Last Month's Best Fund Method Strategy

[DrFaustus]

Can anyone tell me what the LMBFMS is?

I understand the principle, but what do you do, look at last months returns and then invest in those funds? if so, how do you decide how much to put into each fund?

Thoughts and advise are appreciated!

We've been applying 100% to the indicated fund for computation purposes. For example, November's returns (unverified) are:

G-Fund +0.31%
F-Fund +3.30%
C-Fund -7.18%
S-Fund -11.13%
I-Fund -6.72%

Since the best performing fund in November was the F-Fund, we apply 100% of our TSP funds to the the F-Fund for the month of December.

(just for the record, I am not using this strategy)

LMBF Report Card for Nov:
+0.31% Nov
-14.57% YTD

 

[McDuck]

LMBFM call of the F-fund for December was a good pick.

It appears that the I-fund will be the LMBFM choice for January 2009.

LMBFM is at -12.62% year-to-date.

 

[tsptalk]

LMBFM is at -12.62% year-to-date.

Not too shabby.

 

[malyla]

Well, Jan was not good for this method. The strategy had you in the I fund for Jan. The I fund was down -11.93%. That's a big hill to climb for the rest of the year. I hope the market gets back on track soon as this methods works great in a bull market, but the bear market volitility is causing some headaches. I'm looking to see if a bi-weekly signal (shorter time frame) may work better in a bear market.

Is this method in the autotracker? If so what is the name?

Good luck everyone.

 

[ATCJeff]

I don't think it's in the tracker. Better ask Tom.

http://www.tsptalk.com/mb/showthread.php?t=3534&page=18&highlight=tom

 

[James48843]

Hey Greg-

Someone was asking- is the Last Month Best Month method being tracked right now in the autotracker?

Thanks

 

[James48843]

According to the results from January- the LMBM method should be now residing in "G" starting February 2nd (IFT to G on Feb 2, so it would be effective COB Feb 2nd).

 

[McDuck]

Hey Greg-

Someone was asking- is the Last Month Best Month method being tracked right now in the autotracker?

Thanks

No, it's not in the autotracker.

LMBFM is doing very bad so far this year. It's currently at - 15.08 %

I think it is a good system under 'normal' conditions. But under the current conditions where there can be a 8% swing in a single day depending how many hundreds-of-billions the government flushes away, LMBFM can be a disaster.

 

[McDuck]

According to the results from January- the LMBM method should be now residing in "G" starting February 2nd (IFT to G on Feb 2, so it would be effective COB Feb 2nd).

Correct.

 

[McDuck]

According to the results from January- the LMBM method should be now residing in "G" starting February 2nd (IFT to G on Feb 2, so it would be effective COB Feb 2nd).

LMBFM did a yeoman's service this February.

http://www.phrases.org.uk/bulletin_board/25/messages/250.html

 

[McDuck]

LMBFM is red hot so far this year. It is beating the C, S & I funds by at least 9%.

 

[malyla]

August 2008 Fund Returns
G Fund: +0.33
F Fund: +0.92
C Fund: +1.46
S Fund: +2.17
I Fund: -4.16

LMBF predicted the S-fund for September, but it went down 10%.

Since the I-fund was a high negative in August, then maybe it should have indicated to stay in the G-fund. Somebody should back test that.

