Congratulations, Mr. Donoghue, for assembling some of the worst advice ever offered regarding the TSP. There is so much bad information packed into a small space that I can only highlight a few points:
1) Quoting 7-year S&P 500 returns from their absolute peak at the beginning of the century is dishonest and misleading. You can quote them from the bottom of a bear market to make them look spectacular. Every honest commentator quotes returns over a longer time period.
2) Followers of Jack Bogle's low-cost, passive investing approach don't just have their "beliefs", they have 50+ years of failures of active investing to beat their returns (once costs are factored in).
3) Short funds are perfect if you can time a bear market. Since no one can, adding them to the TSP would come as close as possible to guaranteeing participant's losses. By contrast, the G Fund is an ideal diversifier to stocks since it never goes down.
4) Your firm's 1 to 2.5% advisory fees are egregiously high.
Re: The most appallingly bad TSP advice ever offered
William Donoghue W. E. Donoghue & Co., Inc. Mon Jan 14, 2008 11:03 AM
I share your concerns with the performance time periods most frequently reported. It is equally unfair but is convenient to compare a performance period that does not include a full investment bull and bear cycle. I am suggesting that people use a "21st Century (since 12/31/99) performance period" to compare fund performance.
As we stand on the precipice of a potential bear market as we did in 2000, I think it is wise to understand the consequences of buy-and-hold.
Mr. Bogle has already retired and can well afford to invest in bond funds in what will likely be a rising rate market (a losing situation) and domestic stock funds (a possible losing situation which will likely dramatically underperform selected foreign stock markets at greater risk). You may not have that luxury.
White is not Black; it demands different strategies yet most investment alternatives refuse to protect your money in down markets.
Bill Donoghue
Re: The most appallingly bad TSP advice ever offered
INSPECTOR/TEACHER DoD Wed Jan 16, 2008 10:32 AM
TSP trading should be allowed since the ones who have loans are very limited in the amounts they can gain compared to TSP investors with no outstanding loans.
If your in a financial crunch and need Help on very high 38% credit card debt ( MBNA & Fleet are masked robbers on their percentage & fees. & Still wanting more 6 months later after being paid off!!Emergency money is sometimes needed & TSP borrowers are penalized but now not allowed to make bigger gains by TSP trades when up swing is going!! BACK to my old 12% yearly mutual funds I guess!! TSP is getting over regulated & going down hill!!
Anlother failure of the article
Programmer TSO Wed Jan 9, 2008 7:20 AM
"Inverse funds" as the author calls them can be useful IF they are used properly... If they are not used properly they can wreck havoc on someone's retirement savings.
We all know there are a great many TSP investors who don't properly utilize the traditional offerings currently in the plan. This situation will be made even worse with uninformed investors trying to use unconventional offerings like inverse funds(which require a deeper understanding of the market).
Finally, somebody with some sense!
Budget Analyst Army Wed Jan 9, 2008 8:45 AM
Thank you so much for this excellent information! It makes perfect sense and was great advice. I agree that we should have an alternative for the bear market times - that is when I usually move to F and G funds, but F can still have down times even when stocks are down. I am so mad at the Board right now, if I could take all my TSP out, which I am fully vested in, and move it to a Roth IRA or some other investment vehicle that I can manage myself. But, it is what it is and I will deal with it as best I can. I would still really like to have someone explain WHY the "L" funds can be rebalanced DAILY by the TSP system, yet we as individuals will be restricted to twice a month. That just doesn't seem fair!
Re: Finally, somebody with some sense!
Engineer USACE Wed Jan 9, 2008 9:07 AM
Balancing is keeping the desired ratio's between the different portions of the C, F, S, C & I funds in the L funds to meet their overal target investment percentages, such as 20/20/20/20/20 (example only)
At the end of the day if the values are 19/20/21/22/18, then the only amounts that would be moved are that which would bring the funds back to their planned ratios. Therefore only a small percentage of the overall fund is moved each day.
Balancing is not moving 100% of one fund into another and back again at frequent intervals, which is what is occuring in the accounts of the heavy traders.
The two concepts are totally different, market timing versus account balancing to keep a consistent portfolio, and should not be compared to one another.
Re: Finally, somebody with some sense!
