I'm asked that question often, as in, will my TSP returns improve if I do this consistently? Well, think about it for a moment. What would it provide? Clearly, in a trending market with momentum, it should do just fine. It will be counterproductive however in a trendless market. What it really is, IMHO, is a moderate term momentum play.
How would it do? Let's see...
1989
G fund 8.8
F fund 13.9
C fund 31.0
LM fund 21.6
1990
G fund 8.9
F fund 8.0
C fund -3.2
LM fund 3.5
1991
G fund 8.2
F fund 15.8
C fund 30.8
LM fund 11.8
1992
G fund 7.2
F fund 7.2
C fund 7.7
LM fund 0.8
1993
G fund 6.1
F fund 9.5
C fund 10.1
LM fund 4.6
1994
G fund 7.2
F fund -3.0
C fund 1.3
LM fund 1.0
1995
G fund 7.0
F fund 18.3
C fund 37.4
LM fund 26.2
1996
G fund 6.8
F fund 3.7
C fund 22.9
LM fund 24.5
1997
G fund 6.8
F fund 9.6
C fund 33.2
LM fund 10.0
1998
G fund 5.7
F fund 8.7
C fund 28.4
LM fund 28.5
1999
G fund 6.0
F fund -0.9
C fund 21.0
LM fund 9.7
2000
G fund 6.4
F fund 11.7
C fund -9.1
LM fund 1.4
2001
G fund 5.4
F fund 8.6
C fund -11.9
S fund -9.0
I fund -21.9
LM fund 5.2
2002
G fund 5
F fund 10.3
C fund -22.1
S fund -18.1
I fund -16.0
LM fund -1.2
2003
G fund 4.1
F fund 4.1
C fund 28.5
S fund 42.9
I fund 37.9
LM fund 33.6
2004
G fund 4.3
F fund 4.3
C fund 10.8
S fund 18.0
I fund 20.0
LM fund 11.2
2005
G fund 4.5
F fund 2.4
C fund 5.0
S fund 10.5
I fund 13.6
LM fund 5.9
2006
G fund 4.9
F fund 4.4
C fund 15.8
S fund 15.3
I fund 26.3
LM fund 8.3
2007
G fund 4.9
F fund 7.1
C fund 5.5
S fund 5.5
I fund 11.4
LM fund 13.3
1989-2007 Totals
G fund 118.2
F fund 143.7
C fund 243.1
LM fund 219.9
Clearly, you would have done better during the 19 year period from 1989 thru 2007 by staying in the C fund rather than switching to the best fund of the previous month.
2001-2007 Totals
G fund 33.1
F fund 41.2
C fund 31.6
S fund 65.1
I fund 71.3
LM fund 76.3
As seen above, the Last Month (LM) fund tends to help during bear markets but loses money during bull markets. The question is..wouldn't it more productive to simply leave equities during extended bear markets and stay in during extended bull markets? What do you think?
