After almost sixth months of choppy growth, the S&P 500 and the C Fund that tracks it has almost fully recovered from the late-January selloff earlier this year:
At the end of last week, the S&P 500 hit 2,800 for the first time since early February, just 2.5% shy of the 2,872 record high that it reached back on January 26th.
Last week, however, was choppy. Investors were spooked when another round of $200 billion in tariffs against China were announced, resulting in mild sell-offs in the market. However, last week also was the beginning of this quarter’s earnings season, when most corporations begin reporting their fiscal quarter results. The big tech stocks like Microsoft, Amazon, Apple, Google, and Facebook all hit record highs last week in anticipation of their upcoming earnings reports. And all five of those stocks are among the top ten largest holdings in the C Fund.
The S Fund Has Had a Big Bull Run
While the C Fund has nearly recovered, it is the S Fund that has had the best 2018 results overall, and the best results over the past 12 months:
Over the past year, the G Fund has given mildly positive results, the F Fund has given slightly negative results due to rising interest rates, and the I Fund has struggled against a strong dollar. Right now, only the S Fund and G Fund are at record highs.
Diversification and Staying the Course
Investors that invest in the lifecycle funds, or that invest in a balanced way in general, are doing fairly well this year. All the lifecycle funds are positive over the past 12 months, but most of them are still a few percentage points under their late-January record high:
The good news is that diversified investors that continue to add money each paycheck are likely sitting on record TSP balances, or at least close to that.
Depending on how large your TSP balance already is, adding several hundred dollars per paycheck for the last 12 paychecks since early February has helped to offset the last few percentage points between current TSP fund levels and their record levels.
Not changing TSP allocations too often, staying reasonably diversified, and investing as much as possible each paycheck, is one of the most reliable ways to build TSP wealth over the long term.