Thread: Boghies Account Talk

I always get into a correcting market early - just see 2008 for a real solid example. Yowser...

So, now I am making an effort to get in too late.

Burro must be kinda pissed with me. So boring, so sleepy... I have half of my assets sitting around doing nothing for me. However, I do not want to get them involved till late this month. I think somewhere around the 20th I will move 10% into C/S/I and somewhere around the 27th another 10%. That will make me 70% in by November and we shall see from there. Regardless, I think the F Fund will be a dangerous spot to be invested in for quite some time. Too bad we do not have commodities, emerging market, or REIT options available to us...

Ric Edelman discusses the 'safety' of pensions about an hour into today's (2015/10/24) show...

The whole show is a worthwhile listen. Here is his main link: Experts in Financial Planning. Edelman Financial Services

Click on the 'Listen' menu option to either get a list of radio stations or access his pod cast (or whatever they call it). Currently, the pod cast is last week's show, but he will post this weeks show soon. The various radio stations present his show at various times so you might be able to get today's show this weekend before it hits his recorded version on his website...

Originally Posted by Boghie

I always get into a correcting market early - just see 2008 for a real solid example. Yowser...

So, now I am making an effort to get in too late.

Burro must be kinda pissed with me. So boring, so sleepy... I have half of my assets sitting around doing nothing for me. However, I do not want to get them involved till late this month. I think somewhere around the 20th I will move 10% into C/S/I and somewhere around the 27th another 10%. That will make me 70% in by November and we shall see from there. Regardless, I think the F Fund will be a dangerous spot to be invested in for quite some time. Too bad we do not have commodities, emerging market, or REIT options available to us...

What are you waiting for? You are going to miss all the good rallies.

Geeze JP, you were right. My waiting game has been a losing game. I always get in too early - and usually early October - but I think I'm too late this time. Anyway, here is the new allocation.

• G: 23% - Still overweighted in G because F is correcting
• F: 12% - I don't want to grab that knife
• C: 27% - Already corrected from the correction, so why buy more
• S: 23% - Overweight because it hasn't fully recovered
• I: 15% - Overweight because some here think it will boom and it will be your fault if it tanks

Expected Return: 5% (after inflation adjustment)
Expected Risk: 8%

So, now I am 65% in the market and awaiting information on direction. I want to be 75% - 80% in the market sometime this year...

Rate hike coming, but the market seems good to go with it...

•G: 17% - Still overweighted in G because F is correcting
•F: 8% - I still don't want to grab this knife
•C: 34% - Hoping for Santa
•S: 26% - Hoping for Santa
•I: 15% - Hanging tight

Expected Return: 7% (after inflation adjustment)
Expected Risk: 9%

So, now I am 75% in the market after the market seemed good to go with an expected rate hike. Really don't want to be in the F for the rate hike, but you never know...

What is this market???
Does it seem toppy or bottomy???
What are the factors - economic and political - driving it???

Normally politicians in America would try to goose things in an election year. Can they do so now? Has our brilliant leadership already spent into years of design margin? Is there any slack left? I don't think so. In reality I think government entities that have deficit spent for 50 mostly golden years are now going to be forced to tighten belts. All levels of government. I think there is very little appetite in the private sector to bail out a free spending and inefficient public sector. Anyone out there want to double your taxes???

Will this crash the market? That is the question. We need about a 12% cut in spending to break even with income. If the Federal gubmint starts cutting spending measurably (say 5%) than the private sector might kick in either through growth or through direct contribution. I get the feeling that non-gubmint entities are looking at the numbers nowadays. The last threat of a gubmint shutdown did not elicit the normal howls of protest - it was more a who cares moment. I really don't think the private sector is done with growth, I just think they are choosing not to grow. They are sitting on their hands awaiting decisions. They cannot vote folks to make tough decisions so they await change forced upon gubmint. Thus, I think this year politicians lose and management wins - hopefully.

This is going to be a rocky year - especially for us...

For now, I will stay mostly invested. We seem to be at a balance point. We have already gone through a 10%+ correction - short lived, but still...

At a trailing P/E of 20+, the answer is "toppy". I don't think politics matter (until later in the year), unless they involve lots of stimulus money, which won't happen this year. Oil oversupply remains a drag on the overall market. Agreed, this January (like last), is likely to be rocky - time to pay attention.