Programmer TSO Wed Jan 9, 2008 9:10 AM
As to your question of why - Each L fund has one set of transfers each day to rebalance(as opposed to the incorrect assumption by some that each investor in a L fund has their own set of transactions per day). Everybody in that L fund has a share of the rebalanced fund.
That is far different(and far cheaper) than many individual accounts being rebalanced daily based on many different reallocation percentages.
As far as a bear market fund - it's a good idea if it's used properly. It's a very bad idea if used improperly. Considering how many people don't use the current traditional funds properly, what are the odds that an unconventional bear market fund(which requires more knowlege) will be used correctly?
Terrible Article
Anon SSA Wed Jan 9, 2008 9:25 AM
This is a rather impenetrable article from a "financial professional." Read the last sentence again: "Taxable ETF portfolio might produce superior after-tax returns." A lot of things 'might' happen. What is he talking about?
And next: "the rare experienced proactive advisors who do manage separate accounts know that some objective trading is more than appropriate".
First of all I'm not entirely sure what that sentence means. But the idea that the average federal employee who doesnt have the same experience or training as the 'rare experienced proactive advisor' would be able to make the same wise decisions is laughable.
Lastly, for someone who puts such great stock in 'inverse stock alternatives'. He doesnt bother to explain them very well. Especially in light of the arcane & questionable concerns about other approaches, he should talk more about the very real dangers of inverse fund approaches.
Poor Article
Soil Conservationist USDA Wed Jan 9, 2008 9:46 AM
This guy says 'the law should be changed' on IRAs. Yeah, well 'the law should be changed' on a whole lot of different things. We need to be told what's going on & not what 'should' happen.
Extremely poor article.
THE BEST TSP advice ever offered
Manager Labor Wed Jan 9, 2008 10:15 AM
Many thanks for your contribution Mr. Donoghue!
Re: THE BEST TSP advice ever offered
IT specialist DOD Wed Jan 9, 2008 11:58 AM
This is by FAR the worst article I have read in the FedSmith!!
Frequent Trading in TSP by William E. Donoghue
Assistant District Manager Social Security Adm Wed Jan 9, 2008 1:20 PM
Thanks for the article. Now, once again, in English.
Re: THE BEST TSP advice ever offered
Budgeteer USDA Wed Jan 9, 2008 4:12 PM
I can tell from the negative comments that this article really offended the worshipers of the church of "buy and hold" investing. Kinda reminds me of the often quoted data about the losses due to missing the best market days, without ever mentioning the greater gains of missing the worst market days.
I think it was one of the more innovative and interesting TSP commentatries I have read anywhere, especially for FedSmith.
Re: Re: THE BEST TSP advice ever offered
IT Spec DOD Wed Jan 9, 2008 7:43 PM
The negative comments pointed out very real flaws in concrete terms.
You can give us a clever sounding phrases like "church of buy and hold" if you think you need to but that's not going to change the facts.
Thanks very much for some sanity.
Retired Computer Engineer NASA Wed Jan 9, 2008 5:02 PM
Thank you, thank you, thank you for a little sanity. I was beginning to think all media reporting on the TSP were perhaps getting paybacks of some kind from Barclays (manager of the I fund).
I plan to investigate any services offered by the firm of William E. Donoghue if/when the TSP board implements the limits on the IFT transfers tentatively planned for April.
Since I'm retired, I am lucky enough to have a choice to withdraw my money from TSP if I choose and transfer to an IRA elsewhere.
Thanks very much for publishing the first article that I've read published anywhere that offers some arguments that counter the current policies of the TSP which I personally believe after studying meeting minutes is being mis-managed and which doesn't have the proper oversight it needs to serve its clientel(sp?), in my opinion.
Don't Offend the Herd
The Herd Treasury Wed Jan 9, 2008 5:38 PM
Careful Mr. Donoghue. You seem to be offending "the herd". We only want to do what we've have been told to do. We want to keep our hands off of our money so the big firms and government can control it for us. We don't even know how to do it ourselves anyway so, baaaaaaaack off.
signed,
the herd
P.S. The buy and holder faithful have lost all of their 2007 gains in the 1st week of 2008, so they may be a little testy.
Re: Don't Offend the Herd
Supervisor DHS Thu Jan 10, 2008 6:50 AM
Herd, that's very entertaining but it doesn't hold water once we look beyond the theatrics and examine the facts.
