TRAFFIC_DOG's account talk

**TRAFFIC_DOG** · 07-13-2006, 08:01 PM

Nnuut, you seemed to be disappointed with the lack of response to your question about a bottom here. I'm no expert so I'll give some thoughts over here in my secret place.

Firstly, I have no idea about the exact direction of the market, but I was 35% stocks at the beginning of the week and I've been adding as we fall, including today. I'm now 75%, and I may add more if we hold the trend support we have have going since mid '04. We have a 4 yr cycle low that we need to establish this year, so that is a concern regarding chances of holding support. Summer is seasonally week, and I do believe we will finish the year strongly so a push lower could come any time. I have read although, that the levels we held in Apr signaled a soft 4 yr low.

My strategy is to roll into stocks at relative technical lows and roll out at relative technical highs. I have ,excuse the reference, "power account" numbers in my TSP so I started last year to roll in and out gradually even if I am feeling very sure of myself. Also, I've learned the hard way the value of insurance. This saved me on the big move up Jan1. I was just convinced that the decline in late Dec was going to continue to that trend support down at about 1220 on S&P, but I left about half in. That convinced me to manage my account with a bias only and not try for the home run.

I still have 9 yrs 'till retirement so I'm OK getting into a 100% equity position, it just needs to be "right". So what is right? Wow, I've lost many TENS of thousands of $'s in the crucible of greed and fear. What I've learned is:

1. The market is most times in a long term trend. (up now), bias to be in.
2. I can't predict a trend reversal.
3. It is all about corporate earnings (good, hence trend up)
4. This is the one we are all concerned with: The Big Boys are trying to take our money! They do this with market volatility. Pushing prices high with momentum trading causes us to have to buy shares (if you are dollar cost averaging every 2 weeks) from the big boys at inflated prices. They get the herd stampeding. We also buy with an IFT, not to miss the "rally". When the selling begins we wait to see if it's just a minor correction before another leg up. We buy another 2 week contribution at lower but still inflated prices. Momentum selling takes hold. We don't know anymore ( if we ever did ) where the value pricing was. Prices keep falling: Do the Big Boys know something we don't, after all the market is forward looking... (they're telling us something)...we sell ....they buy, and buy hard in a snap back from oversold capitulation. After all they don't know something we don't about the future. They do, however, know how to drive the herd. Alas, we just miss the low with our 2 week DCA buy and get a "fair" price....... I think?

So.. I try to be in a position to gradually get out when extended ( with insurance) and roll back in as prices fall. TA is very important here. So far working OK, 9% + YTD.

Sorry, I know that's more than you needed from a newbie!

**nnuut** · 07-13-2006, 10:05 PM

TRAFFIC_DOG thanks for the reply. You may be a newbie to the board but you are not new to investing your money. You have a handle on it maybe better than I do. During my time moving my money around trying to make more cash I have made many a mistake and sometimes I learned form them. System, what system senior? I don't have no stinkin' system. Some posters have complicated systems, some claim to and don't. I shoot straight from the hip, no fancy system, each day or week is different and needs to be researched. What indicators are saying may mean one thing now and another next week, it's never easy unless we are on a long term up trend, haven't had one of those in a while. I know the posters that went 100% stocks today are looking for the big bounce, but looking at the price of OIL, the political state of the world, the dollar etc. it really may not be the time to jump in, but you never know and they may have made a really good move, We may win the war in Iraq or something, we will see tomorrow. In the past I have been really burnt by hanging in there as we walk down the wall of worry, hopin' for the turn around, sometimes it pays off and as in May of this year it was a bad mistake. I played May well and had the 4th highest return for that month. Of course I have waited too long and missed the first part of a rally, but I think if you can get it to work it is the best policy not to dive in chasing a bounce without good reason.
Oh, It seems your contributions are going straight to the market funds (C, S, I) what about to the "G" then when we get a big down and seem to hit bottom transfer out of the "G" when it's low and dollar cost averaging might pay better. I usually don't post such a Long winded reply, just got carried away!
Good luck with your investments!!!!
Norman

Wizard · 07-13-2006, 10:32 PM

Had you pegged for a permabull.

Thanks for the confirmation.

**nnuut** · 07-13-2006, 10:57 PM

In moderation! SNORT!!

**TRAFFIC_DOG** · 07-14-2006, 02:19 PM

I'm the farthest thing from a permabull. In the winter of '02/ spring '03 I was 100% short w/ maximum margin in my brokerage account when we went into Iraq and the market started to fly. Had to react quickly to what the market was telling me , even if I didn't understand it. That's my key: there's only one thing that is 100% right ...price. A long sequence of prices establishes a trend, UP or DOWN.

I want to be out in down trend, but as I said, I can't predict a reversal.

I certainly have my finger on the trigger right now. Very precarious.

