Good Evening everyone
February is now behind us, and the month was clearly a positive one. This was a welcome breath of fresh air, after having put January, a negative month, to rest. I might add that per TSP site data, January ended up being a negative month across all the stock funds, and most of the bleeding occurred in the later portion of the month. During the first week of February, support on the SP 500 Index was found at the 1740 area, and then a weak uptrend began, on low volume.
As discussed in numerous prior posts, volume is the “horsepower behind the move” and can also be associated to “the credibility of the move”, and high volume is much more credible than low volume. During the first week of February, the index trickled up, then went flat, from Feb 14 to Feb 23, trading around the 1835 area. Lets take a look at some charts, first is unmarked, second is marked:
As can be seen on the charts, we had lackluster volume (and thus I was not eager to “jump in with both feet” quite yet) during the first week of February, then some flat action, then on Feb 24, a very strong “up” day with the SP 500 Index making a new All Time High. This was discussed in my Feb 25 blog post, and a few days later, the national news media “experts” decided that they too, would report on it.
As we enter March, we have had some international events throw water onto the market’s fire, with the I-Fund being (not shockingly) hit the worst, due to it’s international nature. These events were primarily the Russian military action in Ukraine. The indexes were hit hard, and the Dow was down triple digits after Russian actions on March 3, which also happened to be a Monday for US markets. Mondays are not a good day, market-wise, to have one country invade another country. However, on the big picture scale (and why I did not panic) is that neither country was a huge economic engine or financial powerhouse. Russia invading Ukraine (in my view) is akin to Venezuela invading Aruba. Not a total surprise was that on March 4, the markets were up huge, with the Dow up 227 points, in a quick one-day reversal of investor sentiment towards the Russia/Ukraine situation.
I continue to be 100% S-Fund, however will add that C-Fund is doing well also. The I-Fund (as discussed before) is an excellent investment vehicle, and in the past, has put great returns on the table, but it is more volatile and sensitive to international events. Me personally, if I-Fund is only slightly outperforming S/C-Fund, I am probably going to just go with the domestic S/C-Funds.
Before I close out, thank you for the numerous emails and compliments.
“Thanks for giving us some insight into the many fund choices and market’s behavior. While I do not follow your moves 100% exactly, I enjoy your site, and no longer have to play Pin the Tale on the Donkey and try to guess which fund out of ten choices is the one to be in. Thanks.”
With that said, lets take a look at some quotes from Paul Tudor Jones, a very successful hedge fund manager and trend follower. Trend following is a practice that I use for my own investing, both TSP and in my personal account. Allow me to cut and paste some of his quotes:
“If I have positions going against me, I get right out; if they are going for me, I keep them… Risk control is the most important thing in trading. If you have a losing position that is making you uncomfortable, the solution is very simple: Get out, because you can always get back in.”
Paul Tudor Jones
“Don’t focus on making money; focus on protecting what you have.”
Paul Tudor Jones
Sound familiar ? Have you heard a similar philosophy here ?
Thanks for reading and please share my site with your friends and colleagues.
– Bill Pritchard
