2022 TSP performance: Stocks’ worst start since WWII

The performance of the TSP in April 2022 reflects the worst performance of the stock market and most Thrift Savings Plan (TSP) funds in months. Inflation, the Russian-Ukrainian war and general negative sentiment about the country’s direction weighed on financial markets.

TSP performance in 2022 and world events

69% of likely US voters now think the country is heading in the wrong direction according to a recent poll. Or, put another way, 31% think the country is moving in the right direction.

As shown below, stock prices show a similar negative response for the month, year-to-date and for the past 12 months.

Those of us who shop for gas, eat out, or just shop at a grocery store have noticed that inflation is in full swing and rising every month. To put that into perspective, inflation is higher than it has been for over 40 years.

COVID may or may not recede. He may be preparing to start infecting people again with a new version of the disease.

Russia has invaded Ukraine in the first invasion of another country in Europe since World War II and the Russian leader is threatening to use nuclear weapons to get what he wants with the invasion and is also threatening NATO countries helping Ukraine.

While many Americans thought we were entering an era of greater national unity, that fanciful image may have dissipated. Even a symbol of the strength of American entertainment, Mickey Mouse, is in trouble and deeply embroiled in a political dispute. The Walt Disney Company has strayed into controversy over a Florida law titled “Parental Rights in Education” or labeled “Don’t Say Gay” by political opponents of the law.

Florida’s new law says sexual orientation classes are banned from kindergarten through third grade. Why the executives of one of America’s biggest entertainment companies providing children’s entertainment thought it was a good idea to throw its clout and entrenched reputation behind a contentious social issue like this isn’t not clear.

What is clear is that Disney’s stock price has fallen from a high of $189.22 to $111.36 and now there is an ongoing shake-up in the management mix of the company. And, after weighing in on the political quagmire, the state of Florida passed a law revoking the “special district” planned for the Disney corporation that allowed the corporation to operate effectively as its own government. If the law goes into effect, there will be a significant impact on the company’s bottom line as well as the stock price that the company has already experienced.

So no national unity on issues ranging from social issues like proper entertainment to political issues – most of which are usually partisan – and a general belief that the country is heading in the wrong direction.

All in all, it’s no big surprise that the stock market is down so far in 2022.

Impact on the performance of the TSP 2022

Returns for Thrift Savings Plan (TSP) investors are determined by what happens in the stock market. So far in 2022, stocks are having a harder time than Disney executives in Florida.

The S&P 500 Index (the index on which the TSP Fund C is based) fell 8.8% in April. This index is also down 13.8% so far in 2022. This is the worst start to the year for this index since World War II.

The Thrift Savings Plan did not exist during World War II, but the TSP funds closely track their respective indices for stocks.

Fund C lost 8.2% in April. It is now down 12.91% so far in 2022. Fund S is down 10.57% in April and it is now down 18.83% so far in 2022. Fund I is down 12.73% for the year and lost 6.39% in April.

All negative funds except fund G

The only TSP fund with a positive return for the month was fund G. It is now up 0.65% in 2022.

All Lifecycle funds posted negative returns in April. Looking at the chart displaying returns for April, YTD and the last 12 months, all funds in almost all categories have a negative return.

The main exception is Fund G which is positive in all three categories and Fund C which has returned 0.21% over the past 12 months.

TSP performance for April 2022, last 12 months and year to date

Here are the TSP returns for all TSP funds for April 2022 and for the last 12 months.

Fund G Fund F Fund C Fund S I finance
Month 0.20% -3.75% -8.72% -10.57% -6.39%
12 months 1.63% -8.31% 0.21% -18.75% -8.87%
YTD 0.65% -9.33% -12.91% -18.83% -12.73%
All TSP returns are available at TSPDataCenter.com.
L Income L 2025 L 2030 L2035 L 2040
Month -2.04% -3.59% -5.12% -5.63% -6.12%
12 months -0.46% -1.57% -3.10% -3.64% -4.15%
YTD -3.32% -6.04% -8.58% -9.48% -10.33%
L 2045 L 2050 L2055 L2060 L2065
Month -6.56% -6.97% -8.11% -8.11% -8.11%
12 months -4.66% -5.08% -5.82% -5.82% -5.83%
YTD -11.10% -11.80% -13.56% -13.56% -13.57%

Conclusion

April is often a good month for stock prices, as consumers often increase their spending. When April is not a good month for stock prices, stock investors may develop a pessimistic view of how their investments will perform over the next eight months.

No one can predict what will happen in the coming months. We know that the US economy unexpectedly contracted by 1.4% in the first quarter. Inflation in March jumped to 8.5%. The Federal Reserve raises interest rates in an attempt to reduce price inflation without sending the economy into recession.

And, as usual, world events will have an impact. If the Russian leader decides to drop a nuclear weapon on another country, as he threatens to do, stocks would drop like a stone, at least in the short term. On the other hand, if the war in Ukraine unexpectedly ends satisfactorily, stock prices will rise.

© 2022 Ralph R. Smith. All rights reserved. This article may not be reproduced without the express written consent of Ralph R. Smith.

Comments are closed.