Sunday Update: 05 January 2019
2019 was an amazing year for the TSP stock funds! With a gain of just over 30%, the C Fund (S&P500) had its best performance in 6 years! Of course, these gains come on the heels of a 10% loss in 2018… Annual gains are an important metric but, they are a snapshot and you need to keep them in perspective.
The beginning of a new decade finds us at historic highs for the TSP stock funds, a country politically divided, serious international security concerns, Articles of Impeachment still outstanding, and a Presidential election year. How will this play out in the market in 2020? It’s impossible to know for sure but you can read expert Bull vs Bear commentary at SeeItMarket.com. Enjoy!
The market started off the year jumping to new highs on the first trading day, 02 January. Unfortunately it immediately rolled over on Friday giving us a lower weekly close. For the week the C fund was down 0.16%, S fund down 0.10% and I fund down 0.53%. While it was a down week, it could have been much worse. The 3 year weekly chart of the C fund below shows a close about in the middle of the weekly trading range. The weekly trend is clearly up but, the rate of ascent is unsustainable. Once the top is in, the correction is likely to be swift and severe (i.e.. January 2018).
On a daily basis, the C fund is consolidating at its 10DMA. As we discussed last week, the market could run a bit higher. Watch the 10DMA closely. A gap down below the 10DMA would be the first red flag.
The S fund closed right on its 10DMA after having spent the majority of the day below it. At this point, the 10DMA is a ceiling for the S fund. The S fund is also displaying lower highs in the short term. A close below 1500 would be the first red flag for the S fund.
The I fund fell significantly (1.24%) on Friday to close just below its 10DMA. The I fund is clearly back into its recent consolidation pattern. A close below 69 would be a red flag for the I fund.
Bottom Line: 2019 was a banner year but I would be very hesitant to expect similar returns in 2020. 2019 began at relative lows versus 2020 beginning at All Time Highs… We will likely make gains in 2020 but, the Buy & Hold strategy will not get you there. It will take more work in 2020.
Strap in and hold on! January could be one for the record books!
Jerry
Jerry, Appreciate the analysis. It was interesting to see the dialog on FB about > 30% PIP. I was curious about that calculation, so your blog was enlightening. Does the calculation take into account only the market performance, or also account your recurring contributions?
While I do sense current events may be overriding the underlying trends, I value the disciplined approach you provide, and sleep much more soundly at night. Thanks!
Ken. I’m glad to hear that the GMTSP approach works for you and I appreciate the kind words.
The approx 30% gain in the C Fund was price appreciation only. That did not count TSP contributions.