TSP Talk Blog

Stocks were up early on on Thursday but another late rally from stocks on Thursday moved the indices deeper into positive territory and we saw respectable gains across the board by the close. The Dow gained 63-points with gains in the 0.15% to 0.30% range for many of those indices. Small caps (actually it was the mid-caps) led and the Transports were down.

Daily TSP Funds Return More returns

The S&P 500 is up about 3-points since the open on Christmas Eve so anyone keeping score on that Santa Claus Rally statistic, staying in positive territory between that day and two days after the New Year may be key. See the December 28 commentary for more on that.

The late day rallies appear to be window dressing type action where money managers are buying stocks that did well in 2017 to show them to investors in their annual reports. Remember, tax rates on short-term gains will be decreased starting in January, so that may be one reason why there are practically no sellers in these final days in December, where we might normally see profit taking, but it could be a different story when the new year starts and the TY18 tax rates are in place next week.

Another interesting development this week was the rush to pay off 2018 property taxes early so they can be deducted from 2017 tax returns. Apparently there were lines all over the country to get this done. I wonder about the short-term impact of this money leaving consumer's pockets, where it would have happened later in 2018?

It's been a tough year for market timers since there was little volatility and for the second year in a row, the buy and holders were in charge. Of course buy and holders take the full brunt of any corrections or bear markets so they won't always be the heroes, but for now, they are making market timers look like amateurs. For that reason, some of those money managers are desperately adding those winning stock in their portfolios despite having held onto cash and waiting for a decent pullback that never really manifested in the latter half of 2017. I can relate.

The dollar is having its worst year since 2003 and that has helped the I-fund lead the U.S. funds all year with gains near 25%. By the way, in 2003 the I-fund gained 38% and it was followed by a 20% gain in 2004.

In 2017 everything was about tax cuts. As we head into 2018 the word is going to be infrastructure, infrastructure, infrastructure. The headlines will be market movers until something bigger takes the spotlight off of it. North Korea will also dominate, but don't look for anything major from the U.S. to happen in that area until after the Winter Olympics in South Korea are concluded.

Again, the charts are doing little this week so I'll wait until after the new Year before putting them up and trying to analyze. I'll leave the prior commentaries below (or see prior day's commentary in the archive if looking at the blog) which show some interesting recent years end of year / beginning of new year, statistics.

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Thanks for reading. Have a great holiday weekend, and Happy New Year!

Tom Crowley


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