Done

Results of back testing Last Month Best Fund Method using an added refinement:
If the LMBFM indicated a move into the stock funds (C, S, I), a verification check looks at the S or I fund return for confirmation. If the sister stock is negative, the move to stocks is cancelled and a move to the highest safety fund (G, F) is made instead of stocks.
Negative returns are in ( ).
1992
LMBFmethod = 2.47%
G fund = 7.24%; F fund = 7.21%; C fund = 7.71%
1993
LMBFmethod = 3.56%
G fund = 6.13%; F fund = 9.52%; C fund = 10.12%
1994
LMBFmethod = 0.64%
G fund = 7.22%; F fund = (2.97)%; C fund = 1.33%
1995
LMBFmethod = 29.43%
G fund = 7.03%; F fund = 18.30%; C fund = 37.39%
1996
LMBFmethod = 26.96%
G fund = 6.76%; F fund = 3.66%; C fund = 22.85%
1997
LMBFmethod = 9.52%
G fund = 6.76%; F fund = 9.61%; C fund = 33.17%
1998
LMBFmethod = 31.25%
G fund = 5.76%; F fund = 8.74%; C fund = 28.44%
1999
LMBFmethod = 9.70%
G fund = 5.99%; F fund = (0.86)%; C fund = 20.95%
2000
LMBFmethod = (6.46)%
G fund = 6.42%; F fund = 11.65%; C fund = (9.14)%
2001
LMBFmethod = 26.80% (Feb,June, July changed to F fund changes a past return from 3.85%)
G fund = 5.39%; F fund = 8.57%; C fund = (11.95)%; S fund = (9.03)%; I fund = (21.94)%
2002
LMBFmethod = 3.30% (June changed to F fund changes a past return from (1.65%))
G fund = 4.99%; F fund = 10.27%; C fund = (22.04)%; S fund = (18.14)%; I fund = (15.96)%
2003
LMBFmethod = 20.55% (April, Oct changed to F fund changes a past return from 38.73%)
G fund = 4.14%; F fund = 4.11%; C fund = 28.52%; S fund = 42.91%; I fund = 37.94%
2004
LMBFmethod = 15.48%
G fund = 4.29%; F fund = 4.30%; C fund = 10.79%; S fund = 18.03%; I fund = 20.01%
2005
LMBFmethod = (1.85)% (June, Sept changed to F fund changes a past return from 5.70%)
G fund = 4.49%; F fund = 2.41%; C fund = 4.96%; S fund = 10.48%; I fund = 13.63%
2006
LMBFmethod = 8.18%
G fund = 4.94%; F fund = 4.39%; C fund 15.80%; S fund = 15.32%; I fund = 26.31%
2007
LMBFmethod = 10.52% (Sept changed to F fund changes a past return from 13.78%)
G fund = 4.87%; F fund = 7.08%; C fund = 5.55%; S fund = 5.50%; I fund = 11.44%
2008
LMBFmethod = (2.47)% (Sept changed to F fund changes a past return from (11.38%))
G fund = 3.74%; F fund = 5.45%; C fund = (36.99)%; S fund = (38.32)%; I fund = (42.42)%
2009 to March 1
LMBFmethod = (11.74)%
G fund = 0.39%; F fund = (1.24)%; C fund = (18.15)%; S fund = (17.57)%; I fund = (20.94)%

The 17 year (1992-2008) growth percentage moved from 339.50% to 386.15% using the method outlined above to verify a move to stocks. Since June 2003 (to Feb 30,2009) the growth percentage moved from 41.38% to 30.99%. I'm seeing a bear market improvement with this verification method (Blue italic years). Loses some if the verification method is used in Bull market years (Red italic years).

 

[malyla]

I am wondering how this strategy would do if we used a Last-Eleven-Business-Days-Best-Fund (LEBDBF), since we have two trades a month.

In panic situations we could still dump the shares into the G-fund.

I looked at this and posted my results here http://www.tsptalk.com/mb/showpost.php?p=159880&postcount=27

It has not improved. Bi-weekly moves are worse than following the LMBFM.

 

[tsptalk]

LMBFM is doing very bad so far this year. It's currently at - 15.08 %

I think it is a good system under 'normal' conditions. But under the current conditions where there can be a 8% swing in a single day depending how many hundreds-of-billions the government flushes away, LMBFM can be a disaster.

I have said this before, following a system requires consistency. People jump on a system after it has done well, and abandon it after a bad stretch. Jump back in after it does well again, etc. That is the worst thing someone can do their someone's account.

They are missing the good runs and are in for the bad. I'll use the Ebbchart System as an example.

After the Ebbchart was up 20% in 2007, the system struggled in early 2008 but by the end of the year it beat the three TSP stock funds by between 19.5% and 25%, and beat the diversified account by about 4%.

Some think it is off to another weak start in '09 but again it is beating the TSP stock funds by about 8% to 10%, about in line with the diversified.

