TSPwire Blog

13-Jul: TSP Weekly Allocation Alert

ee@tspwire.com — Mon, 14 Jul 2008 02:59:00 GMT

I Fund	C Fund
50%	50%

Good evening, TSPwire Tactical Investor!

Stop worrying, and Learn to Love the Bear. People yanked $39 billion out of US stock market so far this year. But if you are still in your saving and investing years, a bear market is a gift from the financial gods – and the longer it lasts, the better off you will be. Instead of the running away from the bear, you should embrace him.

Investing is simple: diversify, keep costs low, buy and hold. But simple is not easy to do in markets like we have right now. However, people that can take the pain of a bear market, that seems to drop another 1% almost every day, will ultimately triumph, by patiently amassing greater and greater equity positions at better and better prices.

For the next week we are keeping our allocation at the same level:: 50% C Fund and 50% in I Fund.

Jun-29: TSP Weekly Allocation Alert

ee@tspwire.com — Mon, 30 Jun 2008 02:22:00 GMT

I Fund	C Fund
50%	50%

Good evening, TSPwire Tactical Investor!

Rough days for the markets have a way of converging around the end of a quarter, particularly since the credit crunch began. With one more day before the end of the second quarter, the Dow Jones Industrial Average on Friday fell 0.9% (19.9% from its October 2007 record – 20% constitutes a bear market).

In the latest quarter, investors weary of persistent pressure from credit, housing and commodities markets have been pulling money from mutual funds and hedge funds – forcing firms to sell stocks and other liquid assets to raise cash.

The good news is that overall market now is beginning to look more attractive based on any number of metrics. For example, the SP 500 (C Fund) now trades at a price-earnings multiple of about 15 times this year’s expected earnings, which is lower than the 10-year P/E average of 18.7 meaning that stocks in SP 500 are trading at cheaper level.

For the next week we are keeping it at the same level: 50% C Fund and 50% in I Fund.

22-Jun: TSP Weekly Allocation Alert

ee@tspwire.com — Sun, 22 Jun 2008 19:34:00 GMT

I Fund	C Fund
50%	50%

Good evening, TSPwire Tactical Investor!

Stocks prices on Friday dropped to the levels last seen in March, back when investors feared that the global financial markets were on the verge of collapse.

That earlier selloff had all the hallmarks of a panicky run to the exits. This time it is something more basic: a realization that the combination of the credit crunch and higher energy prices is causing more prolonged harm to corporate earnings than many investors had expected. And unlike the Fed’s bailout of the financial system, these are problems that are unlikely to be solved with a quick fix.

The dollar fell Friday after crude oil prices rebounded and U.S. stocks plunged ahead of next week’s decision on U.S. interest rates. The dollar traded in a depressed range as a recent string of poor economic data in the past few days appears to limit the Feds ability to raise its benchmark interest rate. Investors expect the Federal Open Market Committee to keep the interest rate on hold during meeting next Wednesday.

While we can not predict which way the U.S. Stock market will move next, we see no reasons for dollar to rebound against major currencies. Our current allocation should benefit from falling dollar and therefore we are keeping it at the same level: 50% C Fund and 50% in I Fund.

08-Jun: Weekly TSP Allocation Alert

ee@tspwire.com — Mon, 09 Jun 2008 01:47:00 GMT

I Fund	C Fund
50%	50%

Good evening, TSPwire Tactical Investor!

The likelihood that the U.S. in a recession appeared to increase Friday, following weeks of hopes that the country might be skirting one.

Unemployment rose sharply and payrolls shrank for the fifth consecutive month. The economy news came on a day that oil surged to record prices, the dollar weakened and the Dow Jones Industrial Average plunged nearly 400 points. The deteriorating job numbers led markets to scale back the odds that the Federal Reserves will boost short term interest rates this fall to fight with inflation.

The jobless rate posted its largest one month gain in two decades, rising to 5.5% in May from 5% in April. The rise in unemployment has been accompanied by higher food and energy prices.

This week we will keep our allocation at the same level: 50% C Fund and 50% in I Fund.

Jun-01: TSP Weekly Allocation Alert

ee@tspwire.com — Sun, 01 Jun 2008 19:14:00 GMT

I Fund	C Fund
50%	50%

Good evening, TSPwire Tactical Investor!

On Friday stock markets struggled amid rising oil and gas prices, and a mix economic news that did little to temper fears about a slowdown. SP 500 (C Fund) gained 0.2% for the week and about 1% for the month of May.

Stocks sank last week as oil prices hit an all-time high around $135 a barrel and investors backed off ahead of a long Memorial Day weekend. But this week, stocks have been on the rise as the dollar has firmed up and oil prices have backed off a bit.

A Thursday report showed first-quarter GDP growth was better than initially reported, while Friday’s economic news was mixed. Reports showed an uptick in personal income, in-line inflation, weaker consumer sentiment and continued weakness in manufacturing.

At this point we do not see a reason to change our allocation. For the next week we will keep it at the same level: 50% in I Fund and 50% in C Fund.

