TSP Inverse Fund

[tsptalk]

I'm not sure if you need to be logged into Facebook to see this post from one of our members. He's trying to get a petition going to add an inverse fund to the TSP...

https://www.facebook.com/tsptalk/posts/679604635413634

I'm not trying to get a discussion going here, although you are free to comment. Just passing it along. Perhaps discussing it on that Facebook page would get some views.

 

[nnuut]

Going SHORT would be good but we would need more IFTs! IMHO

 

[tsptalk]

I agree that would be a priority over the inverse fund.

 

[JTH]

I would love to have an inverse fund, I doubt it will ever happen. The timing just isn't right, when you consider the markets made 30% last year. In addition, this would go against the Feds policy of providing liquidity into the markets, essentially we are asking for a fund that shorts the government.

Regardless, if the petition gets published, I'll sign it.

 

[Warrenlm]

Just a thought, in case this phrase is going to be seen by deciders on the issue: "Unfortunately, in a falling stock market, participants are NOT ABLE to benefit as the players on Wall Street can." ......might be better received by those deciders if it said..... "Unfortunately, in a falling stock market, participants are NOT ABLE to act as private sector investors can. "

 

[Boghie]

Just a thought, in case this phrase is going to be seen by deciders on the issue: "Unfortunately, in a falling stock market, participants are NOT ABLE to benefit as the players on Wall Street can." ......might be better received by those deciders if it said..... "Unfortunately, in a falling stock market, participants are NOT ABLE to act as private sector investors can. "

WarrenLM,

We simply do not have a safe fund that will move inversely if the equity markets drop. The 'F Fund' is in correction as I type. It does not have the room to buffer an equity correction. It will stay in correction.

And, with the FED ending QE, what happens to the 'G Fund'. We (the Imperial We as in the Federal Gubmint!!!) have sustained enormous debt growth - much of which the FED purchased. Remember also that the Treasury seems to enact extraordinary procedures every year to float their debt habit. Those extraordinary procedures are raids on your pension and 'G Fund' assets. The 'G Fund' rate of return should go up to entice the purchase of those assets - but that rate is artificially created by the Gubmint. Who is to say they will not both 'borrow' from the 'G Fund' and artificially depress the interest rate. They got to grab the easy money where they can!!!

So, back to this thread... With the high probability of F/C/S/I funds moving in the same direction during an equities correction the only asset class we have available is the 'G Fund'. And, the market does not control the 'G Fund'. While I would not really want an inverse fund I would like a REIT, a true cash fund, an emerging markets fund, and a commodities fund.

 

[Play_the_Extremes]

I have decided to publish my petition to the White House on on January 15th. I will have the link to it, and I will post it on the TSP Talk Facebook page. All who have a vested interest can then freely disseminate the link to whomever. By the rules set up from the White House, 100,000 signees will be needed within the 30-day limit from date of publishing. If this comes about, then the White House will release an official response. I will be monitoring comments to this post on FB/TSP Talk, and reply as needed.

 

[tsptalk]

I will sign the petition and help spread the word since I'd really like to see an inverse fund, but I think we'd be taking on the wrong fight as nnuut mentioned. I would guess that an inverse fund petition might generate a couple hundred responses while an increased in the limit of monthly IFT's might get thousands, maybe 10's of thousands. 100,000 for any TSP related change is a little ambitious and would take some work. I think we'd be hard-presses to find 100,000 federal employees / military personnel who would know what an inverse fund is or what to do with it. I'm with you, but just keeping it real.

 

[nnuut]

I'll sign that one!

 

[wavecoder]

in the past i would have been all for it, but eh I've adopted a different strategy. being in cash during a market down is the same as winning to me.

if there's an inverse fund we'd definitely need more IFT's to really take advantage of it, and I don't see it happening unfortunately

 

[MrBowl]

An Inverse Fund would be pretty dangerous...don't know if I'd use it. I have occasionally bought SDS shares in my trading account and I've learned a lot of lessons. The need for more IFTs is important because those vehicles tend to only go up for short durations. Afterall, the overall trend of stocks is upward, so timing is essential.

That being said, I'm all for having more freedom and choices. I would use a commodities or energy or precious metals fund more, I suspect. I also wonder why a NASDAQ tracking fund has never come about...is it because its close enough to the S Fund?

Even more important to me is to eliminate the transaction lag. I most want my transactions to be instantaneous, or as close to that as possible, with no deadline.

 

[Play_the_Extremes]

I will sign the petition and help spread the word since I'd really like to see an inverse fund, but I think we'd be taking on the wrong fight as nnuut mentioned. I would guess that an inverse fund petition might generate a couple hundred responses while an increased in the limit of monthly IFT's might get thousands, maybe 10's of thousands. 100,000 for any TSP related change is a little ambitious and would take some work. I think we'd be hard-presses to find 100,000 federal employees / military personnel who would know what an inverse fund is or what to do with it. I'm with you, but just keeping it real.

