Time to JUMP !!!???

[The HalfBreed]

I watched the market move from 14,000 touching down to almost 8,000 over the past few (?) months. I can see light at the end of the tunnel, and believe in the American Stock Market and it's ability to get up after a punch.

I've lost some, but not as much as others possibly. Being CSRS, I get no matching funds, so it's all my doing. Here's my dilemma....

I have as much money OUT of the TSP as money IN the TSP. When the FEDS hiked the overnight rate last year, I saw the writing on the wall, and quickly moved the majority of my assets (outside of the TSP) into longer term CDs paying 5.25 to 5.40 APY, stretching out almost 5 years now, in increments ranging from 18 months to 5 yrs......So basically, HALF of my total investments are tied up there for now. In the TSP, HALF of it is in the C Fund, with a 25/25 split between the F and G funds. I changed my contributions to the C Fund about 6 months ago to 100%, instead of the 50/25/25 mix.

I recently (6 weeks ago) decided to change the per pay period investments to $1000, instead of 600 to purchase more shares of the C Fund while it's trading below $11/share (as of Fri 10/17).

Here's another train of thought...

Should I start transferring $$$ from the F or G fund, into the C fund to purchase more while it's low (in 5K increments or the like), or wait till Jan and do a 5500/5 = $1,100 per pp AND $635/pp for a total of $1,735/pp directly into the C Fund to begin the new year?

I'm eligible to retire in 18 months, but am only 53 yrs old, and suspect that I won't touch the money until late 60's or 70 yrs of age.

Lot's of brainpower on this board, and I'd appreciate thoughts, positive and 'constructive'.

 

[Show-me]

Your plan is well thought out and very well done, IMO. Not going to touch it for 10 plus years is a plus.

Make sure you do not exceed the $15,500 limit or you will miss out on matching funds.

Given your age I would DCA in very slowly over the next year, maybe two.

 

[James48843]

I can see light at the end of the tunnel, and believe in the American Stock Market and it's ability to get up after a punch.

That light you see at the end of the tunnel could be the on-coming train fast approaching.

Sure, values are down, and in ten years, the market should recover nicely and then some.

Should you go in now?

Good question- and only one you can answer.

Yes. No. Maybe.

Warren Buffet says yes- so if you believe him, then this is a good opportunity.

Magic Eight ball would probably be as accurate as anything else in this market. Why not give that a try?

Personally, I am fully in right now, and won't get out anytime soon. I keep telling myself I am beating the S&P500 by 15% right now- so it must be good. :nuts:

 

[XL-entLady]

Here's a recent article from Jason Kelly that might give you something to think about as you're making your decisions. I highlighted some passages that may be of interest.

Good luck,
Lady


Which of These Investors Are You?
October 16, 2008
Yesterday's technical look at ProShares Ultra Financials (UYG) didn't help much, as it showed a slightly bullish bias going into a day that saw the market sell off again to the tune of -9% for the S&P 500.

It's important to distinguish your time frames when trying to profit from this market. If you're looking to pull money from it each day or week, then tight stops are essential, per my Tuesday article on UYG and ratcheting stops higher to lock in gains. The leveraged ETFs are moving so much each day that they're like money machines if you watch them closely and catch just a small part of a trend -- or a big trend like Monday's surge higher for the longs or yesterday's plunge lower for the shorts.

Here's how that can look when done right. On Monday, you would have seen UYG bouncing off support at $10 after surging upward from $8 Friday. You wouldn't care about missing the 25% run from $8 to $10 (unless you already owned it on Friday when it was bouncing along $8, but let's be conservative and say you didn't). You just pick up whatever number of shares you want at $10.05, put a stop on them at -5% or $9.55, then move the stop up as the shares rise. By the end of Monday, UYG was at $11.25 and you would either have sold to avoid overnight surprises or set your alarm to start Tuesday with the market to keep on top of it.

