Here's an article from Bloomberg on the extent of the recent rally:

http://www.bloomberg.com/apps/news?pid=20601087&sid=ai1PUDORj5Vk

We didn't talk about Bernanke's comments on winding down the rescue package, but I think I've pretty much said my piece on the market for now, and I'm going to go back into hibernation.

I'm confident our MANY readers (LOL) can handle things...

manoman- How is our next COLA looking?

Edited by author 07-26-2009 07:04 PM
wunderkind, the figure used to calculate our next COLA adjustment will be based on the July CPI which comes out Aug 14th. I've been doing a running commentary on the monthly CPI changes over on PT's threaded board, and it looks to me like we're NOT going to get a COLA increase, just as we didn't get one when the Jan. CPI came out.

The NALC site has a news update you can check on Aug 14 - they're pretty good about doing the COLA numbers:

http://www.nalc.org/news/latest/index.html

I'm thinking the C fund will come in tonight at around $12.07 for its first close above $12 in quite a while.

Edited by author 08-21-2009 08:32 PM
I threw up the previous message real quick to beat the actual TSP release - I figured it would be out momentarily. Just went back & checked, the last time the C fund was over $12 was October 6, when it was $12.12.

I heard a lot of chatter on the news today about Bernanke saying we were starting to pull out of the recession, and there was news that housing sales were up nicely. I suspect that Mr. Market may have already factored some of this news into his outlook, which could be why it's as high as it is today.

Risk-Reward Revisited

A while back, I tried to do some rough calculations on a possible risk/reward scenario for the market going forward. Given the passage of time, we've seen some new figures, some new news, and the "experts" have come out with some new predictions.

First, remember that on Mar 9th THIS YEAR, the C fund stood at $7.86. Tonight's C fund figure isn't out yet, but I'm pretty sure my $12.07 guess is in the ballpark. That's a $4.21 gain in just over 5 months, which is HUGE - 54%!!!!!!!!!

Right now, the highest guesses I'm seeing for the S&P are around 1,200. That would be about 17% higher than the market closed today. It's harder to find any agreement on a where a possible pullback would take the market, but the 940 area looks pretty sticky (just as it was pretty hard to break going up, it might be hard to break if the market went back down). I also see an area right around 900, and mid-800's. Everyone (including the TSPtalk guy) has been waiting for a market pullback, so they can jump aboard the train at lower prices, and the market has NOT been accomodating them. It's possible that we'll get that larger pullback just when everyone is least expecting it (when all the news seems to be getting better). Anyhow, let's take the 850 level as an extreme pullback case. That would be 17% lower than where we are now. Hmm, the market COULD go up 17%, and it MIGHT go down 17%. What to do? Long-term, my feeling is that the market could go up quite a bit more, just because it had such a HUGE drop. Short term (next few months), I'm thinking we may see that long-awaited pullback. So it all boils down to timing, which it usually does. IF you put 100% of your TSP money in the C fund on the lowest day, and are now up by 54%, I'd say pull back while the dust settles. Of course, there are as many scenarios out there as there are TSP holders. I doubt that many were all in for the big rise, and are now eyeballing that HUGE gain thinking they'd like a piece of that. Trouble is, going forward, I doubt we'll see another 54% gain in the next few months.


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I meant to add that I did a funds transfer today, pulling 25% more out of the stock funds, putting it into the G. Remember, I'm super cautious with my TSP account, and usually get out too early. I'm close to retirement, and don't like "gambling" with such a large amount of money. Anyhow, my move should guarantee we get a nice move up in the next week or so, LOL.

Not sure how many people still visit this site anymore.Was quite busy up until the crash.As for me I've become very disenchanted with the stock market.Starting to think it's one big Ponzi scheme.I Just put everything in the G fund.If you ask me I think the whole 401k idea has been a failure.Seems the only winners are the big shots on Wall Street.All I can say is for those nearing retirement is be very careful.

Tony, I doubt very much that you are the only one disenchanted with the stock market. The excesses, greed, and downright thievery probably contributed to the severity of the drop in the stock market. Not to mention that the housing/banking scam ALMOST flushed our economic system down the toilet. It's probably going to be a long time before peoples' trust comes back into the market.

