Monthly Archives: December 2017

Good Afternoon Readers

First, Merry Christmas and Happy New Year.  2017 indeed has been an exciting year, on many fronts, and our TSP is no exception.   Let’s take a look at some of my personal TSP moves.  You may recall my January 13, 2017 post regarding the January Barometer.  I shared my opinion that based on market action in January, that 2017 was setting up to be a strong year.   I am pleased to report that this analysis was indeed correct:  2017 witnessed the SP 500 return 20%, and the NASDAQ return 29%.

Note that both Year to Date and Last 12-months data reflects that the top two funds were the C-Fund, and I-Fund, in 2017.  See graphic:

Further note that I was 100% S-Fund, under the valid belief that small business would benefit most from the variety of economic incentives being advocated by President Trump, however my crystal ball apparently needed calibration as the S-Fund slightly underperformed the C-Fund in 2017.    Additionally, the “international scene”, plagued by 2015 and 2016’s terrorism and North Korea fears, caused me to be gun-shy (no pun intended) on international investments.  It could be said that my TSP reflected an “America First” allocation.  I did shift to 50/50 C-Fund and I-Fund mid-year, believing that was the correct allocation to capture the best performers for the rest of the year.  This analysis, like my January Barometer analysis, was correct:   those two funds were 2017’s top performers.

Finally, in December, I switched to 50/50 S-Fund and C-Fund, my current allocation.   Again, the is performance based, when a new young Quarterback is improving each game and showing promise, I tend to pay attention to him.  This is not some sort of witchcraft, tea leaves, mumbo-jumbo, or reading the past to predict the future, etc (all of which some naysayers claim this site does…).   It is really quite simple.  It is what it is:   Being heads-up and alert and responding to the threats/opportunities in front of you.  Thinking ahead.  Situational Awareness.   Retreating to cover and concealment when required.  Jeff Cooper.  All of the above but applied to our TSP.

Let’s collectively wish for a great 2018.   Merry Christmas and Happy New Year.    God Bless our nation’s public safety, law enforcement, intelligence, and military professionals so that the rest of America remains safe.

Merry Christmas !!!

-Bill Pritchard

Hello Folks

On Saturday December 2, at approximately 2AM, the Senate passed their version of the proposed tax bill, which has some slight differences from the House version.   However for the first time in a long time, we are seeing progress forward, and the US market futures have responded enthusiastically.   Please see chart below of E-Mini Dow Jones Futures, which begins trading on Sunday afternoons:

The Dow Jones futures are “trading up” 200 points as of 7:30 PM Central Time, a very positive sign.  Unless sentiment shifts, this should result in a very positive Monday in the US stock markets, which will benefit the S-Fund and C-Fund.   As such, and after an over-abundance of caution and “wait and see” over the prior months, I will be moving my personal TSP allocation to 50% C-Fund and 50% S-Fund.   This reflects a change from my prior allocation of C-Fund and I-Fund, which was fine:  both Last 12-Months data and YTD data reflect those were the two top performing funds:

The fact that my prior personal TSP allocation had been in the top two performing funds, out of ten total fund choices, was not by happenstance, it was the result of careful analysis and monitoring of the markets.  I have said before, and I will repeat again, that one day panics are not reason to dive into G-Fund or run for cover.  I am looking at the overall trend, the structural integrity of the trend, and what stocks within that trend are performing best.  I am also watching for “tomorrow’s winners”- redwood trees don’t sprout overnight, they develop over time.  It is that same analysis that prompts me to change my personal TSP allocation to reflect C-Fund and S-Fund.   S-Fund has been outperforming I-Fund for the last 90 days, for a variety of reasons, and if the final tax bill can clear House and Senate, and get signed by President Trump, all business, large and small, are expected to benefit.  Anyone in a compliance-heavy (and who isn’t these days…) industry, in which more time is spent dotting “i’s” and crossing “t’s” and “getting ready for the next audit” versus spending it on the organization’s core mission of selling widgets, or creating solutions for customers, is expected to benefit from the tax bill and future deregulation initiatives from President Trump.

Let’s take a look at the Gold chart to see if any prior selloffs have resulted in a move into Gold, the standard safe-haven currency:

As can be seen, Gold has been relatively “flat” since October, even in light of recent North Korea flare-ups and recent headlines from Washington.  This reinforces my belief that prior selloffs were indeed panic driven versus representative of structural cracks in the foundation of the uptrend.

Note that the Christmas break for Congress is December 15, 2017 to January 2, 2018.   With that said, Congress has two major to-do items, the Tax Bill, and passing a short-term Continuing Resolution (CR) as the current CR expires on December 8.   While the tax bill progress is positive news, nothing is done until it is done, and this week will be a busy one for Congress.  Note:  Not to be Debbie Downer but any Tax Bill failure (not a delay, but a hard-down, failure) will be a serious problem for the markets.  Ideally the new tax bill is signed before 2018, however a delay to tweak it is much preferred to a failure.

As an additional note, Dan Jamison of the FERS Guide has released another update, I strongly suggest going over to his site and subscribing to his newsletter.  He has some important benefits related information all federal employees could benefit from (no pun intended), so please take a look:   https://fersguide.com/

That is all I have for now, thanks for reading.  Please continue to share this site with your friends, coworkers, and colleagues.

Thank you….

-Bill Pritchard