F Fund Confusion

[Rod]

Why is the F Fund posting gains when the G, C, S, and I are posting losses?

I thought that when interest rates rise, the value of bonds fall? If that's the case, then why is F gaining?

Thanx!

[Pete1]

Theefficient market hypothesis would assert that the bond market incorporated the news regarding the first rate hike long before the actual hike took place. Also, there were no surprises from Greenspan regarding accelerated future rate hikes. Both of the above may help to explain the short-term performance of the F fund.

Exactly right Pete. As I stated in another forum, the futures markey is paying for next year at an anticipated feds rate of 3.04%. I'm looking for more increases soon after the elections. Could see another small one before also. Buy your house now!

Unless of course you have cash. Then wait till the housing prices drop because of the rate hikes! :^

[Pete1]

The weak June jobs data shouldboost F fund prices (highly unlikely that Greenspan will pick up the rate hike pace on this news).

[Pete1]

Interestingly, 30 fixed mortgage rates dropped after the rate hike. Seems like bankers stroked those looking to refi or buy prior to the hike. I agree that now would probably be a good time to look but there may be further drops in the 30 year fixed rate based on the jobs data.

[Pete1]

I should have said short-term drops :)

[Rolo]

Oy...I am buying another house to move into by November, possibly sooner. Any tips or advice regarding securing the best rate/price and timing?

[Pete1]

It is tough to know when to lock in a rate.Rates trended up prior to the hike but have dropped a small amount and seem fairly steady right now. The best advice that I can give is to shop around for the best rate available when you do decide to buy your house and also, try calling a couple of mortgage brokers to see if they can provide any useful input regarding the short-term.

Pete1 wrote:
try calling a couple of mortgage brokers to see if they can provide any useful input regarding the short-term. Isn't that like asking a surgeon if you need surgery or not? :P

[Pete1]

Sort of :).

[Rolo]

Pete1 wrote:
Sort of :).
Well, that would also be a good "litmus test" to find the no-BS, honest broker.

[Pete1]

I heard mortgage rates came down again today. Not sure how much.

[azanon]

Why is the F Fund posting gains when the G, C, S, and I are posting losses?

The F fund has been the worst of the 5 TSP funds this year, as the not-dropping, and rising interest rate would have suggested. In contrast, the F fund did great the past 2-3 years with falling interest rates. The only reason the return is even positive so far this year is because the interest (so far) exceeded the drop in principle, and its only barely positive. A near 0 or, worse, negative return for a debt instrunment is a sign that its not the place to be at the moment.

The MPT/efficient market areprimarily stockmarket concepts, and much less, if at all, applicable to bonds. When interest rates rise 1%, bonds fall ~ 10%. A couple of the posters above are indirectly suggesting that because of MPT/efficient market, you can either 1. ignore interest rates because they are already factored in.... or worse, 2. its a positive contrarian thing because people rushed to take advantage of interest rates before they started climbing.

Also, if you look at a historic chart of interest rate changes, the rates tend to more often change in the same direction that they did the previous change, so even with just one last rate increase, rates are more likely to rise again next time as opposed to fall back down. Even more so, considering how low interest rates are compared historically.

I say keep it simple with respect to timing; if rates are showing a pattern of climbling (established by just one rise), then avoid bonds, or minimize them.

Azanon

[rokid]

Anazon,

I'm confused. Why doesn't efficient market theory apply to bonds? They're a market whose prices are determined by willing buyers and sellers interpreting all available information, e.g. interest rates. Are you stating that bonds are frequently mispriced, i.e. the bond market is inefficient? Are you also stating that you can't use bonds as an asset class in a MPT portfolio optimizer?Can you cite anybooks or articles to support your position?

Finally, I think it's interesting that the much malignedF Fund only trails the C Fund by .04% for the year. In fact, according to the statistics on TSPmoney.com, it has provided the best returnin recent weeks.

[Rolo]

rokid wrote:
Finally, I think it's interesting that the much malignedF Fund only trails the C Fund by .04% for the year. In fact, according to the statistics on TSPmoney.com, it has provided the best returnin recent weeks.

Holy crap! I'm about to side with Az!

