Managing your funds

[Spaf]

The Kingdom of TSP​

Managing your funds: When to hold, when to fold.

Using a IFT and acting quickly when the market turns out of favor can avoid losing a large portion of your principal. When you get out, your funds won't be tied up in a losing position. You will be able to reinvest another day.

It's ok to hold funds as long as the price is advancing. When prices are locked in a trading range or falling, it's time to fold, and get out.

Preserving capital is of the highest priority.

..Protecting your principal is No. 1

..Don't let a large profit turn into a small profit.

..Try not letting a small profit turn into a loss. And,

..Don't let a small loss excalate into a large loss.

The following is the Percentage gain that is required to recover from losses:
A loss of: ||requires a recovery % gain of:
5%...........5.2%
10%.........11.1%
25%.........33.3%
50%.........100%
75%.........300%
100%........Doom

Things to consider in Fundamentals: Markets are more global. Rising energy costs will affect all markets. Stocks can advance from oversold conditions, but they struggle in overbought conditions, and typically have to fall in a correction to gather steam to continue upward.

Things to consider in TSP: The TSP is a saving-for-retirement-fund. At least with minimum investment and matching grants the G-Fund + matching will yield about 10%, with zero risk. The bond and equities funds involve more risk, in these the money needs to be managed.

Rgds, and be careful!... ...Spaf

 

[Birchtree]

Very notable information

Spaf,

I only wish I could practice what you preach - but over the years I've developed the investing style of a cycle rider. Rider up and rider down. When the objective is to accumulate with dollar cost averaging the direction is of secondary consequence. When I hit 40,000 shares of a fund maybe I'd be more open to pistol shooting the ranges. As we currently sit the fund I accumulate will cost me more the next contribution date - I'd rather hold for a small pull back and cheaper pricing - but it ain't gonna happen I'm afraid.

Dennis

 

[Spaf]

Preaching!

Me too! Dennis
I'm still practicing too!..... ......Spaf

 

[bkrownd]

When you get out, your funds won't be tied up in a losing position. You will be able to reinvest another day.

Being "out" also means you're losing when those that are "in" are winning.

 

[Spaf]

Clarification

Being "out" also means you're losing when those that are "in" are winning.

The reference was to a losing position, one that is declining. You want to vacate a declining position asap, and not hold and hope it will reverse. Thats where small losses become big losses.

Rgds........... ............Spaf

 

[nnuut]

I like this article, but don't agree with the author:
See READERS COMMENTS at the bottom of the page.
faa has it pegged.

Timing the Market with Your TSP Funds? Here's What Happened in Recent Bull and Bear Markets
By Ralph Smith
1/5/2005
http://www.fedsmith.com/articles/articles.showarticle.db.php?intArticleID=428