This week, the stock market experienced significant volatility, with the S-fund seeing notable shifts in both gains and losses. As the S-fund concluded a remarkable five-day rally, investors faced a critical decision point when the fund's trajectory reversed mid-week. This report delves into the S-fund's performance, investor responses, and strategic adjustments within the TSP Talk AutoTracker, offering insights to help you navigate these unpredictable market conditions.
On Tuesday, the S-fund finished a five-day streak of gains that began on Wednesday, July 9th. During this period, the S-fund rose by 8.28%. However, it dropped by 3.41% over the last three days of this week, yet S-fund exposure among non-premium AutoTracker members reached its peak for the week on Friday.
Here are the weekly, monthly, and annual TSP fund returns for the week ending July 12:
The S-fund's popularity was already growing in the TSP Talk AutoTracker during its rally. The greatest influx of S-fund investments occurred on Tuesday coinciding with its fifth consecutive day of gains, nearly 2% at the TSP trade deadline.
In Tuesday’s Last Look Report, sent 30 minutes before the TSP trade deadline, we saw eleven members increasing their stock exposure, including four members taking on 100% S-fund. The average allocation of the S-fund jumped from 25.05% on Monday to 26.79% by Tuesday’s deadline.
When the market faced its first loss in a week on Wednesday morning, most investors viewed it as a buying opportunity rather than a signal to exit. S-fund exposure increased again across the TSP Talk AutoTracker. However, those few who reduced stock exposure at the first sign of trouble held on to their gains and distinguished themselves this week:
These seven members were alone in outperforming the S-fund this week. Slsmul put together the best return for the week when they moved from 100% S-fund to 100% G-fund on Wednesday. They took on Wednesday's losses but avoided Thursday's and Friday's. This move has them in first place for the July AutoTracker Contest.
Rangerray and Beau435 were the only two members to take profits before Wednesday's sell-off. Rangerray extended his portfolio into the C and S-fund on Monday voicing his hesitation on the TSP Talk Forum. Lucky for him, his hesitation got to him during Tuesday’s early gains, and he moved most of his S-fund allocation back to the G-fund. This move landed him return fourth best return for the week.
As the S-fund losses continued over the last two days, but TSP Talk members kept buying the dip and increasing their S-fund allocations. By Friday’s TSP trade deadline, S-fund exposure was at its peak for the week at 27.62%. TSP Talk investors reduced both the G and C-fund positions to take on more of the S-fund.
This dip-buying strategy will be successful if the S-fund resumes its rally sooner rather than later. Some of the few who moved their TSP out of stocks this week may be looking to jump back in if they still have a July IFT to spare. One member, MRJ, already executed this maneuver, moving to the G-fund with a Thursday IFT and then reentering the S-fund with a Friday IFT. This move allowed them to avoid Friday’s 0.35% loss in the S-fund while positioning for a rebound next week. They are still able to move back to the G-fund in July.
Take a look at your TSP allocation. If you are unsure about the market, prepare a plan of action. This could mean setting a price at which you are willing to buy more stock funds or establishing a threshold of losses you won’t exceed this coming week. Whatever your strategy, think through scenarios before they happen, so you are not driven by emotions when they do.
For extra insight, consider one of TSP Talk's Premium Services to help you improve your investment strategy and maximize your TSP return.
Good luck and thanks for reading! We will be back here next week with another TSP Talk Wrap Up. You can read our daily market commentary at TSP Talk - Market Commentary.
Thomas Crowley
(TommyIV)
www.tsptalk.com
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The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.
