| "Sell in May and Stay Away" Words to live and | | | | 3.616667% annual increase based on only two |
| invest by? I don't know who coined the phrase | | | | trades per year. |
| but I did a bit of research and yes this strategy | | | | From 2001 through 2005 the C Fund (based on |
| would have worked out for you is you had | | | | the S&P 500) annual average was only 2.22%. Its |
| implemented it over the life of the TSP | | | | average gain October through May was 9.24% |
| retirement account. Of course we know past | | | | while it's June through September average was an |
| performance does not guarantee future results | | | | appalling 7.02% loss. Utilizing the same strategy as |
| but there is something here that makes this | | | | above, our average rate of return would have |
| investor think that just maybe there is something | | | | jumped from an anemic 2.22% to a healthy |
| more to the story this time. | | | | 11.38%. That is an amazing increase of over 9% |
| There are five funds available in the Thrift | | | | based on just two trades per year. |
| Savings Plan. | | | | Since its inception in 2001 the S Fund (based on |
| The C Fund is based on the S&P 500 | | | | the Wilshire 4500 index) has averaged 9.314% |
| The F Fund is designed to match the bonds in the | | | | and the I Fund (based on the EAFE index) |
| Lehman Brothers U.S. Aggregate (LBA) index. | | | | averaged 6.56%. They show the same pattern of |
| The G Fund invests in short-term U.S. treasuries | | | | gains October through May, with gains of 14.05% |
| The S Fund follows the Wilshire 4500 index | | | | for the S Fund and 10.368% for the I Fund |
| The I Fund follows the EAFE index | | | | annually during those eight months. They also |
| From its inception in 1988 through the end of | | | | continue the S Fund pattern of losses Jun through |
| 2005 the C Fund (based on the S&P 500) has | | | | September, a 4.736% loss for the S Fund and |
| averaged 12.61556% per year. In the months | | | | 3.808% loss for the I Fund. Using the same |
| October through May it averaged12.87611%. From | | | | strategy of eight months in the S and I funds and |
| June through September it averaged -0.26056%. | | | | four months in the F Funds, you would have |
| For the same 18 year period, the F Fund | | | | realized additional gains of 6.336% for the S Fund |
| averaged 3.356111% for the four months June | | | | and 5.378% for the I fund brining your rate of |
| through September. Had you sold all of your | | | | return to 15.65% for an S+F strategy and |
| stock C Fund on May 31 and moved all your | | | | 11.938% for an I+F strategy. |
| money into the F Fund and then moved all of | | | | What do you think about this? Join the TSPcenter |
| your money from the F Fund back to the C Fund | | | | forum and let me know. My gut tells me we are |
| on September 30th, you would have realized a | | | | in for a bad summer. Of course that could be a |
| 3.616667% per year increase in your rate of | | | | result of the pepperoni pizza I just ate. |
| return over 18 years. Let me repeat this, a | | | | |