TSP Planning Report – July 2019

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TSP Planning Report July 2019

Facts:

  • Unemployment is at 3.7%.
  • 1st Quarter GDP was 3.1%, according to the third estimate.
  • PMI posted another month of expansion, with the index reading to 51.7%.
  • The S&P 500 (C Fund) gained 7.04% during the one month of June.

Assessment:

  • Unemployment is at historically low levels, again, although slightly increased from last month.
  • PMI still continues it’s impressive streak, performing above-average (50% is considered average) for the past 30 months, although slightly lower than usual.
  • 3.1% quarterly GDP is very good.
  • The S&P 500  performance YTD is roughly 18.5%!

Bottom Line:

The broad market indicators are looking good.

I am concerned about 3 things:

  1. Trade Wars.  This is a short term concern as it is mostly a media hype.  This alone is not enough to make me adjust my posture.
  2. Interest rate cuts:  The Fed is considering further cuts.  Why?  It seems they are trying to artificially stimulate something.  I’m not clear on this yet, but it does suggest a latent weakness in the economy.
  3. The real estate market is relatively slow.  This should not be happening.  Interest rates are super low.  This should be buying season.  But it’s not.  This slow performance has been going on for 3 months.   

The above 3 points are very concerning for me.  I have adjusted my posture to be a bit more conservative.  My recommended portfolios have changed substantially.  Fewer portfolios and barely any G fund.  To my surprise, the F fund has made the list!   I believe this switch between G & F happened because interest rates have dropped so low, and because the stock yields are anticipated as being diminished, that the F fund is now needed to give a little boost.  This is very unusual, and I’d be surprised to see this last long.

No I fund – as usual.

I would suggest anyone who will be deriving income from their portfolio over the remainder of this year to proceed with caution.

If you are on the brink of retirement, consult with me before you position your TSP too aggressively. Email me stephen@stephenzelcer.com

Check out the 2 page report below.   DON’T JUST LOOK AT RATE OF RETURN.  Always view the target return of each portfolio in context of its ranges of fluctuation.

To download this month’s portfolios – Download Here

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