That said, if you put 5% into the TSP, and stay 100% in the G fund, you get a match of that 5% (doubling your money) and NEVER have to worry about losing when the market drops.

In an inflationary environment, though, this isn't going to do it for you. That's why I too am wondering about the 401K. A nice little bout of inflation for a couple of years would pretty much cut your retirement account in half. The idea behind the 401K was to get people to set money aside for retirement, and let it grow, tax-free. I can envision a scenario wherein taxes could increase enough in the future that the 401K strategy would backfire on the "savers". That's why a Roth IRA might be something to look at after you get a nice chunk of change in your traditional IRA.

Since I am near retirement, I am being pretty conservative with my TSP money - right now I'm mostly in the G fund. For those who have many years until retirement, though, you almost have to put $$ into the market to build your account.

Edited by author 08-24-2009 08:53 PM
In /m1481, I mentioned that I had done a funds transfer into the G fund. I now have only 5% in the TSP stock funds. Partly, this is my cautious nature with a $160,000 wad of money, and partly it's because I'm pretty close to retiring, and I also have around $50,000 of my own money in pretty risky stocks, so the TSP helps balance the risk.

But, I put the transfer in Friday (effective this morning) because the market has come up a LOT in the last few months, and though it could very well continue to go up, I wouldn't get as big a %-age return if it did. Other reasons for transferring were that the market was on a 5-day win streak and there was an options expiration on Friday. The market was "due" for a pause, and often it will reverse on the Monday following an options expiration Friday. The problem, of course, is that we only have 2 transfers now, and so I've got to do bigger shifts than what I did previously. IF I did catch the market just prior to a correction (I usually don't), I've only got one shot at re-entering at a lower level. It makes switching a LOT tougher.

Anyhow, I thought I'd do a post just to show some of my thought processes. Others out there probably have a totally different take on how to proceed. That doesn't mean I'm wrong or they're wrong - we just have different situations and factors playing into our decision-making.

When I saw the futures this morning, I figured I'd done my premature thing again, and when the market opened up nicely, I was sure of it. Wonder of wonders, as the day wore on, the market dropped back and finished essentially flat. Is this the start of the long-awaited correction? Who knows? Right now, I'm sitting this hand out.

 /m1484 I think you be on to something. Today there was some pretty good economic news but the market refused to advance. It seems like traders are waiting for an excuse to sell. There is nothing wrong with being mostly cash, especially when the market is "stuck. Better safe than sorry.

Had a down day yesterday, and the futures are off so far this morning. Maybe we'll see that drop that everyone seems to be waiting for. September is typically the weakest month of the year for stocks.

Time to go - new start time 8:30. Ain't life grand?

Again, we're in a market that looks as if it "wants" to go up. I suspect that what's been happening is that all the people who sat on the sidelines while the market gained 50-60% are now jumping in.

My last transfer was pretty close to being on the money. Trouble is, I needed to transfer back into the stock funds on Sep 2. I was hoping for a bigger pullback than what we got. Oh well, at least my money is safe - LOL.

The news background has been very good - yesterday I heard that Bernanke said the recession is probably over. A lot of the numbers are coming in better than forecast, and consumer sentiment took a big jump in the last report. Our friend over at TSPtalk keeps pointing to various indicators, and the "smart money" seems to be looking for that long-awaited pullback. I think the money on the sidelines jumping in is what's keeping those pullbacks from developing into something I want to "play".

I just looked at a chart for the Dow, and I've been telling everyone at work for the last couple of weeks that I thought 10,000 was do-able. Anyhow, on the chart, I see 10,000 is just a number - 10,500 & 11,000 are the areas where I see actual resistance.

Here's a blast from the past:

June 2, 2003 G Fund ===> $10.00
Sep 16, 2009 G Fund ===> $13.0045

June 2, 2003 C Fund ===> $10.03
Sep 16, 2009 C Fund ===> $12.5938

So, if you'd have put all your money into the G fund in June of 2003, you'd have outperformed the stock fund. Looking back, though, if you'd have shifted back & forth just a few times AT EXACTLY THE RIGHT TIME, you'd have kicked butt!

