Good evening, TSPwire Tactical Investor!

It is too early to say if recent rate cut improved situation on the credit market. It might take weeks or even months before we will see some distinctive signs of improvement.

There is another interesting theory surfaced recently. Statistics shows that in the first half of this year small-cap companies (S Fund) greatly benefited from high merger and acquisition activity. Private equity funds were using cheap funds to buy out small companies like crazy. As a result now we are having small companies trading at 50% premium while valuations of large-cap companies (C Fund) stays at a very attractive level. Study suggests that investors should move their attention toward C Fund rather then S Fund. We partially agree with that theory. Valuations do not lie but at the same time improvement on the credit market will affect small-cap companies (S Fund) more then large-cap companies (C Fund). That is exactly why we are still keeping 20% of our funds in small-cap companies.

For the next week we are keeping allocation at the same levels: 50% in I Fund, 30% in C Fund and 20% in S Fund.