TSP board to limit interfund transfers

[Babo]

Hmmm....doesn't look like this recent change will affect my investing strategy negatively at all. In fact, it seems to me that the savings they get from not letting you all trade 20 times a month will be passed on to me with a lower expense ratio. I think I'll send a letter to thank the board.

Seriously though, TSPtalk.com traders will likely have the exact same AVERAGE return trading 4 times a month (2 out of G fund, 2 back in) as they had trading 20 times a month. Don't forget the lesson of the monkeys. While you personally MIGHT have some market timing skill (but are probably just lucky that year), there are just as many who are unskilled (or more likely just unlucky) that on average you do no better than buying and holding.

As of 11/16 holding 20% each (a truly know-nothing portfolio) had returned 6.73%. Those of you who were tracked all year had a high return of 18.95% and a low of -8.12% (holy shiza Tom, all 5 funds are positive and you're down 8%? How is that less risky than buying and holding again?). 44 are beating the know-nothing portfolio and 46 are trailing it. Seems like an awful lot of effort to just get the same average return as just going 20% each. But hey, knock yourselves out writing your congressman. They probably used your returns as evidence that people didn't get any benefit from being able to trade on a daily basis. If they did, I'd have to say I agree with them.

[FONT=&quot]If the underlying rationale for 3000 individual tsp traders was, on average, random, we would "likely" not be having this discussion. In fact, if this were true, the TSP board wouldn't "likely" need to execute major transactions on a daily basis to balance funds (that is except for the folks in the L funds).

I for one would rather be a monkey out of the cage than a human in one, any day of the week (and especially when the VXO is hitting 10 to 30+).

Please keep the monkeys free.....let them eat bananas made of gold, or dirt, as the case may be. If the $4/year this costs the "sheep" is too much, they are myopic beyond belief. Half of those 3 million some odd TSP'ers probably spent more than that on their latte and biscotti this morning anyway....you wanna talk about irrational...now that's irrational![/FONT]

 

[NASAguy]

I'm not quite sure how much of this is just talk and how much is real. I see the article, but the limits for transfers are specifically addressed in the law that governs the TSP. Therefore, I'm not sure the Board can just change the rules as stated in the article.

Here is a link to the code: http://a257.g.akamaitech.net/7/257/...ccess.gpo.gov/cfr_2007/janqtr/5cfr1601.32.htm

See the last few lines.

 

[fabijo]

I'm not quite sure how much of this is just talk and how much is real. I see the article, but the limits for transfers are specifically addressed in the law that governs the TSP. Therefore, I'm not sure the Board can just change the rules as stated in the article.

Here is a link to the code: http://a257.g.akamaitech.net/7/257/...ccess.gpo.gov/cfr_2007/janqtr/5cfr1601.32.htm

See the last few lines.

Thanks for the link, NASAguy. I believe someone else posted it here or elsewhere, but it's good to have a reminder. So far, the letter we read was a recommendation and not necessarily something that will be implemented. We haven't read Greg Long's reply to the letter, if there is one. But, there is some discussion going on speculating that Saul Andrew is involved in this fiasco. For all we know, he could be trying to change the CFR.

For those who haven't read the section of the Code of Federal Regulations, here it is:

Limit. There is no limit on the number of contribution
allocations or interfund transfer requests that may be made by a
participant.

 

[fabijo]

Check this out from Andrew Saul's campaign site. He mentions his activities with the TSP along with reducing fraud and waste:

Reducing Fraud and Waste – My time in the public and private sector has provided me with the experience necessary to help eliminate fraud, reduce waste and increase productivity in government. I have brought two failing companies back from the edge of bankruptcy; as Chairman of the federal retirement system, I brought new efficiency to the administration of the retirement funds of millions of government employees, translating into millions of dollars in savings. I know that with hard work and dedication we can reduce the fraud and waste that plagues our federal government. This will help us cut taxes, reduce spending and move towards eliminating the national debt.

 

[kaitlinsnana]

I think I'll just keep quiet on this matter.

Good idea -- since this is just play money to you and you're already a millionaire and two trades a month works for you. Very good plan to sit this one out.

