With its higher levels of volatility the vast majority of TSP investors should consider participating in our Standard TSP Pilot Portfolio rather than our new Aggressive Portfolio (AP). However, if you are willing to accept more volatile swings in the value of your TSP account, and are at least 3-5 years from retirement, our Aggressive Portfolio will likely provide an additional boost to the performance of your TSP account.
If you are a new or inexperienced investor don't be put off by this new Aggressive portfolio offering--just stick with our ongoing standard portfolio and you will be just fine.
The Aggressive TSP Pilot Portfolio (AG) uses a completely different set of timing signals and indicators than those used for our Standard Portfolio (SP). It is even possible that on any given day the AG may carry a completely different set of fund allocation positions than is recommended for our Standard Portfolio. Such differences in fund positions might seem disconnected and inappropriate at first blush and perhaps sometimes seem even counter intuitive.
However, while both the Standard and Aggressive TSP Pilot Portfolios each optimize and maximize risk and reward within their own horizons, our new Aggressive Portfolio may often take a very different market timing path of allocations and fund balances to reach its own particular return goal.
While the Aggressive TSP Pilot Portfolio uses a similar set of fund timed computer optimized momentum systems as does our Standard TSP Pilot Portfolio, the variables (or parameters) that determine the more aggressive fund positions are often quite different. Also different are the fund selection criteria that determine how much of your account will be allocated to each TSP fund.
The Aggressive Portfolio not only recommends taking less diversified and heavier percentages in the TSP stock funds than does our Standard Portfolio, it also frequently recommends dropping stock fund positions completely, or makes more drastic portfolio changes when prompted by its own proprietary buy/sell signals. The AG portfolio can frequently move back and forth between 100% safe harbor G Fund and fully invested positions.
Counter intuitively, the AG may even have heavier G Fund allocation than the SP on sell signals if it had been previously fully invested. The AG can also make more frequent and dramatic allocation changes when trends shift direction, sometimes resulting in costly whipsaws.
The AG will therefore not be suitable for most TSP investors with more typical risk preference profiles. With differing investment methodologies, systems and positions will not always be in concert between portfolios. Most TSP account holders would be advised to follow the Advisories for our Standard Portfolio.
Those with some experience in investment analysis will recognize these two different yet parallel standard and aggressive portfolio approaches as a "shifts" in the risk/reward horizon.
Therefore do not be put off by the sometimes seeming disconnects between these two very different portfolios. Both TSP Pilot portfolios are merely designed to suit the personal tastes and preferences of investors with quite different tolerances for risk and appetites for reward. A look at the performance tables for our Standard and Aggressive Portfolios will quickly reveal their individually shifted risk/reward profiles. The numbers for Glossary definitions for Ulcer Index (UI), Ulcer Performance Index (UPI), Maximum % Draw Down (Mdd), and Annualized % Return (AR) for both Portfolios should give you an idea which Portfolio is right for you.
While the TSP Pilot fund timing systems will likely prevent your account from suffering the protracted losses of 20% or more during long term, secular bear markets, frequent sharp account value fluctuations are likely to occur from time to time due to the relatively non-diversified nature of this Aggressive Portfolio. If you are unwilling to see your TSP account fluctuate significantly in value over short periods of time it may be more prudent for you to follow the recommendations for our Standard Portfolio.
However, as a general rule, your acceptance of a higher level of short-term account fluctuation in following a more aggressive investment portfolio will often buy you considerably increased performance at the price of a good night's sleep.
The Standard Portfolio's allocations follow a diversified selection of all five available TSP funds. However, the Aggressive Portfolio will frequently recommend that a substantial portion (50% to 75%) of your TSP account be invested in a single TSP stock fund at any point in time.
While the TSP stock funds themselves are based on relatively diversified, broad-based market indexes, more account fluctuation can be expected when your TSP account assets are concentrated in just one fund. However, that one recommended TSP fund will likely be the highest scoring and performing TSP stock fund based on our proprietary TSP Pilot market momentum and relative strength indicators.
We will usually recommend that the balance of your account be invested across the two remaining TSP stock funds in rather similar percentages. Positions in the TSP F and G bond funds will only be recommended will be during broad market sell signals. On buy signals we will recommend that approximately 2/3 of your account be allocated to that one TSP stock fund carrying the highest current price appreciation and momentum characteristics.
Both the Standard and Aggressive Portfolio recommendations will be carried for TSP Pilot subscribers on our Current Advisory Page.
All new TSP PILOT fund balance percentage alerts are sent to you via email for both the Standard and Aggressive Portfolios. Those alerts will direct you to the newest TSP fund balance percentage recommendations posted on our password protected Current Advisory Page. In seconds you can then plug those new percentages directly into your own personal TSP account screen on the TSP website.
The metrics on Tables IVd and II demonstrate the clear superiority of TSP Pilot Portfolio's dynamic asset allocation and active management strategies in concept, function and results to the passive, "buy-and-hold" results for the new, highly touted TSP L Funds as well as the regular TSP stock funds.
Trading advisories began in the new TSP Pilot Aggressive Portfolio on 5/30/06. Therefore, the performance numbers for 2006 represent an amalgam of both the model and actual results by definition.Recent performance numbers for the Aggressive Portfolio clearly demonstrate its dramatically superior control of both market risk and account exposure to downside volatility and loss.
While the TSP stock funds showed somewhat higher recent year-end returns, those funds suffered periods of MUCH greater losses during the year than did the TSP Pilot Aggressive Portfolio. In fact the TSP Pilot Aggressive Portfolio took between 25% and 57% LESS market risk during the year than any of the TSP stock funds.
The AG's performance in 2013 was extraordinary compared to the very minimal downside market risk exposure it exposed it's followers to. Subscribers saw between 25% to 136% LESS MARKET RISK following the AG than did any of the TSP funds!
From the 26 year history Tables it can be seen that TSP Pilot's Aggressive Portfolio performance was more than DOUBLE that for the entire offering of TSP stock funds and L Funds while accepting less than ONE THIRD the market the risk Maximum % Draw Down (Mdd) in most cases. This characteristic represents the backbone of TSP Pilot performance.
Few TSP investors would have sat quitely on the sidelines and just watched their accounts erode by so much. Looking at it another way, the TSP Pilot Aggressive Portfolio had a very favorable 4/1 risk/reward ratio while the TSP stock funds individually had an absolutely terrible 1/1 ratio! In simplier words the reward received from holding the individual TSP stock funds was definitely not worth the risk suffered.
This underscores the fact that TSP Pilot's dynamically timed portfolio allocations put you miles ahead at the end of the day while insuring your peace of mind during the bad times.
Don't test the retirement waters alone. Put your TSP ship a league ahead by requesting your FREE BACK ISSUE or by SUBSCRIBING at our special reduced rates today!