More on Market Timing

[Griffin]

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.

Fabijo,

I am very impressed by your deductive reasoning. You are correct...and so is nnuut..Desperado and Tech are not the same person (unless he can be in two places 1100 miles apart in the same hour). Although they are both Air Force, so maybe it is possible, but I don't think even a fast mover can cover that distance, with all the admin time - and I am certain Tech does not have the presence of mind to be a fighter pilot.

 

[azanon]

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.

Time will tell? You're too kind to them, especially Tom. It has been blatently obvious the webmaster doesn't have a clue what the market is going to do next. Granted, that's only an insult in-so-much as he thinks that he knows what will happen. I dont know either. The difference is I know that i dont know. What's ironic is that in my humility, i'm probably beating 90% of the folks that hang out here.

Actually, I think Tom is on to something, just not in the way he thinks. I still stop by day-to-day waiting for his eventual switch to stocks. That's the day i'm going to strongly consider moving out of stocks and into G/F. The saddest part is i'm completely serious. My theory's based on a sort of reverse psychology from Tom's sentiment survey, and it goes something like this; maybe the "dumb money" guys are so dumb, they're actually picking the right way to go by some sort of accident. A double syke, if you will.

Its unfortunate a pioneer TSP site didn't focus on just getting out of G, and supporting smart asset allocation. I am surprised the site remains up. I would have suspected the folks at tsp.gov would have had this site down by now, given the harmfulness associated with market timing.

Azanon

 

[nnuut]

Ok, this is good, now we have Frick and Frack singing the same song again. Please don't repeat yourselves! :nuts::notrust:

 

[azanon]

Its nice to see that at least one moderator has chosen a fitting handle.

 

[nnuut]

Thanks, I like it TOO!

 

[SkyPilot]

A double syke

Don't you mean " A double psych" ?

By the way, what is your return?

 

[Griffin]

Azanon -

Please consider the following - according to the fund sheets at TSP.gov the current allocation of assets in the funds are:

66.6 billon G
10.6 billion F
68.9 billion C
14.1 billion S
13.1 billion I

Thats 38% G, 6% F, 40% C, 8% S and 8% I

If this was your allocation in a buy and hold strategy you would have a YTD return (as of last night) of 10.72% which is 3.45% below the S&P 500 (C-Fund). The only L funds doing worse then you would be the L-income and the L-10 fund.

Given the median's and mean's that Desperado posted, our group is out performing TSP as a whole. The quick counterpoint argument that the whole of TSP includes a lot of retirees, is true for us also, as Fundsurfer has pointed out numerous times.

 

[Griffin]

Desperado,

If just occurred to me: your assumption that a "know nothing" strategy of 20% in each of the funds would be out performing the entirety of TSP by 1.56%.

Those Monkey's may be a hell of a lot smarter then we are giving them credit for

 

[Desperado]

Desperado,

If just occurred to me: your assumption that a "know nothing" strategy of 20% in each of the funds would be out performing the entirety of TSP by 1.56%.

Those Monkey's may be a hell of a lot smarter then we are giving them credit for

Personally, I think that's a pretty good strategy. 40% fixed income, 1/3 of equity foreign, with a significant small tilt. If I were looking for a 60/40 allocation, I would probably go 40% G though (for the free lunch.)

 

[Birchtree]

Your monkey scenario is basically "Random Walk Theory". Put the WSJ under the bird cage and you'll do just as well. Better still ask a parrot that has a 3000 word vocabulary - that's how my daughter passed english composition.

 

[Griffin]

That approach would have reduced your yield to 12.20% putting you 1.48% over the TSP entirety. The F-fund has a better 10 year compounded yield then the G-fund, why would you avoid it all together? especially considering that the annual returns of the G fund have been progressively trending down, since it's inception?

 

[Desperado]

That approach would have reduced your yield to 12.20% putting you 1.48% over the TSP entirety. The F-fund has a better 10 year compounded yield then the G-fund, why would you avoid it all together? especially considering that the annual returns of the G fund have been progressively trending down, since it's inception?