Interest rate hikes may have reflected in bond fund's prices since they are inevitible and obvious.

To say that the F fund is leading over the past few weeks is not very sound.


Stocks are consolidating right now, so their returns will be about flat; this is normal and temporary
Bond's low performance will last quite a while, much longer than the market's consolidation
You can sway a bond vs. stock comparison any way you want to depending on the day that you choose (from a low-to-high point, or high-to-low point)
I would say the F fund carries much greater risk than the stock funds due to interest rates having only one way to go. Additionally, your returns on the F fund will be meager at best, so the risk/reward ratio is unfavourable; this is contrary to the idea and purpose of bonds being lower risk

[lovegardening]

:Dat least the market changed a little today.......a few pennies in some of our pockets.....

[rokid]

Rolo,

No argument - stocks have historically out performed bonds. In addition, I expect (and hope) they continue to out perform them in the future.

The F Fund stunk last year and it continues to stink this year - although the C Fund stinks almost as bad.

Since I'm not a market timer,holding a portion of my assets in the F Fund will (hopefully!) lower my portfolio volatility/risk. In other words,if stocks take a dive, I won't lose so much!

However, for market timers, it appears that some money could have been made in the F Fund over thepast few weeks.

[tsptalk]

rokid wrote:
Since I'm not a market timer,holding a portion of my assets in the F Fund will (hopefully!) lower my portfolio volatility/risk. In other words,if stocks take a dive, I won't lose so much!

However, for market timers, it appears that some money could have been made in the F Fund over thepast few weeks.

That's a solid, moderate to conservative approach. Nothing wrong with that.

[Rolo]

rokid wrote:
Since I'm not a market timer,holding a portion of my assets in the F Fund will (hopefully!) lower my portfolio volatility/risk. In other words,if stocks take a dive, I won't lose so much!


Let us think about this. "Volatility" is a short-term term. Proponents of bonds (F fund) right now are long-term investors, "allocators". Why would a long-term investor be concerned aboutshort-term fluctuations? Why not stick with the proven long-term winner?

Barring an unusual bond bull market (such as the early '80's) and unusual bear market in stocks ('00-'02), bonds are guaranteed to water down your gains.

Be you an active trader or long-term allocator, if stocks (or bonds) "take a dive", then have enough sense to get out of the rain.

[Pete1]

Rolo,

Jeremy Siegal and Charles Ellis (both advocates of long-term buy and hold with 100% allocated to stocks) would agree. Bondswater down the long-term return (say 20 years). They would also agree that it makes no sense to offset short-term volatility at the expense of long-term returns.They would disagree with you regarding being able to move in and out of stocks at just the right time. These guys are optimistic market timers, ie, they are bullish 100% of the time and are always fully invested in stocks. Sure, there will be times when they take a hit but over the long-term (say20 years)they contend that the 100% stock allocation inevitably performs better than theallocation watered down with bonds.They would say that for anyone practicing buy and hold with over 10 years until retirement, be 100% invested. Do not watch the indices on a daily basis. Check your account quarterly. Rebalanceif your allocation is out of balance by more than 10%.

That being said, Bill Bernstein, another long-term buy and holder, believes that the long-term equity premium of stocks over bonds is no longer a given. He contends that the undelying fundamentalsfor stocks (dividends and earnings) will not be much higher than bonds and so, he recommendends that the maximum equity exposure at any age should be no higher than 80%.Jack Boglecomes fairly close to this camp as well.Both view the P/E ratioover the long-term (the speculative, daily price fluctuations) to even out over long periods with the underlying fundamentals of dividends/earnings being lowerover the coming decades. Therefore, they advocate allocating part of the portfolio to bonds as there is no guaranteethat the equity premium is a given and in fact, it is highly probable that the equity premium projects out substantially lower than historic levels.There is an interesting article over at AAII.com indicating that over the15 year period ending in 2003, an 80% equity allocation achieved 92% of the return of the 100% allocation at substantially lowervolatility. A 50/50 allocation achieved 72% of the 100% allocation. The15 year periodstudied included both bull and bear markets. If Mr. Bernstein's hypothesis provesto be correct, it makes sense to allocatepart of the portfolio to bonds orthe G fund.

