One of the Wall Street wisdom’s that I remember from my younger days is, “they are always fighting the last battle.” This adage is a stark reminder. Adjust investment management decisions to reflect the current stock and bond market environments.
You cannot do anything now to improve your 401(k) mutual fund choices in the past. The good news is that the truth of another old Wall Street wisdom applies here also. That is, “a rising tide raises all the boats in the marina.”
Your 401(k) retirement plan account ended 2021 near all-time highs. The stock and bond mutual funds you currently own have gone up in value over the last few years.
Do not sleep on your past investment management success. The ability to grow the value of your 401(k) retirement plan account in 2021 has ended.
Economies and company earnings around the world are falling. Interest rates are rising. A falling stock market may be the least of your 401(k) problems going forward.
You cannot focus on the new company 401(k) investment management war if you are still focused on the old one. It will never work for you.
The age-old 401(k) investment management problem of “what to buy” is no longer important. Instead, your focus should be on “when to sell.”
Here is my response to the critics of market timing. Keep your uninformed comments to yourself. The truth is most critics could not define market timing if it sat next to you on your ride home from work.
Market timing has not one thing to do with the preservation of your 401(k) retirement plan principal. The next investment management challenge you face. How to keep the greater part of the last 12+ years of stock and bond market investment gains in your 401(k) account.
You face the challenge to preserve your individual and company-matching 401(k) contributions. For the last several years.
Do you insure your home? Your car? For heaven’s sake, I know clients who are now insuring their pets.
Do not fight the last battle in your 401(k) account. Have a 401(k) principal preservation plan in place. Before the next great stock market fall or interest rate rise.
It is not “if” one or both events take place. It is “when.”
Fight the upcoming battle. How much money are you prepared to lose in your 401(k) retirement plan account?
Ric Lager
Lager & Company, Inc.