**TRAFFIC_DOG** · 07-14-2006, 03:00 PM

Oh, by the way Nnuut, contributions go to G fund. I am trying to play the volatility. DCA doesn't do spit for me anymore. I'm also more timid with my moves due to cursed noon deadline. Technical confirmations: breakdown and support can easily happen after the deadline.

**TRAFFIC_DOG** · 07-14-2006, 03:45 PM

DWCP ( S FUND) broke below the 2 yr trend in Jun but recovered. It's been broken again. It's at 548 and it looks to go down and test 540 again.
I would expect a bounce there, but it could be a small one and continue down to 500 ( 9% ) where I would expect strong support.

1240 needs to hold on the S&P or we'll likely see a retest of 1220. If that fails it's 1180 then very good support at 1150 ( 7% ).

That's my worst case risk analysis.
Not going to add to stocks here. Not getting out either, though I probably should. Would like to be 50/50 here.

15 G 10 F 15 C 60 I

AGG (F FUND ) FINALLY looks to have bottomed. I've been wanting to go there all year instead of G but the Fed shot that to heck. Risk reward in the F has finally turned around. When the Fed isn't raising rates the F is playable.

**TRAFFIC_DOG** · 07-15-2006, 05:06 PM

....."And it's likely to be followed at some distance by another bout of speculative momentum, which will be followed by another correction. Markets move from one equilibrium point to another by a messy process of over-shooting on each extreme of the swing until they find a new center."
Jim Jubak MSN news

This is what I'm trying to play to out perform the funds. Usually prices bounce between a channel that you draw between the recent chart tops and bottoms. These determine the weekly or daily ift's. Tactical moves, if you will. If you expand the time frame you see humps where the bottoms also form on a line either up or down, ( sometimes sideways as from 1965 to 1975 ). These determine the strategic view of the risk assessment.

Go to Yahoo finance Market Summary on left, click on S&P 500. Click max on the little chart to the right. Lay a piece of paper from the left lower corner ( 1950) to the end of the chart at the right.

You'll see that since about 2004 we've been on that line. This is where I believe fair value lies as long as we have a good economy w/out too much inflaton and good corp. earnings. We have this now. This could change at any time, and the market is pretty good at reflecting what's expected six months out. So if the macro economic picture is going to change for the worse, I'll be losing money until I can identify that.

You'll notice that from 1950 to 1973 we were above that line, then a sharp 2 yr correction took us below it, where it remained until 1987. Notice the parabolic move higher in '87. This is never sustainable so, we took a 20% hit. This was the market re-setting to something sustainable. From '92 thru '95 we chugged along right about on my "fair value" line. From 1995 we began a parabolic move higher again, and of course this move was doomed. The low of Mar '03 over shot by about 200 pts and from '04...voila.

I have a friend at work, ( buy and holder ) who continues to carp about how long it is taking to get back to the glory days of S&P 500 at 1525. Every time, I tell him we had no business being there in 2000 but he just shrugs and grumbles.

The problem I see is that the market spends most of it's time either above or below this line, and since we're right on it something's gotta give. Things indeed look to have a negative bent going forward but who knows?

Anybody remember the little book back in late '80's called "The Plague of the Black Debt"? Now that was gloom and doom. I think Wizard must still have his copy. Didn't happen....... not yet anyway..........

I just want to remain nimble, getting used to working in and out of the market so that hopefully I can avoid another painful ride on the Bear Train.

**nnuut** · 07-15-2006, 07:45 PM

Originally Posted by TRAFFIC_DOG

Oh, by the way Nnuut, contributions go to G fund. I am trying to play the volatility. DCA doesn't do spit for me anymore. I'm also more timid with my moves due to cursed noon deadline. Technical confirmations: breakdown and support can easily happen after the deadline.

Yes it can , and the deadline is just lovely, we must be very careful, patience is a virtue!

**TRAFFIC_DOG** · 07-18-2006, 04:44 PM

I'm betting we hold support here, going all in.

40C 60I

**EW_ret** · 07-18-2006, 04:56 PM

Originally Posted by TRAFFIC_DOG

I'm betting we hold support here, going all in.

40C 60I

TRAFFIC DOG,

You need to post this IFT move in your account thread by 12:00 pm to be counted in the TSPTalk Weekly Tracker.

**TRAFFIC_DOG** · 07-18-2006, 06:08 PM

TRAFFIC DOG,

You need to post this IFT move in your account thread by 12:00 pm to be counted in the TSPTalk Weekly Tracker. ....EWGuy

No need to put me in the tracker. I hope this isn't a problem. I'll try to keep current on my allocations on this thead but no guarantees. Some might view this as a credibility problem, so I won't post much over on the general threads.

My goal is simply to outperform our tsp funds, not someone else. My strategy is to go with the trend, but lighten up when the market is ahead of itself and add get back to fully in after corrections. Pretty simple, really. The quality of the information is often quite different than the performance of a participant's account. As I said earlier, I find Tom's morning commentary and resources very helpful indeed, but I acted on that info very differently than he.

So far so good, 6.68% YDT.