Help! - Buy & Hold vs. Trading

[nsjsaacks]

Hi all,

I've been reading the posts here for quite a while. A little about my situation - I'm 29, contribute 5% (plus 5% matching), plan to be with the govt until retirement (at least 57...28+ more years), I'm 100% in L2040 and my contributions go there, too.

Through this economic downturn I've been content leaving everything parked there since I'm in it for the long haul.

I'm starting to get a little bit antsy about this, though, and am thinking about changing strategies...Specifically getting into the G and F. I'm thinking of IFTing my shares into a G/F combination to at least get a little positive return today....thinking that the L2040 and the C/S/I shares may still be on the way down...then I can transfer back into L2040/C/S/I on the way back up, so I'll get it relatively cheap even if it's not totally at the basement price.

Another option is to keep what's in the L2040 there and just change my contributions to something safer until the "up" elevator ride.

One half of my brain looks at my 2008 statement (big loss) and says I need to stop the bleeding, but the other half tells me to not sweat it and ride it out for the long term (or to even sell L2040 for C/S/I).

Any thoughts you can provide would be great.

Thanks!

[Viva_La_Migra]

Hi all,

I've been reading the posts here for quite a while. A little about my situation - I'm 29, contribute 5% (plus 5% matching), plan to be with the govt until retirement (at least 57...28+ more years), I'm 100% in L2040 and my contributions go there, too.

Through this economic downturn I've been content leaving everything parked there since I'm in it for the long haul.

I'm starting to get a little bit antsy about this, though, and am thinking about changing strategies...Specifically getting into the G and F. I'm thinking of IFTing my shares into a G/F combination to at least get a little positive return today....thinking that the L2040 and the C/S/I shares may still be on the way down...then I can transfer back into L2040/C/S/I on the way back up, so I'll get it relatively cheap even if it's not totally at the basement price.

Another option is to keep what's in the L2040 there and just change my contributions to something safer until the "up" elevator ride.

One half of my brain looks at my 2008 statement (big loss) and says I need to stop the bleeding, but the other half tells me to not sweat it and ride it out for the long term (or to even sell L2040 for C/S/I).

Any thoughts you can provide would be great.

Thanks!
L2040 is made up of G,F,C,S, and I funds. TSP has a formula that sets a percentage value in which your money will be invested into each fund. It is designed for people that just want to "set it and forget it," and let the TSP fund managers handle their money for them. Most of us on this forum manage our own accounts, and decide for ourselves which fund we invest in, and how much of our money will be placed into said funds.

I personally chose to get out of the L2040 fund about a year and a half ago and manage my own funds. By doing that, I managed to beat the L2040 last year and preserved most of my retirement funds. I lost a little here and there, but my account still grew over the previous year. It's working for me, but you need to decide for yourself if you're going to put the time and effort into managing your own account. The people on this site are more than happy to share their views and analysis of the market, so you can make informed decisions when moving your funds around. I wish you much luck!

[kodaq2001]

I felt the same way you did. I'm 28 and put in my 5% into the 2030 funds. When I got my statement back about 2 weeks ago I said the L funds just aren't cutting it so I switched it to the G funds - I took enough losses last year. I've been watching people on the TSP tracker to see how they do things and reading the message board and i think i'm starting to get the hang of it.

[DCguy]

you are still young, so I dont see the reason to park your money in G. But the current economy is pretty bad and I think things will get worst. So it may be a good idea to move your money to G and wait for the right moment. If I were you, I just keep on buying and increase contribution to $630 per pp.

[tsptalk]

Welcome nsjsaacks! If you don't want to try to time the market, perhaps you can dollar cost average into it. That is, put just a small amount in C/S/I now (the rest in G and F), and each month move a little more in (maybe 4% or 5% each month) so that sometime in the next 12 to 18 months you are 100% invested.

If we keep going down, you are buying in at lower prices. If we go up, at least you'll have some money in stocks.

[Steadygain]

Hi all,

I've been reading the posts here for quite a while. A little about my situation - I'm 29, contribute 5% (plus 5% matching), plan to be with the govt until retirement (at least 57...28+ more years), I'm 100% in L2040 and my contributions go there, too.

Through this economic downturn I've been content leaving everything parked there since I'm in it for the long haul.

I'm starting to get a little bit antsy about this, though, and am thinking about changing strategies...Specifically getting into the G and F. I'm thinking of IFTing my shares into a G/F combination to at least get a little positive return today....thinking that the L2040 and the C/S/I shares may still be on the way down...then I can transfer back into L2040/C/S/I on the way back up, so I'll get it relatively cheap even if it's not totally at the basement price.

Another option is to keep what's in the L2040 there and just change my contributions to something safer until the "up" elevator ride.

One half of my brain looks at my 2008 statement (big loss) and says I need to stop the bleeding, but the other half tells me to not sweat it and ride it out for the long term (or to even sell L2040 for C/S/I).

Any thoughts you can provide would be great.

Thanks!

First and most importantly let's do an intelligence test
1. You've been reading our posts for quite awhile
2. You're 100% L2040 - planning Long Range
3. Putting in at least 5% to get matching 5%

These alone display outstanding intelligence - I mean you are incredibly smart.