Would anyone not be OK with being down 16.25% from 2007-2009, instead of the 50% plus of the stock funds, or the 29% of a diversified account? I think 95% of mutual fund mangers out there who would take this return over theirs.

But watching subscribers jump in and out of this subscription, almost always at the wrong time, has almost guaranteed they they are not doing as well.

By the way, Trader Fred is up 3.99% during that same 2+ year period. I don't see as much of the love / hate relationship with his subscribers, as he is less aggressive in his allocations and people have come to know what to expect from him.

You have to pick a system you believe in, trust it, and stick with it.

If you believe in the LMBFM system, stay with it or never use it. Otherwise you are almost guaranteeing yourself sub par results.

 

[malyla]

I have said this before, following a system requires consistancy. People jump on a system after it has done well, and abandon it after a bad stretch. Jump back in after it does well, etc. That is the worst thing someone can do their someone's account.

They are missing the good runs and are in for the bad. I'll use the Ebbchart System as an example.

After the Ebbchart was up 20% in 2007, the system struggled in early 2008 but by the end of the year it beat the three TSP stock funds by between 19.5% and 25%, and beat the diversified acount by about 4%.

Some think it is off to another weak start in '09 but again it is beating the TSP stock funds by about 8% to 10%, about in line with the diversified.

Would anyone not be OK with being down 16.25% from 2007-2009, instead of the 50% plus of the stock funds, or the 29% of a diversified account? I think 95% of mutual fund mangers out there who would take this return over theirs.

But watching subscribers jump in and out of this subscription, almost always at the wrong time, has almost guaranteed they they are not doing as well.

By the way, Trader Fred is up 3.99% during that same 2+ year period. I don't see as much love / hate with his subscribers, but he is less aggressive in his allocations and people have come to know what to expect.

You have to pick a system you believe in, trust it, and stick with it.

If you believe in the LMBFM system, stay with it or never use it. Otherwise you are almost guarateeing yourself subpar results.

I agree Tom. Greg asked for ways to improve this method. With this refinement (his suggestion), the LMBFM starts to outstrip all trading methods that use our restrictions (IFTs) to best effect. The longer term Biz-cycle has a better 17 year return, but if I combine the two there may be an optimum return. (What can I say - I'm bored sitting in F). In a Bear market, it may be an advantage to use the LMBFM with the verification method instead of sitting in the F fund.

 

[tsptalk]

I'm all for improvement. I was kind of sending out a word of wisdom / advice to the system users, rather than about the systems themselves.

 

[McDuck]

I have said this before, following a system requires consistency. People jump on a system after it has done well, and abandon it after a bad stretch. Jump back in after it does well again, etc. That is the worst thing someone can do their someone's account.

Tom, I generally agree with that. For January, LMBFM was bad. But now for January thru now, I looks pretty good.

I use LMBFM as only of several indicators. But I think it is would a good system to use if a people wanted to stick to one.

 

[James48843]

Last Month Best Month says:

Last month:

C= +8.81%

S= + 8.64%

I= + 7.20%


Last Month Best Month method would require a transfer today to 100% "C" fund.

Good luck.

 

[Steadygain]

This is really amazing!!

If you take out 2007:

G - 4.19%....F - 4.55%...C - 60.83%...S - 63.07%..I - 68.47%

I had no idea it was over 60% in all 3 Funds.

I wonder what the overall figures would be if the Gov/Fed could give the numbers associated with recent retires who have the bulk of their savings in a 401K with the B&H stategy (which has to be the overwhelming bulk) and include that figure in with anyone forced to live off retirement savings invested in a similar mode. :worried:

 

[James48843]

Last Month Best Month method would make a transfer to "S" fund this month.

Last month (April 2009) :

C fund = + 9.58%

S fund = + 15.00%

I fund = + 12.13%


If you are following the "Last Month, best month", that would call for an IFT into "S" fund.

Be careful. back to back double digit gains have always been dangerous- rarely making three in a row- but if are following LMBM, then there it is- a move to "S".

Good luck all.