posted on 01 June 2016
The Real 401k Plan Manager - A Conservative Strategy For Long-Term Investors
NOTE: I have redesigned the 401k plan manager to accurately reflect the changes in the allocation model over time. I have overlaid the actual model changes on top of the indicators to reflect the timing of the changes relative to the signals.
Markets Rally To Resistance
As discussed in the main section of the newsletter, the short-term dynamics improved last week as "Fed Speak" pushed money back into equities. Importantly, that push higher in the markets was on extremely light volume and failed to break above meaningful resistance.
Therefore, there are no changes to the 401k model this week as risk/reward is still not balanced enough to justify taking on additional model risk.
The strategy from three week's ago remains salient this week as well:
I try and remain very sensitive to making changes to the model since many 401k plans have limits to switching funds.
For longer-term investors, the markets have made virtually no progress since January of 2015. Therefore, there is little evidence to suggest stepping away from a more cautionary allocation...for now.
If you need help after reading the alert; don't hesitate to contact me.
Current 401-k Allocation Model
The 401k plan allocation plan below follows the K.I.S.S. principal. By keeping the allocation extremely simplified it allows for better control of the allocation and a closer tracking to the benchmark objective over time. (If you want to make it more complicated you can, however, statistics show that simply adding more funds does not increase performance to any great degree.)
401k Choice Matching List
The list below shows sample 401k plan funds for each major category. In reality, the majority of funds all track their indices fairly closely. Therefore, if you don't see your exact fund listed, look for a fund that is similar in nature.
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