Signal change for Thursday, April 26th

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With the close of markets on Wednesday, April 25th, my TSP models have signaled a transition from cash to invested.

NOTE:  This is not investment advice.  You are responsible for your own actions and I am not.  Please do your own diligence and please take ownership for your actions.

In the conservative portfolio, the model is suggesting the following allocations:

F-Fund:  38%
C-Fund:  30%
I-Fund:  10%
S-Fund:  22%

Substituting the G-Fund for the F-Fund is also a safe and prudent action.

In the ggressive portfolio (longer than 10 years before needing the monies), the model is suggesting the following:

C-Fund:  49%
I-Fund:  17%
S-Fund:  34%

Changes made before noon will be effective at the close.

I intend to transition to fully invested using the aggressive portfolio.

For you folks who like statistics, I've updated the model to be consistent with my other models and have the following table:

The four TSP funds are listed across the top.  This is a table which uses the actual closing prices of the TSP funds, and the model accounts for transfers that are made the following night AFTER a signal.

Of importance is simply that we have a "good" number of trades in each fund and the statistics get us in the ball park.

In general, the I-Fund, which is an international fund, has experienced the worse loosing trade.  Note that the average losing trade is the worse with this model.  Certainly not bad, but simply the more volatile of all the other funds.

The F-Fund is the weakest performer, not in terms of equity, but in terms of metrics.  The t-test/SQN value of 1.60 is below minimum of 1.7 and suggests that the model is not in sync for the bond fund.  This is probably true, because the underlying engine is equity-based, not bonds.  Timing bonds with equity movements doesn't always work out in our favor.  Hence, a strategy here is to presently substitute the G-Fund for F-Fund and remove all bond risk.

Regards,

pgd

Update for Thursday, April 5th -- Moving to Cash

With the close of markets on Wednesday, April 4th, my intermediate-termed timer has transitioned to CASH.  I am moving 100% of my monies to G-Fund, effective with the close of markets Thursday.

Conservative Allocation:  G-Fund:  100%

Although the long-term timer is still LONG, and unless we get a complete collapse of the markets over the next week, it most likely will remain long through this bump.  If you are aggressive you can remain long with this latest signal to move to cash, but it could get painful.

Regards,

pgd

Update for April 2nd

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Since our allocation change on 3/14 we've been mostly horizontal in price movement:

G-Fund:  Up +0.043%  (@ 60% allocation)
F-Fund:  Up  +0.009% (@ 3% allocation)
C-Fund:  Up +0.115% (@ 15% allocation)
S-Fund:  Down -0.008% (@ 11% allocation)
I-Fund:  Up +0.008% (@ 11% allocation)

This is poor performance in the markets in general and is not indicative of the allocation amounts.  I generally think that the mix is correct -- bond yields (F-Fund) are on the rise, so we should see bond prices fall.  Rallies are typically led by small caps (S-Fund) so the fact that they are lagging here is indicative of a tired market, hence the lower allocation than the larger C-Fund (S&P500).  We need some international exposure (I-Fund) and in general, the I-Fund goes as the C-Fund and S-Fund, especially as of late, so I continue to keep my eye on this correlation.

Noting that we are at 40% exposure (60% in G-Fund, which is "cash"), I do not see any compelling reason to re-allocate at the present time.  Furthermore, in terms of local cycle, it is quite possible we could be heading downward, as this bull leg is getting quite tired, or alternatively, we could be heading higher through May.  As an example of thinking of this latter point, refer to this chart from Mike Turner, which was forwarded to me by one of our GGT members:

Of course, your crystal ball is as good as mine, and perhaps just as good as Mr. Turner's.  Caveat emptor.

Stay the course until it changes.

Regards,

pgd