Instead of talking about this week’s volatility, I’d like to shift gears and talk about performance. Nineteen months ago, on 26 January 2018, the S&P 500 closed at a record high 2872. This week, the S&P 500 crossed that 2872 level numerous times, closing Friday at 2888. Or said another way, within one percent of where we were at the beginning of 2018. The journey has had its ups and downs, but we wound up being essentially flat. Our TSP TIPS strategy is a “Trending Investment Portfolio Strategy”, which means we look to materially participate in trending bull markets, while stepping to the sidelines during trending bear markets. Based on this, we materially participated in the bull markets of 2016/17 when our return over those years was 7.3% and 18.7% respectively. So now let’s look back a little further. On 31 December 1999, the S&P 500 closed at 1469.25. Fast forward 8 years and on 31 December 2007, the S&P 500 closed at 1468.36. Fast forward another 6+ years and on 10 January 2013, the S&P 500 closed at 1472.12. Between 31 December 1999 and 10 January 2013, the S&P 500 went essentially nowhere. This was due to the fact the market lost approximately 50% during the bear market of 2000, and a similar amount during the bear market of 2008. These 13 years of mediocrity are what I call the “Buy and Hold Calamity”. There had to be another way to avoid those major losses like those in 2008, when the S&P 500 lost 38.6% during that one year. Using our TIPS strategy (before we started the TSP TIPS subscriber service) my 2008 PIP was 4.07%, thereby sidestepping those major market losses. Since then, we essentially been in a bull market without any comparable bear market losses like 2000 and 2008, but we’ve had losses like them about once every decade since the Great Depression. Another factor is trade frequency. With the TSP, you’re allowed (with certain exceptions), only two exchanges per month. In order to take advantage of these minor moves over the last 20 months, it is optimized when you have the flexibility of unlimited free exchanges, like those offered with the ProFunds family of funds. While it would be great if the markets continually moved in an upward direction like 2016/17, we need to balance short and long term expectations. It reminds me of when I had my refrigerator ice maker repaired. I called the repairman about an hour later and told him it wasn’t making ice. He replied with “It takes time to make ice”. That said, we’re recommending no TSP TIPS allocation changes this week. In closing, if you’d like a copy of our TIPS strategy file just let us know. If you’d like more info regarding our ProFunds based ULTRA TIPS strategy, check out http://www.weisertinvestments.com/ultra-tips.html
Instead of talking about this week’s volatility, I’d like to shift gears and talk about performance. Nineteen months ago, on 26 January 2018, the S&P 500 closed at a record high 2872. This week, the S&P 500 crossed that 2872 level numerous times, closing Friday at 2888. Or said another way, within one percent of where we were at the beginning of 2018. The journey has had its ups and downs, but we wound up being essentially flat. Our TSP TIPS strategy is a “Trending Investment Portfolio Strategy”, which means we look to materially participate in trending bull markets, while stepping to the sidelines during trending bear markets. Based on this, we materially participated in the bull markets of 2016/17 when our return over those years was 7.3% and 18.7% respectively. So now let’s look back a little further. On 31 December 1999, the S&P 500 closed at 1469.25. Fast forward 8 years and on 31 December 2007, the S&P 500 closed at 1468.36. Fast forward another 6+ years and on 10 January 2013, the S&P 500 closed at 1472.12. Between 31 December 1999 and 10 January 2013, the S&P 500 went essentially nowhere. This was due to the fact the market lost approximately 50% during the bear market of 2000, and a similar amount during the bear market of 2008. These 13 years of mediocrity are what I call the “Buy and Hold Calamity”. There had to be another way to avoid those major losses like those in 2008, when the S&P 500 lost 38.6% during that one year. Using our TIPS strategy (before we started the TSP TIPS subscriber service) my 2008 PIP was 4.07%, thereby sidestepping those major market losses. Since then, we essentially been in a bull market without any comparable bear market losses like 2000 and 2008, but we’ve had losses like them about once every decade since the Great Depression. Another factor is trade frequency. With the TSP, you’re allowed (with certain exceptions), only two exchanges per month. In order to take advantage of these minor moves over the last 20 months, it is optimized when you have the flexibility of unlimited free exchanges, like those offered with the ProFunds family of funds. While it would be great if the markets continually moved in an upward direction like 2016/17, we need to balance short and long term expectations. It reminds me of when I had my refrigerator ice maker repaired. I called the repairman about an hour later and told him it wasn’t making ice. He replied with “It takes time to make ice”. That said, we’re recommending no TSP TIPS allocation changes this week. In closing, if you’d like a copy of our TIPS strategy file just let us know. If you’d like more info regarding our ProFunds based ULTRA TIPS strategy, check out http://www.weisertinvestments.com/ultra-tips.html