“Sell in Might and Stay Away” Words to reside and invest by?  I don’t know who coined the phrase but I did a bit of investigation and yes this technique would have worked out for you is you had implemented it over the life from the TSP retirement account.   Obviously we know past performance does not guarantee long term outcomes but there is something here that makes this investor think that just maybe there is certainly something more for the story this time.

There are five funds available within the Thrift Savings Plan. 

The C Fund is depending on the S&P 500
The F Fund is designed to match the bonds within the Lehman Brothers U.S. Aggregate (LBA) index.
The G Fund invests in short-term U.S. treasuries
The S Fund follows the Wilshire 4500 index
The I Fund follows the EAFE index

From its inception in 1988 through the end of 2005 the C Fund (based on the S&P 500) has averaged 12.61556% per year.  Inside the months October through Might it averaged12.87611%.   From June through September it averaged -0.26056%.   For the same 18 year period, the F Fund averaged three.356111% for the four months June through September.   Had you sold all of your investment C Fund on May possibly 31 and moved all your cash into the F Fund and then moved all of one’s funds from the F Fund back again to the C Fund on September 30th, you would have realized a 3.616667% per year boost in your pace of return over 18 a long time.  Let me repeat this, a 3.616667% annual boost based on only two trades per year. 

From 2001 through 2005 the C Fund (depending on the S&P 500) annual average was only 2.22%.  Its average gain October through Might was 9.24% while it’s June through September average was an appalling 7.02% loss.  Utilizing the same method as above, our average fee of return would have jumped from an anemic 2.22% to a healthy 11.38%.  That is an amazing boost of over 9% depending on just two trades per year.

Since its inception in 2001 the S Fund (depending on the Wilshire 4500 index) has averaged 9.314% and the I Fund (based on the EAFE index) averaged 6.56%.   They show the same pattern of gains October through May, with gains of 14.05% for the S Fund and 10.368% for the I Fund annually throughout those people eight months. They also continue the S Fund pattern of losses Jun through September, a 4.736% loss for the S Fund and three.808% loss for the I Fund.  Using the same technique of eight months inside the S and I funds and four months within the F Funds, you would have realized additional gains of 6.336% for the S Fund and five.378% for the I fund brining your fee of return to 15.65% for an S+F method and 11.938% for an I+F method.  

What do you think about this?  Join the TSPcenter forum and let me know.  My gut tells me we are in to get a bad summer.  Needless to say that could be a result with the pepperoni pizza I just ate.

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