Stay the course?

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    S fund starts out the month of October by dropping to the lowest value since May. Meanwhile, the C fund has experience much more modest declines and G fund has gone up. If your followers had a more balanced approach to their TSP, it would seem a great time to rebalance, buying up shares of S fund on the cheap. Unfortunately, when you are entirely invested in the S fund, there’s nothing to rebalance with. Just because the metrics ‘say’ the market should be doing something does not mean the market will cooperate.

    TS Paul

    Nothing truer than your last sentence ever written.

    I have written before about why I don’t wait to buy or rebalance on dips in my TSP. The math just doesn’t favor that approach historically over the long term. While that approach would have worked out better this year, in four of the five previous years that “balance” would have cost me a lot of money.

    In my other accounts, when I see a sector appear to be oversold I will sometimes shift assets towards that sector or, more often, dig up some spare cash to try to take advantage of what I think is a short term market inefficiency. I think right now we are seeing a good buying opportunity for both small caps and emerging markets, but we could be in for some rocky weeks before things sort themselves out.

    The divergence between the S Fund and C Fund this year is certainly unusual (although not unique) from a historical perspective. I will write about why I think that has happened, and what impact that will have on my allocations in my next update (which I will try to get out a little earlier this month).

    Good luck out there.

    The TSP Allocation Guide

    Thomas D

    I’m glad this message and question was here. I was worried about ‘staying the course’ with all S fund in my TSP. I had to put a bit into G and some into C to hold a little diversification like Quinn stated. I like trying to get a total market index with a ration of 3:1 or 4:1 C to S fund. It seems the S fund is a dangerous fund to hold right now 100%.

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