Built on a tripod of bullish news, the S&P 500 broke above the 3300 mark this week and closed Friday at a record high of 3329. The first leg of this tripod focused on trade deals, where Phase One of the U.S./China reduced market uncertainty and the USMCA with Canada and Mexico winning broad bipartisan support. The second leg was the strong economic jobless claims and retail sales data, but topping it off was housing starts which soared nearly 17% in December and reached a 13-year high. And the third and final leg of the tripod was the start of earnings season. With the initial 8 percent of corporations reporting, over 70% have better-than-expected numbers. For TSP TIPS, we are not recommending a reallocation since the C and S funds are ranked 1 and 2, but would like to talk about the TSP TIPS investment strategy. We follow an incremental approach and increase the equity allocation (C/S/I funds) as market influencers (tripod above), supported by technical analysis, drive prices higher. If you look at recent TSP TIPS history, you’ll see that we took an initial bullish stance (over 50% allocation to equities), on 7 September when the S&P 500 was at 2978. The next increment occurred on 14 September when the markets continued to “break out” and we recommended over a 75% equity allocation with the S&P 500 at 3007. Since then we have remained nearly 100% in equities and the S&P 500 has climbed to 3329 for about a 10% gain. TSP TIPS subscribers that have been with us throughout this period have had a corresponding nice run up. However, I would like to address those new subscribers that have come onboard during this time. If your equity allocation was similar to the TSP TIPS allocation when signing up, you’ve probably had similar results as we’ve become fully invested. That said, what about those TSP TIPS subscribers that come onboard where their equity allocation was significantly different. A worst case scenario would be to have all your funds in the G and F funds, jump into the market when we’re recommending a high equity fund allocation (above 75 percent), only to see it start to turn downward and return to the mean after marking some nice gains. In this case we recommend that you also follow an incremental approach with your account like we do with our TSP TIPS strategy. Stair step your way into the equity funds in 20 percent increments over a period of up to two months until fully transitioned to where the equity allocations match. For instance, if you’re currently 20% in equities when you subscribe and we’re recommending 100% equities, start out by going with a 40% equity allocation. Give it another two weeks and increase that equity allocation to 60%. Then follow that same "Getting Started" methodology until the equity exposures match. Hope this helps and remember that the TSP will be closed Monday in observance of the Martin Luther King, Jr. holiday.
Built on a tripod of bullish news, the S&P 500 broke above the 3300 mark this week and closed Friday at a record high of 3329. The first leg of this tripod focused on trade deals, where Phase One of the U.S./China reduced market uncertainty and the USMCA with Canada and Mexico winning broad bipartisan support. The second leg was the strong economic jobless claims and retail sales data, but topping it off was housing starts which soared nearly 17% in December and reached a 13-year high. And the third and final leg of the tripod was the start of earnings season. With the initial 8 percent of corporations reporting, over 70% have better-than-expected numbers. For TSP TIPS, we are not recommending a reallocation since the C and S funds are ranked 1 and 2, but would like to talk about the TSP TIPS investment strategy. We follow an incremental approach and increase the equity allocation (C/S/I funds) as market influencers (tripod above), supported by technical analysis, drive prices higher. If you look at recent TSP TIPS history, you’ll see that we took an initial bullish stance (over 50% allocation to equities), on 7 September when the S&P 500 was at 2978. The next increment occurred on 14 September when the markets continued to “break out” and we recommended over a 75% equity allocation with the S&P 500 at 3007. Since then we have remained nearly 100% in equities and the S&P 500 has climbed to 3329 for about a 10% gain. TSP TIPS subscribers that have been with us throughout this period have had a corresponding nice run up. However, I would like to address those new subscribers that have come onboard during this time. If your equity allocation was similar to the TSP TIPS allocation when signing up, you’ve probably had similar results as we’ve become fully invested. That said, what about those TSP TIPS subscribers that come onboard where their equity allocation was significantly different. A worst case scenario would be to have all your funds in the G and F funds, jump into the market when we’re recommending a high equity fund allocation (above 75 percent), only to see it start to turn downward and return to the mean after marking some nice gains. In this case we recommend that you also follow an incremental approach with your account like we do with our TSP TIPS strategy. Stair step your way into the equity funds in 20 percent increments over a period of up to two months until fully transitioned to where the equity allocations match. For instance, if you’re currently 20% in equities when you subscribe and we’re recommending 100% equities, start out by going with a 40% equity allocation. Give it another two weeks and increase that equity allocation to 60%. Then follow that same "Getting Started" methodology until the equity exposures match. Hope this helps and remember that the TSP will be closed Monday in observance of the Martin Luther King, Jr. holiday.