The most obvious fallacy is that buy and holders have lost all their gains. Buy and hold configurations are all over the board with widely varying allocations. A blanket statement that attempts to lump them all together with equal performance results makes absolutely no sense.
TSP TRADERS
RN DVA Wed Jan 9, 2008 6:31 PM
in 2002 I started to take control of my TSP un fortunatly that was too late as I lost close to 40K For years I stood by and did nothing with my tsp and I said I would never let that happen again and I didn't. I found the TSP investors web site and started to manage my own account and for the past 6 years I have averaged 21% in my TSP. I moved into G on 1/2/2008 and I was glad I did as the market is now down over 10% for the start of 2008. I had a choice and I took it and now I am being told that I may have to suffer great losses again as my ability to get out of a falling market is prevented by the new trading rules. If there is an additional coset associated with frequent trading of my TSP I will gladly pay them but I would like to have a choice. This whole agenda by the TSP board smells funny and I see a scam built into this somewhere. I would like to call for a congressional investigation into the tsp board decision to limit trades. Two trades a month does not solve the problem but
Last 10 year average S&P return is 5.5%
I manage my TSP well. FED Wed Jan 9, 2008 9:42 PM
USA Today reported that the last 10 years the S&P average return was 5.5% and I want to make more than that. Take inflation out of it and I would say the more people need to do better than Buy & Hold. You can get 5% from a online bank. LOL You Buy & Holders what to sit on your rear ends and do nothing. Not me!!! How are your accounts doing now? The C fund YTD yesterday was -5.4%. That is when I bought it. I will ride the wave and take profit at the next rally while you will be trying to make back your losses. If you are in the S fund you took 8 days in a row of losses and I bought much lower than you did. The S fund was donw over 7% YTD. Quit trying to limit my ability to make money while you lose money in a buy and hold death spiral because you can make a decision for yourself. Your Uncle Sam not going to take care of you when you retire. He is going to raise you taxes and cut your Medicare and Social Security. Reality check is coming and you will be way behind.
Re: Last 10 year average S&P return is 5.5%
admin asst dod Thu Jan 10, 2008 7:22 AM
Anybody who thinks buy and hold portfolios can't exceed the S&P with periodic rebalancing doesn't understand buy and hold.
WF&A
WF&A DOJ-BOP Thu Jan 10, 2008 12:45 AM
Waste, Fraud and Abuse.... Enough said... allow us to manage our own funds.
Re: WF&A
IT Spec DOD Thu Jan 10, 2008 7:18 AM
Limiting frequent trading doesn't prevent you from managing your own funds.
MONTHLY TRADE LIMITS AND INVERSE FUNDS
Regional Information Technology Supervisor DOJ\BOP Thu Jan 10, 2008 12:01 PM
I believe I'm one of the so-called frequent traders the TSP Board is focusing their wrath on. Over the past 18 months, I've moved in\out of stocks multiple times during some weeks, but I"ve also gone several weeks where I didn't make a single move. Averaged out over the past 18 months I made an average of 4.4 moves per month between S\I funds and the G fund. My rate of return on my TSP has been more than double (20%+) of that I would have received with a "Buy and Hold" strategy in one fund, or a combination of funds. I don't consider myself a stock market expert by any stretch of the imagination. I've taught myself to look at various market indicators available to anyone, and then use them to help me decide where I want my money invested at a given time of the month\year. I'm not always right about my decision, but it's my decision and I have to live with. Set the limit at 4 trades per month. That's a fair number for all. Frequent traders and "Buy and Hold" investors
Thank You Mr Donoghue
engineer Air Force Fri Jan 11, 2008 4:15 PM
The TSP is GREAT! I hope it continues forward instead of backing up like the recent two-trade per month solution.
I appreciate both FedSmith publishing the article, and Mr Donoghue giving some very good information. He is right, no TSP bear market upside. I think...
I guess that's it. You have to think. That means you have to work to learn and know. Thinking right increases assets. You get much less for not thinking or thinking wrong. Anger is no substitute for knowing.
I have been amazed at the hosility that has been expressed by those seduced into not thinking for themselves and believing L-Funds and buy and hold strategies are a good solution to their future.
