Stocks

2022 TSP Performance: Worst Start For Stocks Since World War II

The TSP’s performance in April 2022 reflected the worst showing for the stock market and most of the funds in the Thrift Savings Plan (TSP) in months. Inflation, the Russia/Ukraine war, and a general negative sentiment about the direction of the country have taken a toll on financial markets.

TSP Performance in 2022 and World Events

69% of likely American voters now think the country is heading in the wrong direction according to a recent poll. Or, stated differently, 31%, think the country is headed in the right direction.

As noted below, stock prices are showing a similar negative response for the month, year-to-date, and for the last 12 months.

Those of us who buy gas, eat in restaurants or just shop in a grocery store have noticed inflation is in full swing and going higher each month. To put this in perspective, inflation is higher than it has been in more than 40 years.

COVID may, or may not, be receding. It might be gearing up again to start infecting people 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 also making threats to NATO countries helping Ukraine.

If there are many Americans who thought we were entering an era of greater national unity, that fanciful image may have dissipated. Even a symbol of America’s entertainment strength, Mickey Mouse, is in trouble and deeply embroiled in a political dispute. The Walt Disney corporation wandered into the controversy over a Florida law entitled “Parental Rights in Education” or labeled the “Don’t Say Gay” bill by political opponents of the law.

The new Florida law states that lessons about sexual orientation are banned in kindergarten through third grade. Why executives at one of America’s greatest entertainment companies that provides entertainment for children thought it was a good idea to throw its weight and its well-established reputation behind a controversial social issue like this is not clear.

What is clear is that the Disney stock price has gone from a high of $189.22 to $111.36 and there is now an ongoing shake-up in the company’s executive line-up. And, having weighed into the political morass, the State of Florida has passed a law revoking the “special district” provided for the Disney company which enabled the corporation to effectively function 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 hit to the stock price the company has already experienced.

So, no national unity on issues ranging from social issues such as appropriate entertainment to political issues—most of which are generally partisan—and an overall belief the country is heading in the wrong direction.

All in all, it is not a big surprise the stock market is down so far in 2022.

Impact on 2022 TSP Performance

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

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

The Thrift Savings Plan was not around in World War II but the TSP Funds closely track their respective indices for stocks.

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

All Funds Negative With Exception of G Fund

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

All of the Lifecycle Funds had negative returns in April. In looking at the chart displaying returns for April, the year-to-date, and the last 12 months, all funds in almost every category have a negative return.

The major exception is the G Fund which is positive in all three categories and the C Fund which has a return of 0.21% for the past 12 months

TSP Performance for April 2022, Past 12 Months, and Year-to-Date

Here are the TSP returns for all of the TSP Funds for April 2022 and for the past 12 months.

 G Fund F Fund C Fund S Fund I Fund
Month 0.20% -3.75% -8.72% -10.57% -6.39%
12 Month 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 L 2035 L 2040
Month -2.04% -3.59% -5.12% -5.63% -6.12%
12-Month -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 L 2055 L 2060 L 2065
Month -6.56% -6.97% -8.11% -8.11% -8.11%
12-Month -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 ramp up their spending. When April is not a good month for stock prices, those investing in stocks may develop a pessimistic outlook on how their investments will perform over the next eight months.

No one can predict what will happen in the coming months. We do know that the American economy unexpectedly contracted 1.4% in the first quarter. Inflation in March jumped to 8.5%. The Federal Reserve is raising interest rates to try and tamp down inflationary prices without sending the economy into a recession.

And, as usual, world events will have an impact. Should Russia’s leader decide to drop a nuclear weapon on another country, as he is threatening to do, stocks will drop like a rock—at least in the short term. On the other hand, if the war in Ukraine unexpectedly ends in some satisfactory way, stock prices will jump up.

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

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