Market Talk / May 7 - 13

[Pilgrim]

If I jumped in right now, we would have a correction of at least 5%.....:cheesy:

Then we could all buy in low!! Would you consider taking one for the team??

 

[Wizard]

:nuts:

 

[Spaf]

Then we could all buy in low!! Would you consider taking one for the team??

I did back in the first part of the year. I went over to the F-Fund, and it still ain't recovered...... I sold my last three gold eagles in December.....:embarrest:

 

[Wizard]

I bought 611 ounces in 2001 @274 per ounce.

Up over 12K today. :blink:

I was expecting to be down at least 10K today with the FOMC meeting tomorrow.

Oh well.

 

[Wimpy]

Spaf,

I can appreciate what you are saying here, BUT it ignores the RISK of being in the dollar. Yes, a person will get all the dollars they have in their G-Fund account, but the REAL question is purchasing power. Will those ?SAFE? dollars in the G-Fund retain purchasing power? If that G-Fund purchasing power goes down 20%, isn't that RISKY as well? It is certainly more risk than I want.

A little clarification is needed.

When I say 20% drop in the dollar or dollar purchasing power I'm referring to an 'engineered' drop versus accidental. In other words, if a person had $100,000 in the G-Fund and the dollar was devalued 20%, there would only be $80,000 worth of purchasing power in that account.

If the 'engineered' drop turns into a runaway drop, as in runaway inflation, we could possibly see a 40 per cent drop or more...at best...or the complete destruction (Weimar style) of the currency as a worse case scenario. In which case the G-Fund account with the original $100,000 in it would only purchase $60,000 worth of goods and services...at best...or zip...as a worse case scenario.

Rumblings about an 'engineered' 20% drop took place, I believe, when the USDX was around .87-.88. That would, by inference, be completed at USDX .70. We are mid-84s today. I could see us there by December 2006. This is absolutely the best case scenario, in my opinion. The REAL question is whether they can get this sled stopped on .70. Be prepared for a lot of jawboning by the FED all the way down to that point. Each one of the fed members will have a script to follow and they will all be saying something different at key times to keep this dollar train on the tracks. The more frequent the jawboning...the more worried they are.

 

[learning]

Spaf I hear you. The problem is I have some greed issues. I won't put more into the I fund tell it falls. But, I won't pull out tell it starts it's fall. I want to be all in. But, that is where my big issue then clicks in- I'm a chicken.

 

[Wizard]

Some movers today:

PA.M06 PALLADIUM Jun 2006 (NYMEX) 394.90 19.65 5.24%

SI.M06 SILVER Jun 2006 (NYMEX) 14.409 0.695 5.11%

ZI.K06.E SILVER 5000 OZ May 2006 (E) (CBOT) 14.365 0.689 5.08%

YI.N07.E SILVER (MINI) Jul 2007 (E) (CBOT) 14.590 0.699 5.05%

RB.M06.E RBOB GASOLINE Jun 2006 (E) (NYMEX) 2.3510 0.1024 4.62%

GLD.Z06.E GOLD TRAKRS INDEX Dec 2006 (E) (CME) 40.41 1.29 3.30%

 

[Wimpy]

I bought 611 ounces in 2001 @274 per ounce.

You are sitting pretty, my friend. We got in about the same price a year earlier. I think it pulled back to $255 after we bought, for the final bottom. It has been quite a ride since then.

What has really been a hoot is listening to the gold top callers all the way up from $295. Every round number they would come out and say it was going to crash. Those fools will be top calling all the way up and through $1595 and above. One of these days they will get it right...he, he, he.

 

[Wizard]

What has really been a hoot is listening to the gold top callers all the way up from $295.

The precious metals are in a real bull market. The U.S. stock indexes are on an imaginary bull market with the "Fed is One and Done" that everyone is hyped into for the last 18 months.

Maria B reports on Monday that the Fed Chairman says he is not a dove and does not understand why the market "misunderstood" he is going to pause. Then the dumb money stock market rallies on Friday because the Fed is one and done.:nuts:

It really cracks me up.

 

[walli1]

A little clarification is needed.

When I say 20% drop in the dollar or dollar purchasing power I'm referring to an 'engineered' drop versus accidental. In other words, if a person had $100,000 in the G-Fund and the dollar was devalued 20%, there would only be $80,000 worth of purchasing power in that account.

If the 'engineered' drop turns into a runaway drop, as in runaway inflation, we could possibly see a 40 per cent drop or more...at best...or the complete destruction (Weimar style) of the currency as a worse case scenario. In which case the G-Fund account with the original $100,000 in it would only purchase $60,000 worth of goods and services...at best...or zip...as a worse case scenario.

Rumblings about an 'engineered' 20% drop took place, I believe, when the USDX was around .87-.88. That would, by inference, be completed at USDX .70. We are mid-84s today. I could see us there by December 2006. This is absolutely the best case scenario, in my opinion. The REAL question is whether they can get this sled stopped on .70. Be prepared for a lot of jawboning by the FED all the way down to that point. Each one of the fed members will have a script to follow and they will all be saying something different at key times to keep this dollar train on the tracks. The more frequent the jawboning...the more worried they are.

