Thrift Savings Plan Talk

The indicators are still overbought.

I will wait it out in 50% G, 50% C until the overbought condition eases some. February is not always the best month to be invested so I will be patient. Eight of the next 13 trading days are historically down more often than up. See the seasonality chart at the bottom of the page.

The only other thing worth noting today was the action of the U.S. dollar. It was up big yesterday breaking above the recent consolidation and above the first resistance area. The 200 day exponential moving average will be the next resistance tested. I don't know if the bottom will be a "V" or if it will go back down and test the lows made in December. Obviously the I fund will be effected by whichever direction it takes so we should watch it closely.

Chart provided courtesy of www.decisionpoint.com

I wanted to share with you, an email I received recently. While I don't completely agree with what the author has to say, I do believe there is some truth to it. Particularly since I see how often people are now making transfers. I certainly make my share but I seem to be on the conservative side compared to some of our message board members. Here it is, with my response...

"I have a few problems with your web site (TSPtalk.com) and what you are doing. I really recommend that you take down this web site.

1. The TSP is not a vehicle for market timing. You are teaching people to abuse a system that is designed for long term investment for retirement purposes. Market timing type of trading activity will drive up the costs of any fund eventually. You are encouraging people to engage in behavior that will hurt thousands of people in the long run. If you want to teach people to do market timing, teach them to do it with ETFs or stocks – not the retirement plan that the rest of us are depending on.

2. You state that you are not an “investment guru.” This could not be more obvious. Your movement in and out of funds is simply schizophrenic. The problem is that you are sucking a lot of innocent people down with a flawed strategy (market timing in our retirement funds). I highly recommend that you read “Common Sense on Mutual Funds” by John Bogle. He is, in fact, considered an “investment guru” by many and is an acknowledged expert on index funds. Seriously, you need to read this book. You are going about this all wrong and dragging down a lot of people with you.

I really think that you are going to hurt a lot of innocent people with your ridiculous strategy of market timing with their retirement accounts."

My response:

"I appreciate your input. I admit I do get a little too active at times, but it's not as if we are trading on margin, buy options or shorting the market. This website is not about day trading. It is about waking people up. There are thousands of people who have been sitting in the G fund for 15 years who will wonder why they don't have enough money to retire. The site teaches them how to recognize market trend changes - When to get aggressive, when to sit on the sidelines.

If it is not your trading style, that's fine. It works for me. Your argument has been brought up many times on the message board. I encourage you to share your opinion. I am trying to help people. Hearing both sides of the argument is always a healthy way to teach."

Well I don't plan to take down the site, but the message is not without merit. Active trading is not for everyone. I know this approach to our accounts is not embraced by everyone, but I am surprised how rarely someone actually brings this up. This is probably only the 2nd or 3rd time since the site started over a year ago. We are all here to learn, make money and have a little fun while doing both. Let's take this as a reminder to be smart and not to get too carried away. Thanks.