It isn't all about returns, it is also about risk. The G fund is NO risk. Remember what these funds track. The F fund tracks a bond index that contains treasuries and corporate issues and goes up and down with interest rates and default risks. The G fund tracks a treasury bond index, yet doesn't go down. You get the yields of treasuries with the risk of a money market account. There is a free lunch there on the risk:return continuum (it comes at the taxpayer's expense). So rather than holding say 40% F and 60% C, you could hold 65% C and 35% G with similar risk, yet a better long-term return (due to more of the higher yielding asset.) By taking less risk in your fixed income portfolio, you can take more in your equity portfolio, and you end up with a better returning, equally risky portfolio overall. Personally, when you have the G fund available to you, there is really no point in holding any F fund IMHO, unless you are a market timer and you expect a dramatic drop in interest rates in the next little bit.

 

[SkyPilot]

It isn't all about returns, it is also about risk. The G fund is NO risk.

Actually, as a buy and hold tool the G fund offers substantial risk when you account for inflation. It does however, provide a safe haven for traders.

The G fund should be used with caution, as a reliance upon it may result in substantial losses related to a well managed portfolio.

This is why the TSP board developed the L accounts, as they projected the risk of participants parking or over allocating to the G fund would produce dismal results for the retiring employee.

 

[grandma]

The TSP is really a unique investment. If market timing works anywhere, it should work here.
..... 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.

How do you arrive at the `Unfair' anaylsis? You are saying that all five on your list are unfair and then add one more... unfair advantage over whom? The difference I see here is that TSP is probably not as likely to get embezzled as occcurs with `outside' retirement funds. For us TSPers this IS our retirement. The gov pension only counts if you have been in for umpteen years, the salary needing to be more than just adequate. Please consider it hasn't been `that many' years since we were able to make IFTs only twice a month, and then waiting another 15 days for it to show up. We now have this advantage, yes, but your use of the term unfair comes across as a personal judgment call that gives notice of your gut dislike toward TSPers now having other options besides `sitting.' I gather you would prefer TSP be shuttled .... it is difficult to believe you actually use it.
..or, am I mis-interpreting your comments?

 

[SkyPilot]

I would have suspected the folks at tsp.gov would have had this site down by now, given the harmfulness associated with market timing.

Azanon

Perhaps you feel that the government needs to protect us from ourselves? Maybe we would do better if the government would just take over our accounts manage and our retirment for us? Maybe the state knows better?

 

[Birchtree]

What do you think social security is - give me my money and I'll be happy to educate myself and make it grow. But it looks like even the 4% personal account plan will be off the table now that Dems are protecting me. Stink.

 

[SkyPilot]

Birch,

My point exactly!

 

[fabijo]

What do you think social security is - give me my money and I'll be happy to educate myself and make it grow. But it looks like even the 4% personal account plan will be off the table now that Dems are protecting me. Stink.

They better not take that off the table! Nothing will be taken away from current Social Security recipients if we continue to pay the same social security taxes, but opt to give an extra couple of percent to a personal account. I hate how this issue is never clarified to people.

 

[Birchtree]

When and if you die your personal account money stays in your family. It doesn't get rotated back into the general fund. The Dems want to take care of their constitutency - they cherish buying those votes.

 

[Desperado]

How do you arrive at the `Unfair' anaylsis? You are saying that all five on your list are unfair and then add one more... unfair advantage over whom?
..or, am I mis-interpreting your comments?

Unfair versus non-TSP market timers. It certainly isn't a disparaging comment toward any federal employee. It is simply an advantage you have, a reason, if you will, why you should be more likely to be able to time the market than the average investor.

And yes, according to TSP.gov and my leave and earnings statements, I do actually have money in the TSP. Why would I care about any of these issues if I didn't even have access to the TSP myself? Why would I even be on this board?