As per Dennis Snoozy, at this moment in time, we’re in a bull market, but one in which we’re all nervously awaiting a change. For over a decade, it has been plodding along without a single 20%+ correction. Considering the hostile nature of the world, TSP investors are closely watching the situation with Brexit in Europe, the conflict between Syria and Turkey, and other events.
With investing, the goal is to buy low and then sell high, but the art of investing is gauging when the turn is about to come. During what’s now considered the Great Recession just over a decade ago, thousands of participants in the TSP sought safety and security. Therefore, they abandoned the S and C funds (both are stock indexed) for the G fund. Since this date, many have remained.
According to Dennis Snoozy, suddenly, there’s a greater concern than ever before that a huge correction is on the way. Last years third quarter, the performance was a mixed bag for the TSP. In terms of positive returns, it was good news for the F, G, and C funds. On the other hand, the I and S funds had negative returns; the latter manages huge foreign companies while the former concerns small and medium-sized enterprises. As trade between China and the US halts, there are concerns over the US and global economies.
Broadening the view slightly, results were more favorable for the last couple of years as a whole. From the beginning of 2018 to the end of the third quarter of 2019, the I fund is the only one not offering positive returns.
Positive and Negative Trends
When making any investment decisions, it’s essential to look at the facts. They are as follows:
• Bond prices continue to rise and are reaching record levels (one reason why the F fund has performed so heroically). At the other end of the spectrum, rates continue to decrease.
• The bull market – one of the longest in US history – goes on.
• Over the 12 months to the end of 2019, there was an increase of 1.7% in consumer prices – inflation has remained low.
• There were mixed results in unemployment for September. While unemployment was indeed low, the number of jobs available was similarly small (while wage gains were slow).
• Across many industries, growth rates started to slow towards the end of 2019. Thought to be a result of the trade tariffs – affecting manufacturing, farming, and many other industries – many fields are struggling.
• Consumer debt seems to be increasing while there was very little change in consumer spending.
At the moment, it seems to be anybody’s guess as to what will happen. For the longest time, the economic growth in the United States has been the envy of the world. This being said, the growth isn’t necessarily sustainable when brought through Fed rate cuts alone.
According to Dennis Snoozy, with the stock markets, the day a bear market arrives (a decline of at least 20%) will be no surprise. With this, both S and C funds will decline, and all TSP investors need a plan of action to protect their portfolios.
