“The four most expensive words in the English language are “this time it’s different.”
– Sir John Templeton
Oh, how many times I have heard an individual company 401(k) retirement plan participant utter words that were eerily similar to quote above. For those readers who don’t know, Sir John Templeton was one of the greatest stock market investors of all time.
Individual investors have the same investment management strategy as the stock market moves up. 100% invested, buy-and-hold means free money and all-time record highs. Why do I need to pay any attention to my company 401(k) retirement plan account?
When the stock market begins to fall quickly and dramatically, individual company 401(k) retirement plan participants first gut reaction is the same. This time it is different. Eventually the stock market will recover any losses and then move higher.
The financial media adds to the problem How many articles and soundbites have you read and heard in the last week advising you not to panic and make any sudden investment management moves in your 401(k) account?
If you Google search investment professional reactions and comments surrounding the last great stock market crash from July 2008 to March 2009, you would find the same comments.
Common sense has a great deal to do with long-term stock and bond market investment management success. This fact is true. And it will always be true.
No stock market investor ever wants to miss out on a stock market advance. All-time stock market highs were reached as recently as February 16, 2020.
Those same stock market investors have fully participated in the record stock market losses over the last two weeks. Now is the time to give serious consideration to a principal preservation game plan in your company 401(k) retirement plan account.
It is looking more and more like the U.S. stock markets may be in the early stages of another great stock market decline. This time, the stock market disaster has the help of a world-wide pandemic virus and all-time low interest rates.
The current stock market decline is not different. No matter what “buy-the-dip” strategy worked in the past.
You can’t time buying and selling of your stock market investments on a consistent basis over the long term. And that is not what I am advocating here.
You can get ready to take advantage of the eventually “dead cat bounce” that is part of every fast and furious stock market decline.
Play a more successful long-term company 401(k) retirement plan investment management strategy this time. This time, be different.
Ric Lager
Lager & Company, Inc.
