The anticipated U.S. economic and stock market recovery has not shown up yet. Housing, jobs, and economic growth were all supposed to have rebounded by now. Even the casual economic and stock market observers know that none of these basic economic conditions have recovered.
Historically, economic and stock market conditions like these are dangerous for Minnesota company retirement plan participants.
You are hearing and reading in the financial media about the same old investment management themes that are supposed to work well in uncertain economic times.
Rebalance, stick with the long-term, and buy-and-hold are talked and written about on a daily basis now. The financial media has a set of guidelines that they follow in uncertain times; the most basic investment management themes are the only things that they know how to promote.
The guests or experts that you hear and read in the financial media are no better. They all get paid their maximum salaries and bonuses when the investors in their investment products continue to buy-and-hold regardless of the economy and stock market conditions.
What else do you think they are going to tell mutual fund investors to do?
If an individual company 401(k) retirement plan participant would have followed this kind of basic investment advice during any previous stock market decline, their company retirement plan account balances would be worth much less today.
Minnesota company retirement plan account balances are only slightly higher than several years ago. Factor in retirement plan account contributions over the last few years, and these retirement plan accounts have not grown in value at all.
Buy-and-hold investment management only works during a general uptrend in both the U.S. economy and the U.S. stock markets. We don’t have either one of those conditions now; and we have not had both those conditions for several years.
Right now, you have to seek out investment advice that helps you manage the stock market risk in your company 401(k) retirement plan account investments.
The financial media and investment experts have the same old buy-and-hold investment management message now for individual company retirement plan participants. Buy-and-hold and contribute more money is all they know.
There has not been one economic slowdown or stock market correction in the past when a buy-and-hold investment approach worked well for an individual company retirement plan participant.
This time is not different. No matter what you hear or read.
Ric Lager
Lager & Company, Inc.
