This time a year ago most Thrift Savings Plan investors were enjoying what’s turned out to be the longest bull market in stock market history. Now, not so much!
Although market corrections are to be expected, last week’s $1.3 trillion “paper” loss gave a lot of people the jitters. Yesterday’s column gave a breakdown of what’s been happening, the good days and the bad days, in the US stock market. For many the big question is what’s next? Should they head for the ‘safety’ of the Treasury securities fund, as thousands did during the Great Recession of 2008, or stay the course?
To help figure out what’s going on, Washington, D.C.-area financial planner Arthur Stein is our guest on today’s Your Turn radio show. Most of Stein’s clients are active or retired feds and some of them are self-made TSP millionaires. So listen today at 10 a.m. EDT on www.federalnewsnetwork.com or at 1500 AM in the D.C. metro area. All episodes are archived on our show page.
Send questions you want answered on the show to firstname.lastname@example.org before airtime, Here is a preview of what we will discuss:
What a difference a week makes! Returns for the TSP US stock funds C and S were up almost 11 percent at the end of last quarter. Two weeks later on Oct. 12, the year to date returns were only 5 percent for the C Fund and 1.9 percent for the more volatile S Fund. The international stocks I Fund return changed from -1 percent to -7 percent.
In addition, volatility has been much greater this year than 2017.
From the beginning of this year through Oct. 12, the C Fund share price:
Increased 5 percent or more four times,
Decreased 5 percent or more three times, and
Ended the period 5 percent higher than it began.
This is not an unusual amount of volatility. Historical results indicate that S&P 500 Index declines of 5 percent or more happened, on average, three times a year. So is the glass half-full or half-empty? Looking at only the C Fund, participants could be
Happy that the C Fund increased 5 percent, which is not a super return but it follows an 18 percent return in 2017, or
Scared about all the volatility, worried about issues that might negatively influence US stocks, such as rising interest rates, an increase in inflation, trade wars, etc. And, they could be
Concerned because US stocks are overdue for a major decline of 20 percent or greater.
F — intermediate term bonds —S and I returns were worse than C. F and I are down for the year and S —stocks of small and medium sized US companies — is barely positive.