Plan for 2006

[thurston]

imported post

HI. First my goal for 2006 is a return of 30%. Here is what I know or expect for 2006. The Bush administration will continue to spend like a drunk sailor on liberty.
The dollar should go down in relation to the euro and yen.
A US recession is between 6-12 months away when the short term and long term interest rates invert.
Buy low and sell high.
Bank interest rates in Japan and Europe should increase modestly.
The 500 pound gorilla in the corner is the huge consumer debt being carried in the US. When the recession hits expect large number of bankruptcies to be filed.
I would like to do less than 10 trades next year.

So, I like the I fund. It's done well the last couple years. Will it ride on the dollar next year? When a recession hits the US, it will effect Japan since they won't sell as many goods to consumers in the US.

So what are the comments. Keep a foot in the F fund with some in I?

 

[Birchtree]

imported post

thurston,

Gotta tell ya I admire your spunk and negativity - hope your views don't change too rapidly. You have a good handle on what is important to monitor - but the outcomes will probably be different than what your expectations are.

If you want evidence of how appealing Japan is as an investment, look no further than next year's anticipated boom in initial public offerings.

Dennis

 

[tsptalk]

imported post

thurston wrote:

First my goal for 2006 is a return of 30%.

After the initial sell off early in 2006, I believe we could see a 30% returnin the C or S fund alone. (I haven't thought about the I fund yet.) For many reasons which I will talk about all year.

 

[Show-me]

imported post

Sounds like a plan to me. Why play the F ifyou are convinced thebetter gains are expected from the I fund? I would only use the F if I lost faith in all three equities.

Since 1988 the C fund always outperforms the F unless the C finishes in the negative.

Since 1995 when the C and S funds both had a negative year the I fund followed with a negative year.

Since 1995 the I fund has had only one year that has outperformed both C and S funds, 2004. I don’t count this year….yet.

I don’t dislike your plan but it would seem to me the global market place would have to make some drastic changes in order for the I fund to perform exceptionally well while the US markets did not do well. After all we are the global consumers and if we don’t consume we drag everyone else down with us. Unless the global market place can find a new big consumer. Be nice if those big savers in Japan started being big consumers.

Anyway just thought I’d throw that out there.

Merry Christmas!

http://www.tsp.gov/rates/monthly-history.html

 

[roguewave]

imported post

Here's another perspective on Japan. A primary reason Japan hasn't gone through civil unrest is that they have a tremendous amount of real savings that has helped them get through the last 15+ years.

http://www.[[financialsense.com/fsu/editorials/2005/1219c.html

 

[Wheels]

imported post

thurston wrote:

First my goal for 2006 is a return of 30%.

Are you expecting the equity markets to do that well, or are you expecting to deftly move in and out of them so well that you will earn 30% while stocks return much less?

Dave

<><

 

[Greg]

imported post

tsptalk wrote:

After the initial sell off early in 2006

Tom, would you tell us more about this?

 

[tsptalk]

imported post

Greg wrote:

tsptalk wrote:

After the initial sell off early in 2006

Tom, would you tell us more about this?

The intermediate term indicators have been pounding the table that one more 'major' pullback is needed (5 to 10%) for a few weeks now. Actually for longer than that but the short term oversold condition brought on the strong rally that didn't get those intermediate term indicator into a place wherea longer term rally can feed.

So, the intermediate term is begging the market to rest, the holiday strength is pushing the short term indicators back to overbought, and January is notorious for largemid-month pullbcaks, particularly in the Nasdaq.

All that tells me that some time between Christmasand New Years, and possibly as late as the the first week in Jan if you want to push it, we may want to get back to defensivive mode and waitfor the indicators togive an all clear sign.

 

[thurston]

imported post

Let me explain a little more. I don't expect the I fund to make 30% over the year, but if you buy and sell on the dips and swings I expect you could make that or more. An example is this year, if you sold in the spring, and maybe made one or two other trades, you could add 10% or more to your total.
If you look at one of the calculators at tspmoney.com it shows that max possible that could be made in the tsp for an example.

I mentioned the F fund, since when the I fund or one of the other stock funds are in the pits, it may be a place to make money.

I like the I fund since I think you can make money with it easier than the other stock funds.

I agree near term there will probably be a sell off in Jan.

One thing I forgot was that the EAF is weighted to Europe, so even though Japan owns US debt and is a major trader, it's effects on the EFA is not as much as Europe. Probably a moot point if the US economy goes too far south, it won't matter.

 

[bkrownd]

imported post

thurston wrote:

...if you buy and sell on the dips and swings I expect you could make that or more. An example is this year, if you sold in the spring, and maybe made one or two other trades, you could add 10% or more to your total...

If, if, if, if....ah, the magic of "if".

 

[roguewave]

imported post

thurston wrote:

Let me explain a little more. I don't expect the I fund to make 30% over the year, but if you buy and sell on the dips and swings I expect you could make that or more. An example is this year, if you sold in the spring, and maybe made one or two other trades, you could add 10% or more to your total.
If you look at one of the calculators at tspmoney.com it shows that max possible that could be made in the tsp for an example.

I mentioned the F fund, since when the I fund or one of the other stock funds are in the pits, it may be a place to make money.

I like the I fund since I think you can make money with it easier than the other stock funds.

I agree near term there will probably be a sell off in Jan.

One thing I forgot was that the EAF is weighted to Europe, so even though Japan owns US debt and is a major trader, it's effects on the EFA is not as much as Europe. Probably a moot point if the US economy goes too far south, it won't matter.

I think maybe you should reassess Japan's role in all of this. You also might want to take a look at the dollar index and how it's derived in terms of its weighting. Also, while you're boning up, you might want to check into Japan and Europe's trade numbers and how theyaffect the Euro/Yen exchange rate. I could go on and on, but for right now, just throwing out some food for thought. Next year is going to be a very exciting one. Good luck to you and everyone else. Merry Chistmas and happy New Year!

 

[Wheels]

imported post

thurston wrote:

but if you buy and sell on the dips and swings I expect you could make that or more. An example is this year, if you sold in the spring, and maybe made one or two other trades, you could add 10% or more to your total.

I suppose that is the goal of everybody in here.And while some have had a certain degree of success, I don't think anyone can claimbeating the best performing fund by 10% (let me re-phrase - anyone can claim it - but of the people on this board who share thier trades and allow them to be tracked - no one has topped the I or even the S and probably not even the C by 10%) And then you would have to have equities go up by 20% to get to your goal of 30%. I guess my long winded point is this - while I'd love to have a few more years like the late nineties - a goal of 30% seems a little lofty.

Dave

<><

 

[thurston]

imported post

News is the bonds yield inverted. Sooner than I expected. http://biz.yahoo.com/ap/051227/wall_street.html?.v=10

Couple thoughts on this. This is a good indicator that a recession is looming and thus a bad time in general to be in stocks.

Second is what impact will this have on the billions of dollars in bonds that are being held by foreign investors, primarily the Japanese?