The Tuesday pre-market made it obvious that UYG was set to move higher again, and indeed it did. That was stop ratcheting time, which worked to get traders out of UYG at around $12 for a 20% gain.

Long-term investors, on the other hand, should approach bargain prices differently. The jury is still out on how severe a recession we face, whether government moves will stave off a systemic financial meltdown, and so on. Everybody is saying they're going to wait and see. The truth is, though, that the jury is always out. There's never a clear signal in the market. It's always uncertain.

Which is why moving gradually makes sense. One thing we can all agree on is that the risk in the stock market is less today than it was a month ago. You read that right. Prices are lower. Money put into shares now will appreciate more than money put in a month ago. If stocks fall farther, money put in now will not have fallen as far at the bottom as money that was put in a month ago. That's lower risk.

But we all know that it sure doesn't feel lower. It feels like risk is at an all-time high, that the last place you'd want your money is in the nutty stock market where all recent comparisons go back to the Great Depression. One thing to remember about the Great Depression, however, is that it was a pretty good time to buy stocks -- but not all at once because there were several bear market bounces and then more legs down before it based and rose.

So, the long-term investor recognizing that these days are pretty good for putting money to work in stocks, should divide his or her capital into chunks and dollar-cost average into broad indexes, either leveraged or plain. The volatility will continue, and that's why moving gradually will remove some of the stress.

Look at ProShares Ultra S&P 500 (SSO), for example. If you'd begun moving capital into it when I wrote on Oct. 8 that you should "get your greedy hat out," you would have paid around $30 for it the next day. On Monday, it closed at $35.50 to give you a quick 18% gain. Now, it's back down to $29. So what? You don't need that money now. Let it ride.



If the worst prediction I've read comes to pass, we'll see the S&P 500 fall another 30% from yesterday's close. That would take SSO down 60% from $29 to less than $12. It would likely happen in the next six months or so, which means that the smart long-term dollar-cost averager would divide capital into six chunks, one for each month. The first chunk went in at $30, maybe the second one goes in at $25, the third at $20, the fourth at $15, the fifth at $10, and the sixth at $15 as the market finally starts its way back up. Here's how that would look if each chunk were $10k:

• 333 shares at $30
• 400 shares at $25
• 500 shares at $20
• 667 shares at $15
• 1,000 shares at $10
• 667 shares at $15

The $60k invested would buy a total of 3,567 shares at a cost basis of $16.82.

The S&P 500 would be at around 700 at the end of this six-month scenario. Its slow climb back to the 1,400 level -- where it was just last May -- would see the investor's $60k become $180k.

Those are the two ways to approach this market, and neither is particularly stressful. Choose which kind of investor you are, and put the plan in action.

If neither appeals to you, then do absolutely nothing and feel no regret for it. There's no law saying you have to invest in stocks just because so much is going on in the market. Cash is cash, it's great to have, and I'll bet you could put some of it to fine use on holiday shopping lists.

Pasted from <http://jasonkelly.com/>

 

[Guest2]

Magic Eight ball would probably be as accurate as anything else in this market. Why not give that a try?

My M8B said; Who do you think I am, The Oracle of Omaha ? :nuts:

Darn thing never gives me a straight answer ! :toung:

 

[Birchtree]

How did we gert into this mess in the first place? As in the 1920s, the current crisis started with a mania - housing appreciation. But manias always have a cause. If you investigate individually the manias that the market has dubbed over the years, in every case, it was expansive monetary policy that generated the boom in an asset. The Fed money supply is pumping around 12% after being flat for the last eighteen months - I actually heard the expansion rate is now closer to 25%. I think the next asset bubble will be in the S&P type equities which is the C fund. Grab'em cheap while you can. Fear and panic means you are now unusually prone to acting on a gut feeling, instead of thinking. I will be buying tomorrow regardless of the market's actions. The S&P 500 is down 42% from the October '07 highs - it took 2.5 years from 2000-2002 for a drop of 50% - expect a big V rocket blast at any time.

