If there is a "black swan" type of event, what would you do with your TSP account?

[cak165]

If there is a "black swan" type of event, what would you do with your TSP account?

I'm just wondering if there are any special tactics or strategies that can be taken to avoid exposure to such an event if you're invested in the market or if there's a way to take advantage of it if you're on the sidelines?

If the event happens after 12 pm, all we can do is sit there and watch. If it happened before noon, you're left trying to figure out if you'll miss the boat by moving in or out of the market by end of trading day.

I just think with all the bots and algorithms traders out there, it's even more likely to happen again. The only thing I can think of is taking a loan from the TSP that is equivalent to what you would normally put into a G fund and keep it in a money market brokerage account, any other ideas?

 

[Bullitt]

Re: If there is a "black swan" type of event, what would you do with your TSP account

If it happened again, I'd just rebalance the TSP allocations. That would probably entail selling some F & G and buying some C,S,I.

You should never make investment decisions during the trading day- way too much emotion involved. Instead they should be made after hours when your head is clear.

Determine buy/sell levels and set the IFT in motion when your levels hit COB prices. In a brokerage account, put the orders in at night for your buy/sell levels and forget about it. In the flash crash, you couldn't buy stocks at rock bottom prices unless you had the order in at least the night before.

 

[Warrenlm]

Re: If there is a "black swan" type of event, what would you do with your TSP account

Instead they should be made after hours when your head is clear..

and able to consult Jim, Jack, Johnny and Jose when necessary.

 

[Boghie]

Re: If there is a "black swan" type of event, what would you do with your TSP account

It probably isn't mere circumstance that you ask this question today. However, equities funds will lose 2 1/2% in a day in a normal market. And, we are down only 7% off the recent 52 week high - that is not even a market correction.

If you are in equities for the long term proven gain you have to live with the volatility.

Now, let us talk crashes. October 7, 2008 dropped almost 6%. There were some days (in October as well) where the market dumped 8%. And, we lost 39% in the two months after August 25, 2008. That is a crash. The question is: Can you save yourself when this happens. Yup, but it is really a tougher call than most will tell you. The best is not to be fully in the market when it starts crashing. The next best is to give the market a couple of days and than start moving assets in a measured pace out of C/S/I. For example, if the market dumps 10% take 20% out of C/S/I and put it into G/F. Wash and rinse. That way, if the market is not in complete free fall you will have a decent amount in C/S/I to catch the early boom - the March 9 days. If you are 100% out of the market you will lock in all losses with no chance of success.

Even in a crash, it is best to move slow and with a plan.

And NEVER panic.

Happy Hunting:toung: