Making money with buy and hold

[Intrepid_Timer]

It might be "fun" buying more shares as the market goes down, down, down, but I wonder how much "fun" it is watching your total account value go down, down, down.......................

 

[tsptalk]

Nothing wrong with learning by following the successful.

 

[jpcavin]

It might be "fun" buying more shares as the market goes down, down, down, but I wonder how much "fun" it is watching your total account value go down, down, down.......................

I guess we have to stand by the Birchtree for support:laugh:

 

[Intrepid_Timer]

BTW cashflow, to put it in layman's terms, if you had held a 100% postion in the S fund at the end of 2007, as of the close yesterday, your account would be worth 14.4% more than it was then, excluding contributions, and would of included a loss of 38.32% in 2008. If you had been in the G fund those same 3 years, you would have earned 10.26%. As a trader, my account is up around 50% since the end of 2007 and includes a loss of 5.56% in 2008. This was with a basic trading system that didn't get finalized until last year.

Please, please, please, do yourself a favor and don't buy and hold. You may have 2 or 3 good years, but those bad years will hurt...........even if you do own more shares now. Put your contributions into the equity funds if you want to buy more shares, just protect your current nest egg, even if means losing out on a few percent during the golden years............

 

[Intrepid_Timer]

I guess we have to stand by the Birchtree for support:laugh:

Or cover from the hail storm...................:toung:

 

[Birchtree]

I knew my comments would pull at least one old friend out of the woodwork. My theory is that time in the market often times can be more rewarding than timing the market. Once the timer gets out it takes an eternity before they are ready to get back in. That's what has happened in this last cycle - so many got out on the bottom and missed the entire run up of 97%. I rode it down, bumped my butt on the bottom and then began the climb out of the wet well - the important thing to remember is keep throwing good money down the rat hole regardless of what anyone thinks - DCA is the redeemer of all portfolios. Once you retire the game changes if you stay in TSP - there no longer is the benefit of dollar cast averaging so one has to become a swing trader to keep growing with more than market capital appreciation.

 

[Intrepid_Timer]

If you bailed at the bottom and missed all the gains back, I don't consider you a timer. I consider you a buy and holder who couldn't take any more pain...

I think us swing traders are rubbing off on you BT. I just saw in your account talk thread that you may sell a bit soon............that would have NEVER happened a couple years ago...........good for you!!

I knew my comments would pull at least one old friend out of the woodwork. My theory is that time in the market often times can be more rewarding than timing the market. Once the timer gets out it takes an eternity before they are ready to get back in. That's what has happened in this last cycle - so many got out on the bottom and missed the entire run up of 97%. I rode it down, bumped my butt on the bottom and then began the climb out of the wet well - the important thing to remember is keep throwing good money down the rat hole regardless of what anyone thinks - DCA is the redeemer of all portfolios. Once you retire the game changes if you stay in TSP - there no longer is the benefit of dollar cast averaging so one has to become a swing trader to keep growing with more than market capital appreciation.

 

[Birchtree]

Times change with age and circumstances - but I'm still basically a buy and holder. Venturing to explore the swing trades a bit more - even though just riding the capital appreciation cycle will make me good money with this rampaging bull - but with enough shares to make swing trading profitable I'm sure I'll get better with time. There is always something more to learn and have money making fun. I just recently picked off $0.30 from the S fund. It was a $0.55 move but I had to subtract my I fund change.

 

[jpcavin]

I have a question. If you keep buying shares when your fund is on it's way down, why would you continue to buy shares when it's on it's way up? Should you not keep your money in the fund that is going up and allocate your bi-weekly contributions to whatever fund happens to be going down?

 

[Birchtree]

Generally in a bear phase all funds go down simultaneously - but if your objective is to accumulate shares then buying all the way down and then while on the bottom and then on the way back up gains you more shares at cheaper pricing. This cycle can take a number of years to fully complete. The upleg off the March '09 low has now been in force for about 23 months with a gain of 97%. From this point forward contribution money will buy fewer shares because of higher pricing. I was fortunate to be over 50 so I had the benefit of catch up money to play DCA with. My lowest price for the C fund in this cycle was $8.54. That bought considerable C fund shares.

 

[jpcavin]

Birch
How long did it take you to get to "almost" a million? And how much $$ were you contributing at the start?

 

[jpcavin]

Speaking strictly TSP

 

[Birchtree]

I've always been fortunate enough to maximize my contributions at the 15% level and when the percents were dropped a few years back I continued to max out with my catch up. That level is now $22K with the catch up. A deployed military officer with rank can contribute up to $49K that is regarded as tax free. A disciplined approach to saving is why the TSP exists - and the added benefit of stocks fund appreciation is just frosting on the fiduciary account. But there is inherent danger when you play in the investment arena as well as outperformance rewards. I always say learn before you churn. That's why we have several home grown premium services available for the uninitiated. I usually make it a policy not to discuss my TSP balance because it would only further antagonize - but my primary goal has always been to gain 40,000 C fund shares.

