What YOU can do to fight back - IFT limit

[Viva_La_Migra]

Ralph Smith of FedSmith.com just put out another article on the proposed IFT restrictions today. Here is the link:

http://www.fedsmith.com/article/1434/

I just posted a comment to his article and told him to go back and do some real research on what the actual and projected expenses of the TSP are, instead of just quoting the nonsense they put out in their press releases. Mr. Smith wants to perpetuate the myth that 3,000 traders are causing a huge surge in expenses, when that is BOGUS! As we have previously discussed here, the Sept. 2007 Meeting Minutes of FRTIB and numerous other sources all indicate that TSP expenses are low, and getting lower!! We are down to about 2 basis points now (as contrasted to 10 basis points 5 years ago), and Greg Long, Exec. Director of FRTIB, projects that they will decrease further over the next few years, as TSP assets increase (they are increasing now at the rate of about $2 billion/month). All of this information is readily available, yet Mr. Smith takes the lazy approach and simply passes on the B.S. that he reads in the TSP press releases. I suggest everyone write to him and set him straight!!!

I didn't see your comments, but I submitted a post of my own. Here is what I submitted:

"The reason people like me move funds around frequently, is because we want to build up our retirement funds. Our retirement system relies too much on Social Security, which I believe will not be there when I retire. I have twenty years to go until my mandatory retirement age (I'm 6c covered), and I want to maximize my retirement.

There are other ways to deal with this issue than limiting the number of trades per month. For example, one of the biggest problems with the I fund is the Fair Valuation. The TSP Managers right now have to guess what the price will be at the closing of the overseas markets, which doesn't happen until well after the closing of the US Market. Lately, the market has been too volatile, and the Managers are guessing wrong, which drives up costs. Why don't they simply show the price the next morning, when all of the markets have closed for the day?

Oh, we are not day traders. We are active traders! There is a BIG difference!"

 

[Wrngway]

Ralph Smith of FedSmith.com just put out another article on the proposed IFT restrictions today. Here is the link:

http://www.fedsmith.com/article/1434/

Yup, that guy is something else. Here is the response I made to the previous article:

I noticed you pulled some prices and did a little research for the days sited as examples for participants trading into and out of the I-Fund. You then go on to state the closing price on October 31 to demonstrate the profit that would have been made if the investors had maintained their shares in the I-Fund.

I took a look back at that price and those since. I couldn't help but notice that you chose the highest closing price since that time on 31 October. If you want to lend more credence to your article, you might want to keep from cherry picking data to present your case. You may even want to present an objective viewpoint in your articles as opposed to parroting back anything supporting your position.

 

[Show-me]

Alright kids we need to put the pressure on. I talked to Myke Reid the APWU ETAC rep. and he said I was his second call. That is weak! Call'em all, leave a message, write a email.

United States Postal Service folks, we are the largest represented group. Get the word out to our co-workers. Here are the contacts, call them ALL even if you are not affiliated directly with each organization.

ETAC is planning a meeting mid-December and we need them to hear our voices loud and clear.

National Association of Postmasters of the United States
Dale Goff, President
8 Herbert Street
Alexandria, VA 22305-2600

Voice: 703-683-9027
Fax: 703-683-6820
General e-mail: napusinfo@napus.org

American Postal Workers Union, AFL-CIO
Myke Reid, Director Legislative Dept.
1300 L Street NW
Washington, DC 20005

(202) 842-4210

National Association of Letter Carriers, AFL-CIO
James Sauber, Research Director and
Chairman of ETAC
100 Indiana Avenue, NW
Washington, DC 20001-2144

JSauber@NALC.org
(202) 393-4695 or (800) 424-5186 for NALC Retirement Dept.

National Association of Postal Supervisors
Louis Atkins, Executive Vice President
1727 King Street, Suite 400
Alexandria, VA 22314-2753

Phone (703) 836-9660
Fax (703) 836-9665

National Rural Letter Carriers’ Association
Clifford Dailing, Secretary-Treasurer
1630 Duke Street
Alexandria, VA 22314-3467

703-684-5545

 

[NewBee]

I just read the newest article on FedSmith and admittedly, I don't quite understand the chart that the TSP provided to Mr. Smith.

I have tried to go through the FRTIB FOIA Electronic Reading Room (http://www.frtib.gov/FOIA/index.html), but there's a lot of stuff on there. Has anyone gone through all of the links and seen the information that Mr. Smith is quoting and referencing in the article?

