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  • Long Term Archive

    July 2007

    January 2007

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    January 2006

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    Longer-term outlook returns and allocations

    Longer Term Market Outlook

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    Mid Term Outlook (6 months - 1 year)


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    Update 06/02/09

    After over one year at a 40% cash (G-fund) allocation during the bear market, I am making a move in this hypothetical account to raise even more cash after the huge bear market rally that began in March of this year.  Today's (June 2, 09) Daily Market Commentary will explain the why part.

    The new allocation in this hypothetical inactive account is:

    60% G-fund
    20% C-fund
    10% S- fund
    10% I-fund

    Through June 1, this fictitious account is up 5.3% in 2009, after dropping 22.5% in 2008.

    Effective COB 6/02/09.

    Final 2008 Return
    TSP Talk G Fund F Fund C Fund S Fund I Fund 20% Each
    Less Active +3.75% +5.45% -36.99% -38.32% -42.43% -23.04%
    L2040 L2030 L2020 L2010 L-Inc  
    -31.53% -27.50% -22.77% -10.53% -5.09%  

    Update 05/12/08

    I took advantage of the recent strength and put the 40% back into the G fund in this buy and hold / hypothetical TSP account.  The new allocation in this hypothetical inactive account is:

    40% G-fund
    30% C-fund
    15% S- fund
    15% I-fund

    Effective COB 5/12/08 or the morning of 5/13/08.

    Update 01/15/08

    I went ahead and put the 40% I had in the G and the F funds today (20% in each) and moved them into the stocks funds.  The new allocation is:

    50% C-fund
    25% S- fund
    25% I-fund

    Effective COB 1/15 or the morning of 1/16/08.


    I am going to start 2008 off in conservative mode in this hypothetical inactive account. I will look for the air to clear before getting fully invested again.  The charts are not looking particularly well and I would feel better keeping some powder dry while we see how things play out.

    That said, I like buying when things look their worst, and we could see that in the next couple of weeks or months.

    For this account, I will start out 2008 with an allocation of:

    20% G
    20% F
    30% C
    15% S
    15% I

    The long-term account ended 2007 with a +6.64% return.  It was not earth shattering as it fell somewhere in between the returns of the TSP funds:

    2007   Totals
    G Fund: +4.87%
    F Fund: +7.09%
    C Fund: +5.54%
    S Fund: +5.49%
    I  Fund: +11.43%

    The F fund was the surprise of the bunch, beating both the C fund and the S stock funds.  Like 2006, the I-fund was again helped by a weakening dollar in 2007.

    The credit crunch is still with us keeping investors on their toes.  As I mentioned, sometimes it is better to buy when no one else wants to.  Sentiment is low and we could be very close to a better buying opportunity, but the market does tend to go down longer / further than you might think would be reasonable.  The same happens during long market rallies.

    Things are looking bad and we may be hitting the fear and desperation area on the cycle of emotions, but I don't think we have seen any panic or capitulation yet.  That may take time to develop.

    2007 did experience the long overdue 10% correction I had been looking for.  The question is, will it get worse?  Will we actually experience a bear market (20% decline) before it's all over?  I tend to think that will not happen.  There are too many good things happening in spite of the credit situation and the possible recession.  Interest rates are still very low and stock valuations are not a problem at all when compared to other investment options such as bond yields. 

    So, their is no magic formula for 2008.  The market is working out some financial and economic issues, but a good buying opportunity will come sooner or later.  That's when I will move back to a 100% stock allocation in this account.  By then we should have seen a little more panic in the air.

    Good luck!


    Long Term Outlook (3 plus years)

    Not much to say here except that I am bullish for the long term. Of course there will be swings over the course of three plus years but if you are not the type to watch the market on a regular basis and you do have three or more years before you need your TSP funds, stocks are the place to be.   You can use the table below as a guideline, just consider your risk tolerance and also when you will need your money when choosing an allocation.

    Here are some possible allocations for those with less active accounts.

    2009 - Updated 6/03/09 
    Risk Tolerance G Fund F Fund C Fund S Fund I Fund
    Aggressive 60% 0% 20% 10% 10%
    Moderate 60% 15% 20% 0% 5%
    Conservative 65% 25% 10% 0% 0%

    Remember, this is a less active, hypothetical account and it has done well over the years.  But it is not what we do with our own personal TSP accounts.  We tend to be more active. These would be basic guidelines for the longer term, buy and hold type of investors who make few transfers during the year.

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