Thread: Boghies Account Talk

To All,

Taking a little something (and some risk) off the top:

G: 15%
F: 10%
C: 45%
S: 25%
I: 5%

Expected Return: 6%
Expected Risk (Variance): 9%

Dropped a point in expected return, but two in risk. Still have a 75% allocation to stock so I can enjoy much of the growth if there is no correction. And, I have a nice 15% ready to buy in if there is a correction.

As we have all seen, I ain’t a very good market timer. Hence the slowdown in market timing trading. Ahem.

But, I have managed to avoid big downturn bubbles. I actually made a little bit in 2002 and lost a tiny bit in 2003. Likewise in 2008. And, managed to catch much or all of the gains in 2004 and 2009. I just seem to move to the long term norms in the other years – for example last year; yuk, yuk

Anyway, the .com crash was an easy read. As was the credit crash of 2008. Now everyone is looking at a furtherance of some form of private sector crash for the future. I think, however, that we should look for a public sector crash. And, that is not good for either you or me.

Why a public sector debt crash? I don’t have to look far to get a good picture. I just have to look at my city (San Diego), my state (California), and my country (the good old USA). Each of these entities spent more than they had in good times and bad. And much of that was from a mix of responsibility creep and employment cost creep. My city invested in its employees by increasing pension and health care obligations in the out years. My state invested in its employees by increasing pension and health care obligations in the out years. And, by increasing I am not talking about hiring new employees (although responsibility creep did increase staffing) – I am talking about the enhancement of retirement benefits. For my city and my state the out years are now. We, and most other local and state public sector entities, are trying to deal with those out year obligations. And the financial gaming used to document the viability of those obligations is meeting reality. That is, the tax base does not support the promises made by past politicians. Thus, ‘Enron By The Sea’ and ‘California Crashing’. San Diego started dealing with the problem in 2006 and we seem to be on our way out of the hole. California is just waking up – but the politicians are still kicking the can down the road. But even Governor Brown can see that the road will end during his term. Even he is demanding salary and benefit cuts. My city and state were living in revenue and spending bubbles. The blowout of the revenue bubble is forcing a retrenchment of spending. The spending bubble will be popped by retrenchment in employee costs – past and future.

Which brings us to us…

Our public sector entity creates money. It borrows money. And, it only ran tiny ‘surpluses’ in the late 90’s by gaming the financial responsibilities of promised benefits. Social Security and Medicare were (are) considered ‘off balance sheet’. Our entity used the increased revenue from an explosive economic boom starting in the early 1980’s to cover creeping responsibility spending. The enhanced revenue stream was used to cover increasing day to day expenses (new responsibilities). It was not saved. It was not invested. And, it was not placed in a lock box for the ‘now’ obligations. The tax base will not support current spending. So, our entity is borrowing to cover 40% of its hand to mouth spending. Soon the borrowing will get very expensive. We call that a credit bubble. I don’t like what I see. I will come out all right. I am not dependent on a Federal pension (I didn’t even know I had a pension benefit till a few years ago). I am almost out of consumer debt. I have a marketable skillset. And, if there is a retrenchment of responsibility I am employed by a Constitutionally mandated entity. Regardless, I am a Federal employee and I have enjoyed what I do (for the most part). However, reality is coming.

We have been living in a 30 year bubble.

Bubbles pop.

Pop.

To All,

Taking a little more (and some risk) off the top:

From:

G: 15%
F: 10%
C: 45%
S: 25%
I: 5%
Expected Return: 6%
Expected Risk (Variance): 9%

To:

G: 15%
F: 20%
C: 45%
S: 15%
I: 5%
Expected Return: 5%
Expected Risk (Variance): 8%

Because of the market move since my last IFT my allocation actually became more risky. I was running a 10% risk with the same expected return. Time to back down...

Still 65% allocated to equities...

Timed my 10% increase in the 'F Fund' to get the max decline in a bubble pop

Been waiting for it, now may be the time. The good thing is that it is short and mid term maturities. And, a 20% holding will not kill me in a correction...

