This topic contains 3 replies, has 1 voice, and was last updated by Paul Knox 5 years, 3 months ago.
February 11, 2014 at 3:18 pm #9913
I panicked during the 300 point downturn last Monday and moved half of my allocation into Gfund listening to the talking heads that the downturn was going to continue to potentially another 5 or 6 percent or more.
Obviously that was an emotional decision and a mistake. What should I do now? Reallocate my tsp to 100% S fund and lock in those losses. Or leave that 50% in GFund until the next downturn? I am a young fed so we are talking a total tsp sum of about $50k.
ThanksFebruary 12, 2014 at 12:34 am #9917
If we are down a few percentage points tomorrow you won’t be feeling so bad about your decision.
As always, I can’t (and don’t want to give individual advice). So, let’s look at the notion of waiting until the next downturn to occur more generically.
There have been 19 downturns of 5% or more since the current bull market started in 2009. Odds are that there will be several more this year. But typically following one of those downturns, we get back to the breakeven point in less than two months. So unless another downturn occurs in the next month or so, any “losses” would typically have already been wiped out before the next downturn occurs.
That assumes that the most recent correction is over, that we recover from it in a typical manner, and that nothing external happens to rattle the market.
With respect to locking in losses, it is hard but I try to look at every decision as if my money is all in cash and I am deciding where to put it that day. Whatever happened in the past doesn’t matter – all that does is where the best place for the money is today.
Good luck.February 14, 2014 at 12:16 pm #10036
I did the same thing ! I had a plan in place (staying in the S-Fund per this website) but I panicked after the three percent loss and moved into the G-fund a day later after regaining one percent. Now I am on the side lines waiting for the next down turn !! (I hate this feeling) As soon as I see a one to two percent downswing in the S-fund, I will play ball again and stay their until TSP ALLOCATION moves again !February 15, 2014 at 1:13 pm #10045
Only problem is you could miss out on a 5% gain while you are waiting for that 2% drop.
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