Good Evening, Techs woke up a pulled the market marginally higher offsetting yet more weakness in bank and financial stocks. I still don’t understand the weakness in the financial sector. Well, actually I do but I don’t. Bond prices continue to strengthen even with increasing interest rates. Basically bond investors don’t believe the economy will support the interest rate increases and that the Fed will have to back off of their plans for further increases. So how does this effect banks? When the price of bonds go up their yields go down. In other words, the bonds don’t pay as much and this decreases the profit margins of banks. Well the bond investors may be right but it says here that if by no small feat some form of tax reform is passed they will be singing the blues. If that scenario occurs it will be those holding bank stocks that will profit and those holding bonds that will lose. At any rate I’m not selling the financial stocks that I hold just yet….. Oh yeah, one more thing. The Russell 2000 rebalanced today cutting some stocks and adding some new ones. They do that each June and that always causes the volume to rise. It also causes some price fluctuation among the effected small cap stocks. So don’t make any investment decisions based on what small caps did today. Especially if you are looking at volume.
The days trading left us with the following results: Our TSP allotment gained +0.25%. For comparison, the Dow was flat at -0.01%, the Nasdaq added +0.46%, and the S&P 500 was up +0.16%. It was an odd day with bifurcated action that had tech going up and financials goin down added to the rebalancing of the Russell 2000. Odd indeed….
The weeks action left us with the following signals: C-Neutral, S-Neutral, I-Neutral, F-Neutral. We are currently invested with 100% in the I Fund. Our allocation is now +9.15% on the year not including the days results. Here are the latest posted results:
| 06/22/17 |
|
|
|
Prior Prices |
| Fund |
G Fund |
F Fund |
C Fund |
S Fund |
I Fund |
| Price |
15.3563 |
17.9755 |
33.9022 |
43.7492 |
28.0947 |
| $ Change |
0.0010 |
0.0032 |
-0.0153 |
0.1168 |
0.0514 |
| % Change day |
+0.01% |
+0.02% |
-0.05% |
+0.27% |
+0.18% |
| % Change week |
+0.04% |
+0.12% |
+0.07% |
-0.19% |
-0.34% |
| % Change month |
+0.14% |
+0.44% |
+1.05% |
+1.67% |
-0.09% |
| % Change year |
+1.12% |
+3.02% |
+9.81% |
+6.72% |
+14.20% |
| |
L INC |
L 2020 |
L 2030 |
L 2040 |
L 2050 |
| Price |
18.9805 |
25.7078 |
28.7498 |
31.0096 |
17.8071 |
| $ Change |
0.0036 |
0.0081 |
0.0138 |
0.0178 |
0.0118 |
| % Change day |
+0.02% |
+0.03% |
+0.05% |
+0.06% |
+0.07% |
| % Change week |
+0.02% |
-0.01% |
-0.04% |
-0.06% |
-0.07% |
| % Change month |
+0.29% |
+0.42% |
+0.57% |
+0.65% |
+0.72% |
| % Change year |
+3.10% |
+5.03% |
+7.13% |
+8.16% |
+9.07% |
Now lets take a look at the charts. All signals are annotated with green circles. If you click on the charts they will become larger.
C Fund:
S Fund:
I Fund:
F Fund:
There’s nothing really new to add here. There is something old. Many folks that are new investors or at least new to thrift (and I was one of them once) don’t understand when the price posted for the I Fund by TSP doesn’t match the closing price for the MSCI EAFE that it tracks. Not always, but from time to time they are different. I had a couple questions on that today so I though I would include it again here as I’m sure there are many more who were wondering and didn’t E mail me. Here is my best explanation: The I Fund is designed to track the Morgan Stanley EAFE which stands for Europe AustrailAsia Far East. It is an Exchange Traded Fund or ETF as they are commonly called made up of an collection of stocks from Europe, Australia, Asia, and the Far East. The I Fund tracks EAFE but it is it is not the EAFE. So they may not close at the same price but they go pretty much the same place….This is mainly due to the fact that like all good government offices TSP shuts down at 4:00PM Eastern Time which as I have been told results in Thrift Funds being closed out before the final bell rings in New York. That results in a difference in the price that often shows up in the I Fund on the next trading day. Although, the prices are different for a short time the I Fund and the EAFE ultimately end up in pretty much the same place. The more movement in price that occurs during the last 30 minutes of trading the longer it takes for the two funds to agree even though the I Fund is tracking the EAFE. A simple way to put it is that they take different roads but end up at the same destination…. One other thing that occurs that causes the prices to differ is when maintenance Fees are taken. Both Morgan Stanley and Thrift deduct fees necessary to operate the funds. There are two things that will occasionally make the price between the I Fund and EAFE differ. #1 The Fees are different. Actually they are less for TSP. You all gain ground there. #2. The time that the fees are deducted from the funds are different. Thus there are times that the prices of the two funds differ even though they are invested in basically the same thing. This is the way it was explained to me several years ago. This used to drive me nuts, but I just came to realize that occasionally they will be different at least for the short run. The bottom line is this. If you watch the I Fund closely, the price is usually adjusted the next day to agree with whatever the EAFE did the day before. OK, there it is! Have a great weekend and forget about this stuff. It will be there on Monday! May God continue to bless your trades.
God bless, Scott 
***Just a reminder that you can review the performance of our allocation at the Web Site TSPTALK.com in the autotracker section under the screen name KyFan1.
I produce and publish this blog as both a ministry and for the benefit of any Federal Government Employee. This is done to offer you some guidance as to how to approach your retirement more financially successful. When it is time for you to retire, I recommend you utilize the services of a Professional Money Manager, who works with a reputable investment firm. He understands the guidance you have already received and he can manage your savings assets utilizing a more advanced investment program into the future.
If you would like to receive more information about this introduction, please feel free to contact me at KyFan1@aol.com.
