Brand New Forum

[USPFA Team]

With the move to the new website, the old forum and all old questions were left behind. Clean slate now.

The forum is a place to ask questions, report problems, provide new information about your plan and to help each other.

We monitor this forum (pretty much) daily. During busy times in the markets, it may take a day or two to answer questions.

[Derek Meyer]

I like the new website!

[USPFA Team]

Derek,
Thanks! I'm glad you like it. My hope is that this will be easier for everyone.

If you or anyone else has suggestions, cool pictures for the home page, etc., please let us know.

Dave

[John Paul]

Dave,

What are your thoughts on moving to cash in defense of a government shutdown?

[David Lucca]

There is another thread about this, but in summary, your call. I prefer to follow the system.
Historically, the market has not tanked...

[Denver Nolin]

Dave, just signed up and would like to see the document that this old link went to:

http://www.uspfa.org/members/282.cfm

I've re-allocated my 401K and put new contributions in the MM account, but would like to make sure I'm getting off on the right foot.

[USPFA Team]

Nolin,
Will you tell me which document the old link went to (by name). Then I'll find it.
Thanks,
Admin

[Denver Nolin]

Dave, Here is a cut/paste from the newsletter.

Download: “Fast Start Guide”
http://www.uspfa.org/members/
282.cfm

Thanks for the help. Denver

[USPFA Team]

Denver,
Sorry it disappeared from the sidebar. Here is a short link that should download for you...

FAST START GUIDE to Understanding the Advisor 401k Investment Process

Best,
Dave

[Mark Hickman]

Hey sir,

Any chance you can highlight the change(s) in the models in your newsletter?

Thanks very much.

Mark

PS Great job by the way.

[Brian Ward]

USPFA:

New to USPFA and have lots to learn. Have really been impressed with everything you offer.

Question with regards to the Worry-Free 401K Plight Path Model -Express: is it possible to color the legend for the 4 plots to match the plots? In the PDF of the chart, the legend is in gray scale. I would be more confident that I'm reading it correctly.

Thanks.

Brian

[USPFA Team]

Mark and Brian -

Thanks so much for your input. We are always striving to make the newsletter better and will try to get both of these suggestions implemented in the November editions.

Fly safe!

The Autopilot Team

[Everett Martin]

In the October and November 2014 Newsletter we bought Spartan International Fund as the models suggested.

Then, in the December Newsletter, the models bailed out of the Spartan International Fund.

If we follow the recommendation, we will incur a 1% penalty because of the 89 day holding rule.

Do you think it prudent to go ahead with the December model and pay the 1%, or hold until the

89 days are over?

Thanks, Trae

[USPFA Team]

Hello Trae -

Sorry for the delay in getting back to you. The suggested trade was announced in the September newsletter and was just sold at this month when the holding period was over.

Although we generally stay away from recommending funds that have a holding period with early redemption fees, when those fund are trending as the market leaders we evaluate each instance for the potential benefit. In this instance, the outlook for gains was greater than the possible need to get out of the fund early and only lose the 1% redemption fee.

Based on when you personally bought into the Spartan International Fund, you need to evaluate whether you are still gaining or to cut-bait and pull out early and incur the 1%.

Regards

[Jack Crognale]

The August issue of fund selections for the Fedex Models has the Vanguard Wellington Fund, VWENX, listed. I don't see that as available in our 401K list of funds. Did you mean the Windsor Fund? Thanks, Jack

[Jack Crognale]

Disregard on the Wellington Fund. They had it listed under balanced funds. Thanks, Jack

[Peter Lewis]

OK, Its feb 3 and the new newsletter just came out. I wrote at the beginning of JAN about why we didn't go to bonds when the BBo crossed to BEAR, and it was explained to me that it was because the general "feeling" was that it was just a market correction and probably NOT dire circumstances. Seemed to me that it was an "emotional" decision based on assumptions, and went against the 'SYSTEM" which we have become accustom.

So, here we are in early FEB with the BBO still in the BEAR MODE, and NOW a month later we seem again to be making an emotional decision of perceived safety.