[azanon]

They're a market whose prices are determined by willing buyers and sellers interpreting all available information, e.g. interest rates. Are you stating that bonds are frequently mispriced, i.e. the bond market is inefficient?

Where interest rates are concerned, the only factor that goes into the price of a bond purchased today is what the prime rate is today, not what it was yesterday, not whatanyone thinks it will be 3 years from now (be it bond issuer or bond purchaser). Now yes, there are other factors such as the credit worthiness of the bond instrunment issuer and other various factors that will determine what rate you'll get paid for buying the bond that day, but to my knowledge this never includes an interest rate movement forcast.

Now, after you have purchased the bond, it will pay the exact, agreed upon interest rate, that will not change unless the issuer defaults. So what can cause the effective earnings rate to vary from the bond percentage? The direction of interest rates after you bought it. You see, there is no "perception" factor like you have in stocks once you own these. There's the finalized rate of return of the bond you purchased, and the degree of stability of your principle, which is competely a function of the 1. interest ratechanges 2. whether the issuer defaults.

Most would say interest rates are rising now and they really couldnt go much lower, so your principle in the bond is at risk. Why buy an investment when the loss of principle will erode the interest? Of course in a bond mutual fund, like the F fund, you dont see this actually happening since you see the end result of the change in principle and the paid interest of the various bonds that compose it, and apparently the erosion of principle this year has pretty much caused the F fund to have near 0% return.

[azanon]

There is an interesting article over at AAII.com indicating that over the15 year period ending in 2003, an 80% equity allocation achieved 92% of the return of the 100% allocation at substantially lowervolatility. A 50/50 allocation achieved 72% of the 100% allocation. The15 year periodstudied included both bull and bear markets. If Mr. Bernstein's hypothesis provesto be correct, it makes sense to allocatepart of the portfolio to bonds orthe G fund.

That's a really good point, and is explained by the power of compounding. What do i mean? The difference between an 8% return and a 9% return on a portfolio over a long period of time is less than the difference between a 9% return and a 10% return. Basically, what happens in effect is the portion of your portfolio that is stock has its returns "magnified" over that long period making thelessened return by your bond portion negligable, and thus not a linear degradation of return.

Another exampleof this I like is if you picked 10 stocks in July 94' investing 10K in each, one was Dell and the other 9 were such dog stocks that you lost all principle, you'd have about $820,000. Point; - all you need is a little stock powwow, and you really dont hurt yourself protecting other portions in the process.

A final way of looking at it, is if you go from 0 percent stock to 10 percent stock, you add quite a bit of return, and negligible volatility. Go from 10 percent to 20, you get a little less extra return, and a little more volatility. Wash, rinse, repeat. Basically by the time you get to 60-80 percent or so, its not such a good deal/tradeoff. I find it almost impossible to make my mind realize that allocating an additional 10 percent to stock (from bonds, g fund, whatever) is not a linear benefit, but its true, and that craziness is again explained by compounding.

[Rolo]

Pete1 wrote:
They would disagree with you regarding being able to move in and out of stocks at just the right time. These guys are optimistic market timers, ie, they are bullish 100% of the time and are always fully invested in stocks.
How optimistic were they 2000-2002? Their optimism would have cost them 75-90% of their investment--a high price to pay for an emotion.

In January 2000, the technical investors were screaming "Get out now!" and in March the bubble burst. The proclamations were so loud and obvious that you did not have to watch the market daily to have heard it. Anyone who stayed 100% in cash was far ahead of anyone 100% in stocks. This is why I say that every investor, no matter the style, should be privvy to macroeconomic changes, such as a three-year bear market.

Granted, these things do not happen regularly, but they do happen. If a hurricane were headed directly toward your house (an infrequent occurance, but it does happen here), I would hope that you would evacuate--this is the same concept.



azanon wrote:
Where interest rates are concerned, the only factor that goes into the price of a bond purchased today is what the prime rate is today, not what it was yesterday, not whatanyone thinks it will be 3 years from now (be it bond issuer or bond purchaser). Now yes, there are other factors such as the credit worthiness of the bond instrunment issuer and other various factors that will determine what rate you'll get paid for buying the bond that day, but to my knowledge this never includes an interest rate movement forecast.


