C fund is down, or up, maybe both?
Did the recent stock market nosedive send you moving money from the stock indexed C and S funds into the G fund for safety? If so, was that a smart move?
Did the stock market mini-correction a few weeks back make you nervous in the civil service? Did you shift money in the stock-indexed C, S and I funds into the “safety” of the Treasury securities G fund? Was that wise? And what’s next? Are you waiting, as in sweating, a much bigger correction that many experts say is long overdue?
We asked Arthur Stein, a Washington-area financial planner who tracks the Thrift Savings Plan what he thinks is going on. He’s going to be our guest today on our Your Turn radio show (10 a.m. EST) streaming on Federal News Radio or at 1500 AM in the D.C. area. He provided this sneak preview of what he’ll be talking about, starting with this quiz:
”Which of these statements is true of the C Fund (an S&P 500 Index fund)? For the period Jan. 1 to Feb. 16, 2018?
- The C Fund has had a bad year, down 4.7 percent from its previous high.
- The C Fund has had a good — but not great — year, up 2.5 percent so far.
“Well, both statements are true. The answer depends upon whether you compare the Feb. 16 value to the:
- Highest previous value (the C Fund is down 4.7 percent from its previous high) or
- To the Jan. 1 value (it increased 2.5 percent since Jan. 1).
“There has been a lot of volatility so far this year. The C fund was down 10 percent for the first time since 2016. Then it recovered, still lower than Jan. 26 but higher than Jan. 1.
“Does this tell us anything about prospects for the rest of the year? Doubtful. Short-term movements in the stock market are usually not very meaningful and certainly not predictive. For instance, compare this year’s C fund return with 2016.
“The C fund had declined by a much greater amount in 2016. Yet 2016 was a very good year, with a total increase for the year of 12 percent.”
Confusing? We will try to explain on today’s show.
Nearly Useless Factoid
At 18 feet from claw to claw, the Japanese spider crab has the longest leg span of any arthropod.
Source: Wikipedia
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Mike Causey
Mike Causey is senior correspondent for Federal News Network and writes his daily Federal Report column on federal employees’ pay, benefits and retirement.
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