TSP Stocks Up Again: Will The Bull Continue to Kick in 2005?

All TSP stock funds were up again in July. Here are the results for each fund.

Investors in TSP stock funds are continuing to enjoy good returns as America’s companies are turning in solid profit reports. For the fourth straight month, all TSP stock funds continued to move up.

Here are the results for July:

C fund: up 3.67% (13.99% return for the past twelve months)
S fund: up 5.59% (27.14% return for the past twelve months)
I fund: up 3.07% (21.09% return for the past twelve months)
G fund: up 0.37% (4.39% return for the past twelve months)
F fund: down 0.84% (4.85% return for the past twelve months)

And here is news that may make you feel even more giddy than counting the return on your money for the past twelve months: stock market technical analysts think the current bull market is looking even better than they expected.

In plain English, here is what this means: Some analysts use technical charts to gauge the health and future performance of the stock market. According to yesterday’s Wall Street Journal, a number of these technical experts think the current bull market (i.e. rising stock market prices) will continue for another few months. The stock market has generally been going up since 2002. But, as is usually the case, some segments of the stock market have done much better than others.

A quick look at your TSP returns will give you a good picture of which segments of the market are going up. For the past twelve months, the S fund is up more than any of the TSP funds. A gain of 27.14% for a twelve month period is good by almost any measure. Small companies have been doing much better in the stock market than larger companies. The C fund return is not bad for the same period (13.99%). But most investors would prefer to have the 27% gain compared to the relatively anemic 4.39% return of the G fund.

And, here is another indicator the bull market may continue to go up. Bond prices have not taken a big tumble. Often, at the top of a major market move, there is tremendous activity in stocks as investors dump bonds and put money into stocks. But a number of investors are not making this move and are not putting as much money into stocks as has traditionally been the case at the top of a bull market. The apparent reason is that investors are not certain the rally will continue so they are heding their bets by leaving money in bonds.

But before you go and dump all of your F fund and G fund money into the small or international TSP funds, here is another quote from a columnist in the latest issue of Forbes: "[A] number of forces have offset these positives and make the stock outlook grim. The economic expansion is in its 44th month and getting old." Columnist A. Gary Shilling goes on to list the reasons he thinks that stock prices will not fare well in coming months.

Who is right? The frustration for investors is that no one really knows. There are certainly a number of advisors willing to take your money and who will tell you how to invest your TSP funds based on their predictions of future stock and bond market trends. It is possible they will be right and, if they are that good at predicting the twists and turns of the market, they are undoubtedly wealthy. Keep in mind that very few professional analysts have been able to accomplish predicting the future.

TSP investors have a new tool they can use with the life cycle funds of the TSP. The most conservative approach to investing your TSP money is to diversify your investments. You can do it yourself or, with the lifecycle funds, you can have it done for you within the TSP program.

But your future retirement is in your hands. The money you have invested in the TSP is yours to invest as you see fit. For now, anyone invested in the TSP stock funds are enjoying the ride just as they have generally done for the past several years.

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. Follow Ralph on Twitter: @RalphSmith47