I wrote this previously. Think about this... Everyday the L-fund takes money out of the fund that did better and puts it in the fund that did worse. WOW! I simply believe I ought to do it the other way around.
FRTIB, please be a help and not a hindrance towards that end.
Re: Thank You Mr Donoghue
Engineer DOD Fri Jan 18, 2008 1:25 AM
And, as the TSP board keeps pimping L-Funds, more and more folks are going to park their money in the L-Funds. If that happens the daily trading volume due to the L-funds will go up (possibly substantially). At some point its possible the L-Funds could increase costs substantially, and provide mediocre performance all at the same time.
And finally, the really scary part of this is.. I see the TSP board starting to hint at making the L-funds mandatory.. they've already recommended that new hires have their money go directly into the L-Funds.. and that scares the hell out of me.
Re: Thank You Mr Donoghue
Gen Engr DoD Wed Feb 6, 2008 9:33 AM
It amazes me how the VERY MOST important issues are never discussed at FedSmith. The single MOST IMPORTANT issue to TSP members is the timing requirement for placing changes to their asset allocations. Currently, it is 12:00 p.m. EST. Sometimes, if you are not at least an hour early the trade will miraculously slip to the end of the next day.
The industry standard is to get your order in PRIOR to the end of trading - i.e. 4:00 p.m. EST. This allows each TSP participant to MINIMIZE his/her "following" the market. TSPs requirement to place orders at noon is harmful to every TSP participant and should NOT BE TOLERATED by participants. By having access to change orders hours in advance of market closing, TSP managers are able to "front-run" the market with their personal accounts if they choose to do so.
Wake up, people!
The 2nd most important issue is the scope of funds (or even ETFs) available to invest in.
One round trip per month is generally sufficient to do well.
,
IT IT Sun Jan 13, 2008 12:45 PM
Where has Mr. Donoghue's article gone ? I can't seem to find it on the website. Could it be that his advise to people that they made single digit gains over the past 7 years by following a "buy and hold" strategy is contrary to the Thrift Savings Board recent decision to penalize those who want to have the ability to move their funds as they seem fit ? I believe instead of restricting transfers to 2 a month, the Board should have allowed unlimited moves, but apply a fee to do so. That way participants still would have a say in how their money is invested, but have to cover the costs of their actions themselves. And if the TSP is being charged excessive fees that make this impossible to apply, maybe the TSP plan is being bushwacked by the firms handling these accounts.
Cudos Mr. Donoghue!!!
Engineer DOD Fri Jan 18, 2008 12:59 AM
Excellent article!!
Unfortunately I seriously doubt the TSP Board would even consider any of your suggestion.. but we can always hope.
We need more choices (like an SH Fund), we need to be given the responsibility to manage our own money! We need to keep the responsibility of manageing our money at the individual share holder level.
And, if some people don't know anything about the stock market or finance, there are still the L-Funds.
I am very concerned with the moves that the TSP Board has been taking of late. I'm worried that in 10 years time the TSP will morph into something vastly differen't than what we have today. And it all starts with "..we've decided that in your best interest!".
The most appallingly bad TSP advice ever offered
n/a
Tue Jan 8, 2008 10:39 PM
Congratulations, Mr. Donoghue, for assembling some of the worst advice ever offered regarding the TSP. There is so much bad information packed into a small space that I can only highlight a few points:
1) Quoting 7-year S&P 500 returns from their absolute peak at the beginning of the century is dishonest and misleading. You can quote them from the bottom of a bear market to make them look spectacular. Every honest commentator quotes returns over a longer time period.
2) Followers of Jack Bogle's low-cost, passive investing approach don't just have their "beliefs", they have 50+ years of failures of active investing to beat their returns (once costs are factored in).
3) Short funds are perfect if you can time a bear market. Since no one can, adding them to the TSP would come as close as possible to guaranteeing participant's losses. By contrast, the G Fund is an ideal diversifier to stocks since it never goes down.
4) Your firm's 1 to 2.5% advisory fees are egregiously high.
Re: The most appallingly bad TSP advice ever offered
W. E. Donoghue & Co., Inc.
Mon Jan 14, 2008 11:03 AM
As we stand on the precipice of a potential bear market as we did in 2000, I think it is wise to understand the consequences of buy-and-hold.
