Longest Bull Market in History: What Does This Mean for the TSP?

We are in the midst of the longest bull market in history. What does this mean for TSP investors?

Record Setting Bull Market

The current bull market in stocks that began on March 9, 2009 is now, by most standards, the longest bull run over the past 100 years. As of Wednesday of this past week, this current market has lasted 3,453 trading days.

The latest segment in this bull run for the S&P 500 index (the index on which the C fund for the TSP is based) has been driven by booming economic growth in the U.S. and renewed strength in quarterly corporate earnings.

And, after the closing bell for the New York Stock Exchange on Monday, August 27th, the Dow Jones Industrial Average (DJIA) closed above 26,000 for the first time since early in February.

This should be, and has been, good news for investors in the Thrift Savings Plan (TSP).

How the C Fund Has Performed

On March 9, 2009, the value of a share in the C fund for the TSP was about $7.90. At the close of the market this past Wednesday, the value of a share was about $40.75—an overall increase of about 416 percent.

For the baby boomers who are getting ready to retire or have retired, investing in the C fund has been a boon to their financial stability and retirement. Keep in mind the C fund shares include the addition of dividends (and expenses).

While this is the longest bull market, it has not had the highest overall returns. Here is a chart from MarketWatch displaying (as of August 20th) how the current bull market in stocks compares with others:

Dates Length in trading days Percent gain in S&P 500
3/9/2009 -8/22/2018 3,453 322%
10/11/1990 – 3/24/2000 3,452 417%
8/1/1921 – 9/7/1929 2,959 395%
6/13/1949 – 8/2/1956 2,607 267%
10/3/1974 – 11/28/1980 2,248 126%
Average of bull markets since 1921 1,596 163%

Impact of Bull Market on Investors

With the long running bull market, there is a chance that any predetermined percentage of stocks and bonds in an account has become skewed. If a TSP investor has not reviewed a portfolio and rebalanced the concentration of TSP funds, this may be a good time to do that.

For example, if your goal is to have a portfolio of 60% in stocks and 40% in bonds, the value of stocks may now be much higher than the value of bonds in a portfolio.

The fact that the bull market has set a new record does not mean that stocks will automatically go down. There is no way of knowing if stocks will continue to go up or start going down. Short term market timing usually does not work as an investor has to guess when to sell stocks (at the highest price) and when to buy stocks (at the lowest price). That is very difficult to do and often results in losing more money following a regular plan of investing.

In other words, have a plan for investing your money and stick with it. If you do not have an investment plan, formulating one is a good idea. There are qualified financial planners that work with federal employees to come up with a plan for those who wish to use a financial planner.

A greater percentage of TSP investors are also using the “lifecycle funds” in the TSP as a way of balancing an investment portfolio. Lifecycle funds automatically invest a percentage of investments in stocks and bonds depending on a projected retirement date. You give up control over the allocation and investment strategy of the mix of funds in exchange for the convenience.

Regardless of your strategy, we hope you enjoy the process and the results of your efforts in using the TSP — one of the best benefits available to a federal employee.

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