Newsflash! TSP Talk Returns Tracker Inaccurate!

[Desperado]

Unfortunately for those counting on the TSPTalk.com returns tracker to accurately track their investment returns, it turns out the tracker doesn't adjust for gains, investment account contributions, nor investment account withdrawals. While in most market conditions, and for most users, this doesn't result in huge discrepancies between their tracker returns and their true returns, it represents a significant loss of accuracy for some TSP investors.

Two examples to help you understand the problem:

Investor Joe decides on an allocation that is 50% F and 50% I on January 1st. US interest rates rise unexpectedly during the month and the F fund value tanks by 10%. Foreign markets, however, manage to rally thanks to an era of peace in the middle east, and the I fund surges ahead 20% during the month! Joe happened to be on a brief deployment and made no trades during the month. He returns at the end of the month to discover that the I fund now represents 57% of his TSP account, while the F fund represents only 43%. He notes a 5% return for the month for his portfolio. The returns tracker, however, says he only got a 4% return. How can that be? That is because the tracker assumed he was 50% F and 50% I on every day of that month, when in fact, that was his asset allocation only on the first day of the month.

Investor Jane makes an IFT on January 1st to make her account also 50% F and 50% I. She is young, and actually only has about $5000 in her account. On January 15th, she notes that she is still 50% F and 50% I due to sheer random luck. She signs up for two more years in the army, and gets a $10000 bonus. As a wise young GI, she decides to contribute this to the TSP. She gets a hot tip off TSPTalk.com, and decides to lump sum the entire bonus into the I fund. Her allocation is now 83% I and 17% F. But the tracker still believes it is 50% I and 50% F.

In its current form, the only way to make the tracker truly accurate is to post an IFT everyday indicating what your true allocation (according to TSP.gov) is. This is obviously impractical, and so those who use the tracker returns need to realize that this is an approximation of your returns, and that the less often you do IFTs, and the more often you contribute to and withdraw from your account, the less accurate an approximation it is.

The solution (for those actually interested in accurate returns) is to use Excel's XIRR function. Using your balance on Jan 1st, your inflows and outflows during the year and their dates, and your balance on Dec 31st, you can get your true yearly return.

[tsptalk]

We're comparing our return vs. the TSP share prices. Our return is being calculated the same way they do it.

The spreadsheet is not a good way to know your account's actual return because it does not take into consideration contributions. I created it so I knew how my allocations were doing versus the return of the other other TSP funds. It's the best way to compare apples to apples.

[SkyPilot]

Desperado (http://www.tsptalk.com/mb/member.php?u=2167)...

Before you embarrass yourself again, maybe you should ask a question by PM rather than demonstrating your ignorance in such a public fashion. You are not "helping" anyone by posting in such a manner.

But, you already know this, don't you...

[FundSurfer]

Newsflash! TSP Talk Returns Tracker Inaccurate!

Nope. Your assumption of its purpose is wrong. Tom already posted the purpose.

In terms of the Tally, we use the tracker to be able to compare monthly returns of different members.

[pyriel]

D,
Hehehe, your post is funny and also inaccurate. But, I do have to give you some credit since there are some truth to what you said. However, what you are putting out is not in line on what the tracker was really meant to be used.
Next time... I'm smiling here in Orlando...
P

[Spaf]

D,..... However, what you are putting out is not in line on what the tracker was really meant to be used.

He knows that!

[Desperado]

Desperado (http://www.tsptalk.com/mb/member.php?u=2167)...

Before you embarrass yourself again, maybe you should ask a question by PM rather than demonstrating your ignorance in such a public fashion. ...

Perhaps you would be so kind as to explain where my reasoning is wrong rather than simply calling it ignorant.

Tom, the TSP does not track its return the same way the tracker does. The TSP tracks each fund's individual return. This is a relatively straightforward mathematical exercise. The tracker attempts to do this with various asset allocations. On the first day after an IFT, it is 100% accurate, but becomes less and less accurate until the next IFT, when it becomes 100% accurate again. The problem is that the tracker assumes that the allocation is the same on the second day after an IFT as it is on the first day. No one would argue that is the case. It doesn't make a big difference if you trade frequently (thus restoring the allocation to what the tracker thinks it is) but it can make a huge difference for some one more inclined to buy and hold. Examine the spreadsheet and you'll see that I'm right. Whether it really matters much and whether it can be fixed are the important questions.