Mr. Bogle has already retired and can well afford to invest in bond funds in what will likely be a rising rate market (a losing situation) and domestic stock funds (a possible losing situation which will likely dramatically underperform selected foreign stock markets at greater risk). You may not have that luxury.
White is not Black; it demands different strategies yet most investment alternatives refuse to protect your money in down markets.
Bill Donoghue
Re: The most appallingly bad TSP advice ever offered
DoD
Wed Jan 16, 2008 10:32 AM
If your in a financial crunch and need Help on very high 38% credit card debt ( MBNA & Fleet are masked robbers on their percentage & fees. & Still wanting more 6 months later after being paid off!!Emergency money is sometimes needed & TSP borrowers are penalized but now not allowed to make bigger gains by TSP trades when up swing is going!! BACK to my old 12% yearly mutual funds I guess!! TSP is getting over regulated & going down hill!!
Anlother failure of the article
TSO
Wed Jan 9, 2008 7:20 AM
"Inverse funds" as the author calls them can be useful IF they are used properly... If they are not used properly they can wreck havoc on someone's retirement savings.
We all know there are a great many TSP investors who don't properly utilize the traditional offerings currently in the plan. This situation will be made even worse with uninformed investors trying to use unconventional offerings like inverse funds(which require a deeper understanding of the market).
Finally, somebody with some sense!
Army
Wed Jan 9, 2008 8:45 AM
Thank you so much for this excellent information! It makes perfect sense and was great advice. I agree that we should have an alternative for the bear market times - that is when I usually move to F and G funds, but F can still have down times even when stocks are down. I am so mad at the Board right now, if I could take all my TSP out, which I am fully vested in, and move it to a Roth IRA or some other investment vehicle that I can manage myself. But, it is what it is and I will deal with it as best I can. I would still really like to have someone explain WHY the "L" funds can be rebalanced DAILY by the TSP system, yet we as individuals will be restricted to twice a month. That just doesn't seem fair!
Re: Finally, somebody with some sense!
USACE
Wed Jan 9, 2008 9:07 AM
At the end of the day if the values are 19/20/21/22/18, then the only amounts that would be moved are that which would bring the funds back to their planned ratios. Therefore only a small percentage of the overall fund is moved each day.
Balancing is not moving 100% of one fund into another and back again at frequent intervals, which is what is occuring in the accounts of the heavy traders.
The two concepts are totally different, market timing versus account balancing to keep a consistent portfolio, and should not be compared to one another.
Re: Finally, somebody with some sense!
TSO
Wed Jan 9, 2008 9:10 AM
That is far different(and far cheaper) than many individual accounts being rebalanced daily based on many different reallocation percentages.
As far as a bear market fund - it's a good idea if it's used properly. It's a very bad idea if used improperly. Considering how many people don't use the current traditional funds properly, what are the odds that an unconventional bear market fund(which requires more knowlege) will be used correctly?
Terrible Article
SSA
Wed Jan 9, 2008 9:25 AM
This is a rather impenetrable article from a "financial professional." Read the last sentence again: "Taxable ETF portfolio might produce superior after-tax returns." A lot of things 'might' happen. What is he talking about?
And next: "the rare experienced proactive advisors who do manage separate accounts know that some objective trading is more than appropriate".
First of all I'm not entirely sure what that sentence means. But the idea that the average federal employee who doesnt have the same experience or training as the 'rare experienced proactive advisor' would be able to make the same wise decisions is laughable.
Lastly, for someone who puts such great stock in 'inverse stock alternatives'. He doesnt bother to explain them very well. Especially in light of the arcane & questionable concerns about other approaches, he should talk more about the very real dangers of inverse fund approaches.
Poor Article
USDA
Wed Jan 9, 2008 9:46 AM
This guy says 'the law should be changed' on IRAs. Yeah, well 'the law should be changed' on a whole lot of different things. We need to be told what's going on & not what 'should' happen.
Extremely poor article.
THE BEST TSP advice ever offered
Labor
Wed Jan 9, 2008 10:15 AM
Many thanks for your contribution Mr. Donoghue!
Re: THE BEST TSP advice ever offered
DOD
Wed Jan 9, 2008 11:58 AM
Frequent Trading in TSP by William E. Donoghue
Social Security Adm
Wed Jan 9, 2008 1:20 PM
Thanks for the article. Now, once again, in English.
Re: THE BEST TSP advice ever offered
USDA
Wed Jan 9, 2008 4:12 PM
I can tell from the negative comments that this article really offended the worshipers of the church of "buy and hold" investing. Kinda reminds me of the often quoted data about the losses due to missing the best market days, without ever mentioning the greater gains of missing the worst market days.
I think it was one of the more innovative and interesting TSP commentatries I have read anywhere, especially for FedSmith.
Re: Re: THE BEST TSP advice ever offered
DOD
Wed Jan 9, 2008 7:43 PM
You can give us a clever sounding phrases like "church of buy and hold" if you think you need to but that's not going to change the facts.
Thanks very much for some sanity.
NASA
Wed Jan 9, 2008 5:02 PM
Thank you, thank you, thank you for a little sanity. I was beginning to think all media reporting on the TSP were perhaps getting paybacks of some kind from Barclays (manager of the I fund).
I plan to investigate any services offered by the firm of William E. Donoghue if/when the TSP board implements the limits on the IFT transfers tentatively planned for April.
Since I'm retired, I am lucky enough to have a choice to withdraw my money from TSP if I choose and transfer to an IRA elsewhere.
Thanks very much for publishing the first article that I've read published anywhere that offers some arguments that counter the current policies of the TSP which I personally believe after studying meeting minutes is being mis-managed and which doesn't have the proper oversight it needs to serve its clientel(sp?), in my opinion.
Don't Offend the Herd
Treasury
Wed Jan 9, 2008 5:38 PM
Careful Mr. Donoghue. You seem to be offending "the herd". We only want to do what we've have been told to do. We want to keep our hands off of our money so the big firms and government can control it for us. We don't even know how to do it ourselves anyway so, baaaaaaaack off.
signed,
the herd
P.S. The buy and holder faithful have lost all of their 2007 gains in the 1st week of 2008, so they may be a little testy.
Re: Don't Offend the Herd
DHS
Thu Jan 10, 2008 6:50 AM
The most obvious fallacy is that buy and holders have lost all their gains. Buy and hold configurations are all over the board with widely varying allocations. A blanket statement that attempts to lump them all together with equal performance results makes absolutely no sense.
TSP TRADERS
DVA
Wed Jan 9, 2008 6:31 PM
in 2002 I started to take control of my TSP un fortunatly that was too late as I lost close to 40K For years I stood by and did nothing with my tsp and I said I would never let that happen again and I didn't. I found the TSP investors web site and started to manage my own account and for the past 6 years I have averaged 21% in my TSP. I moved into G on 1/2/2008 and I was glad I did as the market is now down over 10% for the start of 2008. I had a choice and I took it and now I am being told that I may have to suffer great losses again as my ability to get out of a falling market is prevented by the new trading rules. If there is an additional coset associated with frequent trading of my TSP I will gladly pay them but I would like to have a choice. This whole agenda by the TSP board smells funny and I see a scam built into this somewhere. I would like to call for a congressional investigation into the tsp board decision to limit trades. Two trades a month does not solve the problem but
Last 10 year average S&P return is 5.5%
FED
Wed Jan 9, 2008 9:42 PM
USA Today reported that the last 10 years the S&P average return was 5.5% and I want to make more than that. Take inflation out of it and I would say the more people need to do better than Buy & Hold. You can get 5% from a online bank. LOL You Buy & Holders what to sit on your rear ends and do nothing. Not me!!! How are your accounts doing now? The C fund YTD yesterday was -5.4%. That is when I bought it. I will ride the wave and take profit at the next rally while you will be trying to make back your losses. If you are in the S fund you took 8 days in a row of losses and I bought much lower than you did. The S fund was donw over 7% YTD. Quit trying to limit my ability to make money while you lose money in a buy and hold death spiral because you can make a decision for yourself. Your Uncle Sam not going to take care of you when you retire. He is going to raise you taxes and cut your Medicare and Social Security. Reality check is coming and you will be way behind.
Re: Last 10 year average S&P return is 5.5%
dod
Thu Jan 10, 2008 7:22 AM
WF&A
DOJ-BOP
Thu Jan 10, 2008 12:45 AM
Waste, Fraud and Abuse.... Enough said... allow us to manage our own funds.
