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DON’T Check Your 401(k) Balance Today!
By JLP | June 5, 2006
If you are one of those people who are prone to making rash decisions whenever the market heads south, DON’T CHECK your 401(k) balance today! The Dow Jones Industrial Average was down nearly 200 points (-1.77%) and the S&P 500 lost 22.93 points (-1.78%). According to the Wall Street Journal, concerns over Iran and Bernanke’s anti-inflation comments were the cause of today’s loss.
Ignore all this stuff and take a long-term view. It is almost NEVER a “good time” to be in the market.
Topics: Investing | 12 Comments »
June 5th, 2006 at 3:54 pm
What do you think about emerging markets – sell on the next rally and look for a re-entry point later?
June 5th, 2006 at 3:57 pm
let me drop da bomb: let’s just nuke ‘em and be done with it. Have at me, folks!
June 5th, 2006 at 4:03 pm
Bob,
Personally, if it were my money, I would stick it out long-term. I think with emerging markets, you have to have a strong stomach.
June 5th, 2006 at 4:03 pm
Vlad is always so eloquent! LOL!
June 5th, 2006 at 5:04 pm
Also, Bob, my emerging markets holdings have by far outperformed everything, and are somewhere on par with my developed countries international small caps. I am planning to stick with them, especially since everyone is trumpeting the further decline of the dollar.
I will reduce these holdings if the consumer confidence in the US declines, however. They are sure to react strongly to this.
June 5th, 2006 at 5:13 pm
I have a crazy theory that has held up surprisingly well over the years: sell the S&P on May 1 and buy on October 15. This failed (rather spectacularly) in 2003, but has been a decent rule otherwise. The mid to late summer seems to be when a whole bunch of bad news and scare stories tank the market, and the winter is when people realize the sky isn’t falling.
Also, the mid to late summer in election years is when the political opposition (of either party) is pushing its agenda hard in the media and wants things to look awful.
I actually trade the S&P part of my 401K this way; it’s done much better than the S&P overall, except for 2003.
June 5th, 2006 at 6:31 pm
Foobarista,
Your theory is based on firm ground. What you state happens almost every year: the market moves in the first and last quarter of the year. In fact, the S&P Outlook newsletter, which I get, doesn’t fail to mention this every year. I’ve thought about doing it myself, but never do…
Regards,
Vlad
June 5th, 2006 at 7:19 pm
Nice blog. I’m just starting my own personal finance blog. Keep up the good work.
http://roadtoretirement.blogspot.com
June 6th, 2006 at 1:12 am
Good points, and I’m actually really lucky to have found this blog. Thanksf or the link, Matt.
June 6th, 2006 at 5:24 am
You do realize that you just did the equivalent of telling someone NOT TO THINK OF A PINK ELEPHANT. Of course that has the effect of suddenly being able to think of nothing else except a pink elephant just because someone said it. Now that you’ve said not to check-you’ve made me want to check!
June 6th, 2006 at 7:51 am
Actually I was very pleased by this drop because it meant my monthly contributions to my 403(b) – which were processed at the end of the day yesterday – got more shares for the money because NAV was lower.
Since I am only 22 I am always quite happy to get some low priced shares, I’m not selling them!
June 6th, 2006 at 7:57 am
I heard the Marketplace Morning Report today and I seriously thought I should stop my Large Cap fund contributions and shift my 401K money into other investments. Then again, I still get a company match, so I’m not doing quite so poorly.
ThatEdeGuy wrote about it here, and I think it’s a good perspective for folks to keep in mind if they’re the type to hit the panic button.