Or did the TSP Board provide this information to him only? If so, is it possible to FOIA all of that communication (emails from TSP to Mr. Smith)? Or perhaps just FOIA all the charts and data the TSP compiled to date on transaction costs.

For one, I would like to see the chart expanded beyond the Aug. 15 - OCt. 31 timeframe along with a good explanation of the chart.

 

[DrFaustus]

Just read through Ralph Smith's article on the TSP traders. One paragraph in particular struck me as peculiar:

"To meet the requirements of the several thousand people who are frequently buying and selling their shares in the I fund, the TSP has to keep money available. In plain English, this means that the millions of dollars required on a given day with a rapidly changing market are kept in reserve. That means that, because of the frequent trading activity, the vast majority of TSP investors are getting a smaller return because less money is invested on their behalf."

Now, call me an idiot ... but what does the phrase "...TSP has to keep money available" mean? Is he saying that my balance in the TSP is not readily available for me to invest at will? And, if not, where the heck is it???

 

[pogo]

i tried to explain to my 14 year old son what is going on with them restricting my movements in the tsp fund. he response was for me to get everyone to move everyday for two weeks in protest. then i told him he would not get his 20.00 dollars allowance then. he said bad idea---but something to think about. BUST THIER AS*

 

[pogo]

Alright kids we need to put the pressure on. I talked to Myke Reid the APWU ETAC rep. and he said I was his second call. That is weak! Call'em all, leave a message, write a email.

United States Postal Service folks, we are the largest represented group. Get the word out to our co-workers. Here are the contacts, call them ALL even if you are not affiliated directly with each organization.

ETAC is planning a meeting mid-December and we need them to hear our voices loud and clear.




American Postal Workers Union, AFL-CIO
Myke Reid, Director Legislative Dept.
1300 L Street NW
Washington, DC 20005

(202) 842-4210



[/B]

mike reid and steve a. albanese has the same phone number and fax'x their fax's is (202) 682-2528 give him hell

 

[ekatteng]

LET'S MADE THE ONE FRONT AND LOUD VOICE OF THE TSP SHARE HOLDERS AT TSPSHAREHOLDER.ORG...
LET'S BE UNITED AND SYNERGIZE ALL OUR EFFORTS AND RESOURCES AT TSPSHAREHOLDER ORGANIZATION....
LET'S CLAIM OUR TSP RIGHTS AND OWENERSHIP OF OUR RETIREMENT BENEFITS AND ACCOUNTS...
LET'S HELP THE TSP BOARD TO SERVE AND SEEK THE WELLBEING OF THE
TSP SHARE HOLDERS...

 

[airlift]

I modified your text and sent the following to Ralph Smith:

"Please go back and do some research on what the actual and projected expenses of the TSP are, instead of just quoting the misleading information put out in somer press releases. Mr. Smith, you seem to want to perpetuate the myth that 3,000 traders are causing a huge surge in expenses, when that is not substantiated! As has been previously discussed here, the Sept. 2007 Meeting Minutes of FRTIB and numerous other sources all indicate that TSP expenses are low, and getting lower!! We are down to about 2 basis points now (as contrasted to 10 basis points 5 years ago), and Greg Long, Exec. Director of FRTIB, projects that they will decrease further over the next few years, as TSP assets increase (they are increasing now at the rate of about $2 billion/month). Mr. Smith, all of this information is readily available. Please double check your sources."

Ralph Smith of FedSmith.com just put out another article on the proposed IFT restrictions today. Here is the link:

http://www.fedsmith.com/article/1434/

I just posted a comment to his article and told him to go back and do some real research on what the actual and projected expenses of the TSP are, instead of just quoting the nonsense they put out in their press releases. Mr. Smith wants to perpetuate the myth that 3,000 traders are causing a huge surge in expenses, when that is BOGUS! As we have previously discussed here, the Sept. 2007 Meeting Minutes of FRTIB and numerous other sources all indicate that TSP expenses are low, and getting lower!! We are down to about 2 basis points now (as contrasted to 10 basis points 5 years ago), and Greg Long, Exec. Director of FRTIB, projects that they will decrease further over the next few years, as TSP assets increase (they are increasing now at the rate of about $2 billion/month). All of this information is readily available, yet Mr. Smith takes the lazy approach and simply passes on the B.S. that he reads in the TSP press releases. I suggest everyone write to him and set him straight!!!

 

[Show-me]

First draft.

