Elections and the Stock Market: All TSP Stock Funds Down in October

Does the stock market predict the results of a presidential election? The TSP stock funds were down in October.

October tends to be volatile for the U.S. stock market. The crashes in 1929, 1987 and 2008 all occurred in October. This year, the S&P 500 (the index on which the C fund is based) declined by 1.9% in October.  The October S&P 500 results extended the losing streak to three months for this index.

November starts a stretch of what is typically positive returns for the stock market. Between November and January, the S&P 500 has gone up 66% of the time. The average return in this time frame has been 3.2%. According to the Wall Street Journal, this makes this three month period the best one going all the way back to 1928.

Best and Worst TSP Funds in October

October was not a good month for the stock funds in the Thrift Savings Plan (TSP). The C fund, S fund and the I fund all had negative returns in October. All of the lifecycle funds had negative returns as well. The only fund in October with a positive return was the G fund with a return of 0.14%.

The S fund showed the biggest decline. It was down 3.86% in October. The S fund also has one of the best returns for the year-to-date with a positive return of 5.86%.

For the past 12 months, the I fund has been the worst performer, losing 2.18%. And, in an unusual result, the F fund has the best return over the past 12 months with a return of 4.66%.

Returns for October, Year-to-Date and Past 12 Months

G Fund F Fund C Fund S Fund I Fund
Month 0.14% -0.74% -1.82% -3.86% -2.03%
YTD 1.46% 5.22% 5.91% 5.86% 0.71%
12 Month 1.82% 4.66% 4.56% 3.50% -2.18%


L Income L 2020 L 2030 L 2040 L 2050
Month -0.38% -0.91% -1.39% -1.66% -1.89%
YTD 2.43% 3.21% 3.77% 4.03% 4.20%
12 Month 2.32% 2.43% 2.60% 2.61% 2.51%

Elections and the Stock Market

One event hanging over the stock market now is the upcoming election results in the U.S.

At this point, while there are plenty of opinions, no one knows who will be the next president of the United States. According to one theory, Donald Trump will win the election. This is because the stock market’s election year performance between July 31 and October 31 has often accurately predicted the election results for president. “Going back to World War II, the S&P 500 performance between July 31 and Oct. 31 has accurately predicted a challenger victory 86 percent of the time when the stock market performance has been negative,” according to one expert.

The S&P 500 is down 2.2 percent since closing on the last trading day of July. When the stock market goes up during this time period, the incumbent party has won 82 percent of the time since World War II. When the stock market has gone down between July and October, the challenger to the incumbent party has been victorious in the presidential election.

On the other hand, in a poll released on Monday this week, Hillary Clinton’s 6-point national lead over Donald Trump is virtually unchanged since the dramatic announcement by the FBI director about locating missing emails that could be “pertinent” to the investigation over her use of a private email server.

Take Your Best Shot

Our advice to TSP investors would be to have a long term investment plan and to stick with it. Investment decisions based on an election cycle is a short-sighted strategy and likely to be unreliable.

Pontificating on political issues is what many Americans and the press enjoy. We can anticipate a flood of opinions and predictions in the next few days.

Take your best shot. We wish all TSP investors the best in making investment decisions and ending the year with positive returns.

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