Happy Trails Account Talk

[Happy_Trails]

Hello all and Happy Trails to you,

I have decided to actively manage my account. I have been a long time buy and hold investor with an asset allocation of 50% stocks and 50% bonds. This approach works well in most markets but gets hammered in protracted bear markets. My goals are to avoid huge drawdowns and yet, still maintain returns comparable to a basic 50% stock 50% bond mix. I will be following the ideas presented in Mebane Faber's "The Ivy Portfolio" and also, an article in Fedsmith dated 7/28/10 which includes practical applications of Faber's ideas for TSPers. The rules are very simple.

1. If the prices of the stock funds are above their 10 month simple moving averages at the beginning of the month, I am in the stocks funds for the month. If they are below their 10 month simple moving averages at the beginning of the month, I will be 100% G fund for the month.
2. If only one of the stock funds is below its 10 month simple moving average at the begiinning of the month, I will move funds from only that fund to G fund. This would lead to a 66% stocks 34% bonds allocation for the month.
3. I am also keep an eye on the sentiment survey as I see it as a valuable reference point from the wisdom of my fellow TSPers.

My current allocation is 33% C, 33% S, and 34% I. On February 1st, I will check the SMAs and reallocate if necessary. I will also keep an eye on the sentiment survey between now and the 1st.

Happy trails to you!
Happy Trails

 

[nasa1974]

Welcome aboard. This is a great place to learn. Good Luck.

 

[Happy_Trails]

Welcome aboard. This is a great place to learn. Good Luck.

Thanks, you to

 

[KevinD]

Welcome! Are you on the tracker? I would like to follow along and see how you do with your method.

 

[Happy_Trails]

Welcome! Are you on the tracker? I would like to follow along and see how you do with your method.

Thanks, Kevin - I am working on getting on the tracker. This method is designed to work best over entire business cycles. During raging bull markets, buy & hold is tough to beat but this method has pounded buy and hold over the course of entire business cycles that include bear and bull markets. It is a long term strategy.

 

[KevinD]

I will be following the ideas presented in Mebane Faber's "The Ivy Portfolio" and also, an article in Fedsmith dated 7/28/10 which includes practical applications of Faber's ideas for TSPers. The rules are very simple.

Mebane Faber's "The Ivy Portfolio"

http://www.amazon.com/Ivy-Portfolio-Invest-Endowments-Markets/dp/0470284897

Kindle edition $11.99

http://www.amazon.com/Ivy-Portfolio...BY/ref=dp_kinw_strp_1?ie=UTF8&m=AG56TWVU5XWC2

Fedsmith article

http://www.fedsmith.com/article/2508/asset-allocation-your-tsp.html

 

[Happy_Trails]

Thanks for posting those links Kevin! Very much appreciated!

 

[david.alan.williams]

I've been to Yahoo Finance, CNN Money, and I'm have a hard time figuring out how to get the data necessary to calculate, and how to calculate the 10mo. SMA for the 3 stock funds. What is the best resource and how are the calculations done?

Thanks!

 

[Happy_Trails]

I've been to Yahoo Finance, CNN Money, and I'm have a hard time figuring out how to get the data necessary to calculate, and how to calculate the 10mo. SMA for the 3 stock funds. What is the best resource and how are the calculations done?

Thanks!

I used the end of month TSP prices for the last 10 months (March - December end of month/diveded by 10). I then compared the current pricing at the beginning of the month to the 10 month average. The current price was above the 10 month average for each of the TSP funds indicating a buy for each for the month of January.

For February, the calculation will be the average of the end of month TSP prices for the stock funds (April through January/divided by 10). If the prices at the beginning of February are still above the 10 month averages, I will be in stocks for February. You can see the current 10 month averages graphically under the timing model page on Worldbeta.com (one of Mebane Faber's sites). He also has the averages for REITS, commodities, and 10 month bonds.

 

[Happy_Trails]

Sorry, 10 year bonds, not 10 month bonds!

 

[Happy_Trails]

Sorrry again - Mebanefaber.com - the website is called World Beta.

