The S&P 500 (C-fund) spent most of this week in negative territory with turbulent intra-day action along the way. A surge in the final hours of the week led to both the C-fund (+0.26) and S-fund (+0.01) finishing the week with their noses above water.
Meanwhile, the F and I funds both ended the week with losses greater than 1%. The F-fund was already having a poor week heading into Friday, but the September Jobs Report numbers were good enough to provoke the interest rate market to correct itself higher, thus taking the F-fund price down by 0.72% on Friday alone.
A healthier than expected labor market means the Federal Reserve has reason to slow down their rate cut campaign. Interest rates and bond yields rose as the probability of a 0.5% rate cut in November was essentially erased. A week prior the interest rate market held a 53.3% chance of a 0.5% rate cut in November.
The stock market was more volatile than the bond market on Friday as investors fought to determine what the jobs report meant for equities. Ultimately the market was taken over by the bulls in the last hours of trading. Although they did not have the upper hand for most of the week leading to the highly anticipated jobs report.
Here are the weekly, monthly, and annual TSP fund returns for the week ending October 4:
Lessons From The TSP Talk AutoTracker
The TSP Talk AutoTracker mostly stood its ground last week. There was a slight shift out the TSP stock funds (C, S, I) and into the G-fund.
Twelve members were able to outmaneuver the market and wring out more value than any steady allocation. Ten of those twelve increased their stock exposure. And although the week was slow, it again was the contrarians to the TSP Talk AutoTracker trend who outperformed. The majority of IFTs led to G-fund heavy allocations.
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The best to do it was the TSP Talk Premium Service Intrepid_Timer Strategies and those who followed. The Premium Service ended the week with a 1.1% gain. Meanwhile, the C-fund ‘s 0.26% return was the best any TSP investor could do without using an IFT this week.
Subscribe to Intrepid_Timer Strategies to see what move got them to a 1.1% weekly gain and get alerts for their next IFT.
Who had the advantage?
TSP investors were able to use any remaining IFTs for September on Monday and had a fresh set to use for the month starting Tuesday.
In total, 55 TSP Talk AutoTracker members chose to use at least one IFT this week. How did they perform along those who chose to hold their position?
There are 402 members in the TSP Talk AutoTracker who have made at least one IFT this year but stayed put this week. Below is the distribution of their returns this week with lines showing their average return (0.02%) and each of the weekly returns of the TSP funds.
The returns of these 402 lean in positive territory with gains as high as 0.26% (those holding 100% C-fund). This makes sense with more than half of the allocations among TSP Talk AutoTracker members in the G, C and S-funds. Those holding the F or I-fund this week likely saw a negative return this week with the worst at 1.9% (those holding 100% I-fund).
The bar chart above shows the mean weekly return for users based on their "heavy" fund allocation (the fund where they allocated the highest percentage). Each bar represents a fund (G, F, C, S, I), and the height indicates the average return for users who prioritized that specific fund in their allocation.
The 55 who made IFTs this week have a wider range of returns in both directions and a lower average return than those who did not make an IFT this week:
The average return for members who made IFTs this week was -0.16%. Their returns this week were more evenly distributed and stretched from a deeper negative return (-2.47%) to a higher positive return (1.07%) than was capable of holding an steady allocation through the week.
G-fund heavy: 25 members
F-fund heavy: 4 members
C-fund heavy: 14 members
S-fund heavy: 12 members
The majority of moves were to G-fund heavy allocations and members had an average loss of -0.24% for the week, a detrimental move unless they left the F or I-fund. Those who made IFTs to S-fund heavy allocation mid-week outperformed the rest with an average return of 0.39%, outperforming the C-fund’s 0.26% return for the week. Those who moved to a C-fund heavy allocation mid-week had an average loss of 0.02%. No members held I-fund heavy allocations in this group.
Who were better off this week? Those who attempted to outmaneuver the market this week opened opportunities for higher returns while simultaneously opening the risk of deeper losses. Their average return came in at a loss of -0.16%, worse off than the average return of 0.02% among those who stayed put.
The 25 members who moved to the G-fund mid-week locked in early losses that were erased in the last few hours of trading on Friday. Again, we see a trend of those attempting to minimize losses getting burnt when the market bounces back. Although this time it was on a smaller scale than what we saw in early August and September.
Half of those who moved to the S-fund mid-week took the advantage over the market. Six of the 12 accumulated returns over 0.26%. Meanwhile, only three of the 14 members who moved to C-fund heavy allocations outperformed the C-fund for the week.
This data could be mined deeper, but for me, this week goes to those who stayed put this week. Particularly if they held the C and/or G-funds. They still have a full set of IFTs to use for the rest of the month and likely ended the week with modest gains. But we must give credit to the twelve who pulled more out of the market. Hopefully they can add to this early October success.
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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.
