Keep your emotions out of investments

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John C. Bogle, founder of the Vanguard Group of mutual funds, has a tip for federal/military folks who are investing in their company 401(k) plan: "Don't just do something; stand there."

His point: It's OK to be sensitive, but save it for your family, friends or the movies. When you invest, put your emotions on hold.

Investors who react to the ups and downs of the stock market often wind up selling when the price is low and buying back into the stock or mutual fund when the market is rising. It's equivalent to boycotting your favorite department store when it has a sale, then rushing to buy when prices have been marked up.

Despite a bad couple of days in February and March, the stock-indexed funds of the federal Thrift Savings Plan (TSP) have been rising. Thousands of federal investors bailed out of the C Fund, which tracks the S&P 500, and even more pulled money out of the international stock index I Fund last month. That was in reaction to statements, since clarified, by the former chairman of the Federal Reserve and a drop in the Chinese stock market.

In reaction to the brief period of bad news, tens of thousands of TSP investors pulled millions of dollars out of the I Fund and put it into the secure G Fund made up of special U.S. Treasury securities. Although the I Fund acts like a roller coaster, its overall progress has been up since it became an option to the 3.7 million TSP investors. The G Fund never has a bad day but, in investment terms, it is about as exciting as kissing your sister or brother.

Consider this: When the TSP converted employee accounts to shares, the starting price for each share of the fund was $10.

Last week, a share was worth $11.90 in the G Fund, $11.36 in the bond-indexed F Fund, $16.72 in the C Fund, $20.33 in the S Fund that invests in stocks of small and medium-size U.S. companies and $24.20 in the I Fund.

Bonuses: Another view

Much of the press and lots of angry taxpayers reacted harshly to news last week that the cash-strapped Department of Veterans Affairs last year gave bonuses worth up to $33,000 to many of its top career civil servants. The average bonus, according to the Associated Press, was $16,000.

The bonuses were revealed on the heels of word that the giant department had a backlog of more than a half-million cases. The scandals that rocked Walter Reed Army Medical Center also tainted public and political opinion -- although the VA has nothing to do with Walter Reed, which is run by the Army.

Criticism of the VA bonuses is "both unfair and misdirected," said Carol Bonosaro, president of the Senior Executives Association, which represents career, rather than politically appointed, members of the elite Senior Executive Service (SES).

Miss Bonosaro said the career executives manage what to many people is the best -- and certainly the biggest -- health care system in the nation. But, she said, they don't make policy decisions, including the administration decisions "to request less money than needed for VA health care."

Pay for members of the SES ranges from $111,676 to $168,000. Unlike other white-collar federal employees, SES personnel do not get locality pay raises. Most of the SES jobs are in Washington or in other high-cost areas such as Los Angeles, San Francisco, New York City and Chicago.

Miss Bonosaro made it clear that there is plenty of blame to go around for problems within the VA, but that politicians and headline writers should aim higher next time.

• Mike Causey, senior editor at Federal News Radio AM 1050, can be reached at 202/895-5132 or mcausey @federalnewsradio.com.