In the most recent update at Military Update Tom Philpott reported that the "C" Fund at TSP was down more than 40% for the period of 10 Oct 2007 to 10 Oct 2008. Many who subscribed to TSP advisor web sites that urged caution are now very happy with their decision to move to the lowest risk "G" fund. Times are looking bleak at the moment.
So, the question is, when would you start investing again? Will the newsletters call the bottom and switch back to a "buy" recommendation at the correct time? Maybe, maybe not.
I prefer Mr. Philpott's recommendation to dollar-cost-average into this market. That means setting aside a predetermined monthly contribution and investing it regularly, whether the market is up or down. I do not recommend attempting to time this market.
How can this shelter you from a downturn in the market? Well, for one thing the TSP accounts are diversified, particularly if you select a portfolio that consists of all of them, not just one or two. Second, TSP accounts continue to maintain low fees, so you won't be paying advisors a significant percentage of your investment funds for advice. Third, by investing with a long-term perspective, you'll be in a position to overlook short-term losses in favor of long term growth opportunities.
I remain wildly optimistic in the future of America!