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Thread: Boghies Account Talk

  1. #1153

    Join Date
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    Smile Science!!!

    All funds should be looked at...

    I am not a swinger, I normally hold one of three allocations with a little fudging here and there based on my 'feelz':
    • An allocation over weighted for aggression
    • A normal market allocation
    • And, an allocation with a conservative weighting


    Right now, I am holding an allocation that is more conservative than my normal conservative one. To be absolutely honest, I am trying to rework my allocations based on my holdings, age, and emotions. I really don't need to be as aggressive as I once was.

    On the F-Fund... Let us look at the 'recent' (meaning since the start of the recent drawdown which ALL of the funds excepting G have participated in) performance of all of the 'at risk' funds we can invest in:

    Fund Drawdown Dates
    F -11.50% January 2022+
    C -12.96% January 2022+
    S -15.42% November 2021+
    I -12.68% September 2021+

    For quite some time I have underweighted both G and F. The G offers NOTHING, and the F was in a bubble and needed a correction. The REAL question is: Which of the four funds is nearing it's max drawdown and which of them still have some travel time? Right now it looks like there is plenty of downside left for C/S/I. If I am doing the math right our F-Fund should have had a drawdown of 6.8% from July 2021 to April 2022 - not the 11.50% we have actually seen. If we carry the drawdown to where the 'Average Yield to Maturity' becomes:
    • 3% the drawdown should be 9.3%
    • 3.5% should be 12.1%
    • 4% than the drawdown should be 14.8%.

    The bond market has priced in an Average Yield to Maturity of 3.40%.

    An article using July numbers for AGG: https://seekingalpha.com/article/443...odel-portfolio
    This article documented the 'avg yield to maturity' (the coupon rate) of AGG as 1.47% on June 30, 2021.

    An article presenting how bonds are priced: https://www.wallstreetmojo.com/bond-pricing-formula/
    I think the Average Yield to Maturity is now 2.57%

    A nice snapshot of AGG right now: https://screener.fidelity.com/ftgw/e...ml?symbols=AGG

    Personally, I think I am likely going to take an October 2007 approach and go something like 40/30/10/10/10. Had I held that allocation my drawdown would be 8% right now, and the max drawdown in the last 35 years was 13.73%. This can become a very ugly market very quickly and the FED has to raise interest rates in the face of it. However, I want enough in the risk funds to appreciably share in the early recovery gains - which are often quick and dramatic. Nobody can claim an IFT is quick and I don't want to miss 3%+ jumps early in the recovery cycle.

    Yowser. It was difficult to create policies that both damage the economy AND instigate inflation - but we did it!!!
    Lookin' up at the 'G Fund'!!!

  2.  
  3. #1154

    Join Date
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    Default This Does NOT feel like a Normal Market

    This decline has been by drips and drabs with some promising bumps. If this was a normal market we would probably be bottoming out. For the first time since 2008, I don't think this is a normal market.

    The F-Fund (AGG) is priced for an average yield of 3.4%, we are currently at 2.57%. If the final resulting average yield is 4% then the drawdown should stop at 14.8% and we are currently at a drawdown of 11.5%. So, another 3%. Bonds come down to math. Equities come down to feelz. Me not like the feelz. I don't want to participate in feelz based equity losses and I really don't see anything positive out there. Somehow, our gubmint and elites have managed the almost impossible: They have managed to initiate inflation while regulating the economy into recession. No bueno.

    Current Allocation (as of COB Monday, May 2, 2022):
    Fund Allocation Banal Thoughts
    G 40% Ugh. Wimp move. Pathetic. But sometimes not losing is winning
    F 30% The FED has to bump rates. This will decline, but it has already overcorrected for this level
    C 10% Summer and let's see was good old regulation can do. Try it again, and again, and again
    S 10% Socialism and Fascism prefer big business. Easier to influence
    I 10% Maybe these guys are waking up, but the slumber has been so sweet!

    Expected Annual Return: 6.32%
    Expected Risk: 4.97%
    Best Year: 17.67%
    Worst Year: -8.00%
    Biggest Dump: -13.73%

    I hate this allocation. Add current inflation and I am guaranteed to lose purchasing power. We needed a strong market to go with the inflation we are experiencing. For example, if we do not contract the money supply and we end up with 10% annual inflation, and we manage to turn this turd around, then my 6.32% growth will become a -3.68% real gain. Nice, very nice. However, add 10% inflation to an economic deuce in the making and my purchasing power could easily head south by 30% or more. Finally, who actually thinks things will improve anytime soon. Beuller, Beuller...

