Facts:

• • Unemployment lowered, but not by much.  This month’s unemployment rate came in at 6.7%, compared to last month’s 6.9%.
  • PMI (Purchasing Managers Index) continued to expand (any reading above a score of 50 means expansion). This month’s reading came in at 57.5, compared to last month’s 59.3.
  • The S&P 500 (C Fund) increased 10.95% during the month of November.  The YTD return is 13.93%
  • The Fed Funds interest rate remains between 0% – 0.25%, and the Fed suggested that such rates will hold thru 2023.
  • The 3rd Q3 GDP estimate shows GDP exploding 33.4%.  This is on the heels of Q2 where GDP dropped -31.4%.

Assessment:
As we’ve seen for the past 6-7 months, Coronavirus is no longer impacting the economic outlook.  If anything, just the opposite – investors are forecasting an accelerated return to normalcy now that a vaccine is upon us.

As of the end of November, the S&P 500 is up 13.93% YTD.  Remember, the S&P 500 was down 33% at the end of March 2020.  For it to be up 13.93% means that it traversed 46% over 7 months!!!  For perspective, the G fund traversed less than 1% during the entire 2020.

For this to continue, we need business-friendly governance.  This, of course, will depend on the incoming administration.
On a related note – I’m still waiting to see how government policy will affect real estate.  Evictions and Foreclosures have been stalled.   That means the real estate business may have a drag on their recovery.  Thankfully, the TSP is not affected much by the real estate industry.

Anyone who has more than 5 year before drawing income from their TSP should consider taking a more aggressive posture going forward and use my aggressive portfolio’s below.  If you are within 5 years of retirement, you should email me to get a more customized recommendation.

DON’T JUST LOOK AT RATE OF RETURN. Always view the target return of each portfolio in context of its ranges of fluctuation.