Monthly Archives: February 2013

Hello everyone –

I am trying to post updates every two weeks or so, since most of the audience gets enough emails as it is, and do not need more, but I have received numerous emails regarding the Sequestration situation.   I am still 100% S-Fund for the present time.  The markets have sold-off somewhat this past week due to fears that it may not get resolved, however support is holding at the 50-day Moving Average of the SP 500.  This is a trend line that I use to gauge the markets health, amongst other things.

Today, the markets closed higher, mostly on positive housing news and positive reports from major retailers.

While Sequestration is not a “good thing” for most of us, I question the experts who say it is bad for the economy.  I am not so sure that Home Depot will stop selling leaf blowers, or Apple stop selling MacBooks, or Johnson and Johnson stop selling Band-Aids, on March 1.   Just my opinion.   Will it affect defense contractors and companies such as Lockheed Martin ?   Yes.    Could it have been done better, prior to reaching Sequestration ?  Yes, I think so.  But here we are, Feb-26, and we have no solution in plain view.

Some may remember the 1995 Government shutdown.

Lets take a look below at the SP 500 Index from that time frame.   Yes, I concede that the 90’s were the “boom years” of the stock market and witnessed many stocks going to record highs.   That bull market was a train that was hard to stop.  But, the below chart shows basically not even a hiccup during the shutdown.

Is 2013 different ?  Yes maybe it is.  Is it the same ?  Maybe it is.  I don’t know.  But I am not so sure that market-wise, big picture, some reduced government spending is bad for the markets.   This week observed some volatility and hiccups, yes.     More conservative investors may wish to go to G-Fund during these periods of volatility.   However I am still 100% S-Fund.

As always, thank you for reading.

Bill Pritchard

Good Afternoon

I hope everyone’s February is going well….I wanted to update everyone, now that we are mid-month, as to how things are going.   Let me mention that this month as we all know is the shortest month of the year, and thus the shortest trading month, with the fewest days that the stock exchanges are open for trading.  As such, this month is less indicative of “rest of the year” type behavior for the markets.   February historically mirrors what happened in January for the first two weeks, then goes flat for the rest of the month.  So I guess what I am trying to say is that if the next two weeks are lackluster, that is “ops normal” for February and nothing to worry about.   If the markets go up, well great, I won’t complain.

Since pictures are worth a thousand words…I have attached a chart of the SP 500 index, which I use to measure the behavior of the markets.  As I have said in prior posts, I use this index because it is composed of 500 stocks (hence the “500” in the name) from both the NASDAQ and NYSE exchanges.  I don’t use the Dow Jones Index as it is only 30 stocks, nor the NASDAQ as it is mostly tech companies and/or smaller up-and-coming companies which are more volatile and do not necessarily reflect the big picture.  So, for me, the SP 500 is my index.  Lets take a look:

As you can see, the first of the year witnessed a huge uptick in the index on above average volume, thus propelling the index into a new up-trend, which continues to present date.  I see no indications that the index will “correct” or “drop” even though some reported experts in the media claim this will happen.

Also note that my personal opinion is that the Sequestration issues and Continuing Resolutions issues which will be faced in March, will not drastically impact the markets.   This is different from the Fiscal Cliff, in which our country’s financial system and reputation was facing downgrade by rating agencies and deterioration in the opinion of world leaders.  It is my opinion that Seq / CR issues are largely a “government event” and market performance is not dependent on resolution of these issues.  In contrast, the Fiscal Cliff situation could have resulted money being withdrawn from US investments, which would have sent the markets lower.  Obviously this is all my opinion.

Enough of all that, the primary question is “how is the TSP doing and where should I be.”   The answer to that is the TSP is doing very well, the S-Fund is still the leader of the pack as of 02-17-2013, and I am personally still 100% S-Fund.   I see no hiccups or problems brewing which would affect things.    As it stands now, the S-Fund will probably outperform the rest of the funds when the month is over.

Again, I am 100% S-Fund.  That’s all I have for this update, thank you for reading.  If you find the information on this site useful, please forward this to anyone who may benefit, and encourage them to sign up for updates via email.

Thanks for reading

– Bill Pritchard

Hello everyone

The first month of the year is behind us, and as expected, the S-Fund came out the top performer.  On January 2, I discussed how the S-Fund would likely be the place to be, out of ten different fund choices that exist.  Subsequently, the S-Fund outperformed all funds, with a 6.96% return.  Please see graphic from the official TSP site.

My analysis of January’s activity reflects that I-Fund is “catching up” to the S-Fund, performance-wise, however for the present time, I am remaining 100% S-Fund.  This is due to various reasons, the first and foremost is, my analysis of the markets reflect that S-Fund will likely remain strong, and that historically, in February, small cap stocks outperform large cap stocks (international stocks are not part of that historical study).

Some notable events have occurred this past month, such as AAPL stock suffering hits to the downside as investors wonder if AAPL’s growth and ability to obtain new technology breakthroughs have stopped or slowed.   In addition, Android growth has seriously impacted AAPL’s earnings.   Since AAPL is a major member of the NASDAQ, this has caused that index to go down somewhat.   Are the markets “headed lower?”  No, this is just one stock affecting things.    (AAPL is not a small cap stock by the way).

Some have emailed me and asked why is the market going up, if the economy is still down.   I offer this explanation, that historically, the stock markets are a leading indicator of economic events, not lagging.  In other words, in six to twelve months, we may see the economy finally getting back on track.  I might add that some believe it already is flashing signs of life.   At the end of the day, I simply respond to the markets themselves.   To further that theory, I am posting a Jon Stewart video, who criticized Jim Cramer.   Watch this video and you will understand why people should not blindly listen to “experts” on TV.  I have no personal opinion regarding Mr Cramer, but as they say in some circles, “it is what it is.”  Video is courtesy of YouTube and MSNBC.  You may need Google Chrome for the video play properly.

As of 02-04-13, I remain 100% S-Fund.   I am monitoring the other funds and as discussed, the I-Fund is showing some promise.   Last month, this site provided some insight into fund choices, ten choices of which TSP investors must wrestle with and attempt to decide on.  This site provided accurate information as to the top performing fund(s) and delivered to subscribers the #1 fund at the time.  Thank you for reading.

Bill Pritchard