Stocks began to sell off immediately to start the new month, prompting less tolerant investors to quickly move to the G and F funds to protect their August gains. For many, the potential cost of missing further gains was worth the security of stepping out of the market for a moment.
However, one of TSP Talk AutoTracker’s top investors for 2024 took a different approach, buying into the early weakness. Top 5 member "Cash_Money" moved 50% out of their cash reserves (100% G-fund) and into the S-fund on Tuesday.
When lower-than-expected job openings data was released on Wednesday, the losses deepened, prompting another wave of moves into the safety of the G and F funds. Again, moving against the current, Cash_Money transferred the remaining 50% of their G-fund holdings to the S-fund, resulting in a 100% S-fund allocation.
This isn't the first time Cash_Money has made such a contrarian move. In August, they followed a similar pattern, moving 50% out of the G-fund and into the S-fund during the initial sell-off on August 1st, and then committing fully to the S-fund as the market sank further days later. They maintained that position for over a week while the market rebounded, then started taking profits 50% at a time, eventually returning to 100% G-fund by August 23rd. This strategy earned Cash_Money a 4.7% return for August, ranking them 12th in the TSP Talk AutoTracker community.
Cash_Money has developed a successful strategy and is sticking to it, even when it goes against the more common moves among the TSP community. Those who quickly moved to the G-fund early in the week were grateful though, as the market's weekly losses accumulated and wiped out the TSP stock funds’ August returns. The S-fund, in particular, fell 5.29% for the week, marking the worst loss among the TSP stock funds.
Here are the weekly, monthly, and annual TSP fund returns for the week ending September 6:
The August Jobs Report brought more weakness to the market on Friday. All of the TSP stock funds fell more than 1.5% for the day. That didn't stop four members from increasing their stock exposure. Among them, Silver2828 was the only one to shift to a 100% stock allocation. Like Cash_Money, Silver2828 was also among the top performers in August, securing a return of over 3% with just four days of stock exposure. They made a similar move on August 5th, moving to a 100% C-fund allocation from the G-fund when the market was at its lowest, then quickly taking profits on August 9th after gaining over 3%. Currently, they sit at 100% C-fund and seem unafraid to take profits as they arise.
Both of these investors succeeded in August with similar strategies in similar situations. For the second consecutive month, stocks have dropped sharply in the first few days. The early losses in August ultimately presented a buying opportunity, yielding the best returns for those willing to take the risk. Cash_Money and Silver2828 stand out because they capitalized on the August rebound gains while being prepared to take profits and buy into this new dip.
This is a chart of the S&P 500 (C-fund) action last week.
I admire the market maneuvering of both of these investors, but I haven't yet been swayed to join them. I currently hold 65% in the G-fund, 5% in the F-fund, and 30% between the C and S-funds. I was tempted to increase my stock exposure on Friday. The indices were already down more than 1.5%, and Cash_Money and Silver2828's IFTs were featured prominently in the Last Look Report that morning. However, the deteriorating labor market and uncertainty surrounding the size of the Fed’s upcoming rate cut on the 18th have made me hesitant to invest in this volatile market. I believe there could be further downside, and my strategy is to wait for a lower entry point before leaning back into stocks. Still, even lower prices on Monday morning might be enough to tempt me back in.
A three-month view of the DWCPF (S-fund) chat shows and index in oscillation. The index filled an open gap from mid-August and its current price is within a trading range of early summer. But will this swaying index continue to drop lower as it desperately searches for its true value? Or will more dip buyers keep it from further damage next week?
Allocation flow of the TSP Talk AutoTracker:
The TSP Talk community fled out of the C and S-funds this week. Their new investment destinations were mostly the G and F-fund, but the I-fund was also preferable alternative. The I-fund is not what it was, this week the TSP announced a new benchmark index for the I-fund.
Most new allocation landed in the G-fund this week. But those who moved to the F-fund early were rewarded. The F-fund led the TSP funds with a gain of 1.29% this week.
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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.