May-18: TSP Weekly Allocation Alert

ee@tspwire.com — Mon, 19 May 2008 01:20:00 GMT

I Fund	C Fund
50%	50%

Good evening, TSPwire Tactical Investor!

A record high in crude oil and a consumer confidence reading that recalled the 1980s recession hampered the stock market Friday, leaving major indicators mixed but up for a week. Oil futures finished up $2.17 at a records settlement of $126.29, boosted by a report from Goldman Sachs commodity analysis, who said investors are underestimating the inevitability of further increases in crude and other raw materials. Other commodities followed crude higher on Friday.

The University of Michigan issued a surprisingly weak reading of its consumer confidence index, which hit its lowest point since June 1980. The session capped a week in which investors shifted some of their attention from slowdown in US economic growth to the question of when companies might gain increased flexibility to pass along commodity costs to consumers, prompting a full blown bout of inflation.

Next week we will keep our allocations at the same level: 50% in I Fund and 50% in C Fund.

May-11: TSP Weekly Allocation Alert

ee@tspwire.com — Sun, 11 May 2008 22:39:00 GMT

I Fund	C Fund
50%	50%

Good evening, TSPwire Tactical Investor!

Wall Street’s optimism confronted reality during the week. Reality won.

American International Group (AIG) dropped 8.8%. The insurer late Thursday posted $7.8 billion loss and unveiled the plan to raise $12.5 billion in capital. General Motors (GM) was the second-worst blue-chip after AIG falling 4.1%. FedEx also added some negative news to the mix. After the closing bell, the shipping company, an economic bellwether, warned that it will miss expectations because of rising fuel prices. Its shares fell 3%.

Stocks also were hurt by the climb in oil prices (passed $125 per barrel). Commodity prices can weigh on economic growth and stocks. Basic materials and energy sectors were the worst-performing sectors on Friday, suggesting that high prices will crimp demand. And though the worst of the credit crunch may be over, its economic effects seem to be lingering. The Commerce Department reported the trade deficit shrank in March as imports and exports fell.

Stocks were due for a break. After touching bottom on March 11, US stocks bounced back 10-11% to its highest level of the year when the week began. We believe that this week we observed a temporary adjustment and there is nothing to worry about.

Next week we will keep our allocations at the same level: 50% in I Fund and 50% in C Fund.

May-04: TSP Weekly Allocation Alert

ee@tspwire.com — Mon, 05 May 2008 02:47:00 GMT

I Fund	C Fund
50%	50%

Good evening, TSPwire Tactical Investor!

It was a respectable week for stocks overall, helped by another cut in short-term interest rates by Federal Reserve. While investors responded positively to the employment report, analysts said it reflects a stalled economy. Friday, the Fed unveiled an expansion of its Term Auction Facility to provide extra cash to struggling banks.

The Standard and Poor 500 index (C Fund) gained 1.1% for the week. Treasury bonds fell on jobs report, sending yields higher. The dollar gained against the euro and yen.

For this week we will keep our allocation at the same level: 50% in I Fund and 50% in C Fund.

Apr-27: TSP Weekly Allocation Alert

ee@tspwire.com — Mon, 28 Apr 2008 02:18:00 GMT

I Fund	C Fund
50%	50%

Good evening, TSPwire Tactical Investor!

Investors shrugged off soaring oil prices and crumbling consumer confidence to push stocks higher Friday with a hope the credit crisis might be waning. The consumer survey also found that inflation expectations are rising. Underlining that worry, crude oil surged.

Some Wall Street analysts believe that the worst may be over. Oil hit another record high but has pulled back. The dollar has finally started to show some signs of life. And for the most part, corporate earnings were pretty good. There have been no more major bombshells from financial institutions, a sign that six rate cuts since last September and massive injections of liquidity into the banking system may be working.

Overall we still feel very good about our current allocation: 50% in I Fund and 50% in C Fund.

Apr-05: TSP Weekly Allocation Alert

ee@tspwire.com — Sat, 05 Apr 2008 17:03:00 GMT

I Fund	C Fund
50%	50%

Good evening, TSPwire Tactical Investor!

The U.S. economy lost 80,000 jobs in March, the biggest drop in five years, as weakness in the labor market spread beyond housing and finance to engulf a broad swath of businesses. The bigger than expected employment drop keeps pressure on policy makers at the Federal Reserve to cut interest rates aggressively when they meet at the end of April.

Stocks mounted a valiant effort to move higher Friday in the face of bad news about the economy. Then the air steadily leaked out of the market as worries mounted that Wall Street’s credit crunch is spreading into other sectors. Meanwhile the dollar weakened further against the euro and yen.

Despite a flurry of bad news in recent weeks, stocks have been on a solid upward trajectory. The advance started on March 11, when the Fed unveiled a plan to lend certain Wall Street banks as much as $200 billion of its own Treasury bonds and bills for 28 days. The move raised hopes that it would help thaw the credit crisis that has caused financial markets to seize up. Several other Fed initiatives have helped prop up stocks since, including its bailout of Bear Stearns, which was purchased at a fire-sale prices by J.P. Morgan Chase.

This week we will keep our allocation at the same level: 50% C Fund and 50% in I Fund.