 

[KevinD]

Here's a recent article from Jason Kelly

<snip>

Pasted from <http://jasonkelly.com/>

Thank you for that article and link. Much appreciated!

 

[XL-entLady]

Thank you for that article and link. Much appreciated!

Glad you enjoyed it. There was a radio show host on the east coast (can't remember his name) who used to say something about a friend being someone who thinks you're a good egg even though he knows you're cracked. I'm glad you agree!

Lady

 

[Guest2]

Glad you enjoyed it. There was a radio show host on the east coast (can't remember his name) who used to say something about a friend being someone who thinks you're a good egg even though he knows you're cracked. I'm glad you agree!

Lady

Schmerconish ?

 

[XL-entLady]

Glad you enjoyed it. There was a radio show host on the east coast (can't remember his name) who used to say something about a friend being someone who thinks you're a good egg even though he knows you're cracked. I'm glad you agree!

Lady

Schmerconish ?

No. I had to google it because it was bugging me that I couldn't remember the name. It was Bernard Meltzer. I never heard his show but a book I was reading had some of his stuff in it.

Lady

 

[Guest2]

No. I had to google it because it was bugging me that I couldn't remember the name. It was Bernard Meltzer. I never heard his show but a book I was reading had some of his stuff in it.
Lady

Keeping it in the family, he could be related to "Big Al" Meltzer
of NBC10. He was a Sports and News Commentator for years
in the Philadelphia area.

 

[The HalfBreed]

Well, thanks for the responses, and 'other comments'.

I've decided to continue investing at what I consider the LOWS of this market. I'm putting 5K or so from the F fund every month, over and above my normal contributions of $600.00/pp into the C fund. It may take a little time to move it all, but I moved 10K into the C fund over the past few days, and I have to wait until Nov to continue this movement of funds. Buy Low, sell high.

When there's a sale going on, I run INTO the store, not away from it.

Things that make ya go Hmmmmmmmmmmm.......

 

[2EASY]

I hate being limited to 2 moves a month!!

Dow Jones closes up nearly 900 points, giving more than 10%

 

[Birchtree]

What's to say we can't get three more days just like today. The biggest surprise for the majority would be for a day to day advance in the face of all the gloom and doom.

 

[TRAFFIC_DOG]

When you are always all in, and not savy enough to harvest some cash when everyone thinks higher prices are ahead........

All you have are pom poms and hope at the depths.

The true guts are to sell during high times to truly fill the rocket with cheap fuel before blast off, when everyone else is running away from the launch pad.

I'm adding more than a few measly drops while we wait.

 

[Birchtree]

You are my hero - do it. Will you declare a $140K profit this year to the IRS? I didn't think so.

 

[CapeChem]

I decided to jump in two days before the largest one day loss......which, i guess forced me to stay in C to try and recoup someday....and low and behold i see the second largest one day gain........anybody got some dramamine, I am sea sick.

 

[TRAFFIC_DOG]

You are my hero - do it. Will you declare a $140K profit this year to the IRS? I didn't think so.

Try to focus.
1.TSP talk
2.C fund thread

IRS is not involved.

Keep cheerleading though, while the others are getting it done on the field.

 

[Birchtree]

You are wrong - the IRS is involved because you get to reduce your AGI with your contributions. You are saving taxes now and will pay later on withdrawl at your income tax rate as ordinary income.

 

[TRAFFIC_DOG]

You are wrong - the IRS is involved because you get to reduce your AGI with your contributions. You are saving taxes now and will pay later on withdrawl at your income tax rate as ordinary income.

You really can't focus.

I suppose that's why your never sell, child like simplicity is all you can handle. Maybe the next ten years will work better.

Will you declare a $140K profit this year to the IRS? I didn't think so.

IRS taxes the profits when they are taken as ordinary income.

No declaration to anyone this year.

Really though..... try to focus. I think you can if you try.