Sunday Update: 06 January 2019

2018 is in the record books and the results are in.  For the year the C fund was down 4.41%, S fund down 9.26%, I fund down 13.43%, F fund up 0.15%, and G fund up 2.91%.  We have to go back 10 years for the last negative annual return for the C fund.  Back in 2008 the C fund was down a crushing 36.99%!  Negative years don’t happen often but they certainly focus our collective attention on our dwindling TSP accounts.  HOWEVER, annual return is just a metric.  It is the difference in price over one 365 day period.  This one metric gets a LOT of attention but it’s really not that important and it should NOT drive the way you manage your TSP account.

TSP investing is a MARATHON.  To maximize your TSP account over the long haul, you have to be in the stock funds when the overall trend is up and in the G fund when the overall trend is down.  You do this by understanding market risk, maximizing gains, and minimizing losses.  That’s what GrowMyThriftSavingsPlan is all about.  Understanding market risk and using this knowledge to make informed reallocation decisions.

Lots of people follow the site and use the information to manage TSP, 401Ks, and IRAs.  The concepts apply regardless of the retirement vehicle you’re using.  If you are a Member of the site, you receive periodic ALERTS when I make a move within my personal TSP account.  Some people follow my moves exactly while others combine with other sources to make their own reallocation decisions.  For the record, my Personal Investment Performance (PIP) for 2018 was 4.59%.  It may not sound like much but, to beat the S&P500 (C fund) by 9% on an annual basis is significant.  Just ask your neighborhood Certified Financial Planner…

That’s enough looking backwards.  As of 1 January 2019, you have what you have in your TSP account.  Regardless of where you are in your career, your goal going forward is to grow that account!  2018 was a wild ride and I expect more of the same in 2019…

Long Term

All 3 TSP stock fund charts below are similar.  They all hit or broke a bit below their respective 200WMA (Weekly Moving Average) at the end of December.  At the same time, the technical indicators for each fund were at extreme lows.  We’ve been discussing the importance of the 200WMA in the Sunday Update for the past several weeks.  The big question is, will the respective 200WMAs hold going forward into 2019?

The C fund hit its 200WMA and exploded higher.  It could go a bit higher from here but will be tough to push thru the 2600 level.  If it rolls over, we want to see a strong re-test of the 200WMA or support at the 10 year trend line.

The S fund dipped a bit below its 200WMA but closed the week above it.  Like the C fund above, the S fund will have a tough time getting above the 1275-1300 level.  If it rolls over, we want to see support as it re-tests its 200WMA or support at its 10 year trend line.

The I fund also broke a bit below it 200WMA but closed this week just above it.  It needs to stay above the 200WMA and/or find support at its 10 year trend line.

Short Term

In the short term, the market has room to move higher.  The resistance area in the chart below is where I expect the C fund to roll over in the short run.  I expect the C fund to move a bit higher before rolling over and re-testing the 2350 level or lower.  At that point we should be at a tradable bottom.  That MAY be a low market risk time to ease back into the stock funds.

A Final Caution

When the market finds support at its 200WMA, it tends to move significantly higher BUT… When the 200WMA lines ultimately fail, the market can fall MUCH lower!  This happened twice in the 10 year period from 2000 to 2010.  It pays to keep your eye on the chart…

Have a great week!

Jerry