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Thread: Boghies Account Talk

  1. #169

    Default Re: Boghies Account Talk

    Hope you don't mind a long comment, but this is a subject that interests me.

    I agree with most of the reasoning why taking a TSP loan and using the cash to speculate is a negative return proposition. However, I do think there are some reasons why one might find it an acceptable trade-off.

    Loan repayments are distributed across whatever fund(s) your payroll contributions are going to, and as soon as they're back in you can reallocate just like the rest of your account funds, so I don't think the 5 year low return on the G is accurate.

    I took a tsp loan this spring at 2.875% and paid off all credit card debt running high-teens into 20+%, thinking i would come out better than even on the interest spread. No comment about poor financial decisions that lead to the credit card balances in the first place. Now I just have a student loan consolidated at 2.5% fixed, no other consumer debt or mortgage or car payments. Nothing fancy but the roof don't leak and the car runs good, gets the job done. Poured all resources into paying the tsp loan off and in 2 more weeks will be clear of that too.

    Given how the market took off since March, obviously I would have done better leaving the money in tsp for the rally and been patient paying on the cards. But I've been sleeping much better at night knowing the CC companies can't sneak in after the lights go out and put it to me again and again. Fringe benefit, not sure how to factor that in to the calculations though.

    I also thought about buying more cows with it, frustrated with losing 40% over the previous year, thinking "hell you can't eat your tsp and if things keep going the way they are no $ amount on paper in NY is going to help." But the freezer and pantry were full so I held off on that idea.

    As for gold, I used to have some 1 oz coins, kind of an international collection of countries that mint bullion, but sold them in 2003 for the divorce attorney retainer. Best money I ever spent in my life. You're right about the premium on both the retail buy and sell sides though, need a major move to overcome that. I sometimes wish I still had them so I could sell at 3 times purchase price, but truth be told I would have already sold them many times over in the intervening years and squandered the loot.

    Theres something addicting about that shiny yellow metal though holding it in your hands. So i took up coin collecting as a hobby, not much investment value involved but satisfies the urge for hard assets. Also pick up random 1 oz silver ingots at coin stores, pawn shops, jewelers, etc. at a little over spot, lots of interesting stuff out there. Kind of like dollar cost averaging and a cheap way to scratch the itch.

    I would love to have physical gold again but just cannot see buying it at these prices. If it takes off and explodes in value like some expect, then I think the much better armeggedon investment is in lead and blued steel. Can you really imagine going to the market, bartering, and then breaking off the appropriate size chunk of a krugerand? Most likely someone who had invested in lead will have separated you from your assets long before you got to the rice and canned meat aisle. Kind of like having a big food storage in Utah. Why bother when all of your neighbors already have more than enough. And if predictions about the rapture are correct then they will all be instantly in a better place, so there should be plenty just laying around. Besides, there will likely be much more immediate concerns than what to serve for thanksgiving dinner.

    Anyway, I digress. I do wish there was a way to use gold/commodities in my tsp account for the times when the stock market is full of fear and nobody trusts paper, a low cost fund makes the most sense. But therein lies the rub. Gold is only truly of actual value when it is used, ie: paper is worthless. But if the only way for the retail investor to cost effectively compete in gold is buying paper promises, then how do you expect to take delivery when it hits the fan? I don't think the little guy will ever be the guest of honor at that party.
    100g

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  3. #170

    Default Re: Boghies Account Talk

    Probably a breach of etiquitte to post twice in a row in another's thread, but I only see 3 scenarios where taking a tsp loan could have positive value. All require uncanny vision and precise timing. Unlikely that any of them are going to work well as a long term strategy:

    1) Whatever you use the money for has a much higher personal value. Buy the little red corvette, get the hot gal to go for a ride, live happily ever after. Opportunity only knocks once. But if the object of your desire requires that kind of maintenance the future probably holds some nasty suprises. And the types that regularly trade future security for instant gratification probably don't spend much time on this board or have sufficient resources in tsp to make the purchase anyway.

    2) Be your own broker. Loan yourself the money for your very own margin account. Borrow at a low rate, invest in assets unavailable in tsp, make a big score. But if one is that good at timing the market, why aren't other more liquid funds available for one's disposal? If you have to ask yourself for a loan you probably can't afford it. Not a good use of retirement funds.

    3) Most interesting option: subvert the 2 trade limit. Stuck in G for the month, take the loan, change contribution allocations to CSI, repay the loan. Unfortunately, a very small window to accomplish this. Loan proceeeds are sent only by treasury check and take 7-10 days to arrive for deposit in bank account. Also, loan repayments in excess of regular payroll deductions must be mailed in by check, add another week. Unless your net take home is enough to cover the balance due and payday is coming soon, this is not going to do much good except in the extreme circumstance when you are out of trades early and absolutely know that in 2-1/2 weeks you must be in equities for a few days at the end of the month.

    Anybody else had measurable success with tsp loans?
    100g

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  5. #171

    Join Date
    Sep 2008
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    West of Atlanta
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    2,580

    Default Re: Boghies Account Talk

    Scenario 3 can be achieved with the <1% method. You would be surprised at the percentages that can be moved in a short period of time during an uptrend.


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  7. #172

    Join Date
    May 2007
    Location
    Fort Stewart Georgia
    Posts
    502

    Default Re: Boghies Account Talk

    interesting read
    God Bless Our Troops!
    Let the Bulls run! SNORT!