[SkyPilot]

Desparado,

Tom has already explained this issue below, as well as several others. It is becoming aparent that you really don't understand what it is that we are doing here...

If you still cannot or will not understand, then I don't know that I can help you.

You must take responsibility for your own education... we will be patient, but only to a point. And really, this is not so difficult. I am not aware of anyone else who is having this level of difficulty understanding the purpose of this forum, the tracker, etc...

[FundSurfer]

Perhaps you would be so kind as to explain where my reasoning is wrong rather than simply calling it ignorant.


The tracker keeps percents not totals. Your error is in thinking in terms of dollars and not percent. The tracker calculates percent gain or loss. Yes techically the tracker only gives the right percent for days where you enter data.

I'd suggest if you want to check, try checking with dollar figures....
scratch that.... you'd probably screw that up as well...maybe you'd just better trust us.

[Fivetears]

You're killing me Smalls!!!
This is just a friendly investment competition between TSP investers. As long as we're all using the same playing field, bats and balls... everything is fair.
Even if there's minor numerical inaccuracy (which I don't personally see), what does it matter; really?
Just put your glove and hat on like the rest of us are going to do... and lets play ball; January 2007.

http://www.uwec.edu/studentsenate/UAC/films/images/sandlot.jpg

[Show-me]

http://images.google.com/images?q=tbn:Nfrv8AYH2NoH1M:http://anaheim.angels.mlb.com/images/2002/08/06/5DskhCqO.jpg (http://images.google.com/imgres?imgurl=http://anaheim.angels.mlb.com/images/2002/08/06/5DskhCqO.jpg&imgrefurl=http://www.baseball-fever.com/showthread.php%3Ft%3D45260&h=235&w=275&sz=11&hl=en&start=11&tbnid=Nfrv8AYH2NoH1M:&tbnh=97&tbnw=114&prev=/images%3Fq%3Djumping%2Bmonkey%26svnum%3D10%26hl%3D en%26lr%3D)

[tsptalk]

Perhaps you would be so kind as to explain where my reasoning is wrong rather than simply calling it ignorant.
- You invest $10,000 on Jan 1 in the C fund which has a value of $10 per share.
- You have 1000 shares worth $10,000 (1000 x $10).
- No more deposits.

- On Dec 31 of that year the C fund value is $11 per share and ...
- Your 1000 shares are worth $11,000 (1000 x $11).

- 10% gain in both the C fund and your account - regardless of what happened during the year.

[pyriel]

- You invest $10,000 on Jan 1 in the C fund which has a value of $10 per share.
- You have 1000 shares worth $10,000 (1000 x $10).
- No more deposits.

- On Dec 31 of that year the C fund value is $11 per share and ...
- Your 1000 shares are worth $11,000 (1000 x $11).

- 10% gain in both the C fund and your account - regardless of what happened during the year.

Hmmmm... It's scary... I actually understand that... Hmmm... D, you still need help?

[Show-me]

My input, LOOK AT ME!

http://upload.wikimedia.org/wikipedia/en/thumb/e/ee/Rally_Monkey.jpg/180px-Rally_Monkey.jpg

[Show-me]

And look at the smile on the little fellows face...............priceless.

[Desperado]

You're killing me Smalls!!!
This is just a friendly investment competition between TSP investers. As long as we're all using the same playing field, bats and balls... everything is fair.
Even if there's minor numerical inaccuracy (which I don't personally see), what does it matter; really?
.

Now that, is the first fair comeback on the thread. Everyone IS playing by the same rules (including those pesky monkeys that keep winning.) But if there were a better set of rules to play by, would you be interested? I think it would be relatively easy to get excel to perform the calculation correctly. The point of the thread is that it currently isn't. It doesn't matter much for those of you who trade every week. But those who would be trading only to rebalance the original asset allocation require a more accurate instrument.

And Tom, your simplistic response has nothing to do with calculating the return of a trader who is swapping in and out of funds, although it may introduce the concept of accurate measurement of returns to pyriel. You once told me this:

By the way, I am concerned that you believe the calculations are inaccurate in our spreadsheets. I'd like to know what you found because I would want to fix that right away.