Kinda a bad day, but then isn't everyday a bad day for the middle class.

Has anyone looked at what this years salary increase actually means. I own (actually paying a mortgage) a condo, own a 2007 Honda Civic, and still live in early modern poverty (but fixing that this weekend!!!). So, pretty middle class. Well here goes the job the gubmint does on me:

Federal Tax Bracket: 25%
State (Kalefornea) Tax Bracket: 9.3%
Social Security and Medicare (My Part): 7.5%
FERS ('Invested' in the crappy G Fund with a promise by politicians to pay): 0.7%

So, that means that taxes and unwanted 'benefits' consume 42.5% of the pay increase. Think about Social Security and FERS. Taken together, you and your employer are moving about 30% of your income to the 'G Fund' where future politicians must honor the vote buying promises of current politicians. My guess is that both benefits will be cut significantly. Imagine if you could have invested 30% of the cost of your employment in TSP. Your retirement would be amazing, eh. But, instead, look at that crappy Social Security benefit, your crappy pension, and the fact that you gotta move another 10%+ of your gross salary to a real investment in the real effort to take care of yourself in old age. How pathetic;swear

Nice, very nice. But, I can see, and I have knowledge.

I can adjust...

Running for cover before the big draw downs hit. But, still have no crystal ball so I cannot completely bail out. Doesn't feel like 2008, more like 2011...

• G: 50% - Lousy investment, and one the Feds can grab
• F: 0% - Even lousier investment
• C: 26% - Has been running too hot recently, but...
• S: 16% - I was waiting for the S Train, running over me
• I: 8% - Eurotrash allocation

Expected Return: 4% (after inflation adjustment)
Expected Risk: 6%

Will President Obama get the blame for the upcoming recession??? Whatever is happening now will probably take some time to was out - and it ain't China...

Sticking my head out a little bit. Moving to a reasonable facsimile of an Edelman allocation. However, I want nothing in the F and the G Fund is significantly better than cash.

• G: 40% - The G Fund returns pennies on the dollar
• F: 0% - Even lousier investment
• C: 27% - Has been running too hot recently, but...
• S: 23% - The S Train is moving
• I: 10% - What am I doing. I don't know
• Expected Return (after inflation): 4%
• Expected Risk: 8%

Since the rest of the world does not have a stable cash fund earning 1.75%, and all allocation estimators use 0.1% earnings for cash, my best guess is that I am at something like 5/8 or 5/7. I just don't like the F right now. Wish I did though.

By the way, JPCavin pointed me to the Portfolio Visualizer 'Backtest Portfolio Asset Class Allocation' site. I think the best fits for our funds are as follows:

• G: Cash / Money Market - You will get some Alpha in comparison here
• F: Total Bond
• C: Large Cap Blend
• S: Small Cap Blend - This is the most variant as far as matching
• I: International Developed Markets

My current 40/0/27/23/10 allocation results in:

• Expected Return: 7.51% (4.79% after inflation)
• Expected Risk: 10.58%

My previous Conservative 50/0/26/16/8 allocation resulted in:

• Expected Return: 6.87% (4.16% after inflation)
• Expected Risk: 8.86%

The S&P500 0/0/100/0/0 allocation results in:

• Expected Return: 10.28% (7.48% after inflation)
• Expected Risk: 17.78%

Why don't I just stay in the C Fund? Look at the risk. If you use the site, look at the max drawdown. Remember 2008 and 2009 and how fast big chunks of that drawdown occurred. When I was younger and broker and didn't have a wife and a dog and a cat I was always in C/S/I. I will be fully invested if the market is in a stable upswing, but it ain't stable.

However, remember 'risk' is really just a more advanced data aware standard deviation. That means that 67% of the time the market is bounded +Std (yuk, yuk) and -Std from the expected return. Two deviations occur 95% of the time, and a 2008/9 style crash of more than 3 deviations occurs like 1% or 2% of the time. But, look positively too. Folks forget that. And, the market biases to the positive. Love those outliers to the positive. Gotta have a chunk of that - while hopefully moving to the Lilly Pad in time to avoid the worst.