TSP Commentary for 03/30/20

This is your TSP Watchdog UPDATE for the week ended March 27, 2020.

Stocks surged this week: S&P 500 +10.26%.  Dow +12.84%.  NASDAQ +9.05%.

It felt good to see prices finally rise for multiple days in a row – as Tue, Wed and Thu saw large gains.

We caution against getting too excited.  Bear market rallies can be swift and strong.  It is most common to see a rally and then a re-test of the previous lows.  If the previous low holds, then the rally that follows is more likely to have staying power.

Everything is about the coronavirus at this point.  The economic numbers are, for the most part, irrelevant.  Everyone knows the economy is in the toilet, and the pivot will not appear in any economic reports but in the outlook for Covid-19 and the eventual efforts to re-open the economy.

President Trump announced on Sunday a 30-day extension to the social distancing guidelines that have been in place.  This may disappoint the market – which had been hopeful that lockdowns across the country might begin easing before the end of April.  Or, the market might like this development because it provides more confidence that appropriate measures are in place.

This dichotomy highlights the “uncharted waters” aspect of this whole situation.  It is difficult to know what the market will do because we have not sailed in conditions like this before.  If the economy stays on lockdown much longer than April, the damage will begin to mount exponentially – and the market will NOT like that.

That said, in our TSP Watchdog database, we have no trend changes to report.  We remain 100% in the G fund – as all the TSP funds are still on negative trends.

This means we do not have to worry about the market’s gyrations – we are not exposed to any of it.

With our TSP accounts safe from the storm, perhaps we can turn our attention to helping friends and neighbors who are struggling.  Try to stay above the drama that the media portrays and, instead, focus on your own community.  You may find that things aren’t as bad as click-baiting headlines suggest.

Things may get worse before they get better – but they will get better.  Stay focused on the eventual recovery so you don’t make decisions that you regret later.

We will let you know when the trends turn positive again.  Until then, relax – knowing you are safe in the G fund, and look for small ways to offer a hand up to folks who aren’t as fortunate as you are.

We are always here to answer your questions – send them over in a reply to this email.

Scot B.