Returning to 1933? How Are Your TSP Funds Performing in 2016?

By on April 1, 2016 in Retirement with 8 Comments

Image of bull and bear beside a bar graph

American stocks have been on a roll in the past several months. Here is one headline that is eye-catching: “Dow Posts Biggest Quarterly Comeback Since 1933“. That sounds like a very positive headline and it is. It means that your stock market investments went up significantly since going down in recent months. (The C fund was down 5.7% for the year at the end of February.) On the other hand, when headlines start making comparisons between today’s stock market and the 1930’s, investors should be cautious.

Here is an example. Of the top ten biggest gains for the American stock market of all time, 7 of the 10 biggest gains occurred between 1929 and 1933. On the flip side, 9 of the top 20 most dramatic stock market losses happened during the same era. The stock market was highly volatile during the depression era and the volatility lasted for a decade.

In 1933, the stock market went up almost 50% following straight years of a declining stock market. Any TSP investor with assets in the C fund would love to see a 50% return in a year. 1935 and 1936 also saw dramatic stock market returns (about 47% and 32% respectively) before falling another 35% in 1937.

There is no indication that history will repeat this scenario in our current environment but we are clearly in a period of economic and political uncertainty which can lead to swings in the stock market. For those with short memories, the C fund dropped about 37% in 2008 followed by seven years of positive returns, including returns of more than 32% in 2013 and about 27% in 2009. No doubt, that demonstrates significant volatility in the stock market.

To put our current situation in perspective, here is a decidedly optimistic quote from financial analyst Morgan Housel: “If we could go back seven years and tell everyone that the Dow is near 18,000, unemployment is 4.9% and gas is $1.90 a gallon, they would think we won the lottery and were drowning in prosperity. Instead, we’re complaining about market volatility.”

So, how did your TSP funds fare in March, for the year-to-date and for the past 12 months? Here are all of the results:

G Fund F Fund C Fund S Fund I Fund
Month 0.15% 0.93% 6.79% 8.24% 6.59%
12 Month 2.07% 2.35% 1.87% -8.53% -7.98%
YTD 0.49% 3.13% 1.37% -0.70% -2.24%
L Income L 2020 L 2030 L 2040 L 2050
Month 1.53% 3.35% 4.54% 5.25% 5.94%
12 Month 1.43% -0.07% -0.89% -1.59% -2.29%
YTD 0.62% 0.47% 0.39% 0.30% 0.15%

Will the upward trend hold for the rest of the year? Nobody knows what is going to happen but TSP participants can at least feel good about this month’s returns.

© 2016 Ralph R. Smith. All rights reserved. This article may not be reproduced without express written consent from Ralph R. Smith.

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About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources.

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