Return to Article: TSP prepares for increased activity due to stock market plunge
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43002
I've been reading the "dollar-cost-averagers" lambaste the "day-traders" (please excuse the inaccuracies, you know of whom I speak). Please remember that these folks are not mutually exclusive. There are two transactions involved here. Purchasing and holding. The purchasers (aka: the "dollar-cost-averagers") are correct that when stock prices are depress, treat it like a K-mart, blue light special. But that is on the purchase side. The "day-traders" (once more, I admit to inaccuracies but ... you know whom I mean) are seeking to preserve capital (aka: sunk funds). Now the purchasing side is pretty much a no-brainer. You buy more stocks as the prices sink. The capital preservation is a little trickier. Okay, it's a LOT trickier; but there are great potential gains that should not be ignored by either the target population nor the TSP managers.
Once more, I decry the fraud we have experienced of paying for a VERY expensive computer system TWICE (please remember the original contractor's default and subsequent buy out, then the last contractor) to allow us to do just that, trade daily.
We (the TSP fund) are once more entering a computer system maintenance upgrade. Will we get what we want now? Will the contractor provide what we need now? I ask "How can they?" The board doesn't even know (or at least acknowledge) our desires.
Mr.s Long and/or Saul, can you hear the words coming out of our mouths? Think daily transactions (with individual costs assessed) and ROTH!!
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42999
Mr. Doane, I agree. Please note that while the automatic enrollment may be depriving the US government of hundreds of millions of dollars in the current year; but using the Rule of 72, given a 8% average annual increase, it should take 9 years to double those monies diverted into the TSP. I could use the average 30 year career but with all the mil-to-civ actions and my own estimate of increased job rotation due to NSPS, I'll use a 20 year career. That means every $100 dollars put into the TSP will double twice, or rather quadruple, and come out the back side as taxable income. I really don't foresee too many complaints from the Feds on this topic.
Now the Roth is a very different animal. I figure it will be a HARD fought win; IF we win.
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42357
I tried to do a transfer out of one fund into another. But the transfer screen on the web site required that I enter percentages for all the funds I own. Since the transfer screen did not allow for fractional shares I had to move those fractional shares out of the funds that I did not want to touch. This is VERY BAD design, that requires many more transfers than necessary.
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42278
Eh, it doesn't matter what we say, but my TSP balance speaks for itself. By following my co-worker's advice based upon his developed pattern, I managed to nearly double my gains over a six month periodby daily trading from the previous six month period of letting it sit in the C, S, and I funds.
What I suggested was sell before it starts losing money, then buy before it's going to make money.
Or, you could follow the TSP board's advice and "wait it out". Oh, by the way...so far this month, the I fund has lost 10.14%. Sure thing, TSP board.
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42269
Dear anti-Rob, You've read a lot into Rob's post however, I won't try to read your mind as you did with his, but I will say your pleading asking us to listen to the TSP Board is wrong. They are not friends; no one that wants to control how others invest their monies for retirement is. Frankly, I am wondering exactly what your agenda is and whether it's based on personal ignorance, fear or a more devious root, perhaps as a TSP Board shill?
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42150
Don't know if I'd be so quick to buy in. I just saw a prediction yesterday that real estate property value is predicted to fall 15% in 2008 and another 10% in 2009, and this reflects what I've been hearing all along. Also, take a look at this headline from Govexec this morning..."Budget office predicts growing deficit but no recession next year". That doesn't exactly give me a warm fuzzy about stock funds. I'd say start buying in gradually...a few percent at a time. Otherwise, you really are day trading and taking quite a bit of risk.
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42085
I hope people here don't listen to Rob and take his advice... no offense Rob, but you couldn't be more wrong on your advice here. And you add that people don't even need a high school diploma to figure it out. I'm assuming you have more than that, and you obviously haven't figured it out.
By your advice, I'm guessing you were advising people this past November to move their money into the C, S, and I funds when they were up nearly 20 percent over the past 12 months. Now that they have given all that back and more, you are telling people:
"it doesn't even take a high school diploma to say, "hey, uh, I'm losing money...should I reinvest in a different fund?"
Following your logic, they should jump back in after it climbs again and miss the majority of every move up, and then after it falls like it just did, move out of the fund and miss the rally back. That way they only take the losses and miss a majority of the gains. If that is what you are going to do, then don't invest in the TSP. Hold onto your money - doing that is just throwing it away.
I implore everyone - Listen to the TSP board - as far as long-run investing they are telling you the truth! If you were going to get out, you missed your chance. Now's not the time. Don't move after the market has already moved. Like another poster said, you are just locking in your losses. If anything, you should be moving into these funds now. Think about it this way - prices are low now... Stocks are on sale... these funds are on sale. If you are in G or F, I would suggest you move in now or soon... you missed a large move down. So on the rally, you can ride it up and move out when stocks are high if you move at all. Don't listen to the Robs of the world. You have to be proactive in this if you are going to move at all now is the time to move into these funds, not out. For those already in the funds, what you are buying in them now is at a good price. Stay the course.
Buy low - sell high. Rob is suggesting the complete opposite. For your own sakes, don't listen!
I have nothing to gain from telling you this, but just had to have someone offset what Rob was suggesting...
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42078
I will be more than happy to pay 3 basis points to have contol over my account. I would be interested in statistics showing how many interfund transfers are continually made by the same people. When individual patterns are discovered, why not address their poor investing practices with them and not penalize everyone. I can't imagine the mass trading is done by the majority.
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42074
that is why Robert dollar cost averager will work until he's dead while the rest of us half brainers will retire early
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42072
It's interesting to note that many people believe that the daily traders are losing money because everything is a day behind. More often than not, one could devise a pattern to anticipate movements in the market such as one individual in my office. All it took was five minutes out of the day to look at certain stocks and funds, compare it to our pattern chart, log into TSP, and make our interfund transfer. At first, I was skeptical, but after following his advice, I only lost maybe a couple hundred dollars on one or two days of the month while at the same time, making gains in the thousands per month. For those of you who believes that it can't be done, it has been done and rather successfully. Otherwise, folks wouldn't be making daily trades if they were losing constantly.
Back to the article...I like how the TSP officials want you to take the long-term approach to investing. As of today, the C fund is down 10.69%, the S fund 12.03% and the I fund 12.84%. I don't know about anyone else, but it doesn't even take a high school diploma to say, "hey, uh, I'm losing money...should I reinvest in a different fund?"
Before long, the TSP board is going to require everyone to lock into just one fund and one fund only for your entire government service career.
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42058
I agree with Robert below, and I would add that if your TSP investments are in the C, S and I funds, you need to relax and don't make any changes because it's the movers, who will end up losing when this market rebounds again, and it will because most is based upon fear and what your level of risk is to stay the course, and make money while the market is down. Think about this, if you're dollar-cost-averaging every pay period by adding to these funds, your're now buying more shares with the same dollar amount that you were doing before.
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42055
I have been around a long time and find it amazingly naive that anyone would believe what most financial "experts" have to say when it comes to investing their hard-earned money. With very, very few exceptions, until brokers start jumping out of windows, the message these "experts" provide is always positive. Why is that? Well, personally, I think it's because nearly all of them make money when people trade stocks and don't make money when people don't trade them. The "mortgage crisis" is now blamed by almost all of them for the current "market volatility" (read severe downturn of 10% and sinking since January 1st). But the mortgage problem is a symptom, not the cause. The causes of our financial woes go far deeper than that. For years we've been allowing administrations to ignore the fact that petroleum is disappearing while human populations are skyrocketing. This is unsustainable. But underlying it all is corporate greed, particularly among oil companies and financial institutions. Banks often charge 30% for credit card debt, and neither sector has any meaningful curb on its activities and both are paying half the maximum taxes they did 40 years ago. As a society, we have replaced self-sacrifice and sense of community with the lofty ideals of greed and lust for power; rationalizing them by calling them the American dream . . . I don't think so. Our own corporations and our own shortsighted politicians have killed the goose that laid America's golden egg . . . the middle class. Elect representatives who will develop policies to ensure the viability and future well-being of our middle class and our economy will do just fine. Ignore the fundamentals, look for easy targets to blame and quick fixes and your pouring money down a rat hole. As for "staying the course" with our TSP funds at this time. Doing so over the past three weeks would have cost 10+% of an employee's retirement fund. That means the fund will need to grow by more than 11% just to break even. It is NOT smart to accept losses like that.
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42048
I fully support the plan to limit the number of trades. One can look critically at the circumstances causing the change and and question how much time some employees have been spending during work hours in tracking stock movement.
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42045
Isn't it interesting to see that the total overall costs for the TSP for ALL of 2007 was only 1 basis point! ($10 for every $100,000 in account balance!) This is so far below what normal costs are with other brokerage firms, that I don't think the TSP has to worry about changing OUR options and abilities to manage our accounts until the costs start coming close to exceeeding those of other similar plans.
I don't know about the rest of you Feds, but I think paying my $20 for the management of the TSP is quite low, and have no problem with that number going higher to keep OUR plan the way it is! Don't mess with something that works - TSP Board!
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42027
I think it's hilarious that folks are locking in their losses by moving in and out of these funds. I love times like these. Relax and stay the course is what I do. Others are doing what 99% of financial planners say don't do and that's jump ship.
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42024
Here we go again! The TSP won't stop until they cut their account holders out of the investing formula. The end game is for them to manage our money. If you move your money they penalize you, if you don't they penalize you. Let's face it our economy is in trouble and it's having an affect on the world markets which in turn is affecting our TSP financial growth potential.
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42021
I particularly noted this paragraph in the news article - "Lawmakers have expressed concern over the cost implications of the automatic enrollment proposal, since it would result in more federal employees deferring some of their salary from their taxable income. While a Congressional Budget Office estimate cannot be made until the legislation is introduced, Trabucco acknowledged that an unofficial accounting indicates the proposal could deprive the U.S. Treasury of hundreds of millions in tax dollars."
Notice that the emphasis was not on the hundreds of millions of dollars that would be added to employee savings, but instead was that it would "deprive the U.S. Treasury of hundreds of millions in tax dollars".
If this is government for the people, I wonder what government for the GOVERNMENT would look like?
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42013
There might be a simple way to curtail 'trading' activity without the Draconian and unpopular step to hard-limit monthly transactions: Show the improvements in account value achieved by frequent transaction account holders versus those of less frequent account changers. This would reveal no personal information and could be displayed in categories of transactions per unit of time.
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41994
I have been in the TSP for twenty years. Now all of a sudden this past year, changes are being made becuase of cost, what happened in the past, didn't the operation cost anything.
Two years ago I contacted TSP and asked what were the fees for my account maintenance for my income tax. I was told there were none. After checking further I found out their were and reported them on my taxes as required.
This reduction in inter fund transfers to two a month is not wise. I think many people especially baby boomers will be doing roll overs upon retiring if this goes through. I want to manage my porfolio effectively and I need the ability to move it when I want to, not when I am allowewd to.
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41992
I won't be rushing to make any transfers. Anyone with half a brain would have seen this coming months ago and already moved funds to the G or F. The Fed can only prop up a crappy economy with feel good interest cuts for so long. Only question now is when to buy back in (maybe not quite yet considering our huge trade deficit, high petroleum costs, and cost of the war in Iraq)....but there's no way I could screw that up bad enough not to come out of this ahead of the "dollar cost averagers".
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