Current Allocations: 34% C Fund, 33% S Fund, 33% I Fund

Happy St. Patrick’s Day everybody!  I’m Shipping Up to Boston for the weekend and wanted to get this post out before the weekend really gets going…

It was a pretty calm week for the C and S funds but a huge week for the I fund.  We’ll get to that below.  I want to really look at the short term chart this week.  It’s a great example of how we apply the idea of risk in TSP management.

Short Term

Right now the S&P500 (C fund) is approximately 2375 and on the trend line.  It’s 1% below the prior high at 2400 and 1% above the floor at 2350.  Regardless of your age, years of service, time to retirement, etc, if the S&P500 closes below 2350 I would reallocate to the G fund.  Assuming you are fully invested in the stock funds, the downside risk right now is 1%.

If you have reallocated into the G fund over the past few weeks as we discussed, your downside risk is 0.  If the market closes above 2400 you would get back into the stock funds.  This would represent an opportunity cost risk of 1%.  This is a great example of how we can use technical analysis to manage TSP.  We can take emotion out of the decision making process and think 2 steps ahead.  There is no need to attempt to predict the direction of the market.  All we have to do is have a plan for both directions…

Long Term

The long term C fund chart is looking pretty good here.  After a strong break above the upper channel line, the C fund has been consolidating for the past 4 weeks.  We want to see a weekly close above 2400 within the next couple of weeks.

The S fund rolled over off the upper channel line last week but recovered to the upside this week.  The S fund is pretty close to the middle of the trading range so it’s best to just let it ride.

It was a huge week for the I fund!  The I fund has been the under performer for the past several years but we may be seeing the beginning of a significant bull run with a close above the prior high of 65.  This is a great example of why we evenly distribute between all 3 TSP stock funds.  Ideally they all move up and down relatively together but, on any given day/week, you never know which will out perform.

Have a great weekend everyone.  Please post questions to comments.

Slainte!

Jerry