By Suzanne Kubota
Senior Internet Editor
FederalNewsRadio.com

Looking outside the glass-enclosed nerve center of WFED, spring is in the air. As blue as the sky is, as puffy as the blossoms are on the trees, they don’t come close to what certified financial planner, Art Stein, sees in the market.

“It was a very smiley quarter,” he told Federal News Radio.

That’s right. “Smiley.” Not “smelly.”

Bonds were up, stocks were up, “the C fund in the TSP was up about 6% for the quarter. The F fund was up 7%, and of course, if you look at the last 12 months you see really strong returns (across the TSP.)”

While there were a couple of reasons stocks came roaring back at the end of the first quarter, said Stein, “the most fundamental of the fundamentals is corporate earnings.”

One of the reasons that earnings are up is that companies are not hiring workers they laid off. It’s more efficient, said Stein. So that helps profits, but it doesn’t help unemployment rate.

Where to Next?

When thinking about your TSP investment, Stein suggested “the one that should give people pause is the bond market.” Bonds move in the opposite direction of interest rates, explained Stein. “You know I hate to forecast, but it seems likely that interest rates are more likely to go up than down. Then the G fund is going to be a safer alternative, although the long term return is probably going to be lower.”

And since the F fund has more bonds, said Stein, “people are going to be surprised” if interest rates go up to see their F fund investment value go down.

Basic Advice for the Second Quarter and Beyond

“People need to come up with an appropriate asset allocation,” said Stein, “and stick with it and not be whipsawed by the ups and downs of the stock and bond market. That’s market timing. People who get out, even if they got out before the decline and most people don’t, they then have to get back in at the right time. And what I find is that once most people get out, they don’t get back in at the right time.”

Happy Spring!

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