Has something changed? Or do you want to fix this right away?

As long as everyone is willing to go by the concept that you are approximating your actual returns in a manner that is easy to calculate and track, fine. But don't delude yourself that your TSPTalk Tracker returns are equivalent to your true investment return.

[SkyPilot]

Dude, you still don't get it...

[tsptalk]

You once told me this:

By the way, I am concerned that you believe the calculations are inaccurate in our spreadsheets. I'd like to know what you found because I would want to fix that right away.

Has something changed? Or do you want to fix this right away?

As long as everyone is willing to go by the concept that you are approximating your actual returns in a manner that is easy to calculate and track, fine. But don't delude yourself that your TSPTalk Tracker returns are equivalent to your true investment return.
We delude ourselves to compare our returns vs. TSP funds. We know it is not a true depiction of our return, but it is close enough for government workers and the best way, as I said, to compare apples to apples, and to compare our allocation returns with each other.

[FundSurfer]

But if there were a better set of rules to play by, would you be interested? I think it would be relatively easy to get excel to perform the calculation correctly. The point of the thread is that it currently isn't.

OK... I'll play. I'm not getting your percieved error. I need an example, an spreadsheet illustration, something more concrete to go on.

I've checked that spreadsheet numerous times and have found errors in the past. Most of the recent errors are entry errors. I have followed the money and done dollar examples in the past. Namor once brought up that we had a discrepency in the compounding and he was right.

Keep in mind the numbers in the yellow box have had the compounding removed in order to compare apples to apples.

Oh, and why I think you are wrong is that even day to day the percentages change in your account BUT the number of shares of each fund stays the same so the percentages are correct as long as you use the share price from when you purchased and sold shares. The day to day movement is in the fund price not the number of shares.

All kidding aside...do the math by hand and check it for yourself.

[ChemEng]

Oh, and why I think you are wrong is that even day to day the percentages change in your account BUT the number of shares of each fund stays the same so the percentages are correct as long as you use the share price from when you purchased and sold shares. The day to day movement is in the fund price not the number of shares.

Exactly!!!

All kidding aside...do the math by hand and check it for yourself.

Why would he do that when its much easier to stir the pot? And again, another DCA and BAH user interested in rocking the boat in other forums BESIDES the DCA and BAH forums. You would think they could all meet there and impress each other with their "discipline" instead of making waves elsewhere into a disinterested audience...

(As an aside, I used all my idioms for "causing problems" in this message. If anyone can lend me a few more for a later post, Id appreciate it. :))

[Griffin]

What a fool I am, I'm trying to inititate a dicussion that could make the difference of 1000's to 10 of 1000s of dollars for the average board member, when the hot ticket is an argument over "what if" senario's that might actually make the difference of a few pennies......or not. :nuts:

[Birchtree]

Unfortunately you two new moderators have too much malignity towards the approach of the buy and holder. No one is suppressing you - so try to lighten your rhetoric. All strategies should be appreciated and welcomed.

[Fivetears]

"Shake the baby"... "Poke the bee's nest"... :nuts: As an aside, I used all my idioms for "causing problems" in this message. If anyone can lend me a few more for a later post, Id appreciate it. :)

[sugarandspice]

We are all playing with the same set of rules and tools.......except you Desperado....because you still won't post your allocations. Get in. Even though I think it would be something along the lines of 100% G fund and then a repost every three months to stay current. Start playing and stop braying.

[Scout333]

Hello guys, Bottom line is we don't care whether the tracker numbers are precise or not. They are estimates. The only numbers that really matter are the dollars in our accounts! Check those if you want to know what your real return is.

[Griffin]

To back up what Tom said,

Last year, I achieved a 10% return (per a non-tracked copy - I had not become a member at that point), however, I paid back a TSP loan I had taken out to put an addition on my house (gazeebo with a hot tub - worth every penny :D ). I also maxed out the IRS contribution. Net result, my account doubled, last year from where it was at the end of 2004, because I am relatively new to the Federal Gov. as a civilian employee.

