Right now, the TSP is 100% G Fund, and I expect it to stay that way for awhile, unless there is a fundamental structural change in the economy.
It seems rather obvious, but the best way to make money is to not lose it. The ability to remain fairly nimble is the key to success. The TSP restrictions make this very difficult, and as a result I tend to find myself waiting for superior setups. If I don't get a setup, I will remain in the most stable vehicle.
I have broken down a top down analysis process I refer to as Thesis-Trend-Metric-Vehicle-Entry. I find it helps keep me out of bad situations, and really develops critical thinking about the state of the economy.
Thesis - The overall view of the economy due to a structural reasoned thought. For example, a good thesis is "Corporate debt levels have shrunk, while the overall economic activity has increased. This will lead to greater corporate profits going forward. This fact, combined with a benign inflation outlook, should result in an increase in the overall shareholder equity for corporations, and a resultant increase in stock prices." [Note: the aforementioned thesis is not my current view.] A bad thesis would be "Buy and hold for the long term and you will be good."
Trend - Major trends that occur as a part of the thesis. For the good thesis given earlier, the trends would be 1) Decreasing corporate debt levels, 2) increasing economic activity, 3) increasing corporate profits, 4) benign inflation outlook, 5) increasing shareholder equity on corporate balance sheets. Notice how the bad thesis has none of these.
Metric - Each trend gets a subset of metrics. Metrics measure the success of the trend. For example, "Increasing economic activity" gets a set of measures like 1) Increasing GDP (Yes or no?), 2) Increasing Consumer Confidence (Yes or no?), 3) Durable Good Orders Increasing (Yes or No?), and so on. Bad metrics are based on anecdotal evidence, like "The economy must be doing well, because Wal-Mart was packed."
Vehicle - The security that will be affected by the improvement or deterioration of the Trend as measured by the Metrics. TSP offers us limited choices in their funds.
Entry - Determination of low-risk/risk-mitigated points of investment. For the example cited, a buy the dips. I even like to have a list of items for the Entry as well, like 1) Is the chart making higher-highs and higher-lows (Yes or no?); 2) Is the chart is some sore of pattern that could subject it to greater selling pressure (Yes or no?) [such as a bear flag, or rising wedge].
Notice how wisdom of the Lifecycle funds pays no attention to the vehicle, by setting the vehicle allocation to be based on when you want to retire. This is the most ridiculous idea I can image. And by espousing an investment strategy that buying more and more at regular intervals, you can be sure that the Entry you recieve will be at best average.
Anway, I find it to be a more scientific way of looking at things.
Interested in your thoughts.
It seems rather obvious, but the best way to make money is to not lose it. The ability to remain fairly nimble is the key to success. The TSP restrictions make this very difficult, and as a result I tend to find myself waiting for superior setups. If I don't get a setup, I will remain in the most stable vehicle.
I have broken down a top down analysis process I refer to as Thesis-Trend-Metric-Vehicle-Entry. I find it helps keep me out of bad situations, and really develops critical thinking about the state of the economy.
Thesis - The overall view of the economy due to a structural reasoned thought. For example, a good thesis is "Corporate debt levels have shrunk, while the overall economic activity has increased. This will lead to greater corporate profits going forward. This fact, combined with a benign inflation outlook, should result in an increase in the overall shareholder equity for corporations, and a resultant increase in stock prices." [Note: the aforementioned thesis is not my current view.] A bad thesis would be "Buy and hold for the long term and you will be good."
Trend - Major trends that occur as a part of the thesis. For the good thesis given earlier, the trends would be 1) Decreasing corporate debt levels, 2) increasing economic activity, 3) increasing corporate profits, 4) benign inflation outlook, 5) increasing shareholder equity on corporate balance sheets. Notice how the bad thesis has none of these.
Metric - Each trend gets a subset of metrics. Metrics measure the success of the trend. For example, "Increasing economic activity" gets a set of measures like 1) Increasing GDP (Yes or no?), 2) Increasing Consumer Confidence (Yes or no?), 3) Durable Good Orders Increasing (Yes or No?), and so on. Bad metrics are based on anecdotal evidence, like "The economy must be doing well, because Wal-Mart was packed."
Vehicle - The security that will be affected by the improvement or deterioration of the Trend as measured by the Metrics. TSP offers us limited choices in their funds.
Entry - Determination of low-risk/risk-mitigated points of investment. For the example cited, a buy the dips. I even like to have a list of items for the Entry as well, like 1) Is the chart making higher-highs and higher-lows (Yes or no?); 2) Is the chart is some sore of pattern that could subject it to greater selling pressure (Yes or no?) [such as a bear flag, or rising wedge].
Notice how wisdom of the Lifecycle funds pays no attention to the vehicle, by setting the vehicle allocation to be based on when you want to retire. This is the most ridiculous idea I can image. And by espousing an investment strategy that buying more and more at regular intervals, you can be sure that the Entry you recieve will be at best average.
Anway, I find it to be a more scientific way of looking at things.
Interested in your thoughts.