I agree with Az on this one (holy crap! twice in as many days! heh), however, we are not talking about individual bonds, but rather bond funds. I cannot help but to think that there may be some efficient market theory effects on a fund. Additionally, bonds can and do go for premium and discounted prices, based on recent interest rate changes and in anticipation of prime rate changes.

[azanon]

I agree with Az on this one (holy crap! twice in as many days! heh), however, we are not talking about individual bonds, but rather bond funds. I cannot help but to think that there may be some efficient market theory effects on a fund. Additionally, bonds can and do go for premium and discounted prices, based on recent interest rate changes and in anticipation of prime rate changes.

Ahh, so if someone else buys the bonds for you, then all of a sudden the dynamics as to how they work and what effects them changes? I dont think so. No matter how many bonds compose the bond fund, just as many "principles" go down with those rates go up. That being said, I think its important here to note that above I said EMT is much less applicable to bonds, not necessarily not at all (though i do lean towards the latter).

The only time i think an anticipated rate change would be considered would be maybe the week or two prior to the actual rate change, such as just what happened. We all pretty much knew the rates were going up, just not exactly by how much. That being said, i think more intermediate/long term minded. With that in mind, maybe that's where the problem with this discussion is; you guys are thinking literally day-to-day movement, where i'm a long term investor. On a 1 to 3 year outlook, i'm here to tell you Bonds arnt looking good. Watch and see.

And we agree more often than you think Rolo. Have you already forgotten the days when i agreed with "99%" of what you said? :^

[Rolo]

rokid wrote:
Finally, I think it's interesting that the much malignedF Fund only trails the C Fund by .04% for the year. In fact, according to the statistics on TSPmoney.com, it has provided the best returnin recent weeks.

You mean Year-To-Date, the past seven months. What about longer term?

An afterthought I had to illustrate my point that recent F Fund returns are not only moot and flawed logic. About eleven months ago, the TSP started using share prices and all of the funds started the same at $10/share. To show that volatility is inconsequential (or should be) to the long-term investor and to show that bonds are not a good idea right now, let us look at the current share prices:

Share prices as of July 09, 2004

G10.46
F10.08
C 11.76
S12.77
I13.46

You can see that the F Fund did not do anything, less than 1% return over a year (my money market account beat that! at ~2%); that is listless money, wasted. Even the G Fund had a 4.6% increase with no risk. Stocks gave you a 17.6%-34.6% increase. Volatility is a good thing! There is more upside volatility than there is downside. You cannot make substantial gains without volatility.

[azanon]

Volatility is a good thing!

All other things being equal, volatility is bad, not good. You perceive it as good, because the tradeoff of having to endure volatility is that it (sometimes, but not always) promises higher returns over the long term. Take precious and minerals though, for example, and you have high volatility, and a zero-sum return (over a very long period of time).


You cannot make substantial gains without volatility.

Large-capvalue has doneabout the sameas small-cap growth over 40 years. All the added volatility boughtsomeone was sleepless nights.

[Rolo]

azanon wrote:

Volatility is a good thing!

All other things being equal, volatility is bad, not good. You perceive it as good, because the tradeoff of having to endure volatility is that it (sometimes, but not always) promises higher returns over the long term. Take precious and minerals though, for example, and you have high volatility, and a zero-sum return (over a very long period of time).

Generally, it does. You cannot hit the ideal risk/reward plot without volatility. Your precious metals argument quantifies my point: when that sector goes up...it really goes up and that is a good time to play it. Otherwise, it is pretty flat, just like bonds. My point is that bonds are flat right now and will be for a while. Their upside/downside ratio is ominous.



azanon wrote:
Large-capvalue has doneabout the sameas small-cap growth over 40 years. All the added volatility boughtsomeone was sleepless nights.


hehehe...I thought you would have given up trying to use apples-to oranges comparisons with me, for I will catch you. I do not know about 40 years (where did you find that? I am not necessarily doubting you, but I would like to see the stats.), but according to Dow Jones, the style averages since 1991 are as follows:

Large cap growth: 6.65%
Small cap growth: 8.45%
Large cap value: 11.54%
Small cap value: 14.52%

You must compare growth to growth, not different styles. As you can see, the more volatile small caps beat the large caps in both styles.

