Historically, the stock market returns for the month of January give an indication of how the markets will fare for the rest of the year. As for the Dow Jones Industrial Average, January returns have accurately predicted the year’s direction 75% of the time. In the past 30 years, it has been right 26 times.
So how did the stock market do last month?
It was the worst month in the 113 years of the existence of the Dow Jones average.
That, obviously, is not good news for investors in the federal Thrift Savings Plan funds. The I fund was the biggest loser down 11.93% for the month and also the biggest loser for the past twelve months where it is down 44.57%. The C fund was also down in January, losing 8.41% and it is down 38.62% for the past twelve months.
In fact, the only fund to have a positive return in January was the G fund with a gain of 0.19%. It is up 3.61% for the past twelve months. The F fund is the only other fund with a positive return for the past twelve months with a gain of 2.74%.
The January returns are a disappointment after the market showed signs of life in December 2008 with positive returns for all of the TSP funds. (See Thrift Savings Plan Funds All Up in December–Ending a Dismal Year of Returns)
Here is a summary of the January returns for the underlying Thrift Savings Plan funds:
The L funds did not fare well either. The L income fund returned the best results with a loss of 1.74% for the month. For the past 12 months, it is down 5.83%. The most aggressive lifecycle fund, the L2040, lost 7.67% and is down 33.19% for the past twelve months.
Here is a summary of the lifecycle fund returns for January: