The S&P 500 is down 19% so far this year. And the stock markets may have much further to fall.
And the summer rally has died. The stock markets are down 10% over the last month. Stock market investors have become bearish. The aggressive Federal Reserve monetary tightening will again gain headlines this week.
Have you had the time to go online and check your current 401(k) account balance?
Wall Street says not to worry. So does your 401(k) mutual fund manager. It is always a god day to be 100% invested in stocks and bonds.
Stay calm, do not panic, and hold on. What else are they going to tell you? What else have they always told you?
I have been an investment advisor for over 38 years. I would leave the business if that was the best advice I could provide my individual 401(k) advice clients.
You own too many volatile 401(k) mutual funds. Full of Apple, Amazon, Microsoft, Tesla, and Google stock.
Those company earnings are falling. The Federal Reserve is intent on raising interests rate for the near future. You do not have to have a PhD in economics to understand the stock market consequences.
When the economy slows company earnings fall. When interest rates rise company earnings fall. When company earnings fall stock prices go down.
If you continue to own 401(k) mutual funds full of stocks with lower earnings, those funds will decline in value. If you continue to own 401(k) mutual funds with exposure to bonds, those funds will decline in value. As sure as interest rates rise.
If you own a popular target date mutual fund in your 401(k), you have the double-whammy. Stocks down, bonds down. At the same time.
No wonder most individual 401(k) participants pay no attention to their 401(k) accounts.
Trying to time the entry and exit points in anticipation of a stock market rise and fall is not possible. The same goes with trying to time the interest rate moves of the Federal Reserve.
Remaining 100% invested in your 401(k) now is not wise. The economy is slowing. Stock prices are falling. Interest rates are rising. What else do you need to know?
Your company 401(k) account needs your attention now. This is not a drill. Do not listen to the financial media. Take action to preserve your 401(k) principal.
Ric Lager