Gail

 

[fabijo]

And here's some more crap from his site:

Andrew, after U.S. Senate confirmation in 2002, serves as Chairman of the Federal Thrift Investment Board. As Chairman, Andrew manages the retirement funds for most federal employees, including Military Personnel and Postal Service employees. Andrew’s accomplishments with the Federal Thrift Investment Board include cutting operating expenses by over $20 million while helping to grow the plan by over $2.5 billion a month. When Andrew began as Chairman, the fund was valued at $98 billion, under his leadership he has grown the fund to $225 billion. It is the largest retirement fund in the United States of America, providing retirement security for more than 3.7 million participants.

And what is he talking about, "grown the fund to $225 billion???" How did he grow it?? I thought people's deposits combined with fund returns grew it. Between 3 million participants, that kind of growth equates to $42,333.33 per person from 2002 to 2007. So, in 5 years, each person merely added less than $8500 a year to their account - maybe even less since some of that could be agency matching. And none of that includes the percentage gains of any of the funds.

 

[Talltimber]

What ever happened to less regulation and free capitol markets? Oh wait, that doesn't apply to the working middle class. Silly me, what would I do with a nice new car and a fancy house anyway?

 

[GGal]

I think God is trying to tell us something.

More and more people are doing without basic necessities in this country......it is the holiday season, a time for sharing, a time for concern about each other......and all we can do is whine about our # of transfers allowed.....I wonder, have we gotten greedy.....

I don't have a good feeling about this.

But please forgive me, I'm from the South, and guilt is an important part of my heritage.

GGAL

 

[udvare]

Typical government!
We have a successful program that is becoming popular and is being utitized. What is the response of the Bureaucrats? Lets stop it!
How dare those people do this! They are dangerous and need to be protected from themselves.

And there are people who think we should socialize our medicine. Do you want this type of thinking governing your health!?

 

[Wrngway]

More and more people are doing without basic necessities in this country......it is the holiday season, a time for sharing, a time for concern about each other......and all we can do is whine about our # of transfers allowed.....I wonder, have we gotten greedy.....

GGAL...you're right in that we shouldn't lose perspective of what really matters in life, but I don't think the two are mutually exclusive. If, God forbid, I'm not around later in life to take care of my family, I want them to have some financial security. Practically speaking, trading limits do not help.

This from a Southern/Yankee hybrid...from Maryland no less...

 

[kam]

Typical government!
We have a successful program that is becoming popular and is being utitized. What is the response of the Bureaucrats? Lets stop it!
How dare those people do this! They are dangerous and need to be protected from themselves.

And there are people who think we should socialize our medicine. Do you want this type of thinking governing your health!?

I disagree with your premise. The current Executive Director of the TSP, "these people," would be one for privatizing Social Security (another successful program that is "popular and being utilized"), and given his political profile, would also, no doubt, be against "socialized medicine." He's a political appointee of Bush.

 

[FUTURESTRADER]

And here's some more crap from his site:



And what is he talking about, "grown the fund to $225 billion???" How did he grow it?? I thought people's deposits combined with fund returns grew it. Between 3 million participants, that kind of growth equates to $42,333.33 per person from 2002 to 2007. So, in 5 years, each person merely added less than $8500 a year to their account - maybe even less since some of that could be agency matching. And none of that includes the percentage gains of any of the funds.

and the participants, as they become more educated, will withdraw the bulk of their funds for a better serviced IRA at least with more options.

 

[Hardcorps]

http://www.federalnewsradio.com/index.php?sid=1296249&nid=250
I posted one yesterday, here's another.

 

[Skidude78]

Compare to other retirement plans

I did some research on the Calpers retirement plan to see what their policy was on interfund transfers. It's similar to what we have now. Once a day by a deadline. The limit is once a day. They don't seem to have any problems with it. I also noticed that they offer the option of SMA (self managed account) where you can use a contract brokerage and manage your own account. I think that's the direction that TSP needs to go. Why don't we have any utility funds or natural resource funds? I say fire the whole board and start from scratch, it would be an improvement.

 

[kam]

http://www.federalnewsradio.com/index.php?sid=1296249&nid=250
I posted one yesterday, here's another.

This is very informative.

1) It's all about cost - (nothing about "accidently hitting a button")

2) 0.08% cost of trading I fund

3) 2 - 3 thousand people doing this

4) The I want to protect you from yourself speech - "not the purpose of changing this, but an outcome will be to protect those traders, blah blah"

5) Looked at fees, but a) expenses come from market impact and hard to charge b) expenses from buy and sale side and c) would hurt infrequent traders - penalize those people Then why not charge for trades after a fixed amount per month?

