More on Market Timing

[Desperado]

The TSP is really a unique investment. If market timing works anywhere, it should work here. The academic press does not have very many studies of market-timing using vast swings in asset allocation as you see many doing here. Most market-timing studies are done within a single asset class comparing stock pickers to indexers. Perhaps TSP market timers, using macroeconomic analysis, actually could, on average, beat a typical buy and hold portfolio. Many of the advantages that buy and holders usually have don't apply in the TSP.

1) No cost to swap asset allocations.
2) No tax consequences.
3) All asset classes are indexed (hence no individual stock risk)
4) Minimal expense ratios
5) A free lunch fixed income option (G fund provides the return of a treasury fund with the risk of a money market fund)

In fact, TSPers have an additional unfair advantage. Institutional investors cannot swap asset classes as quickly, easily, and cheaply as an individual TSP investor due to market impact. Most individual investors don't have the low cost investment options and even if they have an IRA at Vanguard (the next lowest cost provider of index funds), they aren't allowed to swap their funds in and out due to transaction limitations. So the TSPers should be able to take advantage of some market conditions that others cannot due to their size and transaction costs. In short, a TSP investor should be able to capitalize on at least a few relative inefficiencies even in an otherwise efficient market.

In short, if anyone has a reasonable opportunity to beat the market, it is YOU GUYS. But if you cannot, this may be the strongest piece of evidence yet of an efficient market and the futility of market timing. Only time will tell.

 

[FUTURESTRADER]

The TSP is really a unique investment. If market timing works anywhere, it should work here. The academic press does not have very many studies of market-timing using vast swings in asset allocation as you see many doing here. Most market-timing studies are done within a single asset class comparing stock pickers to indexers. Perhaps TSP market timers, using macroeconomic analysis, actually could, on average, beat a typical buy and hold portfolio. Many of the advantages that buy and holders usually have don't apply in the TSP.

1) No cost to swap asset allocations.
2) No tax consequences.
3) All asset classes are indexed (hence no individual stock risk)
4) Minimal expense ratios
5) A free lunch fixed income option (G fund provides the return of a treasury fund with the risk of a money market fund)

In fact, TSPers have an additional unfair advantage. Institutional investors cannot swap asset classes as quickly, easily, and cheaply as an individual TSP investor due to market impact. Most individual investors don't have the low cost investment options and even if they have an IRA at Vanguard (the next lowest cost provider of index funds), they aren't allowed to swap their funds in and out due to transaction limitations. So the TSPers should be able to take advantage of some market conditions that others cannot due to their size and transaction costs. In short, a TSP investor should be able to capitalize on at least a few relative inefficiencies even in an otherwise efficient market.

In short, if anyone has a reasonable opportunity to beat the market, it is YOU GUYS. But if you cannot, this may be the strongest piece of evidence yet of an efficient market and the futility of market timing. Only time will tell.

now you're catchin on, desp..I hope you at least think enough of the TSP to get your matching, if you're not GI. Tuff to beat that guaranteed 100% with buy n hold

 

[sugarandspice]

And don't forget the biggest advantage of all and that is not being able to get out right away or get in right away. We have the advantage of moving in to a fund and having to wait until the next day for it to take effect. And then having to sit in it all that trading day no matter what is happening. Good or bad.

 

[Desperado]

now you're catchin on, desp..I hope you at least think enough of the TSP to get your matching, if you're not GI. Tuff to beat that guaranteed 100% with buy n hold

I think a lot of the TSP. I max my contributions every year. But I don't get a match. Sucks to be in the line of fire if you get my drift.

 

[ChemEng]

Yeah... something about a pension after 20 years would compensate I would think though. Then typically what happens is that you get to see our side of the coin.

 

[350zCommTech]

Yeah... something about a pension after 20 years would compensate I would think though. Then typically what happens is that you get to see our side of the coin.

Exactly, FERS don't get a real pension like CSRS. That's why I do what I do.

 

[Griffin]

Desperado,

I am in absolute shock that you could expand your horizons enough to consider the possibility that we could be potentially on to something. I can not begin to express how refreshing that is, given the experiences I have on this board in dealing with folks dead set in their ways.

I would like to point out one thing that you did miss in your list of possible advantages that we have.....(talk about missing the forest through the trees).....we have this message board and Tom.

We have dozens of very intelligent people working in real time towards the same goal of developing the ultimate timing system. I personally believe that this board is in it's infancy. I envision a day where a (paying ?) memeber can access real time reports that show the status of all the members through a customizable filter system. The beginnings of this is an automated IFT tracking database....which is under discussion and soon to be in the works.

Maybe we might develop an indicators page where dozens of members each focusing on a single indicator can capture, analyze and summarize enormous amounts of data all in a single view. I have my routine analysis down to a system and I am sure many other here do to. All we need is a display.

Who knows what's to come. I am at about 22% this year and I have twenty years to go - I believe this board will be the catalyst through which I retire a low grade millionaire.

 

[robo]

Desperado,

I am in absolute shock that you could expand your horizons enough to consider the possibility that we could be potentially on to something. I can not begin to express how refreshing that is, given the experiences I have on this board in dealing with folks dead set in their ways.