    But, we took it to them!!! Bad EXXON. Bad Keystone Pipeliners. Bad Energy producers. Bad developers. Bad truckers. Bad foodies. Bad the rest of the economic movers and shakers - And, Bad, Bad, Bad Musk and his damn richness!!!.
    Lookin' up at the 'G Fund'!!!

  4.  
  5. #1155

    Join Date
    Sep 2008
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    Default Re: This Does NOT feel like a Normal Market

    Quote Originally Posted by Boghie View Post
    But, we took it to them!!! Bad EXXON. Bad Keystone Pipeliners. Bad Energy producers. Bad developers. Bad truckers. Bad foodies. Bad the rest of the economic movers and shakers - And, Bad, Bad, Bad Musk and his damn richness!!!.
    At least you can go to a movie and watch a bad movie from the Hollywood elites. Take your own popcorn, there is a shortage.
    In Dog Beers I've only had two.

  6.  
  7. #1156

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    Default Re: This Does NOT feel like a Normal Market

    Come on Mr. Market!!!

    Give me a nice smile before I bail on your @##.

    Let's see what the last hour shows. Smart Money is Late Money.
    Lookin' up at the 'G Fund'!!!

  8.  
  9. #1157

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    Default Re: This Does NOT feel like a Normal Market

    Quote Originally Posted by Boghie View Post
    Come on Mr. Market!!!

    Give me a nice smile before I bail on your @##.

    Let's see what the last hour shows. Smart Money is Late Money.
    Not seeing a smile. All I see is a frowny. Come on smart money, let it rain!!!
    Lookin' up at the 'G Fund'!!!

  10.  
  11. #1158

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    Default Re: This Does NOT feel like a Normal Market

    Now, I'm seeing a smile!!!

    I am bailing out COB (love those IFT time limitations), but if we keep on keepin' on late in the day then it will be time to get back in. Maybe we have hit the bottom. Who knows...

    Going to give it a few. I have a bit in C/S/I so I will 'participate' in the early gains - I'm not zero'd out and won't be a complete spectator. But, I will kick myself in the @##. My previous allocation would have been significantly better. On the other hand, I don't see anything wrong with my analysis - so this could be a head fake or automated buying. Only time will tell.
    Lookin' up at the 'G Fund'!!!

  12.  
  13. #1159

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    Exclamation This Does NOT feel like a Normal Market

    Today looks like capitulation - or the start of capitulation.

    We shall see with the end of day activity.



    I'm starting to think my mental shortcuts might be a bit out of whack. Normally, end of day activity is 'smart money' and the stuff at the beginning of the trading session is 'dumb money'. At least that was the pattern in the past. We really haven't had a good churning for a while, but end of day yesterday did not fit the mold. I cannot think of why the FED increasing interest rates would cause the boom, and if there was a reason why the reaction this morning was so dramatic in reverse.

    I'm glad I am mostly watching other peoples money in this market. I am in a go broke slowly(ish) allocation. If I have to sit like this I will be on oxygen before I can retire with a Winnebago driver and a yacht captain
    Lookin' up at the 'G Fund'!!!

  14.  
  15. #1160

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    Default Re: This Does NOT feel like a Normal Market

    You know what is the most tragic thing about this market - the market of possible investments in TSP???

    A slowing economy brought on by enhancing regulation is causing C/S/I to fall. The C/S were in a bubble anyway so a correction was in the air - but, we are now past correction and well into bear territory. We did not have to have an economic contraction for equity pricing to normalize. But, we got it!!!

    And, somehow we've "policy'd" ourselves into inflation during and economic contraction. This is actually hard to do, but we did it!!! Da Gubmint pulled all the right levers to contract the economy and inflate prices. Nice, very nice. Well done!!!

    So, C/S and I (for similar reasons) are in the tank. The drain still has the force of swirling water.
    The F is in the dumper because the FED is forced to raise interest rates even as the economy contracts.
    And, assets in the G Fund are being inflated away at an alarming pace. Since politicians largely set the return, ...