  8.  
  9. #173

    Join Date
    Apr 2005
    Location
    Gainesville, Florida, USA
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    24,244

    Default Re: Boghies Account Talk

    I just paid off two 25% credit cards by transferring the debt to my margin account with an interest rate of 3%. The rate is going to increase to 5.25% on September 21 but still remains tax deductable. I plan to pay off another card at the end of the month the same way.

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  11. #174

    Join Date
    Mar 2006
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    Raleigh, NC
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    Smile I Was Just Thinking...

    This morning I was thinking about moving another 15% of C/S/I to G/F. That would have given me a stable 70/30 split.

    Just thinking...

    Not acting...

    Maybe for once my patience will pay off
    Lookin' up at the 'G Fund'!!!

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  13. #175

    Join Date
    Apr 2005
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    Gainesville, Florida, USA
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    24,244

    Default Re: Boghies Account Talk

    If you want capital appreciation you must assume risk - too much emphasis on capital preservation is often nonproductive. Just look down the tracker.

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  15. #176

    Join Date
    Mar 2006
    Location
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    3,416

    Default Re: Boghies Account Talk

    I almost thought myself into a more conservative, more balanced allocation. I am using three of Ric Edelman’s portfolios to manage my TSP under normal circumstances.

    Aggressive: 2% G, 15% F, 48% C, 19% S, 16% I <<< Current
    Normal: 12% G, 22% F, 39% C, 15% S, 12% I
    Conservative: 12% G, 27% F, 37% C, 13% S, 11% I

    Then, unlike Edelman, I will sometimes go ‘All In’ or ‘Majority Out’. Those will be implemented in clear times. Times aren’t super clear right now, but my Aggressive allocation gives me plenty of equity (83%) for growth.

    Well, why did I almost think myself to a Normal (if not Conservative) allocation. Because President Obama gets to select the FED Chair next week. Now I know most here don’t seem to think he did a good job. That everything wasn’t perfect. That mistakes were made. Well, the free-fall seems to have been arrested rather rapidly. Things would have been better had the choice for President not been limited to two economic novices.

    The only things that seem to have worked are Bernanke’s Black Helicopters and Obama’s Cash for Clunkers. The vast majority of the stimulus package is still on mid-level bureaucratic desks.

    When the market trains their eyeballs on the upcoming choice then I will be able to buy on a dip with my 17% G/F holdings for an all in position.

    However, if President Obama selects Larry Summers for FED Chair than I will lose. We all will lose.
    Lookin' up at the 'G Fund'!!!

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  17. #177

    Join Date
    Mar 2006
    Location
    Raleigh, NC
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    3,416

    Red face Rebalance - FED Chair, Labor Day, October

    Shouldn't do it, but...

    G: 5%
    F: 22%
    C: 39%
    S: 15%
    I: 12%

    L2040: 1%
    L2030: 1%
    L2020: 1%
    L2010: 1%
    Income: 1%

    Why?

    One should not adjust ones allocation strategy on projected momentum, or on political expectations, or on a whim…

    But, the Seven Sentinels is in a sell. Labor Day is approaching. October is nearing. ‘The One’ gets to pick his FED Chair this week or next. And, a trade today only leaves me 34% out of the equities market for 5 days.

    Am I justifying a ‘fraidy cat’ move?

    Probably.

    But, I have no HOPE that a CHANGE by President Obama in the FED Chair will be positive. Anyone really want Larry Summers. Anyone?

    P.S.
    The 1% holdings in the L Funds might help me move more assets to equity (via ‘<1%’ transactions) if this transfer is a mistake, Obama keeps Bernanke, etc… This would make it possible to move up to 5% every day to funds with strong equity holdings.
    Lookin' up at the 'G Fund'!!!

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  19. #178

    Join Date
    Mar 2006
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    3,416

    Smile Notes...

    I had a potential scud for President Obama if he had let politics play a role in nominating a FED Chairman...

    Thank you President Obama. Maybe Bernanke isn't perfect, but we are no longer in a crash and he isn't a toady. Wise choice.

    Also, doesn't the market feel like money is just moving from bonds to stocks and back again. Just washing our feet. Nothing new coming in...
    Lookin' up at the 'G Fund'!!!

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  21. #179

    Join Date
    Mar 2006
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    Raleigh, NC
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    3,416

    Smile The End is Near...

    My God,

    I think I've lost almost 1% this week...
    Hasn't someone guaranteed me a gain of 1% a week
    That would be an annual average growth rate in excess of 52%
    Now That is something I could live on..

    I just can't handle this.
    I'm panicking...
    Dread
    End

    Lookin' up at the 'G Fund'!!!

  22.  
  23. #180

    Join Date
    Mar 2006
    Location
    Raleigh, NC
    Posts
    3,416

    Default Re: Boghies Account Talk

    For any that are confused as to what I am doing...

    I am obviously confused...

    I am trying to post an html table into the body of this thread. Done it before (I think)...

    Anyway, since I am obviously rather pathetic, to sumarize:

    It looks as if the asset allocators beat the market and the swingers this past week. Rather rare this year.

    ATCJeff will probably get a call from the SEC. He actually made almost 3%. ATC, don't take any calls from anyone you don't know
    Last edited by Boghie; 09-05-2009 at 03:15 PM.
    Lookin' up at the 'G Fund'!!!


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