Thread: Paid TSP consultants

casesb wrote:

I am not sure where to post this question. I have come across a couple of companies that, for a fee, willadvise TSP participants how to allocate funds among the 5 accounts each month.Both companies advertise that their models beat the average market rate of returns, however; these companies are only available by web address and P.O Box (no phone numbers and no business address) so it makes me think they are just scam artists. I am interested in this type of advice, and would be willing to pay for it. Are there legitimate businesses out there that provide this service? :?

There are a fewthings to consider casesb. Costs. Credibility. Strategy.Longevity.

Are they making outrageous claims? One site I saw recently claims they averaged over 22% a year for 15 years. Nope! Not gonna happen. Warren Buffett would be asking them for advice.

I don't believeasmall fee is too much to ask but you have to know what you are paying for. Are they professional money managers or just amateur investors (like me)?Are they looking to help you or just looking make money off of you? How long have they been around?

Just reading this site (TSP Talk) will give you some basics of investing from a wide variety of individuals and may be all you need to help youwith what you want to do with your account.

Over the last fours years (2000 to 2003) my return beat the stocks averages handily but the G and F funds beat me soundly. Some years are good, some bad. In 2004 so far I have lagged the averages. I don't make any claims. I'm just hear to help you make better decisions. Many of the people here do make better decisions than I do.

Anyway, I hope that helps some. If you have any other questions, ask away. I'm sure others will chime in and help you also.

Thanks,
Tom

If you read between the lines on these sites, they say their "system" has averaged high gains over the last 10+ years. What they are saying is that when they back tested their system versus what actually happened their system did well. Now as a computer modeler myself, I can tell you that given what happened, I can create a model that will do very well. The problem is that the market changes over time as people see the same trends and begin to anticipate them, thus creating a new dynamic.

I have been toying with the idea of buying one of the services for a year (the one that cost $5 per month and tracking how they actually did for a year. I probably would notuse a service to make trades tillI had better confirmed track record by either tracking what they do myself or knew someone personally who has used them successfully.

Fundsurfer makes excellent points regarding backtesting. Nassim Nicholas Taleb wrote a wonderful book called "Fooled by Randomness" which delves into apparent market trends and how easily they can lead you astray. Mandelbrot has released a book called "The Misbehavior of Markets" which I have not read yet but have heard good things about. The book deals with the true volatility of the markets and how dangerous they can be even over long periods. Both of the above books are for the more advanced investor and don't really touch on asset allocation. William Bernstein's "The Intelligent Asset Allocator" and "The Four Pillars of Investing" are really good asset allocation books. Be very careful about timing services targeted specifically to federal government employees. They seem to be popping up daily and I can't help but believe that they are a ripoff.

At this point I would pay $5 or even more for some real advice that produces better results than I have had lately. This spendng, then breath-holding all week that we do is not necessarily profitabile. If we gain we are lucky. I don't feel this "advice" is the best way to handle my thrift fund.

Hi smine. I don't thinkthere is a magic pill that these "advisers" have that will make volatility go away. Mutual funds are getting as beat up as you are. I subscribe to a bunch of services and no one is cleaning up this year. If you are in stocks expect swings. If you don't want volatility, diversify and check your account every year or so. That's about what a goodfinancial advisor will tell you. This is not easy. When the market is going down or consolidating, it is tough to make money. Just don't be left out in the cold when this consolidationends, and it will end eventually.

I look at it this way. I made 39% in 2003 being aggressive.I got too aggressive this year and so far I am having a "bad" year down a whopping 1.2%. A diversified account has made3 or 4% this year but last year would have made onlyabout 20%. See why it pays to be aggressive at the right time? When the indicators say so, the downside is limited and you can get aggressive.

The downside is limited right now in my opinion but the market will not go straight up. Don't get discouraged. Hang tough. It's a marathon, not a sprint. If a $5 service helps put your mind at ease and allows you to sleep better, it is worth it.

Tom

I would pay a consultant who consistantly performed better than the averages (or better than I do). But I haven't found one yet. The problem is, as Tom points out, that anybody can say they've performed great in the past...and provide you with false data to back up their claims. They then take your money...and you're the sucker. One comes to mind....

"Are they making outrageous claims? One site I saw recently claims they averaged over 22% a year for 15 years. Nope! Not gonna happen. Warren Buffett would be asking them for advice."

I agree, Tom. They also claim to have achieved more than 4x the return of any fund from Jan-Sept 2004. That's quite incredible. My fear is that many people will be suckered in,based on these false claims....

I had a 12.5% return in 2004 despite the year being so-so. To me that's good; not great but better than savings at banks, CDs etc. So, I ready to do at least this much again by myself. Paying for consultants would have told me to go to G Dec 30th???? That advice would have been worth paying for!

My advisor told me to go into G on the 31st but I listened to the analysts instead and stayed in. That won't happen again.

Who is your advisor? Maybe we'll call him!!!

smine wrote:

Who is your advisor? Maybe we'll call him!!!

You might actually know him, but he's expensive.