 

[david.alan.williams]

Could you check my spreadsheet for errors?

I have 2 tabs. C 33%, S 33%, and I 34% as you mentioned and a second tab C 50%, S 50%.


I gathered all of the End of the month share prices back to December 2008.

If I built the spreadsheet right, this method gained only 2.83% from October 2009 to date and was outperfomed by the G-Fund (3.53%)

The I fund appears to be the killer. In the 2nd tab, I deleted the I-Fund and went 50/50 C/S, and it gained a respectable 7.2%. On this tab, the 2 months we withdrew to the G-Fund, unfortunately, the C and S were VERY profitable.

Did I calculate something wrong?

 

[Happy_Trails]

Could you check my spreadsheet for errors?

I have 2 tabs. C 33%, S 33%, and I 34% as you mentioned and a second tab C 50%, S 50%.


I gathered all of the End of the month share prices back to December 2008.

If I built the spreadsheet right, this method gained only 2.83% from October 2009 to date and was outperfomed by the G-Fund (3.53%)

The I fund appears to be the killer. In the 2nd tab, I deleted the I-Fund and went 50/50 C/S, and it gained a respectable 7.2%. On this tab, the 2 months we withdrew to the G-Fund, unfortunately, the C and S were VERY profitable.

Did I calculate something wrong?

I haven't had a chance to go through the whole worksheet but it looks like The I fund was a sell in May 2010 and all of the funds were a sell in June 2010 (first tab). I will keep looking - thanks for working out this spreadsheet!

 

[david.alan.williams]

There very well may be errors in it! LOL.

Here is an update to that spreadsheet adding a 3rd and 4th tab.

These 2 tabs do exactly the opposite of what you plan. It sends a BUY signal when the 10mo. SMA is ABOVE the current share price. (Buy low, sell high mentallity I guess).

3rd tab (CSI) earns 18.03% and the 4th tab (CS) earns 18.91%.

????

 

[david.alan.williams]

Sorry. HERE is the updated file.

 

[Happy_Trails]

David,

There are definately some problems with the calculations. The system would have been 100% G in June 2010.

 

[david.alan.williams]

At the end of May 2010, the C Fund 10mo. SMA was:

(Cell I21) 12.9880

The End of May/Beginning of June share price was:

(Cell E21) 13.2990

The current share price (13.2990) is above the SMA (12.9880)

Your Quote down in this post...

"compared the current pricing at the beginning of the month to the 10 month average. The current price was above the 10 month average for each of the TSP funds indicating a buy"

Am I missing something?????

 

[Happy_Trails]

At the end of May 2010, the C Fund 10mo. SMA was:

(Cell I21) 12.9880

The End of May/Beginning of June share price was:

(Cell E21) 13.2990

The current share price (13.2990) is above the SMA (12.9880)

Your Quote down in this post...

"compared the current pricing at the beginning of the month to the 10 month average. The current price was above the 10 month average for each of the TSP funds indicating a buy"

Am I missing something?????

Ahhhh, got you. It should be buy if end of month share price is higher than 10 month moving average. The end of June share price was $12.339 (cell F21). The SMA was $13.0204 (cell F21 Average of Septeber 2009 through June 2010). Since $12.339 is lower than $13.0204, C would have been sold July 1, 2010.

 

[Happy_Trails]

Hi David,

I think you are right. The system did not work for May and June 2010. My mistake. I need to take a closer look at this. I could help with a really extended bear market but may not be very good in markets where the prices are up one month, down the next, up the next, etc. That's what I get for trying to actively manage my account. Supposedly, it does work over an entire business cycle if someone were to stick to it. Not sure where I will go from here - probably back to my old allocation. I really want to be active but not sure how to do it.

 

[david.alan.williams]

I really like your idea and I'm still going to crunch more numbers.

Here is the spreadsheet with 12 more months of historical data.

Over 2 years 3 Months, it earned 20.94% using your method (CSI) and earned 25.10% if you drop the I fund.

Not too bad! About 11% a year but I know what you mean aout wanting to be ACTIVE! I love be active.

Thanks Buddy for keeping us thinking! :nuts: