Old Returns

Our service began in 2006. Before that, we spent several years developing our initial TSP strategy. Since then, we’ve tested countless strategies and seen almost every type of market condition.

Below is our performance from 2006-2011.

* 60/40 = 60% stock fund / 40% bond fund (20% in G, F, C, S and I Fund)
** CAGR = Compound Annual Growth Rate

We outperformed most of the TSP Funds. The F Fund had the highest return. It’s also the least popular TSP fund according to an audit. So in reality, very few TSP investors achieved the F Fund’s 6.68% annualized return in this period.

The S Fund had a slightly higher return than we did. But it had a much larger loss in 2008.

Our overall performance was quite good from 2006-2009. But after disappointing results in 2010-2011, we recognized some problems with our approach.

It relied on relationships between stocks, interest rates and commodities. These relationships produced successful timing indicators for several decades. They continued working well in 2006 when we started our service.

But the world changed during the financial crisis of 2008-2009. Our indicators didn’t perform the same way. Other analysts and money managers noted the same thing.

In 2011, we tested many other systems. Very few performed well in the long-term. In fact, only two concepts–trend and seasonality–stood the test of time and changing market conditions. So in 2012-2013, we simplified our strategy by only analyzing trend and seasonality.

** CAGR = Compound Annual Growth Rate

We had two goals: (1) get most of the stock market’s gain during bull markets (2) limit exposure to stocks during bear markets.

We met our first goal by getting double-digit returns in a strong bull market. There were no significant losses, so we couldn’t test its bear market performance.

In 2014, we simplified our strategy even further. We decided to follow the market’s trend. Many studies show the effectiveness of trend-following or “momentum” investing. To determine the trend, we used a medium-term time frame that worked very well from 1997-2013.

In 2014-2015, the markets had a lot of back-and-forth movement, or whipsawing. For example, the C Fund might be very strong for a few months. Then it would suddenly weaken while the F Fund started to rally.

This movement was often just “noise,” not a long-term trend change. But noise can prompt you to switch funds too often, hurting performance.

** CAGR = Compound Annual Growth Rate

After seeing problems with a pure trend-following strategy, we did more research and offered several strategies from 2016-2020. Two core ideas were using economic data (employment, housing, manufacturing, etc.) and identifying short periods when stocks performed best during the year. Our two primary strategies were the Legacy and 50-Day. You can see their 2016-2020 performance below.

* 60/40 = 60% stock fund / 40% bond fund (20% in G, F, C, S and I Fund)

Legacy uses economic data to “filter” trends in the market. If the market suddenly falls 10-20% but economic data remains strong, it remains in stocks. Every modern bear market has been accompanied by a recession and declining economic indicators. So it makes sense to only move out of stocks if the market declines AND economic indicators show weakness. Market corrections and mini-financial crises end quickly if the economy is strong.

This strategy worked well but suffered through some pretty large losses before the market corrected. This most notably happened in 2018 and the March 2020 COVID-19 crash.

Our other primary strategy was the 50 Day. This moved into stock funds during 6 to 9-day periods when stocks historically performed the best.  It’s invested in stocks about 50 days during the year–hence the name

While 50-Day had good long-term results, there was a limitation. It often had lower returns during the best years for stocks (like 2017 and 2019). This is because it’s only in stocks about 20% of the year. It misses a lot of exposure to stocks during long-term bull markets.

Starting in 2021, we found a way to combine them. If our Legacy model has a “buy” signal for stocks, we have a 50% allocation in stock funds. When we enter a “50-Day” period, our strategy moves to 100% stocks for brief periods. This diversifies our approach by using three factors: market trend, economic data and seasonality.

All strategies (and money managers, hedge funds, etc.) have “off” years when they don’t perform as well. While there’s no way to completely overcome this, combining multiple strategies in a single model gives smoother, more consistent results than relying on a single strategy.

Another benefit of combining strategies into a single approach is that subscribers don’t need to choose a strategy–unless they’re very risk averse. Our primary strategy is suitable for most TSP investors. For those who need access to their TSP funds within the next couple of years, we offer a lower risk version. It’s typically invested 25% in stock funds and moves to a 75% allocation during “50 Day” periods.