We've all seen how bonds have been a relatively safe place to harbor your cash off the March 2011 bottom, and the F-Fund has responded in kind with a nice 3.76% YTD return. This is more than twice the performance of the G-fund, so someone might wonder why I haven't IFT'd into the F-fund once in 2011? It's really quite simple, I'm operating under the "less is more" concept where I've been concentrating my efforts on fewer positions, less risk, and less exposure.
Fewer Positions: By working with only the G-Fund and the S-fund this year, I have less positions to choose from. This helps me to filter out the additional noise that comes from trying to figure out which is the best of 5 funds to choose from. Instead of the five choices of GFCSI-funds, I now have 2 choices, this simplifies my decisions and more importantly gives my decisions more conviction.
Less Risk: Although the F-fund does have less risk than stocks, nevertheless it's still risk and I don't like to lose money no matter how small the amount. Over the years I've had mixed results with both the F-fund and the I-fund, sometimes the entry/exit is for the better and other times it's for the worse. When you enter & exit these positions you're never absolutely sure what price you'll get. It's hard enough to deal with the 12 Noon cutoff in conjunction with End-of-Day prices, so why add the additional uncertainty that comes with the F&I funds? The I-Fund is the worst of the 5, you're not just playing the I-fund, you're accepting the risk that comes from investing in 3 major currencies, and 22 countries. Over the previous 5 years the I-fund has averaged 2.61% per year, is this the kind of risk/reward outcome you'd be happy with?
Less Exposure: Back on May 6, 2010 I was invested during the famous Flash Crash where the DOW industrials dropped nearly 9% in a day with a 1,000 point intraday swing. Looking back I keep thinking I wasn't invested and I had escaped the entire event, but the truth is I was invested throughout the entire time. I jumped into the S-fund the day before, and exited 12 May with a meager & grateful .20% profit. What followed was 2 more months of pullbacks, and it took 6 months to re-visit the previous 2010 top. Like others, I was disgusted with the feeling I was not in control of my money and could easily lose 9% in one day without warning. It was at that time I began to think of not being invested as an investment strategy. My goal for 2011 has been to be invested for less than half the time while maintaining performance on par with the S&P 500.
So there you have it, less is more...Jason
Fewer Positions: By working with only the G-Fund and the S-fund this year, I have less positions to choose from. This helps me to filter out the additional noise that comes from trying to figure out which is the best of 5 funds to choose from. Instead of the five choices of GFCSI-funds, I now have 2 choices, this simplifies my decisions and more importantly gives my decisions more conviction.
Less Risk: Although the F-fund does have less risk than stocks, nevertheless it's still risk and I don't like to lose money no matter how small the amount. Over the years I've had mixed results with both the F-fund and the I-fund, sometimes the entry/exit is for the better and other times it's for the worse. When you enter & exit these positions you're never absolutely sure what price you'll get. It's hard enough to deal with the 12 Noon cutoff in conjunction with End-of-Day prices, so why add the additional uncertainty that comes with the F&I funds? The I-Fund is the worst of the 5, you're not just playing the I-fund, you're accepting the risk that comes from investing in 3 major currencies, and 22 countries. Over the previous 5 years the I-fund has averaged 2.61% per year, is this the kind of risk/reward outcome you'd be happy with?
Less Exposure: Back on May 6, 2010 I was invested during the famous Flash Crash where the DOW industrials dropped nearly 9% in a day with a 1,000 point intraday swing. Looking back I keep thinking I wasn't invested and I had escaped the entire event, but the truth is I was invested throughout the entire time. I jumped into the S-fund the day before, and exited 12 May with a meager & grateful .20% profit. What followed was 2 more months of pullbacks, and it took 6 months to re-visit the previous 2010 top. Like others, I was disgusted with the feeling I was not in control of my money and could easily lose 9% in one day without warning. It was at that time I began to think of not being invested as an investment strategy. My goal for 2011 has been to be invested for less than half the time while maintaining performance on par with the S&P 500.
So there you have it, less is more...Jason