For the purpose of this board, if we actually tracked dollars I would have had a 100% return making me look like a genius, but in reality, the money I didn't return because of that TSP loan, was not worth the lower interest rate. Nor did I beat the S or the I-fund. Overall a not to impressive year. So here's the what if scenario we are trying to avoid.

We delude ourselves to compare our returns vs. TSP funds. We know it is not a true depiction of our return, but it is close enough for government workers and the best way, as I said, to compare apples to apples, and to compare our allocation returns with each other.

[Desperado]

For the purpose of this board, if we actually tracked dollars I would have had a 100% return making me look like a genius, but in reality, .

Ahhh...the Beardstown Ladies method of return calculation.

You guys are going to get a kick out of this, but it does go to show my intentions.

I was wrong.

I did not notice that the dates on the left hand side of the tracker are ONLY the dates where a transaction was made, not every day.

As long as you post a new allocation every time you contribute to your account, the tracker should be accurate.

Open mouth, insert foot. Now, wasn't that fun.

[Griffin]

Desperado,

To answer your question - No, it wasn't. The board has rules and guidelines for conduct and those we adhere to as a matter of decency.

However, if there is absolutely one thing that is Taboo, it's calling into question the legitimacy of the tracker. If the debate hadn't already been raging prior to me logging on this morning, I probably would have deleted the thread altogether.

For better or worse, the tracker is what stop folks from making outrageous claims. It is the heart and soul of the board and without it, the board would decend into chaos. Spend some time reviewing the great legitimacy debates with "The Technician" and you will see what I mean.

In fact, without the tracker, your entire claim of BAH versus timing would lack all substance.

Now, wasn't that fun.

[TiCKed]

As long as you post a new allocation every time you contribute to your account, the tracker should be accurate.

Think you're still missing the point:

The tracker will compare your DECISIONS to my decisions. Allocation selections are the key here. Not your balance vs. my balance...not your contributions vs. my contributions...Not the day your contributions were posted vs. the day mine were posted. ONLY our selections for allocation, and when we decide to make our respective moves.

And as Griffin mentioned, this is NOT a "Newsflash" topic. I raised the same questions when I was new, and I've seen it many times since.

[SkyPilot]

Desperado,

I fear that you still have not come to a basic understanding of what this board is about. I applaud your willingness to own your error, long after it was obvious to seemingly everyone else. However, your intent to stir controversy just for your entertainment does not enhance the discourse here.

Be encourage to take this opportunity to reflect in silence until you achieve a greater understanding of the nature of this community. When you decide that you want to participate in a constructive manner, you will find this is a very forgiving community. If however, you demonstrate a continued contempt for the participants and what is being achieved, you will continue to experience a willingness to hold you accountable for your words and deeds.

Unless you desist in your antagonism, you will be regarded along with a rouge's gallery of previous personalities that were unable to find a way to participate with regard and respect.

Disagree as much as you want, but remain respectful. And review the rules for posting here. I think you will find it enlightening.

[nnuut]

Well Said, are you a politician? Not me! No patience at all, one of my faults that I'm rather proud of though. No, best to hold it in now, don't want to hurt anyones feelings ya know!:notrust:

Nnuut,

May I temporarily borrow some of your post space!

Griffin, SkyPilot, TICKed, Tsptalk, FundSurfer and pyriel did a real good job to explain the purpose of the Tracker.

Desperado, I think was finally getting the picture, of what we use the Tracker for... Well hopefully!
He upset the etiquette of the message board, but was not silenced, none of his posts were edited or deleted. The TOS were maybe marginally violated, however he was allowed his full disagreement and talk about the topic of the Tracker.

Things appear to be settled for now.

Thus, for the sake of letting the arguement pass without having other posts resurect the obvious. It is my judgement to lock the thread for a while, let it slide down current posts, and hopefully be concluded....... Whew!

It can be unlocked in a few days.
[If there is any objection please send me a PM.]

Regards
Spaf

[mailmanusa]

What the tracker does for you is show you the result of your move. Was it a good, bad or indifferent move? Did the move advance you above this or that, or would you have been better off over there. Its tracks performance of your moves. It has nothing to do with your contributions or calculating your account balance. I am no schooler but I understood that from the git go. Regardless of any debate,this forum and its tools have greatly increased my ability to secure a comfortable retirement. I love every bit of it.