Also, got 15% in cash ('G Fund') that I could invest. Gotta keep a watch...

Just thinking, not acting yet.

But, the equity funds are starting to turn over a bit - and, I will be on vacation for two weeks starting soon. So, what to do. Here is a thought...

I can take the assets over my cost basis for each fund. That should be pure profit.

From:

G: 15%
F: 20%
C: 45%
S: 15%
I: 5%
Expected Return: 5%
Expected Risk (Variance): 8%

To:

G: 21%
F: 20%
C: 40%
S: 14%
I: 5%
Expected Return: 5%
Expected Risk (Variance): 7%

So, the expected return is the same and I take some risk out of my holdings. I will still have 59% of my assets in the equity funds so I will grab some of the gains if there are any to be had. The 20% in F should buffer losses. Me like. And, I will still have another IFT in the bag!!!

But, I haven't made the move yet. There is still time for fear and greed!!!

From:

G: 15%
F: 20%
C: 45%
S: 15%
I: 5%
Expected Return: 5%
Expected Risk (Variance): 8%

To:

G: 21%
F: 20%
C: 40%
S: 14%
I: 5%
Expected Return: 5%
Expected Risk (Variance): 7%

.
I moved some assets to cash for the following reasons:

1. My expected risk grew to 9% as a result of the market boom. Too high for Go Away May
2. I will be away from a computer (hopefully) for a couple of weeks soon.
3. I don't want as much risk in the low volume months.
4. I've already got my 10%. Yummy.

Boghie's tracer return is 7.78%, not no yummy 10%, and moving 6% more to G fund is starting to look like me and my 8 moves to G fund in a month. Which I got scolded by several for this averaging down mentality. So I'm not doing it no more.

Back to basics: the 50 EMA's on all the funds holds as upper resistence, volume has lightened up to no more than average, so another leg down is possible, says me. Looking to buy in 1/2 heartedly, a little lower, say no more than 1330 in the SPY, 660 or so in the $EMW.

OTOH, could be a neckline right here.....if so....I mighta missed a deadcat. We'll see later on this wk.

Only in Kalefornea...

Kalefornea's tax revenue increased by over 17% in 2011 compared with 2010.

You might think the Golden State could balance it's budget when it's revenues increased by 17%. But you think wrong. So much so that Governor Moonbeam thinks it important to jack up the sales tax, the income tax, and many other fees and taxes. As Roger Hedgekook (yuk, yuk) states, Kalefornea is already in Obama's second term!!!

Amazing

And, I'm taking a bit more off the top today. But, I see your point in a way. Why increase 'G Fund' assets with an IFT when I can bail to the 'G Fund' any day of the month. And, I was at 9.11% (not quite 10%, but we all work for the gubmint) when I implemented my market timing model - yuk, yuk...

Anyway, here is the current going on vacation and going away in May allocation:

G: 20%
F: 30% - Eeee gads, I hate this holding. It's gotta pop soon
C: 35%
S: 10%
I: 5% - Yowser, but it is only 5% of my holdings!!!
Expected Annual Return: 4%
Expected Annual Risk: 6%

Originally Posted by amoeba

Boghie's tracer return is 7.78%, not no yummy 10%, and moving 6% more to G fund is starting to look like me and my 8 moves to G fund in a month. Which I got scolded by several for this averaging down mentality. So I'm not doing it no more.

Back to basics: the 50 EMA's on all the funds holds as upper resistence, volume has lightened up to no more than average, so another leg down is possible, says me. Looking to buy in 1/2 heartedly, a little lower, say no more than 1330 in the SPY, 660 or so in the $EMW.

OTOH, could be a neckline right here.....if so....I mighta missed a deadcat. We'll see later on this wk.

Being on vacation has helped my bottom line a bit...

I think that is a strategy well worth looking into...

Maybe I should start a market timing vacation system. I should have stayed more invested. Oh well...

I won't say a word.