 

[jpcavin]

Birch
I was not asking what your TSP balance is. I am just curious to know how long you have been contributing to TSP and what was your initial contribution in percentages or dollars. But then again, I suppose that information doesn't really help me because everyone's contribution differs based on their salary.
So rather than speak in percentages or dollar amounts, would it be fair to say that you do or try to contribute the maximum allowable amount to TSP? I'm currently contributing 12% and thinking about increasing it.
How does a ROTH IRA play into the big scheme of things? Should I maximize on the ROTH and only contribute the 6% employer matching to TSP? If you have "X" amount of money to invest, how do you decide what percentage to allocate to either one?

 

[Birchtree]

You can only put $5000 in a Roth and you can do $6000 with a catchup so you are limited in that contribution. You can contribute $16,500 in TSP no matter what your salary is and you can add $5,500 more for the catch up if you are over fifty - age has its benefits. Put as much money to work now that you can sacrifice because with the idea that Primary 3 is still in its early stages of unwinding to the upside as it relates to the NYSE group of stocks we will see many multiple 3 digit Dow days in a row in the future. You don't want to miss this ride. I'm talking a little bit of Elliott Wave here.

 

[jpcavin]

You can only put $5000 in a Roth and you can do $6000 with a catchup so you are limited in that contribution. You can contribute $16,500 in TSP no matter what your salary is and you can add $5,500 more for the catch up if you are over fifty - age has its benefits. Put as much money to work now that you can sacrifice because with the idea that Primary 3 is still in its early stages of unwinding to the upside as it relates to the NYSE group of stocks we will see many multiple 3 digit Dow days in a row in the future. You don't want to miss this ride. I'm talking a little bit of Elliott Wave here.

I see the light.. I'm forever grateful.

 

[Birchtree]

Judy,

Let me say that you can't really make serious money in TSP until you have a position of several multi-thousands of shares and it usually takes a working life time to acquire them. Anyway that's just my opinion.

 

[Boghie]

I have a question. If you keep buying shares when your fund is on it's way down, why would you continue to buy shares when it's on it's way up? Should you not keep your money in the fund that is going up and allocate your bi-weekly contributions to whatever fund happens to be going down?

JPCavin,

Everything in investing is about tomorrow, next week, next month, next year, and so on... I mean, Cash here is retiring in 18 years. Unless he is an Intrepid Investor he can double his money every 8 years or so (about a 9% annual return). He MUST be invested in equities to avoid the 'Alpo Meal Deal Retirement Plan'. So, why worry too much about a hiccup that gives you paper losses for a couple of years.

But, it would be so nice to be out of the market before it dumps and jump in just as it rises. For me, the big dumps and the big booms aren't hard to figure out. I don't believe in timing a normal market. You can see my stupid timing - I missed some gains last year.

So, if you can't tell me which of the equities funds are going up over the month you should have some in all of them. There are some obvious things. The 'S Fund' seems frothy and the 'F Fund' is correcting and the 'I Fund' is floating nowhere and seems to want to correct. What about the 'C Fund'? Kinda fairly priced is my guess. But, I don't pretend to know. So some assets are now in the 'G Fund' waiting for an equities fund correction, most is in the fairly priced 'C Fund', a moderate amount (closely watched) in the momentum 'S Fund' and a tad in the 'I Fund' because I don't know what it will do.

Regardless of your allocation you SHOULD maximize your contributions in the lousy markets. BirchTree pushed me to greatly increase my contributions in the teeth of 2008/09. It is frightening what maximum contributions buying $8 shares of the 'C Fund' has done to my account. Love and Kisses Birch.

But, why buy on the way up. Because every single share of the 'C Fund' that you have bought since October 2007 has been cheaper than shares sold in October 2007. Only the 'S Fund' has peeked over the edge - it is now more expensive than the high point of 2007. And, the 'I Fund' is still $5/share cheaper than the recent high.

I am probably going to change my contribution allocation from C/S/I 40/30/30 to C/S/I 50/10/40. That way I'm not buying into momentum - but, I won't change my asset allocation till something patterns out. And, then I'll lose money

 

[jpcavin]

Judy,

Let me say that you can't really make serious money in TSP until you have a position of several multi-thousands of shares and it usually takes a working life time to acquire them. Anyway that's just my opinion.

Understood. But it's the only thing I can play with at the moment.

 

[Birchtree]

This message board will provide you will some good learning tools so that when you are ready you can strap on the dual six shooters and take down the targets. I may turn gunslinger myself just to have fun.