Good Evening Folks
As an update, I am now 100% G-Fund in my TSP, both my Contribution Allocations and Interfund Transfer now reflect 100% G-Fund. I submitted this request on Sunday August-23 late PM. When you are having trouble sleeping, the simple adage is “reduce your exposure until you can sleep again.” In short, that is what happened, almost literally.
The SP 500 has penetrated the 2040 “support area” which was discussed in my July 8 post , this happened Thursday, late in the afternoon, then again on Friday, we saw additional damage caused. It is unfortunate that our markets are almost controlled, to an extent, by what is happening overseas, versus the other way around.
Long-term, 3+ year look-back, we are still positive, lets take a look at the SP 500 chart. Observe that this bull market (well, former bull market) got started in early 2009, so we are 6+ years into this, and the vitality and momentum of this mature market has indeed apparently ceased. See weekly chart, which reduces the noise associated with daily price action:
So since 2009, we have enjoyed a mostly upward trend, with some turbulence along the way, but in light of the recent market behavior, I see “cracks appearing” and feel that a move to G-Fund is prudent. I may lose some additional money as I exit, as the TSP processes my allocation request over two business days, however it takes months, not mere days, for a bear market to fully materialize. Exiting this week, is much preferred over exiting three months from now, assuming this correction continues.
So what is a Bear Market? Note that we are not in a bear market yet. Most professional money managers define a bear market as 15% decline in an index from a recent all time high. Note also that the Dow Jones only contains 30 companies, two of which are Oil companies (Oil is at $40 a barrel), two of which are PC-computer related- Intel and Microsoft, (does anybody go out and purposely buy a new PC these days), and some other companies that just are not keeping up with modern times. So yes, the Dow is getting creamed. But so are the other indexes. So, to obtain bear status, our indexes need to reach (decimals not used):
Dow Jones: 15751
SP 500: 1815
NASDAQ: 4447
With the global turmoil underway, the vague statements by our FOMC, resulting in additional nervousness in the markets, the 2040 being penetrated twice on back to back days, and my overall lack of sleep due to the markets, I pulled the trigger and went G-Fund.
I hope everyone has a good week, and thank you for reading.
– Bill Pritchard