I would like to point out one thing that you did miss in your list of possible advantages that we have.....(talk about missing the forest through the trees).....we have this message board and Tom.

We have dozens of very intelligent people working in real time towards the same goal of developing the ultimate timing system. I personally believe that this board is in it's infancy. I envision a day where a (paying ?) memeber can access real time reports that show the status of all the members through a customizable filter system. The beginnings of this is an automated IFT tracking database....which is under discussion and soon to be in the works.

Maybe we might develop an indicators page where dozens of members each focusing on a single indicator can capture, analyze and summarize enormous amounts of data all in a single view. I have my routine analysis down to a system and I am sure many other here do to. All we need is a display.

Who knows what's to come. I am at about 22% this year and I have twenty years to go - I believe this board will be the catalyst through which I retire a low grade millionaire.

Griffin,

Excellent point!

"When the situation changes, I change. What do you do?" --John Maynard Keynes

 

[SkyPilot]

And this is the power of well reasoned discussion... with some of the funny stuff tossed in the mix.

Desperado, hang around and enjoy, you might find more than you expect!

 

[Griffin]

And this is the power of well reasoned discussion... with some of the funny stuff tossed in the mix.

Desperado, hang around and enjoy, you might find more than you expect!

Amen!

 

[mlk_man]

I think a lot of the TSP. I max my contributions every year. But I don't get a match. Sucks to be in the line of fire if you get my drift.

I don't get your drift. I think you have no TSP at all. I'm not as gullible as I use to be............I've read your past posts, don't **** down my back and tell me it's raining.................

 

[mlk_man]

Oops, guess I can't say P I S S either................I should get my 6 year old neice to come here.

 

[fabijo]

I got the drift. No match means he is military. In the line of fire probably means he just came back from a short deployment. I say short, because he was posting at the beginning of October, then vanished. Now he is back. With a deployment that short, I'd say U.S. Air Force.

 

[nnuut]

Desperado,

I am in absolute shock that you could expand your horizons enough to consider the possibility that we could be potentially on to something. I can not begin to express how refreshing that is, given the experiences I have on this board in dealing with folks dead set in their ways.

I would like to point out one thing that you did miss in your list of possible advantages that we have.....(talk about missing the forest through the trees).....we have this message board and Tom.

We have dozens of very intelligent people working in real time towards the same goal of developing the ultimate timing system. I personally believe that this board is in it's infancy. I envision a day where a (paying ?) memeber can access real time reports that show the status of all the members through a customizable filter system. The beginnings of this is an automated IFT tracking database....which is under discussion and soon to be in the works.

Maybe we might develop an indicators page where dozens of members each focusing on a single indicator can capture, analyze and summarize enormous amounts of data all in a single view. I have my routine analysis down to a system and I am sure many other here do to. All we need is a display.

Who knows what's to come. I am at about 22% this year and I have twenty years to go - I believe this board will be the catalyst through which I retire a low grade millionaire.

Well, you may fit in after all, we like a different point of view. We are all here to make money, what ever it takes. We are open to suggestions! Norman

 

[mlk_man]

I got the drift. No match means he is military. In the line of fire probably means he just came back from a short deployment. I say short, because he was posting at the beginning of October, then vanished. Now he is back. With a deployment that short, I'd say U.S. Air Force.

Techy left in early Nov, but he was already getting ready to leave in Oct when everyone started calling him out. Techy didn't have a TSP account either. I'll stake sugar AND spices reputation on that.........

 

[nnuut]

Nah! Writes completly different, has a different point of view, doesn't use the same wording, personality would show through the C---. I really don't think so!:notrust:

 

[fabijo]

This is definitely not Techy. Tech's more mystical-sounding.

 

[Birchtree]

Ya, he could part the mist but he didn't like to chase it. All his attention was to the downside and 99% wrong most of the time. I had planned to use him as a contrary indicator at one time.

 

[FUTURESTRADER]

Techy left in early Nov, but he was already getting ready to leave in Oct when everyone started calling him out. Techy didn't have a TSP account either. I'll stake sugar AND spices reputation on that.........

I was thinking the same thing, but desp makes more reasonable arguments, though still unsubstanstiated, which makes him more dangerous. His not so veiled insinuation boiled down to this board, and our efforts to be a waste of time, and we should scrap it all. Hmmm..what to make of such a one. But, looks like he's coming around

 

[Desperado]

Hmmm..what to make of such a one. But, looks like he's coming around

Don't get your hopes up too far. There are still two hurdles to overcome before I join your ranks. First, I need to see that it is LIKELY that I can outperform a buy and hold portfolio by rapid-fire timing. Thus far the data show this is unlikely. But that could change, the data is quite limited. The second hurdle is whether it is worth my time to try to do so. Remember in investing that increased savings makes up for decreased returns. If I spend the time I would spend studying the markets working, I could save more.

But I think there is enough possibility here for successful market timing to take place that it is worth watching for now. I'm glad returns are being tracked. I hope enough people stick around next year to give us a meaningful two year set of data.