Good evening, TSPwire Tactical Investor!

Did not we say so?  Last week in our newsletter we said:

... the Federal Reserve artificially improved liquidity by injecting cash in the financial system. Even bigger injections were made by European central banks on Thursday and Friday. The main question now is whether the Fed will go one step further and cut interest rates. In our opinion there are no reasons to expect improvements in housing and/or sub-prime mortgages markets any time soon. Interest rate cut is the only logical solution that can improve problems with liquidity in credit markets...

On Friday Feds gave in and cut the discount rate half a percent. The discount rate, the rate the Federal Reserve charges qualified lenders, mainly banks, for temporary loans, is largely symbolic. The central bank did not change its more closely watched federal funds rate, which affects credit cards, home equity lines of credit, car loans and other consumer loan rates. That rate remains at 5.25 percent. Still it is a very important move because it allows banks to solve their temporary liquidity issues.

On Thursday markets finally touched 10% bottom of market correction and investors rushed back into stocks driving up all major stock indexes. Hopefully market correction is over and we have no where to go but up. We are keeping allocation at the same levels: 50% in I Fund, 30% in C Fund and 20% in S Fund.