The I Fund did much better during those 6 years:

June 2, 2003 I Fund ===> $10.17
Sep 16, 2003 I Fund ===> $18.4287

The point is to look for various strategies based on what has happened in the past. Trouble is, the market has a way of doing things it didn't do in the past.

On the chart, I noticed that the RSI indicator has just started peeking over 70 again - sometimes a sign of being overbought. Last time it went over 70, it stayed for a couple of weeks and we got that last pullback (the one I avoided by pulling out, but then missed the subsequent run-up).

http://stockcharts.com/h-sc/ui

Futures are up big time this morning. I'm guessing we'll finally see the Dow pop up over the psychologically important 10,000 mark. Last night, Intel & JP Morgan Chase came out with earnings better than expected.

This should confound all those waiting for a pullback, but my guess is that we'll get that pullback eventually.

Good luck to all!

The index of leading economic indicators came out today & it was stronger than most anticipated. This is the 6th month in a row that the index has been up, which signals an expanding economy for the next several months.

Story:

http://www.bloomberg.com/apps/news?pid=20601068&sid=aJXD05.1IxF4

I was going to say that the LEI index probably indicates that there won't be a "double dip" recession as some are fearing, but I notice that someone in the article mentioned that. What I've been seeing in the Dow is a strong rise, followed by a pause or a drop back, then another rise, pause, drop, repeat. If you look at the chart, so far the RSI @ 70 has been the signal to watch for. Similarly, an RSI @ 50 (or just below) is another signal:

http://stockcharts.com/h-sc/ui?s=djia

70 & 50 would have been great places to jump out of or into the TSP's stock funds. The trouble with signals, though, is that after a while they stop working, so don't get too comfortable with just one indicator.

Today's rally was impressive - I haven't read any commentary on it yet, but I suspect it had something to do with earnings. We're in the heart of "earnings season" again, and that could move the market for awhile. Traditionally, the stock market has been strong during the last month or so of the year. This year could bring more tax-loss selling, as people sell their losing stocks for a tax break, but there is a positive inflow of funds into the market toward the end of the year.

Again, the market has come a LONG way back, and at some point there SHOULD be a nice-sized pullback. I guess it could be like a reverse capitulation. Capitulation is when EVERYONE gives up and sells - that's the time to buy. So when everyone jumps in and buys - is that the time to sell?

The C fund is toying with the $13 mark - it almost got there on Oct 15. And while I'm thinking about it, the L funds have performed pretty well - I was looking the other day & got the impression that they held up better during the massacre & bounced back better too. I didn't do the calculating I'd need to know that for sure, just a quick look at the numbers.

I've been over at the OPM site running their retirement calculator, and it looks as if I could bail out of the PO, but I'm sticking around for a while just to be ornery.

Edited by author 10-23-2009 07:35 PM
Putting annual leave into your TSP

There is talk about allowing Fed. employees to bump up their TSP by putting all or part of their annual leave into it. Some are suggesting this be done at retirement, others say at the end of each year. Something to think about if you've built up a lot of annual leave.

Here's the story I saw:

http://www.govexec.com/story_page.cfm?arti...interfriendlyvers=1


Interestingly, this kind of dovetails with the sick leave provision that just got passed in Congress. It looks like we'll have more options to choose from, so stay abreast.

TSP rates of return - Oct

http://www.postalmag.com/tsp.htm

C, S, & I funds down 1.86%, 5.51%, & 2.41% for the month. The year-to-date returns for those funds are in the plus 17 - 24% range, though. The market is in correction mode right now, it's yet to be seen if this will be a larger one that what we've seen previously. We've dropped below the 50-day moving average, and several bits of good news haven't moved the market up like you might expect, so be careful, but be ready to "play" the next move up if you got out of the stock funds near the top...

Stock futures are up pretty nicely this morning. If that carries over into today's trading, maybe the market will move back up in another bid to break through the levels where it keeps falling back. We are in a seasonally strong period, so that might help going into the end of the year. So far, the play has been to buy stocks after we get a drop back to support levels, but eventually I'm guessing some of those higher support levels will fail and we'll get a decent pullback. When? Who knows.

I'm still playing defense - don't want to lose any TSP $$ when I'm so close to retirement.