The U.S. stock markets have had their worst start to a new calendar year in history. Retailers have closed hundreds of stores and laid off thousands of workers. The U.S. economic outlook has dimmed.
The Dow Jones Industrials and the S&P 500 are both down about 12% from the highs of 2015. When you get time to look over your year-end 2015 company 401(k) retirement plan statement that just came in the mail, take another 10% or so off those numbers.
What is the message from Wall Street? Stay calm, don’t panic, and hold on. What else are they going to tell you? What else have they always told you?
After 32 years as an investment advisor, I would leave the business if that was the best investment advice that I could provide a company 401(k) advice client.
Too many individual company 401(k) investors currently own highly volatile, high risk mutual funds. When the economy slows and the stock market fall, their company 401(k) retirement plan mutual funds fail them.
The type of mutual funds you own needs to reflect your comfort level with stock market risk. For the vast majority of company 401(k) retirement plan investors that is not the case.
Trying to time the entry and exit points in anticipation of a stock market rise and fall is not possible. Remaining 100% invested when the smartest business people in the world are clearly signaling that the worldwide economy is falling is not prudent.
Even worse, the financial media message now includes the brilliant investment management strategy of “holding on” when the stock markets are in freefall.
Your company 401(k) retirement plan account need your attention now. This is not a drill. Most importantly, this is no time for the financial media to lull you to sleep by telling you what they always tell you.
Ric Lager
Lager & Company, Inc.
