When you check out the balance in your Thrift Savings Plan (TSP) account, don’t be surprised to see that it may have gone down.
The stock market has gone through the worst start to a year for the stock market since 2002. It was a year most investors would like to forget as the C fund dropped about 22% and the S and I funds dropped about 18% and 16% respectively.
The S&P index fell 11.9% during the quarter. The C fund is based on the S&P 500 index.
A number of TSP investors moved money out of the stock funds and into the G fund in May. The stock market went down significantly in the last two trading days of the month and these investors ended up ahead and the G and F funds were the two underlying TSP funds that showed a positive return for the month (and also for the year).
There are several reasons that investors are jittery. The jobless rate is still high, there was the "flash crash" back in May when the market fell dramatically in eight minutes, and there is considerable concern about debt both in the United States and in Europe. (See Checked Your TSP Funds? What Happened on May 6?)
Business publications such as Forbes and the Wall Street Journal have been blunt in their criticism of the economic decisions made in the waning months of the Bush administration and the large deficit spending under the Obama administration. Stock prices reflect investors’ view of our economic future. Uncertainty about the increasing cost of doing business, government spending, tax increases, and lack of confidence in the government’s economic program all lead to businesses waiting for more certainty before hiring new employees. (See Why Obamanomics has Failed and Why The Greater Depression Still Lies Ahead)
These prognosticators and analysts may not be right but as long as investors are facing uncertainty, stock prices will suffer and investments such as gold and Treasury bills (such as the G fund) will be the investments of choice for many large investors. Regardless of what happens in the political arena, continued volatility in the TSP stock fund prices is likely as long as the jobless trend remains high as investors are concerned about the possibility of "double-dip" recession.