Circling the airport

Payday is the end of this week. Right now my leaning is to allow 100% of my contribution to go into stable value fund again. The stock market is still up, and I'm still at about 90/10. If the stock indexes drop significantly by Thursday, maybe I'll buy. See you Thursday!

First time here?

Mystery Solved!

I was comparing notes with a friend of mine today in our respective 401k strategies. His strategy differs greatly from mine, but is a perfectly sound one. He is well diversified (unlike me... I'm entirely in stock index funds except for my small amount in stable value) and then leaves it alone. He hadn't even checked it yet this entire year until today. It turns out his rate of return is 15.X% so far this year... barely lagging me (I'm 16.8% at the end of the day today). So I asked what funds he was in. He had a variety but none had a return of more than about 10%. Hmmm......

He has a relatively new job so I asked him when he started contributing. It was before the beginning of the year. Hmmm....

Then I asked when did his company match, which is unusually good, kick in? Aha! It started in May... right when the stock market was down, and stayed down for a few months before climbing again at the end of the year.

In other words, he accidentally sort of did what I did. He beat all the markets he was into because he started contributing aggressively when stocks were low, which is where most of his gains were.

The comparison did make me research some other investment options (that I don't think I'll take but were interesting, like REIT's) and made him decide to set up automatic notifications for rebalancing. His account was way out of balance after not looking at it for a year. I didn't tell him that regular rebalancing is essentially what I do. :-)

First time here?

Don't Follow the Herd

This is tragic. Investors pulled out of stocks when they were low, and then invested in bond funds and lost there too. I hope the lesson is learned. The correct lesson is not to stay away from stocks or bond funds or any other particular investment. Rather, the lesson is to not follow the herd, and to not sell low or buy high. These investors forgot to be proper contrarians.

Current year-to-date return: 15.2%

No activity today. Stocks are flat. I'd be tempted to sell some stock, but my balance is in the ballpark of where I want it. My goal for now is about 10% stable value, 90% stock funds. Currently my stock funds are at about 94% of my portfolio, and 100% of my new contributions are going into stable value. That's a good setting for now. If stocks go up, great. If they go down, I'll start buying again and if they go down a lot, I can take that stable value and invest it into stocks as well.

Here is a good article about the S&P 500 Index, and why you should be invested in it. There is quite a bit here I didn't know about the index, but it reinforced my view that it should be the foremost holding of any portfolio.

This fund is usually named something like "Large Cap Index Fund" in a 401k account.

Enjoying the Ride

Everyone in the news seems excited about stocks for the remainder of the year. I am too, but the indexes are high at the moment, and I only buy when they are low. So, no activity for tomorrow unless something really drastic happens. If stocks remain high, when payday comes on the 15th I'll put 100% of my 401k contribution into the Stable Value Fund so I can use the money to buy stocks later next time they're down.

This is the time to sit back and relax and enjoy the gains on all the stocks we bought when they were low in June through September.

Personal Rate of Return for year to date: 14.1%

Allocations:
31.47% Large Company Index (S&P500)
31.37% Small/Mid Cap Index (Russell 2500)
12.95% European Stock Index (MSCI® Europe Index)
10.35% Int'l Stock Mkt Index (MSCI® All Country World Ex-USA Investable Market Indx)
4.72% Pacific Stock Index (MSCI® Pacific Index)
2.67% Company Stock
6.47% Stable Value Fund

To be honest I think I could do just as well with just an S&P 500 index, one of the small Russell indexes, and the Stable Value, but I guess in theory this spreads out the risk more. I've noticed all the world stock indexes tend to go up and down pretty much together.