History tells us that it makes sense to stay the course and remain invested if you are still working. Image: peterschreiber.media/Shutterstock.com
By: John GrobeThe investment market has been going crazy since the beginning of April when President Donald J. Trump began his tariff wars with pretty much the rest of the world. The daily changes in market returns are enough to make one’s head spin, with the S&P 500 (the C Fund) flirting with bear market numbers (a drop of at least 20% from its previous high).
What’s a TSP investor to do? First, DON’T PANIC. We’ve had many previous bear markets since the Thrift Savings Plan was introduced on April 1, 1987 and, overall the market (as measured by the S&P 500) has prospered over that period of time.
- A bear market in 1987 resulted in a drop of 33.51%
- The 2000 – 2001 bear market saw a drop of 36.77%
- In 2002 33.75% disappeared from the S&P 500
- The “Great Recession” of 2007 – 2008 shaved 51.93% from the market
- In 2009, 33.92% was lost
- The short, COVID related bear market of 2020 dropped the S&P 500 by 33.92%
- And the 2022 sell-off took 25.43% from investors
The bear markets ranged in length from 33 days (2020) to 546 days (2000 – 2001)
After reviewing the above numbers, one might wonder why I suggested not panicking in the face of the current stock slide. Well, the S&P 500 had years of significant gains during the same period of time.
- In 1989 the index jumped 31.49%
- In 1997 it posted a 49% gain
- 1999 showed an increase of 41.6%
- 2021 saw the S&P 500 go up 39.4%
- 2022’s gain was 26.29%
- Last year the index gained 25.02%
Going back to 1987, the average annual gain of the S&P 500 (assuming that dividends were re-invested) has been 10.5%, slightly higher than the gain the market has achieved since the beginning of the Great Depression back in 1929.
History tells us that it makes sense to stay the course and remain invested if you are still working. If you are retired, consider taking income from your emergency fund or from other conservative investments you may have until markets stabilize.
John Grobe, President of Federal Career Experts, is an expert in the area of federal employee retirement and benefits. This expertise comes from his 26 year federal career in which he managed the retirement program in a 3,500-employee office of a large federal agency.
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