Re: WF&A
DOD
Thu Jan 10, 2008 7:18 AM
MONTHLY TRADE LIMITS AND INVERSE FUNDS
DOJ\BOP
Thu Jan 10, 2008 12:01 PM
I believe I'm one of the so-called frequent traders the TSP Board is focusing their wrath on. Over the past 18 months, I've moved in\out of stocks multiple times during some weeks, but I"ve also gone several weeks where I didn't make a single move. Averaged out over the past 18 months I made an average of 4.4 moves per month between S\I funds and the G fund. My rate of return on my TSP has been more than double (20%+) of that I would have received with a "Buy and Hold" strategy in one fund, or a combination of funds. I don't consider myself a stock market expert by any stretch of the imagination. I've taught myself to look at various market indicators available to anyone, and then use them to help me decide where I want my money invested at a given time of the month\year. I'm not always right about my decision, but it's my decision and I have to live with. Set the limit at 4 trades per month. That's a fair number for all. Frequent traders and "Buy and Hold" investors
Thank You Mr Donoghue
Air Force
Fri Jan 11, 2008 4:15 PM
The TSP is GREAT! I hope it continues forward instead of backing up like the recent two-trade per month solution.
I appreciate both FedSmith publishing the article, and Mr Donoghue giving some very good information. He is right, no TSP bear market upside. I think...
I guess that's it. You have to think. That means you have to work to learn and know. Thinking right increases assets. You get much less for not thinking or thinking wrong. Anger is no substitute for knowing.
I have been amazed at the hosility that has been expressed by those seduced into not thinking for themselves and believing L-Funds and buy and hold strategies are a good solution to their future.
I wrote this previously. Think about this... Everyday the L-fund takes money out of the fund that did better and puts it in the fund that did worse. WOW! I simply believe I ought to do it the other way around.
FRTIB, please be a help and not a hindrance towards that end.
Re: Thank You Mr Donoghue
DOD
Fri Jan 18, 2008 1:25 AM
And finally, the really scary part of this is.. I see the TSP board starting to hint at making the L-funds mandatory.. they've already recommended that new hires have their money go directly into the L-Funds.. and that scares the hell out of me.
Re: Thank You Mr Donoghue
DoD
Wed Feb 6, 2008 9:33 AM
The industry standard is to get your order in PRIOR to the end of trading - i.e. 4:00 p.m. EST. This allows each TSP participant to MINIMIZE his/her "following" the market. TSPs requirement to place orders at noon is harmful to every TSP participant and should NOT BE TOLERATED by participants. By having access to change orders hours in advance of market closing, TSP managers are able to "front-run" the market with their personal accounts if they choose to do so.
Wake up, people!
The 2nd most important issue is the scope of funds (or even ETFs) available to invest in.
One round trip per month is generally sufficient to do well.
,
IT
Sun Jan 13, 2008 12:45 PM
Where has Mr. Donoghue's article gone ? I can't seem to find it on the website. Could it be that his advise to people that they made single digit gains over the past 7 years by following a "buy and hold" strategy is contrary to the Thrift Savings Board recent decision to penalize those who want to have the ability to move their funds as they seem fit ? I believe instead of restricting transfers to 2 a month, the Board should have allowed unlimited moves, but apply a fee to do so. That way participants still would have a say in how their money is invested, but have to cover the costs of their actions themselves. And if the TSP is being charged excessive fees that make this impossible to apply, maybe the TSP plan is being bushwacked by the firms handling these accounts.
Cudos Mr. Donoghue!!!
DOD
Fri Jan 18, 2008 12:59 AM
Excellent article!!
Unfortunately I seriously doubt the TSP Board would even consider any of your suggestion.. but we can always hope.
We need more choices (like an SH Fund), we need to be given the responsibility to manage our own money! We need to keep the responsibility of manageing our money at the individual share holder level.
And, if some people don't know anything about the stock market or finance, there are still the L-Funds.
I am very concerned with the moves that the TSP Board has been taking of late. I'm worried that in 10 years time the TSP will morph into something vastly differen't than what we have today. And it all starts with "..we've decided that in your best interest!".
Again, Excellent article.. let us hope.