econintersect .com
       
  

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.



posted on 16 January 2018

The Real 401K Plan Manager 14 January 2018

Written by , Clarity Financial

The Real 401k Plan Manager - A Conservative Strategy For Long-Term Investors


Please share this article - Go to very top of page, right hand side, for social media buttons.


There are 4-steps to allocation changes based on 25% reduction increments. As noted in the chart above a 100% allocation level is equal to 60% stocks. I never advocate being 100% out of the market as it is far too difficult to reverse course when the market changes from a negative to a positive trend. Emotions keep us from taking the correct action.

401k-PlanManager-AllocationShift

This Is Even Nuttier

At the beginning of December, I penned a blog entitled “This Is Nuts," in which I noted the extreme levels of exuberance that was invading the markets at that time. Well, as noted above in the main body of this missive, it has gotten even “Nuttier."

However, the bullish backdrop remains intact but extensions are getting way out of hand here.

The Dow is set, at the current run rate, to hit another 1000-point milestone at the fastest pace in history and will be up 6000 points in the past year. Think about that for a moment. The Dow will, in just one year, gained roughly 25% of its entire price since 1880. (6000 divided by 26000)

It’s just nuts.

While portfolio allocations remain at target levels, for now, the time for complacency is now gone.

I have added a couple of notations to the 401k plan manager graph above. The markets have now pierced the top of the long-term bullish trend channel, which only happens either at the peaks or troughs of a market trend. Secondly, as noted by the arrows, with the markets extremely overbought and extended, risk outweighs reward at this juncture.

Importantly, note the orange horizontal lines I have added in the two bottom buy/sell signal indicators. The market has never been this overbought since I began tracking our model in 2006.(Just for the record, it hasn’t been this overbought since the turn of the century when I began running this model in the newsletter.)

Given the inability to hedge 401k-plans, I continue to recommended rebalancing risks in portfolios by trimming overweight equity exposure and adding to fixed income exposure.

All NEW contributions to plans should currently be adjusted to cash or cash equivalents like a stable value fund, short-duration bond fund or retirement reserves. We will use these funds opportunistically to add to weightings when corrections occur.

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. principle. 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.

401k-Selection-List

>>>>> Scroll down to view and make comments <<<<<<

Click here for Historical Investing Post Listing










Make a Comment

Econintersect wants your comments, data and opinion on the articles posted. You can also comment using Facebook directly using he comment block below.




Econintersect Investing








search_box
Print this page or create a PDF file of this page
Print Friendly and PDF


The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.







Keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government




























 navigate econintersect .com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2018 Econintersect LLC - all rights reserved