    Bonds can be influenced by fear, but they are largely priced to actual math. If we can figure out what AGG/BND are priced at with regards to the FED rate we can math it to 'FED Rate' + 'Differential'. That number (average yield) can then be used against the average holding period to get the cost of AGG/BND at say a FED Rate of 3.5% (consensus). One nice thing about this epic unforced error is that bonds (and, hence our F-Fund) will have value, return, and a place in your portfolio.
    Lookin' up at the 'G Fund'!!!

  16.  
  17. #1161

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    Default Re: This Does NOT feel like a Normal Market

    I was going to drop this in DA's thread, but that would be totally hijacking it. Anyway, thoughts from the thoughtless regarding similarity between now and 2008:

    BTW, the 2008 crash appeared to flatten in October. I waited a bit and things had leveled off - right about the decline we are currently at.

    I moved increased my C/S/I by about 30% (if memory serves - you can see it in my IFT trades). That afternoon the C dumped by 8%, the next day it dumped by another 8%. I went from +7% YtoD to -11% YtoD in the time it took an IFT to process.

    Currently, this is not like 2008. 2008 was horrid. This can/will be horrid in a different way, but it can be softened by policy change. If inflationary policies do not change there will be NO hiding place in our investment options. In 2008, the G and F Funds were safe havens. I think the F-Fund may work now to some extent, but the G-Fund is a guaranteed loser to inflation. You might think - and, in a way you will be correct - that you are not losing money in the G-Fund, but 8% or 9% inflation absolutely puts you in the red. If inflation lasts a couple/few years your retirement is in jeopardy. If the FED can kill inflation quickly than we can invest in G/F and ride things out without too much damage. To do so the FED will have to pull trillions of dollars of slush fund money (theirs and the Treasuries) out of the market. It can no longer be a measured, organized process. It will have to be quick, nasty, huge interest rate hikes.

    Ugly out there

    Unforced errors. We were guaranteed a correction, we are now in a bear, and we are likely in a stagflation loop. A mess.
    Lookin' up at the 'G Fund'!!!


  18.  
  19. #1162

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    Default Re: This Does NOT feel like a Normal Market

    Quote Originally Posted by Boghie View Post
    but the G-Fund is a guaranteed loser to inflation. You might think - and, in a way you will be correct - that you are not losing money in the G-Fund, but 8% or 9% inflation absolutely puts you in the red. If inflation lasts a couple/few years your retirement is in jeopardy.
    I don't disagree with this but you also have to factor in past years gains. If you averaged 10% a year over the past 10 years you can handle 3% over the next two. If however you have been languishing in the G fund since 2009 then you are just adding to the misery.
    In Dog Beers I've only had two.

  20.  
  21. #1163

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    Default Re: This Does NOT feel like a Normal Market

    Quote Originally Posted by WorkFE View Post
    I don't disagree with this but you also have to factor in past years gains. If you averaged 10% a year over the past 10 years you can handle 3% over the next two. If however you have been languishing in the G fund since 2009 then you are just adding to the misery.
    Truth to that - to some extent. I just checked and the G-Fund is returning 3%. Man, that is nice. So many years at between 0.50% and 1.50%. Yowser.

    But, my point is that when inflation is 8% than you are losing 5% in purchasing power. That, however, is SIGNIFICANTLY better than someone who has camped the S-Fund YoY. Their return is -30% YoY factoring in inflation. Yowser, double yowser.

    Right now, I think I would prefer the FED to absolutely tank the economy by raising interest rates to 10% or something. Just get done with it.
    Lookin' up at the 'G Fund'!!!

  22.  
  23. #1164

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    Default Re: This Does NOT feel like a Normal Market

    I'm thinking of increasing my contributions by 5% to 20%. That would be 25% of my salary going into C/S/I at 40/30/30.

    I can still taste the C-Fund shares I bought for $6.66.

    And, yes, I distinctly remember that price.

    Too funny, and very yummy.

    The mark of the

    Beast



    I think that one move - that is, increasing my contributions as the market tanked through 2008 - has netted me more yummy retirement money than anything I have ever done. If, more likely when, I do it again I can train my brain to think that those shares are the ones I will keep for the next 30 years. Yummy, very yummy. And, if I can get in with a more aggressive allocation before the early recovery boom I will be a very happy person of pronoun as defined someday in the future.
    Lookin' up at the 'G Fund'!!!

  24.  
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