G Fund. This would not affect our allocation, but would affect the costs if more rebalancing is done due to this legislature.

 

[SkyPilot]

Here are the trading costs as of July this year:

F Fund $209,994
C Fund -$19,536
S Fund -$208,716
I Fund $2,707,434

As you can see, the only real cost is the I Fund (and that amount is only .03% of the money traded, which was $9,124,146,415). They can easily make it up because they know how many orders are made by 2pm. If they want to screw us, they can adjust the FV to help pay for the trade. In a sense, they already are charging us for IFTs into and out of the I Fund by playing with FVs. They actually are making money on the C and S Funds so far.

Here's a quote from them, which is exactly what James said:


I got this information here (attachment to July Meeting Minutes):
http://www.frtib.gov/FOIA/MM-2007Jul-Att2.pdf

These costs happen because they are buying and selling stocks and futures in an attempt to match each index's performance daily.

Thanks!

 

[Wasaki]

The big problem I have with these reports is that it only lists the trading costs associated with the F,C,S,I Funds, but makes no mention how much of those costs occured because of IFTs or because of L fund daily rebalancing. For all we know, most of the costs could be from the L funds doing their rebalancing game.

If that is the case, then we may be looking at an increase in costs. They are pushing legislature that makes the default allocation for new employees to be in an age appropriate L Fund, instead of the G Fund. This would not affect our allocation, but would affect the costs if more rebalancing is done due to this legislature.

Your last two posts should be posted on every site that talks about TSP fees so people can see that this should not even be an issue. Great work in researching this!

 

[fedgolfer]

Ebb, very impressive that the system was able to be fully in on the day of the Fed cut, and in a defensive position post-fed-cut (even though the F isn't upholding its part of capital preservations today)... still for a system that has a history that doesn't include a fed cut until now... pretty impressive you hit the big up day and then a defensive move. Doesn't this make anyone that more curious on what makes his signals go from red to green?

 

[Hallatauer]

]Is that a dart in your pocket?[/[/I]quote]

Naaaw.. he's just glad to see ya!

 

[Bigdave125]

EBB, got a question. You have your previous charts posted in GIF format. Is there any way to post them in excel format, or do you know of a way to extract the data from the gif's and import them into excel? Maybe someone on this board has already done that. It's just that I was wanting to extract some data from the charts for comparison, but didn't want to manually type in all the previous data into excel if I didn't have to. Any help would be appreciated.

Thanks,
Bigdave


P.S.
Cutting and pasting doesn't work because they are in gif format!

JD

 

[Croucher]

EBB, I have been a follower for several months now and just wanted to say YOU ARE THE MAN! Keep the system running and returns flowing...

 

[DrunkenMonkey]

The G-fund paid the penny today (Thursday). Does anyone know of an accurate way to determine when the G-fund pays the penny?

 

[FUTURESTRADER]

aside from putting a bug in the boardroom of the TSP, you're not gonna get a more accurate way then what has been described on this board.