Scribbler's Account Talk

**Scribbler** · 01-02-2009, 02:48 PM

Right now, the TSP is 100% G Fund, and I expect it to stay that way for awhile, unless there is a fundamental structural change in the economy.

It seems rather obvious, but the best way to make money is to not lose it. The ability to remain fairly nimble is the key to success. The TSP restrictions make this very difficult, and as a result I tend to find myself waiting for superior setups. If I don't get a setup, I will remain in the most stable vehicle.

I have broken down a top down analysis process I refer to as Thesis-Trend-Metric-Vehicle-Entry. I find it helps keep me out of bad situations, and really develops critical thinking about the state of the economy.

Thesis - The overall view of the economy due to a structural reasoned thought. For example, a good thesis is "Corporate debt levels have shrunk, while the overall economic activity has increased. This will lead to greater corporate profits going forward. This fact, combined with a benign inflation outlook, should result in an increase in the overall shareholder equity for corporations, and a resultant increase in stock prices." [Note: the aforementioned thesis is not my current view.] A bad thesis would be "Buy and hold for the long term and you will be good."

Trend - Major trends that occur as a part of the thesis. For the good thesis given earlier, the trends would be 1) Decreasing corporate debt levels, 2) increasing economic activity, 3) increasing corporate profits, 4) benign inflation outlook, 5) increasing shareholder equity on corporate balance sheets. Notice how the bad thesis has none of these.

Metric - Each trend gets a subset of metrics. Metrics measure the success of the trend. For example, "Increasing economic activity" gets a set of measures like 1) Increasing GDP (Yes or no?), 2) Increasing Consumer Confidence (Yes or no?), 3) Durable Good Orders Increasing (Yes or No?), and so on. Bad metrics are based on anecdotal evidence, like "The economy must be doing well, because Wal-Mart was packed."

Vehicle - The security that will be affected by the improvement or deterioration of the Trend as measured by the Metrics. TSP offers us limited choices in their funds.

Entry - Determination of low-risk/risk-mitigated points of investment. For the example cited, a buy the dips. I even like to have a list of items for the Entry as well, like 1) Is the chart making higher-highs and higher-lows (Yes or no?); 2) Is the chart is some sore of pattern that could subject it to greater selling pressure (Yes or no?) [such as a bear flag, or rising wedge].

Notice how wisdom of the Lifecycle funds pays no attention to the vehicle, by setting the vehicle allocation to be based on when you want to retire. This is the most ridiculous idea I can image. And by espousing an investment strategy that buying more and more at regular intervals, you can be sure that the Entry you recieve will be at best average.

Anway, I find it to be a more scientific way of looking at things.

Interested in your thoughts.

**alevin** · 01-02-2009, 03:17 PM

Looks to me like you will be a value-add around here, Scribbler. Will look forward to hearing your thoughts as we go.

**tsptalk** · 01-03-2009, 02:18 AM

Welcome Scribbler! Nice write-up.

**Scribbler** · 03-04-2009, 04:09 PM

Moving into the C Fund, 100%.

We should see a decent rally here in the near term -- but this trade is based only "a trade" not any level of actual economic recovery.

**kar crazy** · 03-04-2009, 04:59 PM

welcome and hold on tight

**FUTURESTRADER** · 04-17-2009, 04:24 PM

Scribbler,

In your economic report towards the end, you comment that "...all you have left to do is decide when to get back in". That is obviously true, but you have made your 2 IFTs for the month, so...you have two weeks to decide when to get back in

**Scribbler** · 04-17-2009, 07:40 PM

I know -- and this should be an interesting two weeks!

**Pschiffdicpal** · 04-18-2009, 11:36 AM

Your information is A fact based model of reliable information to make informed investment decisions both short and long term, thats what is need in a world of hype, pump and dump. CMBC,FOX BUSSNESS ETC.

**tsptalk** · 04-18-2009, 03:19 PM

Welcome P. Scribbler may need to add cheerleaders to his report to keep up with CNBC's market coverage.

**FUTURESTRADER** · 04-20-2009, 07:18 PM

Scribbler,

In your report this week, you say that you are not too concerned with the 2 IFT rule. Thanks for pointing that out. As your performance thus far this year has demonstrated, that is probably for the best, though these are anomalous times.

**Pschiffdicpal** · 05-21-2009, 04:55 PM

BEARS RULE, the "green shoots" are weeds(banks,cars comps,homes with no value,goverment ownership/legislation/money) that will grow nothing of value, only make more weeds. Only when the weeds are allowed to die or be killed can real growth be a reality. The optoemic opium is losing its power has the pain of this money (drug) withdraws finily hits and the 5 signs of death of this market, (denial, anger, bargaining, depression, and acceptance).
Denial... march 08 we just need tax rebate checkS????
anger.... sept nov 09 lehman crash ballouts

Where at bargaining NOW...... please markets save us

depression....... mid-summer 09 we really are BROKE

acceptance........ late 09 early 10 Yes Chairman MAO is on the we use.

**KevinD** · 01-04-2010, 12:31 PM

Scribbler - Could you give us the cliffs notes version of inflation vs deflation?

Originally Posted by Tsunami

Uptrend,

The combined stuff I read agrees with your short-term prognosis pretty much. I'm expecting a smaller rally though, up to 1150ish, topping on 1/20ish, with my current anticipated bail-out date being 1/19. Then comes the first significant fall since July, down 10% or more, bottoming in late February-ish, then the market surprises again and hit's higher peaks in early April, early May, then the final top in August. Then it's down down down for several years as the deflationary forces defeat the Fed's money printing efforts. If the bearish prognosticators are right, this is going to be a disasterous decade for the unprepared Boomers and already retired folks that try to stick with stocks after August.

I heard this guy on Coast to Coast AM last night, and in the past on financialsense.com. He's kinda "out there", but has made some great calls in the past. http://www.nowpublic.com/world/geral...e-2549227.html Hope he's wrong about the major terrorist attack prediction.

Originally Posted by airlift

Tsunami,

Thanks for your interesting comments, which supplement Uptrend's possible scenario or prognosis.

I have an open question for you, regarding the deflationary forces that you perceive and that you mention above. I really don't understand what impact deflation would have on the price of oil, gasoline, alternative fuels, and other commodities; and on our daily lives and standard of living. Therefore, I would like to understand the potential deflationary scenario better. It is important to get a grip on this aspect, and the deflationary possibilities that you alluded to. Thus, I highlited your comment.

With Uptrend's permission, I want to invite anyone on this board that might be willing to contribute their opinion as to the potential deflationary forces, to please express their ideas on this point. Thank you!