February 13, 2016 at 7:54 am #18194
As the market has continued to decline, many have pulled capital into G or F funds. Given that the rate of return on G is less than 2% annually, it only makes sense to stay there for a short term – in accordance with the Economic Theory of Investing during a recession. At some time, you must move back into C, S or I funds to keep growing your nest egg. However, if you get in back in at a higher price than you sold (minus the little that G added), you are worse off than if you stayed in the stock funds. If you are in F, you also risk losing value as the stock market gains.
What tea leaves are you watching that will tell you it’s time to get back into the market?
○ Absolute price?
○ Moving averages?
○ % change from your sell price?
○ Statistical parameters?
○ Other technical indicators?
○ Market emotional state?
○ What everyone else is doing?February 13, 2016 at 11:21 pm #18221
None of the above. I like the economic cycle approach that TS Paul has, however, I disagree where we are in that cycle and I believe that there are some major underlying problems. I distrust the government’s involvement and spin on current economic conditions. I’m not sure anything will change whether the political parties change or stay the same at the national level.
I look at all the equivalent TSP and other indexes on a regular basis. I like foreign news networks as they seem to provide a different perspective than the US networks. I have been looking into seasonal investing to see if there would be any value in a different approach, but I am not convinced that it is something I want to try.
In 2014 I started getting concerned about the levels the market was attaining and started gradually reducing my stock exposure. Unfortunately I did not continue on this path and had more exposure at the end of 2015 than I should have. Hopefully, lessons learned will help in the future to better manage my investments.
I still have 40% in stock funds because I could definitely be wrong on the economic outlook and it is somewhat of a balancing act, sometimes a gamble–not sure which without a crystal ball. I am concerned with outlook of the current market based on this past 6-18 months. Based on the L Funds, I should have between 53% (L-2020) & 80% (L-Income) combined in G & F Funds at my age/situation. I want to maintain my current nest egg. I would have more of a nest egg had I gone 100% G any time from 1 Nov 2014 through the 1st half of 2015. How much has your nest egg grown in the last year?
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