We need to start somewhere--as Wayne Gretzky once said: "You miss 100% of the shots you don't take." I started with the Inverse funds idea because I want to profit significantly in a falling market. No matter how many IFTs one might do in the course of one month of a falling market, going to the G fund does't really profit. Notwithstanding this, it is quite possible that--should this petition get the attention of the White House--the policy makers may even throw in extra oomph in the form of more ITFs. This petition will get the ball rolling, so regardless of whether we make the 100,000 signee minimum--and if it does, but the White House response doesn't voluntarily include more IFTs-- I will put out part two (more IFTs) to carry on the fight to improve TSP.

 

[Play_the_Extremes]

1/15/14...I have published my PETITION to the WHITE HOUSE today. Here is the direct link to it http://wh.gov/lIsIg
Please take time to read it, sign it, then disseminate it as widely as you can. By the rules set up from the White House, 100,000 signees will be needed within the 30-day limit from date of publishing. If this comes about, then the White House will release an official response. I will be monitoring comments to this post, and reply as needed. Below is the official White House petition as it now reads...


###################################################################


WE PETITION THE OBAMA ADMINISTRATION TO:
Give Federal and Miltary personnel more robust funding options to their TSP Retirement Plan.


Currently, TSP provides for five major funding options:
G fund (money market), F fund (fixed income), C fund (S&P 500 Index), S fund (small cap index), and the I fund (International). Unfortunately, in a falling stock market, participants are NOT ABLE to benefit as the players on Wall Street can.


Inverse Funds would be the fund asset that helps significantly to level the playing field with Wall Street. For example, if the C fund were to fall in price by 5% over the course of a month, then the inverse fund to it (call it -C, let's say) would rise in price by 5% during the same timeframe. Inverse funds could be created for the F, S, and I funds as well. Profiting from a down market will have a monumental impact on the growth of federal/miltary TSP retirement plans.


###################################################################

 

[nnuut]

I just signed the PETITION #3, best of luck!

 

[wavecoder]

i'd much rather have leveraged options than inverse funds. say like something equivalent to SPXL or TNA

 

[tsptalk]

Unfortunately, there is probably zero chance of that happening either (leveraged fund) just as asking for an inverse fund, while desirable, is a waste of time in my opinion, and would probably take away from any effort to get an increase in IFT's.

I'm sorry to say this because I back what you are doing and would welcome an inverse fund, but the reality is the chances of getting 100,000 signatures for an inverse fund is zero. If you get a couple of hundred signatures I'd be surprised, and the downside is that if and when we ever try to do this for an IFT increase, we would lose folks from participating because of the lack interest in this petition. I'll sign it but I'm not sure I want to waste too much time and effort on it.

 

[tsptalk]

OK, I signed it and posted it on TSPTalk's Facebook and Twitter pages.

(I also sent out an email our entire list). :embarrest:

Good luck!

 

[DrFaustus]

I think I am against creating more funds as well.

Our leadership has the mistaken notion that the TSP is a low cost (overhead) investment option. The reason they have this idea is because most people who invest in the TSP are "buy-and-holders" - they leave their money in the G fund and never move it around anywhere. Thus, because most of the TSP community are complacent investors, there is relatively little cost because there were relatively few trades.

Several years ago, our leadership freaked because some of us ( mostly members of TSPTalk, I believe ) were moving money into and out of the I-fund on an almost daily basis. As the I-fund was the most costly investment option, all of these buys and sells began inflating the overhead cost of the TSP. Our leadership reacted to this by taking the action of reducing the number of IFTs we are allowed, thus reducing TSP overhead costs back down to an acceptable level.

I believe that adding more funds to the TSP would cause even more members to make IFTs, thus increasing the pressure for the TSP board to react again. It's my guess that they would reduce the number of IFTs back to what it was - once per month.

This would be BAD.

 

[No-Hackle]

I am wayyyyy more interested in increasing the number of monthly IFT's from two to a higher number. I appreciate the effort to try and change things, but let's focus on the real need, lift the monthly IFT cap.

 

[Play_the_Extremes]

I want to address the comments about what members preferences are regarding improving TSP. The reality is that this is a long-term fight to improve the TSP Retirement Plan, so the best direction to go in is to get the word out to the uninformed TSP participants who know nothing about investing, much less about inverse funds. It's an uphill battle all the way; what needs to happen is to make them realize that TSP is actually in need of improvements, regardless of what anyone thinks those improvements might be. In order to get recognition from the White House, TSP participants need to demonstrate that they are united as one voice; even if one doesn't agree with another, we must all agree to support change. To give an example, let’s think of ourselves as a trade union. In order to accomplish anything, there needs to be membership support of an issue. So, if each of us votes ONLY for our own individual agenda, then we will have multiple factions that compete against each other. Thus, we all need to vote as one for one very important reason: to make change happen. So, whether you are in favor of inverse funds or not, in order to get ANY improvements to the TSP system, we need to demonstrate to the Powers that Be that we vote as one, even though privately one may not agree with another’s opinion. United, we stand, Divided, NOTHING happens!