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Buy High and Sell Low

Dumb article

Nate 32
DOJ
Tue Aug 26, 2008 8:18 AM

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If the market keeps going down, it makes much more sense to park your money (G fund) until it bottoms out. Seeing how bad the economy is, it may take more than a year.

Re: Dumb article

Systems Analyst
USCG
Tue Aug 26, 2008 9:17 AM
I moved my funds in DEC of '07 from stocks to the G fund. I have five years to retire and could not take a big hit in the market. However, future contributions I continue to invest in stocks. I think you have to be wise enough to evaluate your risk based on your own goals.

Re: Dumb article

Budget Analyst
Navy
Tue Aug 26, 2008 9:34 AM
Nate 32,

Your suggestion would be perfect if you knew when the bottom was. Question is - was it in July? Or in the next 6 months? The fact of the matter is that no one knows when the bottom will be. If they did, then they are either lucky or a fortune teller. Pros out there can't even hit a "bottom" let alone anyone else. I would suggest that anyone have C, S or I keep it where it is because that is the point of this article. People are pulling money out of the C, S and I funds and putting into G. You're fine as long as the market continues to go down. Sooner or later though it will go up. Will it reach it's July lows? Maybe...maybe not. The thing people should be doing if they are already in C, S, and I is to up their contributions into the TSP to buy MORE of those funds while they have been beaten down. That will lower your price per share costs. IF you have money in the G fund off the side, I would be putting in some on dips - but that is hard to do unless it dips a few days

Sell High/Buy Low

Chief Security
DOD
Tue Aug 26, 2008 8:37 AM

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I understand if waited until right now to sell off your stocks and you seriously cannot time the market, but I sold off 7 months ago. The G Fund was at 12.43 , now 12.58, F Fund 12.17, now the same, C Fund 15.82, now 14.49, S Fund 18.99, now 18.09 and I Fund 23.82 now 19.97 so how have missed out except for possibly losing about $10,000? I know you cannot time the market but as long as I don't buy higher than what I sold for and I could start doing that when housing recovers, the economy starts turning up, jobs upturn etc, I am not sure how I missed out on future growth. Remember when everyone left their money in back in the early 2000s? They waited and waited and waited and what happened? People lost their shirts. I would say if you had 15-25 years to go to retirement, not a problem but if you have 5 -8 like myself, don't be stupid. Inflation is also killing us to , now over 5%, not the customary 3% that everyone is used to, so your advice is for everyone to keep losing.

Absolutely Correct

Consultant
Retired
Tue Aug 26, 2008 8:42 AM

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There is one mistake small investors make, and it is always the same mistake: by high; sell low.

One problem is that people try to sell at the top--and nobody can predict the top. So, instead of selling at a healthy--although not maximum--profit, investors wait until the market has clearly going down...and then they panic as the market keeps going down.

What is perplexing in the current market is the possibility of a full blown depression. I think that would only be possible due to oil, but that is a real possibility. If there werea war with Russia for example...

Buy high & sell low

Workforce Manager
GSA
Tue Aug 26, 2008 8:57 AM

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One of the great strengths of the TSP's Lifecycle funds, especialy for typical Federal employee investors, is that they are re-balanced daily and re-allocated quarterly. Lifecycle investors should be 100% invested in the L Fund determined by subtracting their age from 65. So if you are 25, you should be in the L2040 Fund.

Re: Buy high & sell low

Budget Analyst
Navy
Tue Aug 26, 2008 9:47 AM
Actually if your're 25, the 2040 isn't aggressive enough. By 99% of financial advisors out there, the 2040 isn't aggressive enough for 20 somethings...it's actually more for people in the upper 30s since it has over 8.5 percent G and 9.7 percent F fund. That is too conservative for someone in their low 30s and definitely someone in their 20s. I'm in my mid 30s and won't go into lifecycle funds until the 2050 comes out in 2010. At that point, I'll put my money into the 2050 and leave it go. Most advisors now go with a 120 minus age rule or higher. That would mean that a 30 yr old would have 90 percent in stocks and 10 percent in bonds/fixed income. If I was a 25 yr old, that would mean 95percent stocks, 5 percent bonds/fixed income but as I stated before, the 2040 has over 18 percent G and F

The thought on this is that with inflation - specifically medical and insurance costs in the future will out do any pension increases unless you are blessed with a great benefits package.

Re-Balance

Manager
USDA
Tue Aug 26, 2008 9:08 AM

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With 20/20 hindsight, we would all be better off had we re-balanced our protfolios months ago. The sad truth is many, including myself, did not. Re-balancing now and taking a loss appears to be more palatable than to continue with the 8.55% to 19.31% losses in the S, C and I funds while the G is running 2.48% positive. The main risk is you might be locking in a loss UNLESS the funds continue their negative trends. With regards to your comment that a major sell off preceeds the next turn around, can you state with any degree of certainty that this IS the sell off we've been expecting; my guess is your information is no better than mine and I'm not sure! I do not know when the funds will turn around, don't think anyone knows for sure. So it becomes a matter of not what your investment will earn but what you can afford to lose. It appears that locking in a 'controlled' loss with potential for a small gain is better than a continued free fall with no bottom in sight.

What to do

Supervisory IT Specialist
DON
Tue Aug 26, 2008 9:17 AM

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If you don't like the way the stock market is going and want to move your money... DON'T DO IT!

Keep everything where it is at, BUT change your new contributions. That way, you don't buy high, sell low and can put 100% into the G fund.

I recommend not doing anything at all and riding it out, but if you must fool with your asset allocation, change your new contributions, don't do intrafund transfers.

SELLING

Program Specialist
ACF
Tue Aug 26, 2008 9:26 AM

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I would like to thank everyone who is currently selling!!!You are artifically driving the price of the TSP fund (C,S, &I) funds lower. Hence, I am purchasing more shares at this low price. On the flip side, if you are investing in the secure (G) fund currently, Think about it. At least flow your new money into the C,S, & I funds where you can tell the funds are on bottom. You will at least ride the wave up with your new money. Good luck!!!!!

Re: SELLING

Financial Management Analyst
SSA
Tue Aug 26, 2008 10:17 AM
Good point, I'm convinced. Into the C, S, & I I go.
Total Comments: 31
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