6) Not unusual to have trade restrictions - Vanguard makes participants wait 60 day before repurchasing any one fund.

7) Take affect March or April of next year. Do they need to change the CFR then?

8) In the interim, (the board) "got permission (FROM WHOM????<< Anybody know?) to implement a temporary restriction" - will send letters to those 3000, "in the meantime, can IFT, but by mail only." Every trade?? Or after the 2 per month?? Not stated.

5) Not much feedback coming in on their Thriftline. Where is this?

 

[NASAguy]

The contact information is located here: http://www.tsp.gov/features/def_ch1-TSP-service-office.html

I only see phone and fax numbers. I intend on faxing a letter to them today.

 

[kam]

My personal suggestion is that everyone call their Senators and Congress Person. If you have a Senator on the Committee on Homeland Security & Governmental Affairs or the House Committee on Oversight and Government Reform, it is even more urgent you contact one of them.

Senate Members:

http://www.senate.gov/~gov_affairs/index.cfm?Fuseaction=About.Membership


House of Representative Members:


http://oversight.house.gov/about/members.asp


They would have to change, or have changed, the CFR 1601.32 to have limitations to trades implemented:

(b) Limit. There is no limit on the number of contribution
allocations or interfund transfer requests that may be made by a
participant


Personally, (see previous message), I would like to know who gave the TSP Executive Board "permission" to implement the interim strategy from December to the March/April date of implementation.

 

[ayla]

Hmmm....doesn't look like this recent change will affect my investing strategy negatively at all. In fact, it seems to me that the savings they get from not letting you all trade 20 times a month will be passed on to me with a lower expense ratio. I think I'll send a letter to thank the board.

Seriously though, TSPtalk.com traders will likely have the exact same AVERAGE return trading 4 times a month (2 out of G fund, 2 back in) as they had trading 20 times a month. Don't forget the lesson of the monkeys. While you personally MIGHT have some market timing skill (but are probably just lucky that year), there are just as many who are unskilled (or more likely just unlucky) that on average you do no better than buying and holding.

As of 11/16 holding 20% each (a truly know-nothing portfolio) had returned 6.73%. Those of you who were tracked all year had a high return of 18.95% and a low of -8.12% (holy shiza Tom, all 5 funds are positive and you're down 8%? How is that less risky than buying and holding again?). 44 are beating the know-nothing portfolio and 46 are trailing it. Seems like an awful lot of effort to just get the same average return as just going 20% each. But hey, knock yourselves out writing your congressman. They probably used your returns as evidence that people didn't get any benefit from being able to trade on a daily basis. If they did, I'd have to say I agree with them.

Do you really not understand the definition of a "learning curve"? or "education" or "training"? I have learned a tremendous amount and currently have a pretty good strategy as reflected in some back testing (doesn't show yet, takes time to have a good record).

Don't you realize that most of us (though not all) are new to trading? When developing strategies, there are going to be mistakes of course. I hope you don't have any children. If you do, they will grow up to be cripples because of your philosophy that if one makes a mistake, they should immediately put themselves in the hands of experts without trying to figure out how to solve the problem themselves.

My signature says it all.

 

[Elgallo]

Someone said it earlier, an I agree completly, allow us to contribute BOTH the employee AND employeer bi weekly contributions to a private brokerage of our choice. Takes care of the problem immediatly I would say.

This will never happen because as it is an issue of THEM wanting to control OUR money, and imposing inane restrictions such as this, and there are others I could cite. Such as; why do I have to wait 6 months after I payoff a TSP loan before I can again, now get this, borrow my own damn money!

When you retire, you can only redefine once a year the amout of YOUR money you can withdraw! How bout dat! Then they turn around and FORCE your to take minimum distributions at age 70.5. Go figure, government CONTROL think at it's finest!

In retirement we need to insist on the ability reallocate distributions at will, anytime. Again it's OUR money!

 

[k2ds]

"My personal suggestion is that everyone call their Senators and Congress Person. "

Contact my Senator, Hell she too busy running for Pres and the other one, who knows what he's doing. But I already sent letters to both and to our new Congresswoman. Lets see how far that goes!! But I have got to tell you, I am SO Glad that they are looking out for me and watching that I don’t hurt my self by hitting the wrong button.. I must admit I am one of the dreaded 3000 or was it 2018. Oh Well..