With 28 years - YOU ARE NOT BLEEDING

Your brain is tugging with decisions - but don't let short term plays (6 months) interfere with the overall picture.

If you are going to BUY and HOLD - which in many ways is superior to frequent Trading - you would be better off putting your money in C/S/I fairly evenly...and not waste your money on G/F.

If you are wanting to mainly BUY and HOLD - which is largely what I plan to do - but willing to make peroidic changes - then your best bet is to go 100% G Fund for the next 6 months and WAIT FOR THE BOTTOM.

You will not find the BOTTOM on a day to day basis and the Markets are highly deceiving - so take your time and keep your money in place month after month.

Once you've determined either a REAL BOTTOM has been established (or a sustained BULL MARKET is really underway) - move everything to C/S/I fairly evenly and check the returns on a monthly basis.

If S and I are gaining at say a 40% Speed and C is gaining at 25% - then switch more to S and I.

You DO NOT have to make frequent trades to make a whole lot of money - but you do need to know if we are either in a REAL BEAR or BULL MARKET and plan accordingly G Fund for BEAR and C/S/I for BULL

By the way - I'm Steady and it's great to have you on board

and these are very good questions

[Steadygain]

I just keep on buying and increase contribution to $630 per pp.

You are a RARE GEM :)

Way too many think of only the 5% and that's honestly a joke as far as retirement goes.

Put in as much as you can as long as you don't go over the limit...

$630 per pp is EXCELLENT !!!

The more you have - the more you make :D:D

[nsjsaacks]

All,
Thanks for your $0.02! I think I'm keeping my money where it is...or may actually move it to C/S/I...versus moving it to G/F. I'll keep buying low for now since I have the time to rebound.
Thanks, again!

[kodaq2001]

$630 per pp? ... i wish.

[Bullitt]

An analysis of nearly 2 million trades by discount-brokerage customers found that those who traded the most earned returns no higher than those who traded the least. After deducting brokerage costs, the fastest traders fell far behind the slowest.Jason Zweig- The Intelligent Investor 2/13/2010 (http://online.wsj.com/article/SB10001424052748704337004575059960489864970.html?m od=WSJ-Markets-LeadStory)

[WorkFE]

That does not surprise me Bullitt. My father and I have 2 identical accounts with an investment company, we use it for bragging rights at the end of every year. He is a trading wacko and I am predominatly a B&Her with an occasional trade to protect myself. Over the past 3 years you could not buy 1 weeks worth of groceries off the differences in our balances. Go figure.

[Boghie]

Nsjsaacks,

Separate your current assets (the stuff you have in TSP) and what you are contributing via your salary.

As far as new contributions – ONLY invest in C/S/I. You are buying new items (equities – stocks) on sale when the price comes down. Read BirchTree’s thread. He illustrates the value of Dollar Cost Averaging new contributions into the market at sale prices. Birch made me A LOT of MONEY over the last couple of years. Yummy…

To help manage your allocation (current assets) I would recommend Ric Edelman’s ‘The Lies About Money’ (http://www.amazon.com/Lies-About-Money-Portfolio-Future/dp/1416543120/ref=sr_1_1?ie=UTF8&s=books&qid=1266078438&sr=1-1). Also, visit his web site and take the ‘Guide to Portfolio Selection’ (http://www.ricedelman.com/cs/home) on the home page. Also, listen to his radio show.

Additionally, (definitely an equal to Ric Edelman), listen to Ray Lucia’s radio show (http://www.businesstalkradio.net/weekday_host/rl.shtml). His discusses a lot of topics, has great co-hosts, and is very informative. I started my understanding about retirement asset management by reading his very good ‘Buckets of Money’ (http://www.amazon.com/Buckets-Money-Retire-Comfort-Safety/dp/0471478660/ref=sr_1_1?ie=UTF8&s=books&qid=1266078503&sr=1-1) book.

At your age I would follow Steady’s guidance. Maybe not 100% in G, but that is quibbling. I would consider using L2020 in place of the G when things are trending down and going full invest (C/S/I) when things start consistently heading up . That way you won’t be 100% out of the market when things turn. And, you won’t have any G/F holdings dragging you down in an obvious bull market. Then again, Steady has a good eye. You can watch him make his move on the TSPTalk ‘AutoTracker’. Find some folks on the blog part of this site and watch their moves.

Finally, this site has folks with a myriad of trading methodologies. There are ‘Buy and Holders’, ‘Asset Allocators’, Swingers, followers of Technicals, and probably followers of the stars – yuk, yuk. All have value – excepting maybe the astrologers (watch out for Birch when he starts yakking about Saturn crossing Mercury or whatever:nuts:).

[Bullitt]

On diversification. Thought this was funny.

"Don't scatter your money and scatter your attention; instead put all your eggs in one basket and watch that basket!"

--Mark Twain

[tsptalk]

"Don't scatter your money and scatter your attention; instead put all your eggs in one basket and watch that basket!"

--Mark Twain
I like that! :laugh: