Summer doldrums?

[DrD]

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When I asked about rebalancing in December, there was a helpful suggestion by TSP Talk to run to bonds for the summer and then get back to stocks in the fall. I think he called it the 'no brainer' strategy.

Anyone have an opinion about that for this summer, given the year to date?

Best wishes
Dr D

 

[Birchtree]

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DrD,

I realize you don't know me but I can give you an honest opinion. I'm afraid if you stay in the bond fund for the summer you will miss the majority of the action. A fellow from Pimco (Gross) thinks th10year rate is going to 3% before summer ends. If he is prescient and that occurs you will make money if you are sitting 100% there. You will make more by riding the bull - this is the current action center. You can divide your choices in a number of ways to either increase your leverage or dilute your risk. I'm sitting 100% C fund until the cows come home and dollar cost averaging my contributions. There are many strategies you can take. You can even play Wyatt Earp and quick draw the volatility that we may experiencce. What ever you decide to do let's have some fun - it's your money. Oh, watch out for Yogi and some of his gloomy friends - they prevailed from 3/7 until 4/20 and caused considerable pain in my own portfolio- but I'm like the Phoenix - I will fly again.

 

[tsptalk]

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DrD wrote:

When I asked about rebalancing in December, there was a helpful suggestion by TSP Talk to run to bonds for the summer and then get back to stocks in the fall. I think he called it the 'no brainer' strategy.

I believe the "no brainer" was the six months in, six months out strategy. In stocks November thru April, out of stocks from May to October. It has beaten the S&P 500 over the longer term.

I remember discussing the possibility of using the F fund over the summer but don't recall if it was tied to the "no brainer".

However, if the market peaks when I suspect it could (end of June) that might work.

 

[Mike]

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Here's what the November to April strategy would've netted this time around:

End of April prices: C $12.40 (3.33%), S $13.72 (4.00%), I $15.10 (7.42%)

Beginning of November prices: C $12.00, S $13.25, I $13.98

Not bad, particularly in the I fund. However, you would've missed out on a lot of gains in May had you bailed in April: another $0.41 in the C fund, $0.72 in the S fund, and $0.09 in the I fund.

This is why I don't like set-in-stone strategies, particularly for those who are not setting a long-term allocation with dollar cost averaging. If you're going to make moves during the course of a year, you need to analyze each situation as if it is unique. Yes, history is certainly a guide, but it isn't everything. I can't imagine too many people would be happy about missing on the gains this month... and note that the F fund has only gained $0.07 this month, so it isn't even keeping up with the lagging I fund.

 

[JustTheFacts]

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DrD, regarding your question on another forum about being banned.You can get a new ISP, ask your current ISP for a new IP address, use a friend's computer or go to the nearest public library and use their computers.

 

[Guest]

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Mike wrote:

I can't imagine too many people would be happy about missing on the gains this month.

Yeah, I'm not happy about it.

 

[DrD]

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There was a Dr Dubious on this site, but I am not him. I'm a Navy employee in California.

I've neer been banned, and hope not to be!

Best wishes
DrD