Re: [TSP_Strategy] Re: Different strategies for TSP contributions and allocations?

 

Many thanks, Ray. I'm glad to hear at least someone else thought the concept was worth studying, and confirmed that the simple approach most of us take is acceptable.

Jim

On Oct 6, 2015 5:14 PM, "Ray Quick mercuray1@gmail.com [TSP_Strategy]" <TSP_Strategy@yahoogroups.com> wrote:

 

 Jim, it's an intriguing and complex subject.    (Is it possible that whatever mix of TSP funds you think will provide the very best long term return (for a given risk preference) is also the identical best mix funds to invest in over a very short time frame?) 

A colleague at our professional investment research partner, Quacera LLC, had done a 20 year study that found little benefit to treating current and new assets differently. His conclusion is to monitor what the market momentum guides you to do, and follow a strategy (algorithmic logical objective model) in which you have confidence. Apply it to both new contributions and current holdings.

This avoids the need for periodic re-balancing, as your fluid actions have done this. 

This topic has generated innumerable opinions. No universal answer for every investor. So keep your approach simple, avoid whipsaws and black swans. Pay attention with a moderate time perspective. Use an approach that mitigates emotions and be able to sleep and relax.   

     Ray Quick mercuray1@gmail.com [TSP Radar]  

On Thu, Oct 1, 2015 at 11:34 AM, JM Bud jmbud2@gmail.com [TSP_Strategy] <TSP_Strategy@yahoogroups.com> wrote:

 

Thanks. I had found this article especially helpful in applying MPT: http://www.acorns.com/whitepaper/ I'm also a paid subscriber to TSP Pilot, which factors in multiple systems into its recommended portfolio allocation, including the Sharp Ratio (from the "father" of MPT). 

But even TSP Pilot assumes contributions and allocations are made in the same proportions, and that subscribers will periodically re-balance allocations to match the current recommendation. No rationale for that approach to contributions or against any other approach is provided. I guess it must be obvious to most people, but it's not to me. 

Is it possible that whatever mix of TSP funds you think will provide the very best long term return (for a given risk preference) is also the identical best mix funds to invest in over a very short time frame (i.e. every pay period)? 

Or, as another person implied, after a few years into the TSP, does where you put $18k of contributions each year not make much of a difference on total TSP value, assuming you periodically re-balance?

Jim

On Thu, Oct 1, 2015 at 8:49 AM, gmbetz@yahoo.com [TSP_Strategy] <TSP_Strategy@yahoogroups.com> wrote:

 

You might want to google Modern Portfolio Allocation for ideas and rationales. 

MPA call for a diversified allocation.  Even though TSP limits choices for allocation,  a contributor can still overweight  contributions to the fund he is underweight in allocation.

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Posted by: JM Bud <jmbud2@gmail.com>

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