Last Month's Best Fund Method Strategy

[tomcat22]

Re: Contribution Allocation Questions

From Nov 2001 through Dec 2010, three times, based on a spread sheet I downloaded from elsewhere in this thread. For the same time period, the C fund did not have a single double month lead! The S fund had 6 months with consecutive leads, three of which were three month duration!

Hmmm. I was following this method the start of this year based on historical returns, but now I'm not so sure. I ditched the system two days ago and got back in early, but I diversified between C, S, and I.

 

[tomcat22]

Re: Contribution Allocation Questions

I just added the numbers from 2011 and the I fund added one more double leader month and the S fund added one more double leader month. Overall numbers for the system still holding out well. For the 17 year period ending 12/31/11, total cummulative returns are as follows:
G 83.79%
F 118.30%
C 172.17%
LMBF 193.61%

Note, S and I 10 year cummulative:
S 96.26%
I 77.09%

Average annual returns for the period ending 12/31/2011 (17 yrs G, F, C, 10 yrs S and I):
G 4.93%
F 6.96%
C 10.13%
S 9.63%
I 7.71%
LMBF 11.39%

LMBF still beating any buy and hold strategy.

 

[Sensei]

Re: Contribution Allocation Questions

Thanks for doing the legwork, Tomcat!

It makes sense that C would not lead in consecutive months, because if it leads going into a rally in the next month, more than likely the S or I fund would overtake it. If it leads going into a slump in the next month, usually F or G would replace it.

I don't faithfully follow LMBF, but if I did, I would tweak it so that any month that a stock fund leads would give a "buy S" signal. Any month that a non-stock fund leads would give a "buy F" signal. More agressive that way, I think. Of course, that would mean more risk.

 

[smallzjohnson]

hey guys....new here and looking to follow this strategy.....since the 1st is on a Sunday, do I IFT today in what I'm assuming to be the I fund? or wait until Monday? Thanks

 

[tsptalk]

Welcome smallz. Monday. I believe the system waits until the end of the final trading day of the month to officially determine the best fund and which fund to be in the next month. So the system is always in the new fund from the 2nd trading day of the month until the last, with the IFT being done on the first trading day.

 

[smallzjohnson]

hey thanks.....so IFT on Monday in order for it to start Tuesday (2nd trading day)?

i've been pretty lazy with my TSP......been in the civil service for almost 3 years and have been contributing 10% with the additional 5% matching, majority in the G fund with small % in the others. Looking to try and be a little more aggresive now. LMBF seems to have a legit tracking record I can deal with but understand the risk.

 

[Viva_La_Migra]

hey thanks.....so IFT on Monday in order for it to start Tuesday (2nd trading day)?

i've been pretty lazy with my TSP......been in the civil service for almost 3 years and have been contributing 10% with the additional 5% matching, majority in the G fund with small % in the others. Looking to try and be a little more aggresive now. LMBF seems to have a legit tracking record I can deal with but understand the risk.

You caught on quicker than I did. Best of luck to you.

 

[tsptalk]

You got it. It seems like a nice proactive system that doesn't require too much effort. It sure beats doing nothing like most people. Good luck!

 

[smallzjohnson]

Re: Contribution Allocation Questions

thanks guys....

 

[James48843]

Re: Contribution Allocation Questions

OK- We got a signal this week- if the last week is any indication, we're moving into some new territory.

The "Last Month Best Fund" method shows that in June, "I" fund was best at over a 7% return. That's pretty unusual, but the "I" does get wild swings from time to time. So we'll follow the pattern indicator and go for it.

A full 100% switch IFT transfer out of "F" and into "I" by noon on Monday is indicated. Let's cross our fingers and hope it works.



MOVING TO "I"

Year to date return is now sitting at: +7.48%. Not bad.

 

[matrix452]

Re: Contribution Allocation Questions

Thanks for doing the legwork, Tomcat!

It makes sense that C would not lead in consecutive months, because if it leads going into a rally in the next month, more than likely the S or I fund would overtake it. If it leads going into a slump in the next month, usually F or G would replace it.

I don't faithfully follow LMBF, but if I did, I would tweak it so that any month that a stock fund leads would give a "buy S" signal. Any month that a non-stock fund leads would give a "buy F" signal. More agressive that way, I think. Of course, that would mean more risk.

Interesting tweak. Have you backtested it and see how it has tracked with the LMBF?

 

[Sensei]

Re: Contribution Allocation Questions

Interesting tweak. Have you backtested it and see how it has tracked with the LMBF?

No, I haven't had time recently to do any backtesting. For the reasons I explained, I would never follow this system into C, and I simply don't trust I (not a good reason, I know ). There's not a whole lot of risk in F vs. G, but this system rarely goes G since that would require stocks and bonds to both be in the red for an entire month. Has happened though.

Anyway, backtesting would be prudent, yes.

 

[smallzjohnson]

ok, just got on board with the IFT into I fund.......not to confortable with I fund but got to be willing to play along with LMBF.

 

[smallzjohnson]

Re: Contribution Allocation Questions

go figure....once i start this strategy, i start off with the I fund which is taking a beating....hopefully it turns around in this last week.....guess that is the risk we pay

 

[tsptalk]

Re: Contribution Allocation Questions

The market never stops testing us.

Good luck!

 

[Steven]

Move to C Fund?

 

[James48843]

Yes. Sorry, I wasn't paying attention again. Yes, last month the best fund was "C", so we move to "C" effective COB today. I screwed up and forgot to post it before noon today. My bad.

Here is the chart:




Last Month the "C" fund was up 1.4%, so that's where we move to.

Good luck out there.

The official "TSPTALK TRACKER" return, year to date, for the Last Month Best Fund method, is now a return of 7.79% .

 

[Rifleman]

"S" Fund it is, 3.57%. So with a holiday is it going to be in effect tomorrow?

 

[ILoveTDs]

My understanding of the system, you place trade before deadline tomorrow. C Fund Tuesday, S Fund Wednesday.

 

[James48843]

Looks like "S" fund did it again, with a nice return in August of 3.57%. We're sitting now ready to make an IFT before noon today- to move into "S" fund. *(We were sitting in "C").

For the year, we're at 10.39% gain so far, which isn't bad.

Last Month Best Fund moves to "S" fund - IFT before noon, effective to "S" at COB today.