Here is a draft I plan to send out in the morning. Please tell me what you think I need to improve it as well as grammar, punctuation, and the whole nine yards. TIA

The FRTIB is planning to imposing interfund transfer restrictions without consent from the participants or the ETAC. These restrictions are in opposition of the Code of Federal Regulation guide lines. They are listed at the end of this brief. As my advocate I want the FRTIB to rescind their decision to impose limits on TSP trades, including the decision to send threatening letters to selected TSP members.

Market impact and fair valuation are the underlying problems cause by the contractual requirement of BGI, Barkley Global Investment, by TSP. That requirement is to settle our trades by the end of each trading day and it be reflected in the share price even though the standard for the market is that it takes 3 days to settle trades.

I can only assume that the “trading cost” referenced in each FRTIB meeting minutes attachments are caused by these unrealistic contractual requirements and mass flight to safety during very volatile months.

For example, trading cost of the I Fund Jan. to Sept. 2007 is $12,240,419. One month stands out, August with $10,522,348 or 32.7 basis point in trading cost. Other months that stand out are February and April with $4,198,802 or 24.3 basis points and $1,489,043 or 11.8 basis points, respectively.

August as a whole was a very volatile month and I would venture to guess that more than just the “3000 frequent traders” made interfund transfers that month. More like a flight to safety after the sub prime news started to come out.

The last week in February was also very volatile, erasing all gains for the entire month in a few days. April would seem to be an anomaly at this point as it was not as volatile as the other two months.

The two most volatile months had the largest “trading cost” and they exceed the YTD total. That would tell me that much more than the “3000” were trading those months and the fact is that the policies and contract for clearing our trades through BGI need to be address more than the number of interfund transfers done by a fraction of participants.

Large moves when the market is volatile causes BGI to delay complete payment of those large trades. This is diluting the fund return also, so it is not JUST frequent trading of the I fund, but the shell game that BGI has to play by buying futures contracts because the contractual requirements to settle IFT daily even thought they are restricted to a 3 day settlement period.

There are a number of solutions to solve these problems.
1. Use indicies or ETF’s that follow TSP fund exactly so that they easier to trade on the open market.
2. Stop fair valuation by posting share prices the morning of the following day.
3. Limit trade in the I Fund only using the 3 day rule for trades to settle.



1. TITLE 5--ADMINISTRATIVE PERSONNEL CHAPTER VI--FEDERAL RETIREMENT THRIFT INVESTMENT BOARD PART 1601_PARTICIPANTS' CHOICES OF TSP FUNDS--Table of Contents Subpart D_Contribution Allocations and Interfund Transfer Requests Sec. 1601.32 Timing and posting dates.
(b) Limit. There is no limit on the number of contribution allocations or interfund transfer requests that may be made by a participant.
2. TITLE 5--ADMINISTRATIVE PERSONNEL CHAPTER VI--FEDERAL RETIREMENT THRIFT INVESTMENT BOARD PART 1601_PARTICIPANTS' CHOICES OF TSP FUNDS--Table of Contents Subpart C_Redistributing Participants' Existing Account Balances (Interfund Transfers) Sec. 1601.22 Methods of requesting an interfund transfer.
(a) Participants may make an interfund transfer using the TSP Web site or the ThriftLine, or by completing and filing the appropriate paper TSP form with the TSP record keeper in accordance with the form's instructions. The following rules apply to an interfund transfer request:

 

[James48843]

Who is the audience for this letter?

 

[ekatteng]

Dr Faustus, with all my respect I think our money is not readily available for us to invest at will. Perhaps they need to be move from the G to I Funds and since it takes sometimes they seems to claim they need to keep millions of dollars on hands... Perhaps the solutions would be to have our money on cash and not on the G fund... Goverment seems to made loans to Social Security and also to TSP if I not mistaken... They borrow money from our TSP in the past... Not to good feelings... Please continue posting your reflexions and sharing your findings with us. Thanks...

Just read through Ralph Smith's article on the TSP traders. One paragraph in particular struck me as peculiar:

"To meet the requirements of the several thousand people who are frequently buying and selling their shares in the I fund, the TSP has to keep money available. In plain English, this means that the millions of dollars required on a given day with a rapidly changing market are kept in reserve. That means that, because of the frequent trading activity, the vast majority of TSP investors are getting a smaller return because less money is invested on their behalf."

Now, call me an idiot ... but what does the phrase "...TSP has to keep money available" mean? Is he saying that my balance in the TSP is not readily available for me to invest at will? And, if not, where the heck is it???

