Hello everyone
We went thru the entire summer with no updates from this free, no subscription-cost website, which was as planned. I seek to not bombard everyone with excessive emails and updates, if there is no news, sometimes that is good news. In addition, this reinforces my position that I do not “day trade” the TSP or jump in and out depending on the direction the wind is blowing, quite the contrary. I simply seek to be in the best performing fund at all times, risk tolerance being a consideration. Indeed sometimes that best performer is the G-Fund.
With that said, Bottom Line Up Front is that I am changing my TSP Allocation to 100% S-Fund. My intent is to be “in position” into the S-Fund before the election. I will skip discussion about the economy and interest rates and keep things focused on my S-Fund decision…
My move to the S-Fund is based on historical patterns that indicate small-cap stocks outperform other stocks in the months following a Presidential election (it does not matter what party wins). We are obviously weeks away from arguably the most watched election in modern times- my general observations about elections are captured in my 2016 Election Post and my 2020 Election Post.
As such, it is not necessary to regurgitate the above posts; feel free to take a look at them.
Graphics courtesy of T Rowe Price, Ritholtz Wealth Management, and my own research, indicate that yes, the small-caps do well immediately after an election. See attached graphics:
Based on these historical patterns, I am moving to 100% S-Fund. Some have asked for my prediction of an election winner and I will stay away from that minefield. My only comment is the election will come down to the swing states, and in those states themselves, the most populated counties, typically the metro areas. One could argue that these swing states will be determined by about 10 or 15 metro areas: Phoenix, Tucson, Las Vegas, Reno, Philadelphia, Atlanta, etc. Complicating this is that some metro areas contain large numbers of residents not from (born and raised, etc.) that metro: Las Vegas being one of them, it contains huge numbers of ex-California residents. Also, I am not so sure if the polls are any more accurate this cycle than they were in past cycles.
Again, I am 100% S-Fund, which is my allocation, and not intended to be investment advice or suggest what your allocation should be. Make your own decisions based on what is best for you.
Thank you for reading and talk to you soon…
-Bill Pritchard
