After the worst week on the Wall Street since 2001 a lot of investors started to speculate on what will happen next. Emotions tell us to move funds from bonds (F Fund) into stocks (S, C & I Funds) but emotions are the worst enemies of investors. In order to out-perform market in a long run we have to keep emotions in check and stick with the system.

Based on scorecard results of our models C Fund got the lowest score and therefore we will stay out of it this week. S Fund came second, I Fund third and the winner is … F Fund. Based on weighted results TSPwire allocation for the next week will be 10% in S Fund, 15% in I Fund and 75% in F Fund.

Last week: China, Greenspan, problems with sub-prime mortgages and terrorist attacks in Afghanistan sparked global sell-off. Prices on gold also fall to 6-weeks low (FYI gold is generally used by hedge funds as a “safe haven” when stocks fall). US Treasuries provided the only safe place and a lot of investors did ran for that door. As a results of big cash inflows bonds’ yields went down and F Fund price went up.

Overall outlook on economy did not change tremendously. US GDP growth might slow down in the second half of the year but our economy should not turn into a recession. (Hopefully Greenspan will stay quite for a while too.) :)

Based on our estimations in a short run F Fund should outperform its’ peers.

v/r

TSPwire Staff

"Honor, Fides, Scientia!"