Wimpy, I'm unclear here about why it makes a difference which fund you're in if a dollar depreciates 20%. If you have a $100K in the G Fund and it's purchasing power is only worth $80K wouldn't a $100K in the C Fund or a $100K in the S or I Fund only be worth $80K. I'm not clear on how you manipulate or engineer a drop in the purchasing power of money in one fund and it not effect the purchasing power of the money in the other funds. Straighten me out.

 

[Spartan]

The I fund is an exchange traded fund. If the dollar drops 20%, the I fund will post a 20% gain, since you are invested in Euros and Yen and not dollars.

In the end, you do not gain any purchasing power, but remain equal because you own more dollars, and those dollars are worth less.

 

[Wizard]

The I fund is an exchange traded fund. If the dollar drops 20%, the I fund will post a 20% gain, since you are invested in Euros and Yen and not dollars.

In the end, you do not gain any purchasing power, but remain equal because you own more dollars, and those dollars are worth less.

But then inflation eats you alive.

Example: I fund up 18% year to date.

Gold up more then double that.

So in real buying power terms you are down 20% in 5 months.

 

[walli1]

The I fund is an exchange traded fund. If the dollar drops 20%, the I fund will post a 20% gain, since you are invested in Euros and Yen and not dollars.

In the end, you do not gain any purchasing power, but remain equal because you own more dollars, and those dollars are worth less.

Thanks, I understand how the I Fund works. Just wasn't clear on what Wimpy said about dollars being worth less in the G Fund. A dollar in one fund is worth the same as a dollar in another fund. Maybe I read him wrong.

 

[Wimpy]

Wimpy, I'm unclear here about why it makes a difference which fund you're in if a dollar depreciates 20%. If you have a $100K in the G Fund and it's purchasing power is only worth $80K wouldn't a $100K in the C Fund or a $100K in the S or I Fund only be worth $80K. I'm not clear on how you manipulate or engineer a drop in the purchasing power of money in one fund and it not effect the purchasing power of the money in the other funds. Straighten me out.

Great question...sorry I confused you. You are correct, $100,000 in any dollar denominated fund will take a hit. That is the very reason a person needs to squeeze as much money out of the funds as possible. Thinking a person is SAFE in the G-Fund, especially with a 4% return, is nonsense. Even worse is the overvalued C-Fund with a lousy 4% or so return...the risk is doubled. The best fund to be in is the I-Fund if you believe the dollar is toast. Yes, it too will lose purchasing power but the fantastic gains will bulldoze right on through the muck relative to the other funds. Worst case for the I-Fund is that it will lose LESS than the rest of the funds. First rule of investing is don't lose money. By at least contributing 5% to the TSP you've already gained 100% on your money. That is good.

Example: Say you begin with $100,000 in both the I-Fund and G-Fund. A twenty per cent dollar drop will take both of them to $80,000 worth of purchasing power. The G-Fund loss will be off-set with a 4% gain or so and the I-Fund loss will be off-set by possibly 20% or more gain. I think the I-fund may hit 40%. But, I'll be conservative and say 20%. The G-Fund will have a net loss of 16% in purchasing power and the I-Fund will have a net gain/loss of ZERO. First rule of investing, don't lose money!
Since I think the I-Fund will do 40%...I'm looking for a 20% net gain in the I-Fund after subtracting the dollar devaluation.

Does this answer your question?

 

[Wizard]

Take a TSP General Loan at 5.115% and buy some gold.

When the fed really does pause.................for the USD.

 

[Wimpy]

Take a TSP General Loan at 5.115% and buy some gold.

Great advice! A fantastic way to wrap your TSP portfolio with a security blanket.

 

[Spaf]

Daily Yak

The Kingdom of TSP
Daily Edition
May 9, 2006 Closing​

Yak, Doodles, Tea Leaves & The Tin Box

Kingdom Yak:
Market Yak..............................Socks still mixed. PC slowdown.
Other Yak................................Lube creeps up over 70
Jester Yak...............................Cartel to yak tomorrow, 2:15 PMET

Doodles:
Socks [$SPX] Closed at..............1325.14, up +0.92
Volume (CMF) (money flow).........+0.090, increasing.
Averages (MACD) (trend)............+6.420, increasing.
Momentum (S-STO) (signal).........95.51, increasing.
Strength (RSI) Overbought/sold....[70] 63.56 [30]

Lube (NYM) Closed at..................70.69, up +0.92
Oil Markers................................<70= ok, 70-75= worry, >75= panic.

Tea Leaves:
Charts & Stuff............................Yellow

Tin Box:
Position.....................................0% Socks
Stops [$SPX].............................Alert: 1312. Trail: 1299.

 

[SkyPilot]

TUESDAY, MAY 9

G 0.00%
F 0.00%
C 0.00%
S -0.05% :notrust:
I 0.53%

 

[Wizard]

May 9, 2006

Gold up 3.29%
Silver up 5.15%

 

[robo]

"Lincoln was right in saying that you can't fool all of the people all of the time. But, the number that can't be fooled are statistically insignificant." James Quillian

Tough Decisions and Tough Calls

http://quillian.net/

THE FED
FOMC to-do list: hike rates, hint pause, talk tough

http://www.marketwatch.com/News/Sto...EA6-4B9F-90CB-1CB5124F2EBF}&siteid=mktw&dist=

THE FED
At root of Fed, market split: lag from past rate hikes
Markets overly concerned about a pause



http://www.marketwatch.com/News/Sto...530-43B3-B12D-5020E357A8CA}&siteid=mktw&dist=