 

[ekatteng]

Dr Faustus, with all my respect I think our money is not readily available for us to invest at will. Perhaps they need to be move from the G to I Funds and since it takes sometimes they seems to claim they need to keep millions of dollars on hands... Perhaps the solutions would be to have our money on cash and not on the G fund... Goverment seems to made loans to Social Security and also to TSP if I not mistaken... They borrow money from our TSP in the past... Not to good feelings... Please continue posting your reflexions and sharing your findings with us. Thanks...

Just read through Ralph Smith's article on the TSP traders. One paragraph in particular struck me as peculiar:

"To meet the requirements of the several thousand people who are frequently buying and selling their shares in the I fund, the TSP has to keep money available. In plain English, this means that the millions of dollars required on a given day with a rapidly changing market are kept in reserve. That means that, because of the frequent trading activity, the vast majority of TSP investors are getting a smaller return because less money is invested on their behalf."

Now, call me an idiot ... but what does the phrase "...TSP has to keep money available" mean? Is he saying that my balance in the TSP is not readily available for me to invest at will? And, if not, where the heck is it???

 

[RAE]

Re: First draft.

Show-me: I made a few edits to your very good draft letter below. See what you think: RAE

Here is a draft I plan to send out in the morning. Please tell me what you think I need to improve it as well as grammar, punctuation, and the whole nine yards. TIA
_______________________________________________________________________

The FRTIB is planning to imposing interfund transfer restrictions without consent from TSP participants or the ETAC. These restrictions are in conflict with the Code of Federal Regulations which govern operation of the TSP. The applicable CFR's are listed at the end of this brief. As my advocate on the ETAC, I hope you will insist that the FRTIB rescind their decision to impose limits on TSP trades, including the decision to send threatening letters to selected TSP members.

I believe that market impact and the way "fair valuation" in the I fund is calculated, is the underlying cause for the problems cited by FRTIB. The FRTIB requires Barclay's Global Investors (BGI) to settle our trades by the end of each trading day and that the new value be reflected in the daily share price, even though the standard for the market is that it takes 3 days to settle trades.

I can only assume that the “trading cost” referenced in each FRTIB meeting minutes attachments are caused by these unrealistic contractual requirements and mass flight to safety by many TSP account holders, during very volatile periods.

For example, trading cost for the I Fund during the period Jan. to Sept. 2007 is $12,240,419. One month stands out - August - with $10,522,348 or 32.7 basis point in trading cost. Other months that stand out are February and April with $4,198,802 or 24.3 basis points and $1,489,043 or 11.8 basis points, respectively.

August as a whole was a very volatile month and I would venture to guess that more than just the “3000 frequent traders” made interfund transfers that month. A more reasonable explanation for high trading costs that month is that there was a "flight to safety" by a much larger number of TSP members, after the sub prime news started to come out.

The last week in February was also very volatile, erasing all gains for the entire month in a few days. April would seem to be an anomaly at this point as it was not as volatile as the other two months.

The two most volatile months had the largest “trading cost” and they exceed the YTD total. That would tell me that much more than the “3000” were trading during those months. The fact is that the policies and contract for clearing our trades through BGI need to be addressed, more than the number of interfund transfers done by a small fraction of participants.

Large moves when the market is volatile causes BGI to delay complete payment of those large trades. This is diluting the fund return also, so it is not JUST frequent trading of the I fund, but the shell game that BGI has to play by buying futures contracts, because of the contractual requirements to settle IFT by 6 pm each evening.

There are a number of possible solutions to solve these problems.
1. Use indicies or ETF’s that follow TSP fund exactly so that they easier to trade on the open market.
2. Stop fair valuation by posting share prices the morning of the following day.
3. Limit trade in the I Fund only using the 3 day rule for trades to settle.

As my advocate on ETAC, I hope that you will raise these points when ETAC meets with FRTIB in December. If any of what I have said is not clear, please contact me at your earliest convenience, at _________. I would be happy to discuss this issue with you further. It is very important that ETAC not simply be a "rubber stamp" for this ill-advised proposal by FRTIB, which could adversely affect the ability of many federal employees to protect and manage their hard-gained TSP retirement funds.

