What is a "FV" and how does it work?

[Gilligan]

How does that relate to the FV?

Say, one night the Nikkei and FTSE are down. The US markets gain 3% on some great news. You run to your computer and go 100% I-Fund and you know that you are fixing to make a bundle. Now Barclays is getting tons of orders to buy I-Fund shares but the foreign markets that trade those shares are closed. So Barclays has to predict what they can buy the EAFE shares for when the markets open up. Since the foreign markets generally follow the US markets, Barclays imposes a 3% FV.

It's starting to make sense, and can understand why a lot here are calculating what the FV would be on a certian day after trading.

Let me build a word problem and see if I'm close. I'll use this past Friday as an example (08/24/2007).

Nikkei was down slightly at close.
FTSE were basically flat.
US Market had a bit of positive bounce.

So the I fund should get a +FV (minus a possible 3% to zero value, or I guess could be said no FV) on Mondays close, +/- any FTSE gain/loss.

My hedge is, the FTSE will rally somewhat on Monday, a decent payday.

My other hedge is (using market forcast data of course) the US Market bounce will fall back harder than an anchor onto a pillow filled with Chinese chicken feathers Tuesday after the FTSE closes. Think they call that the dead cat bounce here
:

It has been assumed that Barclays calculates the FV from the EAF from about noon to market close. EAF moved from 77.5 to 78.3 during that time frame for a change of 0.8, or just over 1%, that’s close to the .21cents that 350Z calculated.

Now Monday we should have a Fair Value Correction (FVC) of minus 21 cents, but the overseas markets should rally enough to take care of that. Now if the USM tanks in the afternoon and we close 1% or more in the red, we could see a –FV on top of the FVC.

I do an IFT to be out of the I fund Monday night. I get to take the FV (+ or -) with me to the other fund. Lets use G as an example. The G doesn't pay it's penny until Tuesday close, and COB the IFT picks up the penny.

Thats correct, but IMO the penny will pay on Monday.

STOP

Anywhere close?

Close enough,
I hope that I haven’t dazed and confused you any more.
Gilligan

 

[Rustynutt]

So assuming nothing occurs in the USM on Monday, and the FTSE didn’t do anything either, the I fund could be down the 21 cents even with gains neutral. All hypothetically of course.

I caught my penny mistake on the G fund shortly after posting this while visiting the TSP site. It's about a day over due from the looks of past payouts. I’m trying understand this, without thinking of the implications however J

mY KEYBOARD JUST WENT ASCII ON ME!

 

[budnipper1]

I caught my penny mistake on the G fund shortly after posting this while visiting the TSP site. It's about a day over due from the looks of past payouts. I’m trying understand this, without thinking of the implications however J
mY KEYBOARD JUST WENT ASCII ON ME!

I've stopped worrying about the G-penny payday. A $100,000 (hypothetical)TSP account balance, 100% invested in the G fund, would hold 8278.1457 shares at $12.08/share and earn a grand total of $82.78 on the next penny payday. For me, moving to G is only for avoiding losses in the other funds. Unfortunately, I never seem to do it at the right time.

mY KEYBOARD JUST WENT ASCII ON ME!
Sorry about that keyboard!​

 

[Gilligan]

So assuming nothing occurs in the USM on Monday, and the FTSE didn’t do anything either, the I fund could be down the 21 cents even with gains neutral. All hypothetically of course.

Thats correct. If the OSM and currency markets are flat then the I fund would lose 21 cents.