Request for comments: How you plan for the correction?

[EmoDx]

I base my request for commentary on this article:

http://finance.yahoo.com/news/Now-That-Everyone-Likes-cnbc-79768860.html

"I'm thinking we're going to have a correction the second or third week of January-a nice correction of 5 to 7 percent. Everybody is way too bullish," says Dave Rovelli, managing director of US equity trading at Canaccord Adams in New York. "We're melting up on no volume."

Ok, so if I have were %50 C and %50 S how would I prepare for a 7% correction? The dollar is rising and the F Fund is in the crapper. So G is where it is at for "safety".

Keeping exposure to equities may be a good idea to ride out the rest of the trend up. Do you think an allocation of %35 C, %10 S, and %55 G would be best to capture the rest of the upward momentum but limit a sharp 1 day drop?

Does anyone have any numerical expressions to support risk exposure to run a couple of different exposure levels? Thanks in advance?

- Emo

 

[Birchtree]

I usually just enjoy the pain - you never know how deep or how long. If you get out you'll miss the sharp rebound. Ask those in the #400 rankings why they are where they are.

 

[CrabClaw]

I usually just enjoy the pain - you never know how deep or how long. If you get out you'll miss the sharp rebound. Ask those in the #400 rankings why they are where they are.

No need to rub it in Birch, the truth does sting a little though

 

[JTH]

In a bull market 5-7% isn't a correction, it's a pullback and under TSP's trading restrictions, some long-term thinking folks wouldn't even move to the sidelines. I encourage everyone to stop reading news articles, nothing good comes from it, just follow price, is it rising? Yes? Then why aren't you invested? Yes folks it's that simple.

 

[EmoDx]

In a bull market 5-7% isn't a correction, it's a pullback and under TSP's trading restrictions, some long-term thinking folks wouldn't even move to the sidelines. I encourage everyone to stop reading news articles, nothing good comes from it, just follow price, is it rising? Yes? Then why aren't you invested? Yes folks it's that simple.

I think the run has some more legs after a breather, and that is why I think exposure during a "pull back" is fine. I am trying to expose myself to different TSP investing strategies to figure out what works best for me.

As for the news, I read it to educate myself. Yes, even the biased articles contain nuggets of truth. But the real education comes from bouncing ideas off people that have been active longer in the TSP and investing in general.

After 1 year in the TSP I am faring better than the G Fund, which isn't great, but given my general inexperience with the TSP, it isn't a bad place to be either.

I do appreciate your time commenting as I do have a 30 year retirement horizon. Your comment helps me focus on the long term and not getting too wound up in the short term.

- Emo

 

[JTH]

Lol just for the record, when I'm peaking I'll be watching 2-3 hours of CNBC, an hour of Bloomberg, about 4-10 youtube videos, and 1-2 podcast. I'm what we like to call a hypocrite

 

[crws]

The number-crunchers on Wall Street are starting to crunch something else: the news.

Computers That Trade on the News

 

[FAB1]

I usually just enjoy the pain - you never know how deep or how long. If you get out you'll miss the sharp rebound. Ask those in the #400 rankings why they are where they are.

Kickem when there down, eh?
Just wait dood. 2011 is going to be different.

 

[Steadygain]

I base my request for commentary on this article:

http://finance.yahoo.com/news/Now-That-Everyone-Likes-cnbc-79768860.html



Ok, so if I have were %50 C and %50 S how would I prepare for a 7% correction? The dollar is rising and the F Fund is in the crapper. So G is where it is at for "safety".

Keeping exposure to equities may be a good idea to ride out the rest of the trend up. Do you think an allocation of %35 C, %10 S, and %55 G would be best to capture the rest of the upward momentum but limit a sharp 1 day drop?

Does anyone have any numerical expressions to support risk exposure to run a couple of different exposure levels? Thanks in advance?

- Emo

Emo - it's great to have you on board and these are good questions.

First, and most importantly, think of the TSP as a very long term 'Retirement Investment' .... that you won't use for many years.

A 7% fall is insignificant compared to an 85% gain or a 185% Gain. When you consider the bigger picture -- especially as serious and long as this present 'Recession' has been ongoing .... An UPSWING is inevidable (and in fact a very Huge and Sustained UPSWING - is unavoidable and unstopable).

In general 'The FEAR of LOSS' is the greatest factor responsible for MISSING the GAINS.

3/09 was nothing more than 'proof' that the MARKETS cannot die - and the room to go UP -- far exceeds the room to go DOWN.

50/50 - C/S will have you reaping in what eveyone in G has missed. I Fund will likely be the 'Huge Gainer' as things take off -- so I would shift some over to that.

 

[EmoDx]

Emo - it's great to have you on board and these are good questions.

First, and most importantly, think of the TSP as a very long term 'Retirement Investment' .... that you won't use for many years.

A 7% fall is insignificant compared to an 85% gain or a 185% Gain. When you consider the bigger picture -- especially as serious and long as this present 'Recession' has been ongoing .... An UPSWING is inevidable (and in fact a very Huge and Sustained UPSWING - is unavoidable and unstopable).

In general 'The FEAR of LOSS' is the greatest factor responsible for MISSING the GAINS.

3/09 was nothing more than 'proof' that the MARKETS cannot die - and the room to go UP -- far exceeds the room to go DOWN.

50/50 - C/S will have you reaping in what eveyone in G has missed. I Fund will likely be the 'Huge Gainer' as things take off -- so I would shift some over to that.

Thanks for taking the time to respond. I guess I see your point. When you can see the impending short term swings it is difficult to stay in %100 equities.

So when looking at the long term trend, instead of %90 - 100 risk aversion during an impending downward turn, perhaps locking in gains in the form of a 10% - 15% transfer to G (or F if it isn't deflating). Once the down trend flattens out the put the funds set aside back in. I think I will run a couple of different scenarios to see what I come up with.

-Emo