Could someone explain to me whether we believe in the BBO SYSTEM or not? And why. No offense to anyone, but, in years past, we would have "bonded" our retirements upon crossing cuz that's the system. No harm when it uncrosses. Now, under the new management, we seem to be changing the path, or setting a bad example, or discrediting the "system", or something.

No offense to anyone, but,................................

PL

[USPFA Team]

Hello PL,

Since this is a forum post, we want to first bring all readers up to speed on our previous email conversation in January.

"PL: Dear Sir, I see that the BBO has crossed into Bear territory, yet we are still "all in", so to speak. I haven't read an explanation as to why we are going against the BBO model.
Did I miss something?"

USPFA:
Peter,
Thanks for your email. You are correct – the Bull Bear Oscillator (BBO) crossed into bear territory earlier this month, but you didn’t miss anything. As we currently sit, without changes in the BBO, we would be heading to more safety in the term of exposure to money market and/or bonds, but not until the end of the month.

Our trading protocols would not have us exiting mid-month based on the BBO going negative. However, we would likely send our newsletter subscribers some sort of alert via email, if we thought there was a total market meltdown and subscribers needed to exit risk assets in their retirement accounts. At this time, we don’t feel the month of January qualifies as a total market collapse, even as painful as it’s been. While we’d all prefer to not be invested during this volatile period, we recognize the limitations on trading and repositioning assets within your 401K investment options. These restrictions are put on you by the 401k plan custodian in order to limit short term trading by participants in the 401k plan in an effort to reduce expenses and honestly, the amount of work the custodian has to do on your behalf.

Here’s a recap of what transpired in the newsletter models last year. We hope the information helps.

1. January – August: the BBO was positive and in Bull mode
2. September – November: the BBO shifted negative and the switch was made to Bear mode, so normal model allocations were overridden
3. December: the BBO shifted back to positive and we moved back to Bull mode (it’s rare to see multiple shifts like this in such a short time frame, but the markets were showing a lot of volatility)

At year end, heading into January 2016, the BBO remained in Bull mode, but just barely. Since we witnessed so much volatility in 2015, it was determined the best course of action was not to second guess the indicators. It should be noted that even the Aggressive model allocates at least 19% to money market at all times, and the average allocation to money market across all three models (Aggressive, Moderate and Conservative) is almost 40%, and can be more, even in Bull mode.

In addition to the BBO shifts above, we also made some fundamental upgrades to the 3 model allocations to reduce risk in 2015. We modified the Velocity Score Ranking component to cap exposure to any one asset class, meaning the number of model holdings would increase. This upgrade will reduce the asset class concentration in the models, which means less risk – a good thing overall. This change wasn’t put in place until near the end of the year November, so the benefits should start appearing in the months to come.

While the newsletter seeks to help rank the assets in your 401k plan, it’s no substitute for real, active asset management, because there are limitations on what can be accomplished while the assets are inside the plan account. The limitations imposed by the plan custodians mean the modeling, while good, can’t be as nimble and responsive as what can be accomplished in an account that can be truly actively managed.

I hope this answers your questions and, if not, please feel free to reach out to us again."

To answer this newest post concerning the Bull Bear Oscillator (BBO) - On December 31st the BBO was positive with the 50 day ema at a reading of 2052 and the 200 ema at 2043. These positives meant January was indicating Bull mode and the portfolios were positioned for a bull mode allocation. The BBO did not go negative until January 8th.

The BBO buy/sell methodology is dependent upon the last day of the month reading. There was a time when an intra-month crossing would have triggered a change. Dave Lucca however changed this to an end of month crossing. Starting on January 8th the BBO crossed into bear mode and at the close of January it triggered a change for February. The system was followed and the portfolios were moved to the bear allocation.

In the last six years, Dave Lucca made the decision to take the system “offline” only three times due to extreme volatility. Since the last override of the BBO the system has been followed without exception.

If you need more clarification please let us know.

Regards

[Author]

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