Sincerely,

XXXXX



1. TITLE 5--ADMINISTRATIVE PERSONNEL CHAPTER VI--FEDERAL RETIREMENT THRIFT INVESTMENT BOARD PART 1601_PARTICIPANTS' CHOICES OF TSP FUNDS--Table of Contents Subpart D_Contribution Allocations and Interfund Transfer Requests Sec. 1601.32 Timing and posting dates.
(b) Limit. There is no limit on the number of contribution allocations or interfund transfer requests that may be made by a participant.
2. TITLE 5--ADMINISTRATIVE PERSONNEL CHAPTER VI--FEDERAL RETIREMENT THRIFT INVESTMENT BOARD PART 1601_PARTICIPANTS' CHOICES OF TSP FUNDS--Table of Contents Subpart C_Redistributing Participants' Existing Account Balances (Interfund Transfers) Sec. 1601.22 Methods of requesting an interfund transfer.
(a) Participants may make an interfund transfer using the TSP Web site or the ThriftLine, or by completing and filing the appropriate paper TSP form with the TSP record keeper in accordance with the form's instructions. The following rules apply to an interfund transfer request:

 

[RAE]

Who is the audience for this letter?

Show-Me: I assumed the audience for your letter was your Union rep. on the ETAC (since you mentioned "my advocate"). If that is not the case, and the letter is intended for someone else, then there would need to be some wording changes to my draft.

Good luck, I think it is a good letter. Some of what you include may be difficult for the average person (non-investor) to understand, which is why I added the part about having them call you to discuss it further, if they needed clarification.

 

[Show-me]

It is intended for anyone on the ETAC and I would not think Union affiliation should be required. Adjust it as you see fit, I appreciate any input, additions, and corrections.

 

[Show-me]

I am sending a copy to several if not all of the ETAC members, but it was primarily for my Union Council member.

 

[James48843]

It is intended for anyone on the ETAC and I would not think Union affiliation should be required. Adjust it as you see fit, I appreciate any input, additions, and corrections.

OK- you had me worried for a minute there. I am one of those people who can't stand it when someone from "the government" goes into acronyms that no one understands.

Some easy rules of thumb:

1. Keep the acronyms down, always spell them out in the first reference, before using them again.

2. Even th ETAC has admitted they never have done anything real before, although they have the power to influence the Board, they have not ever had to before, so this is going to be a first for all of them.

3. I doubt any members of the ETAC know what a fair value is. Remember that- they are nealry all TSP shareholders, who are themselves probably just as likely to be buy and hold G funders, who haven't had a clue to things until now. So you have to be easy on them.

4. Always write like you are writing to explain the problem to a brand new- off the street GS-5, and you can't go wrong. If you start slowly, and bring them up to speed over time, they will understand anything. But you can't start at nuclear science with them- you have to bring them along until you both have a mutal frame of referance to work from, build their trust and understanding, before making the "Ask" of what you want them to do on your behalf.

They have to be able to envision what you are talking about, before you ask them to move the FV settlement time until 6 a.m. the next morning. They don't know what a FV means, or what impact it is having. And they don't know if $900 million in the three-day settlement timeframe is big or small. They know the Board thinks it's big. No one has yet told them that it's small by comparison- remember, the actual funds in the "I" has grown tremendously over the last couple years, so it's no big deal that Barclays would want to increase the pool at the same time. Nor do they know that Barclays got permission in August to use covered calls to increase performance. That tidbit needs to be explained in detail as well, so that the ETAC can put what it happening into proper perspective.

5. We are doing well. We have their (ETAC) attention, and they now know that the ETAC is not a rubber stamp body. While they all might not understand every detail just yet, they do know that something is up, and that they have to get up to speed quickly before the next meeting.

The key will be where will they get their information from? Will it only be from the Board, or will they take the time to learn from us our side as well. A good leader will seek out those other viewpoints to hear alternatives. we need to make contact with these people to ensure they know we are available to talk to them about our perspective.

Things to think about.

Note:

Celebrate small victories. We are now getting the Thrift Board to react to our reaction. (The newly posted FAQ pages).

That is a win for us, and we need to acknowledge the win.

Information is powerful.

Truth is powerful.

Facts are powerful.

YOU are powerful. Each and every one of YOU, who are taking up the pencil and paper, and dialing the phone, are exercising the power you have within you, and, collectively, the power that all of us have together, to make a difference.





(http://www.TSPSHAREHOLDER.ORG - Feel the power)

 

[Show-me]

Will do and thank you!

 

[James48843]

Here is an idea:


Unlimited trades.


Fee of $10 per trade.


If it works for Ameritrade, etc, why is it so hard for TSP Board to simply issue a flat fee?