Also, I assure you, my insomnia is purely attributed to my mental issues and not my volatile stocks. :D (and I lost a good bit today and yesterday, my two largest holdings down 20%...but I am still ahead 12% :P)

hehe...all in good fun and all of our personal education and enrichment, not to mention, all aboutthe Benjamins. :^

[azanon]

No, the precious metals qualifies my point. They've had just as many drastic, literally horrid drops that exceed the most aggressive of stocksof alltime, and their historical (one century) return is basically 0. They are a class of investments often referred to as "zero-sum". Good inflation hedges though. Anyway, lots of volality, 0 average return.

The deal with volality is that a smart investor expects at least as much return for having to endure it, which is one of the key things you look at. This is what morningstar is literally centered around; comparing risk with reward. Despite what you might think, there are investments with high risk (volatility) and low return, as well as the converse. Likewise, there are a few silver bullets too (low risk, high reward).




hehehe...I thought you would have given up trying to use apples-to oranges comparisons with me, for I will catch you. I do not know about 40 years (where did you find that? I am not necessarily doubting you, but I would like to see the stats.), but according to Dow Jones, the style averages since 1991 are as follows:

Large cap growth: 6.65%
Small cap growth: 8.45%
Large cap value: 11.54%
Small cap value: 14.52%

You must compare growth to growth, not different styles. As you can see, the more volatile small caps beat the large caps in both styles.



Lets see... one invest in stocks and the other invest in...... stocks! What's the problem Rolo?Also i dont know about you, but offhand i cant think of very many "growth" stocks i like on the Dow. I can think of several I like in the nasdaq. So what the hey are you looking at there? Regardless, even using your figures, you're showing LC value besting SC growth by 3%, yet the former is less volatile.

If anything, you just make a great argument for focusing on small cap market capitalization, not volatility. What makes a small stock so good? Well, the business has plenty of upside room to grow. That they tend to be more volatile is just a concidence, because as i showed in the case of precious metals/minerals, volatility does not always equal greater returns.

Go to any mutual fund/stock analysis site worth its weight, and i guarantee you every time volatility will be considered, at least by itself, a bad thing and a reason not to buy it.


There is one thing i do like about volatility though; it works great with DCA. It really magnifies the effect of buying low and selling high, in effect.

[Frizz B.]

A good philosophy to follow:

Everyone is entitled totheir own opinion, even if it is wrong :dude:

Truth is I get really tired of hearing other people telling other people what they should or should not be doing. Don't do day trading, stick with one thing and let it be. If someone, like me, really enjoys the hunt, who is it to tell me I am wrong. I made the biggest blunder a week ago and I say, live with it and move on. If I had followed my system without listening to others, this has killed me, I would have been riding high, Oh well, no ones fault but my own. But please, let me do it my way. If someone doesn't agree with your thinking, so what, be happy for them, people need to stop judging others for what they believe in or what they do, even if it does not agree with you.

[rokid]

All,

Thanks for the stimulating discussion. That's what this site is all about, right?

However, Pete1 eloquently sums it up for me. Siegelrecommends 60-108% (conservative to risk taking) equities with a 10 year investment horizon. Experts Bogle, Bernstein,Malkiel, and Gibson recommend50-80% in equitiesdepending on personal goals and circumstances. All recommend buy and hold, i.e. strategic asset allocation,with periodic rebalancing. In addition, all seem to indicate that near termequity returns will be lower than we've enjoyed in recent years and more closely approximate, or even under perform, bond returns.

Since I don't knowwhat the future holds orwhich expert to believe,I'm diversifying (cash, bonds, and equities - large, small, value, and foreign),watching, and learning. So far, so good.

[Pete1]

How optimistic were they 2000-2002? Their optimism would have cost them 75-90% of their investment--a high price to pay for an emotion.

You should read"Winning the Loser's Game" by Ellis, especially the part regarding returns. He would contend thatthe prudent investor would have been buying, buying, buying when stock prices plummet as they did between 2000-2002. In fact, hecontends that long-term investors want lower returns and stock prices during the accumulation phase. Also, you seem to be viewing the stock prices that were in place in 2000-2002 as static rather than transitoryand "losses" as permanent rather than temporary. Sure,those whobailed in 2002,may incur permanent losses, especially ifthey did not get back in for 2003. How many made that mistake in a fit of panic and are still pondering about whether or not to get back in?

