Good Morning, I’ve come to understand that I am never truly brief. However, given that it’s a holiday week and we are all busy with things other than the market I will attempt, again, to keep it short. 2024 has been an interesting year. Some of the returns have been phenomenal. On the surface it has been a really good year. Under the surface it has been a little less. The big news has been the Fed’s pivot from a policy of tightening to one of loosening monetary policy. While the returns have been good it has been a volatile year. This is especially true when considering the effect that a heavily contested Presidential Election had on the market. Between, the two issues it seemed like the market was always confused and you all know well that the market prefers certainty and that is what it got when the election was finally over. Yes, the buy and hold crowd had yet another year to crow about. At least where we’re concerned. We spent well over half our year getting used to our new post pandemic system. By that time we were eating the dust of a lot of the other systems. That said, we did as well as anyone in the last four months of the year and will end with a positive return. I’ll take that and be thankful. The main thing right now it we are ready for 2025. There will be no excuses and not regrets. We will either return to out performance we have been accustomed to over the years or we will not. I must say that I am extremely encouraged. I ran the new system all year long on my portfolio on the street and had the best return that I have ever made in my entire investment career. Albeit it was with individual stocks and not the ETF’s that we use in TSP. I’m sure that the same kind of success can be achieved to a lesser degree in thrift. We will see.
The action in recent days has been somewhat negative. It appears that there is a lot of profit taking going on after traders experienced stellar returns for the year. The important thing to understand about this profit taking is that it is not a function of a poor market but rather the result of a strong market. We are not heading into a protracted downturn. The market is still healthy and ready to run. It’s simply a function of investors wishing to take profits before the end of the year and don’t be surprised if it continues into the New Year before everything resets. There will be investors that will want to take their profits after the first of the year so they will be on next years taxes. After that is done things should settle down. The best strategy right now is to be positioned for the rebound that in the market that will occur once the profit taking is complete. The market should move higher in 2025 with back winds from deregulation and a favorable tax structure. However, there may be some resistance as well in the form of sticky inflation and tariffs. We will just have to see how it plays out. Nevertheless, stocks should find sufficient support to move higher. For now we will remain invested at 100/S but won’t hesitate to move to the C Fund should that chart excel. Right now though, neither the chart for the S Fund or the C Fund has much of an advantage over the other with fundamentals clearly favoring the S Fund. Thus we will hold through the profit taking and see how it goes in 2025. I’ll cut it short and end here today. Happy New Year to you all!!! God bless you and yours! Scott
