Saturday, November 10, 2007


I retired from the Federal Government in 2004 with the best pension on the planet. I can almost live on it. As a Federal employee, I also put a little money into the Government Thrift Savings Plan, with several investment vehicles to choose from: money market, bond, S&P 500, Small Cap or International.

I kept my shares in the C Fund (S&P 500). When I retired, I was no longer allowed to make contributions, so the number of shares I had was frozen. My bottom line, then, was at the mercy of the market. Not good enough for the likes of me.

I decided to game the C Fund. My method was to shuttle the money, back and forth, from the C Fund to the G fund (money market) and back again, with the objective of increasing, over time, the number of C Fund shares I had.

I didn't try to hedge my bets. Moving half was not my style - it was all or nothing, roll the dice.

It was an exercise in market timing. I found that it was extraordinarily difficult to do, but over the past three years I have been successful at it. I have gone to cash and back six times and I increased my shares on all but one of those moves. At present, I have 11% more shares than I had when I retired.

I have courted disaster more than once. The last time was on September 17, when the thing I thought the Fed was least likely to do, it did. When the announcement came the next day, I was dead - hoist by my own petard in the G Fund, accruing a rapidly diminishing, pitiful rate of return, while, according to the Stock Channel, the greatest bull run in history had commenced.

But I exercised patience. When you're dead, patience comes easy. And sure enough, fear, uncertainty and doubt - the three witches of Wall Street - reared their beautiful heads and the market headed south. On Thursday last, in the midst of building pandemonium, I calmly stood in the breach with my finger poised over the Reload button. But there was a catch.

In the Thrift Savings Plan, you can easily move from one fund to another, but you have to make the decision before noon to get the closing price at the end of the day - a heinous rule that makes it virtually impossible to time moves with any precision. But I wasn't worried: Thursday morning, panic was beginning to set in. The likelihood that the bottom would drop out in the afternoon seemed a cider house cinch to me. Just before noon, I pushed the button to go back to the S&P 500.

In the early afternoon, I was thrilled to see that we were down big. The S&P 500 was being slaughtered. I came home early to watch the last hour on TV. There, my thrill turned to thrombosis as the market turned around and came roaring back. By the close, the S&P was flat on the day and my advantage had been wiped out. I got back in at the closing price and ended with a paltry 21 more shares than I had before. Then, on Friday, the market turned back around and resumed the slaughter.

But I didn't care. I rejoiced that I survived the debacle without a loss of shares. In fact, I was up a Jackson. I had dodged a bullet. I thought about Churchill's eloquent observation: "Nothing in life is so exhilarating as to be shot at without result." Even if it's only me, shooting at my own foot.

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