- As a group all contributors, both civilian and military, quite predictably invests heavily in America (3:1 ratio of S/I).
- The vast majority of the money in the TSP is from civilian federal employee contributors. In the past, this has been a group of conservative investors. Having most of their money split between a fund with essentially guaranteed principal and currently yielding about 5% per year and the S&P 500 has proven to be not a bad allocation.
- The new investor class, the military subgroup, is a completely different demographic group. They are younger, more comfortable with computers, and have the usual concerns of Generation X and Y�ers related to retirement. They may well prove to invest differently also. Having grown up with such computer games as MechWarrior, Doom, Diablo, Half-life, TombRaider, etc., combined with their younger age, they may prove to be more risk tolerant than their civilian counterparts. The best educated military in the history of the U.S., may also be more apt to take advantage of the plethora of online investing articles and other tools that older investors could only dream of a decade ago.
There is another wrinkle to the story of the TSP. Last year many military members did not sign up for the TSP. Why? Word of its deployment came somewhat late in the season and, despite an extension of the sign-up period, some were put off by factors related to a lawsuit with AMS, the contractor for the TSP record keeping system. Those issues are now past history; the lawsuit has been settled recently and the opportunity of participating in the TSP is well know amongst throughout the military.
Enrollment is increasing across all ranks. Many senior military members now close to retirement only wish that the program were available earlier in their careers when they could have taken advantage of it.
So new money from a new investment class IS flowing into the market.
For TSP participants and those eligible (all disclaimers apply, this is just my opinion):
- If you participate in the TSP are invested solely in the G fund, you MAY be investing too conservatively. Stocks, both large and small cap stocks are doing well.
- If you participate in the TSP and invest in the S fund, some of that money (however small) will go to supporting your DHB stock.
For Shorts, Longs, and Traders- some observations:
- Because DHB is part of the Wilshire 4500, a small proportion eventually goes into buying DHB stock. Who invests for the TSP S fund? Barclay�s Extended Market Index Fund. A quick look shows that Barclay�s increased position in DHB by 180,000 for the quarter ending 6/30. These shares bought represent participants that are buy-and-holders as compared to traders (helping in the effort of setting higher lows). So month after month, some DHB shares are being shifted from traders (who are all too willing to give up their shares) to buy-and-hold longs. When UBITE strikes, there are less shares to be sold in the heat of the moment as time goes by. And remember that essentially half of DHB�s shares are owned by insiders.
- There is a disproportionate amount of money in the G and F funds mostly due to the fact that the S fund was not available as an investment option until May 2001. Now that it is available, shifting of the $102B G and F funds into the $3B S fund (through interfund transfers) may be occurring. It is probably still too early to tell for sure.
No doubt though, SMALL CAP STOCKS IN THIS RECOVERY ARE HOT! Shorters of stocks that have good fundamentals could be in for an especially long, protracted world of hurt.
DHB is even HOTTER! For all the reasons previously posted by Risc as well as other posters (16973, 16549, 16723), this trend may well continue.
Regardless, new money is flowing into the market and a new investor class has entered the market!
ALL HAIL THE MILITARY!
Shorts should cover up and sleep well. Else it could be Max Payne time.
Hey sapro, nice bit of info on the TSP. I think it is a little bit of a stretch to attribute strength in any particular stock (i.e., DHB), to increased investments in a fund like S. But certainly the increased investment buoys the market in general, making further investment all the more attractive to new investors, which helps the market more, etc.
Interesting that you think there might be a shift from G and F to S. I shifted from 100% C to 50% C, 30% S, and 20% I fund when they became available. On the one hand, it is probably wishfull thinking that the most conservative investors (G fund) would suddenly switch to one of the most aggressive available funds (S). On the other hand, I wish I had been in G for the 2000 to 2002 time frame and switched to S then.