Also, 75-90%? Those with diversified accounts did a lot better than that. Go check out the returns for Dodge and Cox Balanced fund, or a well diversified portfolio of Vanguard or Dimensional Fund Advisors index funds. Hardly 75-90%.Dodge and Cox Balanced:2000 - 15.13%, 2001 - 10.06%, 2002 -( 2.94%), not bad.Maybe if youdoggedly held the S&P500 and nothing else, you sat through a 75-90%transitory decline.

[Rolo]

Pete1 wrote:
Also, you seem to be viewing the stock prices that were in place in 2000-2002 as static rather than transitoryand "losses" as permanent rather than temporary. Sure,those whobailed in 2002,may incur permanent losses, especially ifthey did not get back in for 2003. How many made that mistake in a fit of panic and are still pondering about whether or not to get back in?

I am a Gen-Xer, therefore I am far too impatient to consider three years temporary. :dude: (oh, sorry Frizz) :u

Do you think John Q. Investor, who is not interested in investing details would have the resolve to not only stay in stocks during three years of losses, but buy more?

Whoo-hoo! Buy more WorldCom! :end:

Yes, I have met many people who rode the ride all the way down and bailed right before the nadir. They swore off stocks forever while I was making a killing. In fact, I found no-one who was interested in stocks; I looked like Don friggin' Quixote.

Something I think we all need to bear in mind is that the "experts" and such cater to John Q. Investor, the general public, who is not interested in fine-tuning their portfolios like we are. Just like there are people who take their car to a mechanic and have not the foggiest idea of how to change oil (I cannot imagine that, but it happens!), there are those who have not the foggiest idea about investing so they pay someone else to do it, or they have it all in the G Fund the entire time. This is why TSP is making the L Fund.

Since we are having stimulating (not heated *coughFrizzcough*) conversations on TSPTalk, I would assume that all of us are interested, to varying extents, in tuning our portfolios.

For me, it is 75% about the money, 25% about my mastering it.

Pete1 wrote:

Also, 75-90%? Those with diversified accounts did a lot better than that. Go check out the returns for Dodge and Cox Balanced fund, or a well diversified portfolio of Vanguard or Dimensional Fund Advisors index funds. Hardly 75-90%.Dodge and Cox Balanced:2000 - 15.13%, 2001 - 10.06%, 2002 - ( 2.94%), not bad.Maybe if youdoggedly held the S&P500 and nothing else, you sat through a 75-90%transitory decline.

Yes, I was speaking of market averages/index funds.

Dodge & Cox Stock (DODGX) did better than most, that's for sure, and not much less than balanced:

2000, 16.3; 2001, 9.3; 2002, -10.5; 2003, 32.3; 2004, 6.1

Dodge & Cox Income (DODIX) fared well and bonds were not a bad place to be during the big bear market:

2000, 10.7; 2001, 10.3; 2002, 10.8; 2003, 6.0; 2004, -0.3

As you can see by the contrast of these funds, 2003 was time to stay away from bonds and get back into stocks. (I switched from junk bonds and GNMA's to stocks in May 2003.)



What is my point in all of this? Yes, you can allocate for thirty years based on what any expert says and you will be fine. However, with minimal effort, you can do much better than "fine". Besides, I am not betting that I have thirty years left.

[azanon]

Thanks for the stimulating discussion. That's what this site is all about, right?

For the record, that's the way isee it too.

Frizz, if that comment was related to my response to Rolo, dont sweat that; he knows i pick on him for fun. :cool:

[mrhaslam]

Good evening everyone. I am very new to the TSP world, but I am truly enjoying the very lively conversation and opinions that have been shared here. Alot of the things you all are talking about are way over my head, but I really need to learn about the factors that will affect my retirement in the long run. I am very excited about learning about the market. With that in mind, I will surely ask questions however dumb or retarded they may be.



