Hello Folks
The new year is off to quite a start. This includes my own recent retirement from the federal government, under the FERS “25 years of 6(c) = retire at any age” provision. It was truly the best career in the world, with awesome coworkers and colleagues from other agencies and departments. Old habits will die hard…I am not sure if I will ever stop checking my phone for “missed calls” (nobody called…) or if I will be able to change the way I speak, asking my wife “what is the status of the soccer game” or “are you enroute back home” or “what is the game-plan for tomorrow” type of stuff. Picking up our kid from track? “Who is transporting” or (alternatively) “who is covering the pickup of….” etc. I know, crazy. “Would you like dessert sir?” Negative. It will be hard to de-1811ize myself, after all these years. With that said, I hope to have much more time for this website, and I have some other ideas and projects being contemplated regarding investment education and market analysis. Stay tuned.
Moving onward, time to talk about the markets and the TSP. Back in mid-December, I posted the below regarding small cap stocks:
My point above was that the S-Fund was probably the best place to be for the time being, in my opinion. Not shockingly, recent returns published on the TSP website reflect that out of fifteen fund choices, the S-Fund has been the top performer Year-To-Date for 2021. Link: https://www.tsp.gov/fund-performance/
Note that in my opinion, this will likely continue, and my personal TSP allocation is indeed 100% S-Fund. I do not advocate day trading your TSP, and instead I seek to capture long term trends. As many know, I am not afraid to use the ultra conservative G-Fund as a tool in my toolbox, even if it means foregoing gains in a riskier investment. Presently, it is my opinion that being fully invested in the S-Fund, or a combination of S, C, and I Funds, is something for the TSP investor to consider and research. My own analysis of the various funds and index performance indicates that small cap and international stocks may outperform other categories in the next three to six months. As outlined in FAQ #6, a new President (any party) can serve as a catalyst for a new Bull market. Let’s take a look at a chart of the SPY Exchange Traded Fund, a useful proxy of the S&P 500 index:
As can be seen, this ETF, and the S&P 500 itself, has rallied since November. Moving past this, a look at the weekly price of Gold reflects that investors are leaving Gold (a “safe haven” investment), which would seem to reinforce my theory that stocks are taking on a new Bull posture:
As I have stated in numerous prior posts, Crude Oil is a barometer of the economy, being a supply/demand product, many believe that low crude oil prices are indicative of poor economic conditions. A check of the Crude Oil chart reveals a price uptrend since November 2020:
Additionally, another tool I use for a fundamental analysis of the economy is the Chicago “Business Barometer”, an index which measures manufacturing in the Midwest USA. Values above 50 indicate growth of manufacturing activity. The recent January 2021 release, comes in at 63.8, the highest reading since July 2018. See image:
It is not my goal to bury the reader in charts and graphics, so in sum, my opinion is the stock market may see a new Bull movement, and go higher, in 2021. My opinion is that the S-Fund will be the best performer, with the I-Fund and C-Fund, being second and third choices, for the near future.
With that said, what do you think the stock market will do in 2021 ? I am interested to see what the audience thinks. Please complete this poll (link below), which includes a comment feature if you are a Facebook user:
POLL: https://linkto.run/p/WZCV0DOK
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-Bill Pritchard
