TSP Distribution: S-fund 50%, C-fund 50%
We had another really good week in the market this week. We also hit several new highs on several different indexes. This week my personal TSP account rose another .83% bringing my YTD gain to 10.06%. The L-2040 and L-2050 actual outperformed my settings of 50%-C&S, but not by much. The International Index appears to have risen from the dead once again and did a very nice job continuing its Intermediate uptrend line right before it destroyed that trend. The major news to me this week was the new all time closing high on the S&P500 which our C-fund tracks mark for mark on price.
In this next paragraph I want to address some comments that were made to me this week at work in reference to being out of the market. “I losing money because I’m all G.”, “So is this the big move up?”, “When should I get back in?”,”How much longer before the big crash?”. Ok let me address them one at a time and what I’m about to say is simple and you should expect it before you even ask the question. Well, at least from me.
First if you have all your money in the G, how are your losing money? You safe! You can’t lose money you never had or earned. You also have the peace of mind of being exactly where you want to be, safe. Do you think for one minute that if I thought I had reached my tolerance level in the market that I would not be all G? Yes I would and everyone of these decisions have to be yours and don’t fret it. Your safe.
Second, I do not make predictions in the market. I read past data to make a decision on whether I think the current market looks to risky to make money or looks ripe for riding. I’m a trend follower. Try this little trick. Look at a stock chart, remove all markings you put on it, all moving averages, remove anything that is not price. Look at it and study it for 10 seconds, is it going up or down. Yes, it is almost that simple. We adults make it more difficult by adding NOISE!!
Third, You have to have a plan. If you do not have a plan and listen to the news, or listening to your buddy, and or even me, you’re going to lose. You ultimately need to have a plan that you feel confident using. If your just pulling out or going all in on gut, long term, you are going to lose. I cannot tell you when to get back in once a trend is intact and running because I use indicators to tell me to exit and enter. Once they have fired, I would have to assume for all situations that they are in effect until the next signal fires with a reverse. I use trend lines, moving averages, and CBL’s to help me make all these decisions and I do it without any outside source of information. It works for me and keep my stomach from flip flopping!
Fourth and last, define Crash! 2% pullback or 5%, 10%, or 40%? What is your definition of a big crash? How about 2007-2008 or 2000-2002? Those 2 time frame pullbacks were 57% and 42%, respectively and you want to avoid these tragedies at all cost. They destroyed my TSP account because of my teaching was buy and hold since I was a kid. By the end of 2008 and 09, I decided enough was enough and it wasn’t to late to learn. But back to the original question, when is the next big crash? I have no idea and I do not care. Why? My charts will show me that information every single time without you, the news, or any other resource. So why worry about something I cannot predict or see? To listen to all the table chatter at work the last month, we should have crashed 5 to 10% to the 1450-1485 levels. Once again, I do not care. My charts and price will tell me that information when that time comes. I know point blank I will never get in at the bottom and I will never get out at the top, but this much I will tell you. I will not take another 57% or 42% loss again.
I suggest that anyone having a hard time with all the chatter, news, influences, just take a little time and read one very old book. Nicolas Darvas, How I made 2 million dollars in the Stock Market. Do not let that title fool you, the moral of the story is not how much he made, but what he discovered that help led him to that 2 million. I’ll even provide you with the Kindle Link from Amazon for the $3 book.
Sometime over the weekend I will put up the charts, and talk a bit more about the International and Bonds. There really isn’t anything to say about the S&P and Small Cap but sit back and watch the show and let’s see what happens. I have no clue what will happen next week in the markets, but I know what my charts are telling me today. Invest !
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