Fund Timing Limits Market Risk
Essentially, fund timing significantly increases your investment dollars by limiting market risk and exposure.

That risk limitation can be seen in the smaller average losses taken by a typical market timed portfolio. The buy-and-hold investors are often forced to suffer through protracted periods of emotionally depleting bear (down) markets. Market timers may take a larger number of losses while trying to catch right side of market up cycles (whipsaws), but the total of those losses will be significantly SMALLER that the total of losses suffered by the buy-and-holders.

Market timing concentrates your investment dollars, or market exposure, to those TSP funds that are in rising trends when the market is sound. When the TSP stock funds are flat or falling, TSP Pilot parks your account in a safe Treasury G Fund investment to preserve your capital.

The strength of TSP Pilot's fund timing centers around the improvement it provides in the risk/reward horizon largely by reducing or eliminating the damage to your account during those declining market periods.

However, timing alone will not improve performance during bull markets. Improving the performance during bull (up) markets is the role that fund selection, or allocation, plays--the second key to TSP investment success.


Fund or market timing will often under perform a buy-and-hold during strong bull markets. For that reason it is sometimes difficult to stick with a timing approach when markets are climbing into the clouds like they were in 1998 and 1999--just before devastating the high-tech bust. However, history shows such increasingly strong up market cycles to be forerunners to important market tops and trend reversal points.
Those who stuck with a fund timing approach through the bull market of the early 90's, such as TSP Pilot, would have been rewarded by a near total avoidance of the extended three year bear market following March 2000 and the erosion of account values of up to 50%.

However, to be effective fund timing must be applied in a structured and disciplined approach. The timing systems must be backed by substantial research and proper historical back testing, be coldly objective and be powered by systems that are constantly re-optimized to current market conditions. This is the effective fund timing that TSP Pilot brings to you to dramatically improve the returns for your TSP account.

The operative word to be used here is "effective" since many fund timers simply either don't make a thorough study of the profession or can't follow their own advice long enough to see the profits of their improved approaches. Other professionals "over-optimize" their fund timing systems which results in improper and misleading hypothetical results and a phenomenon known as "curve-fitting" which often leads to market losses. Market timing usually doesn't work for those who try to do it themselves without the help of experienced professionals who often make a very good living with the practice.

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