Oh yeah, I am currently invested in the F fund.I decided to make the move a couple of weeks ago when it wasdown around $9.94. To a green investor like me,it seemed as if I made a good move.I am very excited about the gain, but from your comments, I am not at all excited about the slidethatmight take place.



mrhaslam:^

[Pete1]

Rolo, as I said once before, if you can do it consistently, market it. Or better yet, keep it a secret so that it will keep working. :) Regarding John Q., I agree that there is a dearth of investment knowledge owned by the average 401K participant. It is a very sad but true reality. I am not thrilled about the L fund but if it helps John Q., so be it. :?

[Pete1]

mrhaslam, there is no such thing as a dumb or retarded question. :)

[Frizz B.]

MY comment was at no one in general, just that there are so many comments about how someone should do or not do what they like to do. The comments should be I would not do that, not you should not do that. If someone wants to trade everyday and they are happy about it, be happy for them, don't tell them they are wrong.

Is that fague, (cough, Rolo cough, kool), enough for youROLO, you once mentioned that I answer questions without really answering the question, and thanks, for not using my :dude:. LOL

Pete1 wrote:
Rolo, as I said once before, if you can do it consistently, market it. Or better yet, keep it a secret so that it will keep working.
I've thought about this sentiment before and in my eyes, the more people that follow "my system"the better for me, is it not? If everyone "buys" when I buy, then the higher and the quicker the prices go up. And if everyone "sells" when I sell, tthe lower and the quicker the prices fall so the sooner I can get backk in.

Am I wrong in this assumption?

[azanon]

Frizz, you mentioned that to us before, which maybe explains the reception to your same suggestion here. http://www.tsptalk.com/mb/forum19/206.html I dont want to speak for anyone else, but I really did hear you and considered what you said the first time.

For the record, I disagree with you. I feel its my moral obligation to not allow others to follow down the dark, and dangerous path if I know a better route and sometimes the only way to get someone to consider something else is to come right out and say, you're wrong. Not everything in life is a matter of opinion. There really are some absolutes.

But that's enough for philosophy, lets get back to investments and TSP.

[Rolo]

Pete1 wrote:
mrhaslam, there is no such thing as a dumb or retarded question. :)
Only dumb people who ask questions...bahaha.

Seriously...as for me, reading, asking questions, and reading discussions is how I best learn. Some of us are newer than you think (right, Frizz? hehe). Also, do not doubt yourself just because you are new at it--that has been my worst problem with myself.

azanon wrote:
Frizz, if that comment was related to my response to Rolo, dont sweat that; he knows i pick on him for fun. :cool:


Ya! Az and I chat in IM, too; we have productive and fun discussions...about investing and cars. It may not be evident, but he is a great counterbalance to keep me from going off the deep end. Hopefully, I motivate his interest in becoming more aggressive, and profitable. If nothing else, we chuckle it up pretty well.

mrhaslam wrote:
Oh yeah, I am currently invested in the F fund.I decided to make the move a couple of weeks ago when it wasdown around $9.94. To a green investor like me,it seemed as if I made a good move.I am very excited about the gain, but from your comments, I am not at all excited about the slidethatmight take place.


I have made some brilliant moves and some pretty stupid ones; you will never bat 1.000. I told myself a long time ago, no matter how my moves worked out, if I was confident that it seemed to be the best move at the time, then so be it. The only moves (or decisions to stay) with which I was unhappy are the ones with which I did not fully trust myself and did not follow my instincts.

Frizz B. wrote:

Is that fague, (cough, Rolo cough, kool), enough for youROLO, you once mentioned that I answer questions without really answering the question, and thanks, for not using my :dude:. LOL

hahaha...funny. OK, so what is it with putting my name in all CAPS? All sorts of people do that and I can even here the tone, for they say it that way IRL...it is annunciated louder, and the O's are emphasised. Too funny!

[tsptalk]

mlk_man wrote:
Pete1 wrote:
Rolo, as I said once before, if you can do it consistently, market it. Or better yet, keep it a secret so that it will keep working.
I've thought about this sentiment before and in my eyes, the more people that follow "my system"the better for me, is it not? If everyone "buys" when I buy, then the higher and the quicker the prices go up. And if everyone "sells" when I sell, tthe lower and the quicker the prices fall so the sooner I can get backk in.

