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Thread: L2050 Fund

  1. #37

    Default Re: L2050 Fund

    "Of course you would not be able to adjust it "daily" as stated in the info sheet."....PO
    couldn't you rebalance thru<1%IFTing everyday......funny I just read that <1%IFT thread 5 times and asked amoeba a question about it

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  3. #38

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    Default Re: L2050 Fund

    Yeah, probably rckn. If you have time.

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  5. #39

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    Default Re: L2050 Fund

    Years after the original discussion, I still believe L2050 is underpriced relative to the older L Funds. Now I believe L2065 and L2060 and L2055 are underpriced relative to L2050. This does not mean the newer L Funds are undervalued. Value and Price are not the same thing just as the stock market and the economy are not the same thing. However, the underlying model behind the L Funds is known by economists as "Efficient Frontier".
    This is what was developed by Mercer Consulting. This is what Blackrock manages as the daily NAV for the Board of the TSP. This is what the Board listened to the Aon Consulting when it was argued that L Funds are more conservative in comparision to similar family of products from others like Fidelity and Vanguard. President Trump has introduced politics into the composition of the newer L Funds when he opposed the Board decision to put China into the I Fund. As always, buyer beware and know what you are buying. I argue the TSP Lifecycle funds are related by being all on the save curve as you go out in to the future. All the L funds are related by being on the same curve as you go in toward now L Income. So if you are buying potatoes for tonight's dinner, do you buy individually or in a five pound or ten pound bag? You as a consumer make a choice for what you put in your basket when you go to the market. So not only share price but number of shares does matter. Ultimately, you want your bottom line to be maximized when you start taking distributions for retirement dinners.
    Last edited by edfong; 08-16-2020 at 11:42 AM. Reason: clarification, spelling, new facts

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  7. #40

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    Default Re: L2050 Fund

    10/23/2020
    LS CRUDE Oil
    =$39.85 a Barrel, Daily Status -$.79

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  9. #41

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    Default Re: L2050 Fund

    Does any one think the Core Funds of G F C S and I are over priced or over valued? My belief is that the L Funds Returns are a Weighted Average of the Core Fund's Returns.

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  11. #42

    Default Re: L2050 Fund

    Over priced as far as priced more than their targeting index? Or just over priced as in, the market is over priced?

    The L funds are just various splits of those 5 funds and reallocated daily to keep their prospectus' allocation.
    Tom
    Market Commentary | My Blog | TSP Talk Plus | |

    I am not a Registered Investment Advisor. Do your own due diligence.

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  13. #43

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    Default Re: L2050 Fund

    Value is in the eye of the beholder. Of course, the general consensus is the that the stock market is overvalued as measured by P/E ratio. It certainiy is heavily weighted by the success or failures of the high tech giants headquartered here in Silicon Valley. And for the most part, the FAANG companies do not pay dividends as they put their earnings back into their business. And the FAANG companies as a rule do their manufacturing overseas.

    My question regarding the possible overvaluing of the Core Funds is best represented by how government employees still continue to choose to invest in G Fund when now more than ever it cannot keep up with inflation given the declining interest rates as the Fed continues to make borrowing easy. Simple Supply and Demand means that even at $16-17 per share, it is expensive relative to say I fund which has a negative return year to date. It is cheaper to manufacture overseas.

    Regarding the L Funds merely being baskets of the Core Funds, we now have L2035 trading in the neighborhood of $10 per share. But only two months ago, if an investor felt he should be in that place before his retirement in 2035, he would have been forced to buy 50% of L2030 and 50% of L2040 both trading in the neighborhood of $30 per share. Of course L2050 is the neighborhood of $20 per share.

    When you buy a ten or five pound bag of potatoes, you get a per unit cost break over picking individual vegetables. But should you pay extra for the pre-packaging? You do with L Income over maintaining an allocation of the Core Funds yourself.

    The L Funds are not perfect. But they were put in place in an attempt to help people not comfortable making their own allocation choices beyond the preservation safety of the G Fund.

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  15. #44

    Default Re: L2050 Fund

    We may be talking about two different things because it sounds like you have a good understanding of this. But regarding price and value... Will Apple's stock be any more or less valued after it does its 4 for 1 stock split at the end of the month? Will it matter if you owned one share for $500 or 4 at $125 each?
    Tom
    Market Commentary | My Blog | TSP Talk Plus | |

    I am not a Registered Investment Advisor. Do your own due diligence.

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  17. #45

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    Default Re: L2050 Fund

    Quote Originally Posted by edfong View Post
    I still believe L2050 is underpriced relative to the older L Funds. Now I believe L2065 and L2060 and L2055 are underpriced relative to L2050.
    Here are a few S&P 500 index funds. They all track the same index but have different prices.

    VFINX = $314
    FXAIX = $118
    SWPPX = $52
    VOO = $311
    IVV = $340
    PREIX = $90
    BSPAX = $402

    PREIX has $31.8B under management but trades at $90
    https://www.morningstar.com/funds/xnas/preix/quote

    BSPAX has $24.1B under management but trades at $402
    https://www.morningstar.com/funds/xnas/bspax/quote

    What difference does it make. If the S&P 500 goes up 1% on the day, the fund goes up 1%. Their five year performance is roughly identical as they both track the same index. The difference is probably tracking error or slightly different fees. (Full five year performance is PREIX 74.15% and BSPAX is 73.58%, again differences in tracking or fee structure)

    spx.JPG


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  19. #46

    Default Re: L2050 Fund

    How can 3 of the L-funds have an 10.9% Ytd return when the Highest 'regular' fund the C-fund have a Ytd of 9.9%?

    Screen Shot 2020-08-31 at 2.42.34 PM.jpgScreen Shot 2020-08-31 at 2.42.34 PM.jpg

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  21. #47

    Default Re: L2050 Fund

    If I'm not mistaken those three funds came into existence this year after the March low so they missed the downturn and are up that much since their inception.

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  23. #48

    Default Re: L2050 Fund

    Yeah, started at $10 on July 1.
    Tom
    Market Commentary | My Blog | TSP Talk Plus | |

    I am not a Registered Investment Advisor. Do your own due diligence.

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