The S&P 500 had its worst week since the pandemic induced sell-off of 2020. This time around it is not a pandemic, but a hawkish Fed who is sees a recession as a potential consequence for what is necessary to halt inflation. Stocks gapped down to start the week as we approached the FOMC meeting. Inflation data was giving the Fed the justification for the first 0.75% rate hike since 1994. And that is what happened Wednesday. Market participants weren't too shocked, but the move also wasn't obvious with the Fed previously claiming a steady pace of 0.5% rate hikes. We actually saw some buying following the policy statement. But overnight, the reality of what these higher rate hikes meant set in. The Fed was prepared to push the U.S. economy into a recession and earnings expectations dropped. All three TSP funds sank to a new low Thursday, but the C and S-fund recovered some Friday, but the damage was done. The C-fund fell 5.75% for the week, and the S-fund was down 7.15%.
The Fed is doing what they see necessary to evade likely worse problems if inflation is left uncontested. But this doesn't help the investor who is at the end of their career and is watching years of savings disappear without the time or earnings to replace it. If you are early in your career with years to come, then this bear market is an optimal time to add some savings to this beaten down market and lock in these low prices. A potential recovery is not guaranteed, but this the United States, the worlds largest power house economy, and the Fed is doing the dirty work to keep that going for year to come (hopefully). But if you are late in your career, want to preserve savings, or don't have the stomach to play in a bear market, then the G-fund is a respectable location. In fact, the G-fund provided by the TSP is possibly the most optimal asset for safety and return there is. This week the G-fund has officially gained more than 1% for 2022. Now that won't outpace inflation, but neither will the 29% loss of the S-fund.
Market timing with your TSP account is an art and the approach changes with the market. Doing so in a full-fledged bear market requires quick in and out trades when the opportunity presents itself. It means not getting too eager and or too greedy when the market does go your way. Good luck out there!
The TSP will be closed Monday for the Juneteenth holiday so enjoy the extra day to take a breath and think clearly on how you want to navigate the market in the coming week. Join us on the TSP Talk Forum to discuss your thoughts.
Looking for an edge on your TSP return? Get the Last Look Report for as low as $4.19 / month. The report is a daily email on the TSP Talk AutoTracker moves, news, forum threads, and more before the IFT deadline. The service is aimed to help you make your own IFT decisions by giving you relative information 30 min prior to the deadline including where the members of TSP Talk are moving their money.
Here are the weekly, monthly, and annual TSP fund returns for the week ending June 17:
SPY (S&P 500 / C-fund) gapped down to start the new week to instantly fall to new lows for the year and below what the bear argued was the low of 2022. The ETF sank lower and reached its latest low on Thursday before inching up on Friday to slow the bleeding. The two gaps above will be an obvious target but first the bulls have to mourn the loss of there late May gains. The feeling of bear market as fully sank in, the debate is over. But eventually market participants will believe stocks are over sold. The C-fund loss 5.75% for the week, its worst week since 2020.
The Dow Completion Index (S-fund) may have ended on the best note with a 1.59% gain on Friday, but that was after lagging the other TSP funds deeply through the week. In the end the S-fund fell 7.15% for the week and is now trading at prices not seen since September of 2020.
EFA's (EAFE Index / I-fund) late week action was counter to the S-fund's. The ETF held it's price better than the U.S. stock funds through the week but took a loss Friday where both the lagging C and S-funds saw gains on the day. Nonetheless, the I-fund is in the same boat. It has reached new lows, has the May lows to act as resistance, but has two open gaps that like to the filled above. The I-fund fell 5.03% for the week.
BND (Bonds / F-fund) gapped down with stocks to start the week with bond yields stretching higher with the Fed's aggressive rate hike. Bonds are not the safe place they use to be and have been sinking for some time. The ETF BND did start to fill the latest open gap before the week ended but did not finish. The current price is within the open gap. The F-fund fell 0.90% for the week.
Good luck and thanks for reading. We will be back here next week with another TSP Wrap Up. You can read our daily market commentary at the Market Comments page. If you need more help deciding what to do with your account, perhaps one of our Premium Services can help.
Thomas A Crowley
wwww.tsptalk.com
Last Look Report
Facebook | Twitter
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.
The Fed is doing what they see necessary to evade likely worse problems if inflation is left uncontested. But this doesn't help the investor who is at the end of their career and is watching years of savings disappear without the time or earnings to replace it. If you are early in your career with years to come, then this bear market is an optimal time to add some savings to this beaten down market and lock in these low prices. A potential recovery is not guaranteed, but this the United States, the worlds largest power house economy, and the Fed is doing the dirty work to keep that going for year to come (hopefully). But if you are late in your career, want to preserve savings, or don't have the stomach to play in a bear market, then the G-fund is a respectable location. In fact, the G-fund provided by the TSP is possibly the most optimal asset for safety and return there is. This week the G-fund has officially gained more than 1% for 2022. Now that won't outpace inflation, but neither will the 29% loss of the S-fund.
Market timing with your TSP account is an art and the approach changes with the market. Doing so in a full-fledged bear market requires quick in and out trades when the opportunity presents itself. It means not getting too eager and or too greedy when the market does go your way. Good luck out there!
The TSP will be closed Monday for the Juneteenth holiday so enjoy the extra day to take a breath and think clearly on how you want to navigate the market in the coming week. Join us on the TSP Talk Forum to discuss your thoughts.
Looking for an edge on your TSP return? Get the Last Look Report for as low as $4.19 / month. The report is a daily email on the TSP Talk AutoTracker moves, news, forum threads, and more before the IFT deadline. The service is aimed to help you make your own IFT decisions by giving you relative information 30 min prior to the deadline including where the members of TSP Talk are moving their money.
Here are the weekly, monthly, and annual TSP fund returns for the week ending June 17:
SPY (S&P 500 / C-fund) gapped down to start the new week to instantly fall to new lows for the year and below what the bear argued was the low of 2022. The ETF sank lower and reached its latest low on Thursday before inching up on Friday to slow the bleeding. The two gaps above will be an obvious target but first the bulls have to mourn the loss of there late May gains. The feeling of bear market as fully sank in, the debate is over. But eventually market participants will believe stocks are over sold. The C-fund loss 5.75% for the week, its worst week since 2020.
The Dow Completion Index (S-fund) may have ended on the best note with a 1.59% gain on Friday, but that was after lagging the other TSP funds deeply through the week. In the end the S-fund fell 7.15% for the week and is now trading at prices not seen since September of 2020.
EFA's (EAFE Index / I-fund) late week action was counter to the S-fund's. The ETF held it's price better than the U.S. stock funds through the week but took a loss Friday where both the lagging C and S-funds saw gains on the day. Nonetheless, the I-fund is in the same boat. It has reached new lows, has the May lows to act as resistance, but has two open gaps that like to the filled above. The I-fund fell 5.03% for the week.
BND (Bonds / F-fund) gapped down with stocks to start the week with bond yields stretching higher with the Fed's aggressive rate hike. Bonds are not the safe place they use to be and have been sinking for some time. The ETF BND did start to fill the latest open gap before the week ended but did not finish. The current price is within the open gap. The F-fund fell 0.90% for the week.
Good luck and thanks for reading. We will be back here next week with another TSP Wrap Up. You can read our daily market commentary at the Market Comments page. If you need more help deciding what to do with your account, perhaps one of our Premium Services can help.
Thomas A Crowley
wwww.tsptalk.com
Last Look Report
Facebook | Twitter
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.