Am I wrong in this assumption?

The jails are full of people who do just that.:D They had to change the rules (SEC rules I believe) to keep money managers from being able to tout a stock (or a system) that gives a buy signal, the stock jumps, the money manager bails. Used to happen all the time and probably still does.

I know that's not what you are doing, but I've heard Cramer from thestreet.com say that if he mentions a stock that he likes and he already he owns it, he can't sell for 5 days.

I've wondered how much of an influence we are having. The TSP Talk Email Alert now has over 1600 members. If only 20% of the people who get that email act on it, and the average account size is say $50,000, then that is $16 million being moved. :shock: Not much for Wall Street but pretty significant, and that may be a low estimate.

[Pete1]

mlkman, there is some merit to your sentiment. Pundits on CNBCconstantly attempt to bid up the price of "hot" stocks that they already own and dump them after telling suckers to buy them. Rolo's John Q. is the most likely investor to be victimized by this con game.

However, you are talking about an attempt to legitimately time the market and help others do so, quite a difference than the average CNBC pundit. My contention is that if you become the herd, your system will no longer work. I guess I fall into the contrarian camp on this.

tsptalk wrote:

I've wondered how much of an influence we are having. The TSP Talk Email Alert now has over 1600 members. If only 20% of the people who get that email act on it, and the average account size is say $50,000, then that is $16 million being moved. :shock: Not much for Wall Street but pretty significant, and that may be a low estimate.



Wow, now that's pressure! :shock:

[Rolo]

mlk_man wrote:
Wow, now that's pressure! :shock:
hahaha! Yeah, don't choke on us, Tom!

(I can play my guitars OK in private and a little better in front of people, but I totaly get retarded whenever I am being recorded! :%)

[tsptalk]

Rolo wrote:
Oy...I am buying another house to move into by November, possibly sooner. Any tips or advice regarding securing the best rate/price and timing?
It looks like a good day to lock in a mortgage rate. Bondyields are way down.

[rokid]

I found this interesting article by DFA's David Plecha: http://www.dfaus.com/strategies/fixed/ (http://www.dfaus.com/strategies/fixed/)

Mr. Plecha claims that no one can reliably forecast interest rates. Consequently,and according to Eugene Fama, the current maturity yield curve provides the best estimate of future yields. Rising maturity yields (see the optimal maturities graph) indicate you should go longer in bonds, e.g. five years, declining yields indicate you should go short, e.g. two years.

Obviously, if you need a portion of your money immediately, bonds make sense. However, as a long term, "buy and hold" investor I've been trying to figure out why I need bonds in my portfolio at all. Since bonds depress returns over the long term, theirpurpose,to the extent that theycontinue to non-correlate to stocks,must be to moderate portfolio volatility and preventme from panicking and doing something stupid in a bear stock market.

Finally, I back tested my current allocation, which includes bonds,for the pasteleven years. Sure enough, the returns weren't nearly as volatile as a 100% equity portfolio. Unfortunately, the compounded return was also lower, i.e. no free lunch!

[Mike]

Why bonds? Look at the rates of return for each fund during the bear market. Only G and F came out ahead there.

[tsptalk]

Mike wrote:
Why bonds? Look at the rates of return for each fund during the bear market. Only G and F came out ahead there.
I'm not sure I understand your post. Are you suggesting that we should be in the G and F funds right now? :?

[smine]

I agree. S is losing our money by the buckets. At least G and F made some Friday. I moved out of those stocks earlier, after seeing money poor out. Now most all is in G. I cut losses long ago. So did the rest of us here. It would be great if we bought really low, like now, but it just keeps going lower. Good luck to all you adventuresome people; for me, it's the safety of G.

[tsptalk]

smine wrote:
Good luck to all you adventuresome people; for me, it's the safety of G.
By adventuresome do mean :dah:?

I can understand that. :) July hasn't been much fun.

[smine]

Yeah. Kicked myself end of June after Greenspud spoke and Iraq transfered(causing soring market) and I was out of it all, but had 2K more than now. So, worse to be in and losing $ or out and not making $?? losing money is worse! If we ever see the end of this drop will "buy low."