TSP investors: Is it ‘time’ to time the market?

Between March 2018 and March 2019 the self-made millionaires club of the Thrift Savings Plan added 9,540 new members.

Many Thrift Savings Plan investors, especially those who follow financial news 24/7, know the stock market is way, way, way overdue for a major correction of 20% or more.

Many are also aware of predictions from knowledgable people that something like the Great Recession of 2008 is coming — probably sooner than later. Others remember the boom of the 1990s, warnings about “irrational exuberance.” Some are anxious over the fact that some of the most “successful” ideas or products of the decade are still either under construction or are operating but at a loss. In the late 1990s in an otherwise bland boiler-plate speech in Japan, Federal Reserve Board Chairman Alan Greenspan inserted the now famous “irrational exuberance has unduly escalated asset values” line, which many later took as a warning of the impending dot com implosion.

Between March 2018 and March 2019 the self-made millionaires club of the TSP added 9,540 new members. At that time 32,638 current and retired federal and postal workers had TSP accounts ranging in value from $1 million-$7 million. The average account balance at that time was $142,512 for Federal Employees Retirement System employees and retirees and $150,467 for those under the Civil Service Retirement System. In almost every case investors had been in the TSP for about 30 years with most or all of their retirement nest egg in the stock-indexed C, S or I funds. During the Great Recession of 2008-09 they stayed with stocks and continued to buy them regularly, even as the markets tumbled. Bottom line: They didn’t try to time the market by guessing when it was time to buy and when it was time to sell.

Tracking the market is tricky at best.

The S&P 500 index (the C fund) is a moving target, going either up or down depending on when you check. After a mostly good year in 2018 it dropped dramatically on Dec. 24 (while you were involved in the government shutdown) to 2802.39. But since then, as of Monday, it is up 11.8%. When do you sell and, even more importantly, when do come back into the market?

The Wilshire 5000 total market index closed Tuesday down 0.79%, a paper loss for the day of $250 billion. As of Tuesday it had fallen for the third time in four days. For the month it was down 4.91%. For the quarter it was down 1.19% but for the year, at least so far, it is up 12.30 according to the Wilshire Factoid. All of the numbers mean something, but what?

Since the low of the Great Recession — March 9, 2009 — the stock market was measured by the Wilshire 5000 TMI and is up 321.64%, or $26.5 trillion.

Clearly the numbers tell us something — that part is relatively easy. The more difficult assignment, as Greenspan often said, is figuring out what the numbers mean going ahead.

For more on the TSP millionaires club, and to see how your account balance stacks up with others, click here.

Nearly Useless Factoid

By Amelia Brust

Opened in 1732, Livraria Bertrand in Portugal is the oldest bookstore still in operation in the world. It currently has 52 locations around the country.

Source: Wikipedia

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