On Wednesday 19 February the S&P 500 hit a new record high of 3386. Coronavirus fears accelerated since then and have had a negative effect on global markets. On Friday, the S&P 500 closed at 2954, dropping 12.79% over the last seven trading days. This marks the fastest decline from a record close in the index\'s history, and moves us into market correction territory (a 10% drop from the most recent 52 week high close). On the flip side, interest rates are hitting historic lows with bond funds (which move opposite interest rates) setting new record highs during that same period. The dilemma now is the “Do you buy the market dip”, or “Trying to catch a falling knife (market) with your ‘bear’ hands”. For TSP TIPS, it was only a week ago when we were talking about that “Whack a Mole” type of market with the C, S and F funds all hitting new record highs. As mentioned above, we’ve also seen that systemic coronavirus bearishness bleed over to the C/S/I equity funds. However, the F bond fund has hit new record highs on 6 of the last 7 trading days, including Friday. The F fund’s 20% allocation offset some of the losses, but we also issued a mid-week “third allocation of the month” alert to reduce the C and S fund allocations to 50%. This was due to the Bollinger Band Index (BBI) crossing above that 70 level that I talked about last week. Some may say “Why not go to 0% equity exposure”, but things are a little different with the TSP’s two allocations per month rule. We’ve found incremental changes more beneficial than big allocation swings, which can lead to “whipsaw frustration” similar to last summer. As such, we are taking that more patience and persistence approach and recommend no allocation changes this week. That said, we would like to make mention about an item we sent out via email at the beginning of 2020, stating that we would be expanding our TIPS offerings. This new service is called “The TIPS” bundle and consists of three models which are applicable for anyone with individual/joint taxable accounts and/or Roth/Traditional IRA’s. However, they are significantly different from TSP TIPS in that you will receive daily reallocation recommendations utilizing the ProFunds fund family. This ability to make daily reallocations allows for more frequent and quicker adjustments to market conditions. As noted above, the S&P 500 lost 12.76% over the last seven trading days. During that same period, the "Classic TIPS" model with index funds similar to the TSP had a slight loss of only 2.79%, with the current allocation being 60% Cash, 40% Bonds. Our official launch will be when the software “app” work is complete, but in the meantime we are offering anyone a complimentary email subscription. If you’d like to receive it while in the pilot phase, please sign up at "The TIPS/http://www.weisertinvestments.com/-the-tips-.html". Again, this is in the pilot stage and the pricing is still in flux. However, these strategies are the same ones I’ve utilized with my individual clients since 1994. In closing, we appreciate you all for being TSP TIPS subscribers and hope the above gives you more insight into our investment methodology.
On Wednesday 19 February the S&P 500 hit a new record high of 3386. Coronavirus fears accelerated since then and have had a negative effect on global markets. On Friday, the S&P 500 closed at 2954, dropping 12.79% over the last seven trading days. This marks the fastest decline from a record close in the index\'s history, and moves us into market correction territory (a 10% drop from the most recent 52 week high close). On the flip side, interest rates are hitting historic lows with bond funds (which move opposite interest rates) setting new record highs during that same period. The dilemma now is the “Do you buy the market dip”, or “Trying to catch a falling knife (market) with your ‘bear’ hands”. For TSP TIPS, it was only a week ago when we were talking about that “Whack a Mole” type of market with the C, S and F funds all hitting new record highs. As mentioned above, we’ve also seen that systemic coronavirus bearishness bleed over to the C/S/I equity funds. However, the F bond fund has hit new record highs on 6 of the last 7 trading days, including Friday. The F fund’s 20% allocation offset some of the losses, but we also issued a mid-week “third allocation of the month” alert to reduce the C and S fund allocations to 50%. This was due to the Bollinger Band Index (BBI) crossing above that 70 level that I talked about last week. Some may say “Why not go to 0% equity exposure”, but things are a little different with the TSP’s two allocations per month rule. We’ve found incremental changes more beneficial than big allocation swings, which can lead to “whipsaw frustration” similar to last summer. As such, we are taking that more patience and persistence approach and recommend no allocation changes this week. That said, we would like to make mention about an item we sent out via email at the beginning of 2020, stating that we would be expanding our TIPS offerings. This new service is called “The TIPS” bundle and consists of three models which are applicable for anyone with individual/joint taxable accounts and/or Roth/Traditional IRA’s. However, they are significantly different from TSP TIPS in that you will receive daily reallocation recommendations utilizing the ProFunds fund family. This ability to make daily reallocations allows for more frequent and quicker adjustments to market conditions. As noted above, the S&P 500 lost 12.76% over the last seven trading days. During that same period, the "Classic TIPS" model with index funds similar to the TSP had a slight loss of only 2.79%, with the current allocation being 60% Cash, 40% Bonds. Our official launch will be when the software “app” work is complete, but in the meantime we are offering anyone a complimentary email subscription. If you’d like to receive it while in the pilot phase, please sign up at "The TIPS/http://www.weisertinvestments.com/-the-tips-.html". Again, this is in the pilot stage and the pricing is still in flux. However, these strategies are the same ones I’ve utilized with my individual clients since 1994. In closing, we appreciate you all for being TSP TIPS subscribers and hope the above gives you more insight into our investment methodology.