If you believe in buy and hold DO NOT read this

If you believe in buy and hold than don't read this

http://www.ritholtz.com/blog/2011/11/we-expect-the-stock-market-to-bottom-this-week-then-rally-for-a-combination-of-technical-and-fundamental-reasons/?utm_source=dlvr.it&utm_medium=twitter

If your thinking about retiring in the next 5 years and your financial advisor has you on that same roller coaster that you've been on you better talk to someone else if you believe this article

Time to redeploy

With todays big move up I am looking to redeploy the money I put into money market when the S&P hit 1220

My main relative strength indicator has remained favoring stocks over moneymarket but the S&P breakdown at 1220 had me pull some money off the table. With the up move today it reverses my S&P chart and I will be looking to put the money back to work.

Some of you will call this market timing-I call it trend following.

As I said before what harm has been done? Especially in your IRA or 401k. I was conservative and moved some money to safety now with the move back up in the S&P I can redeploy that money and the S&P is at 1195 as I type this,lower than the 1220 I got out at.

I now have to watch and make sure this is not a "dead cat bounce" So again if the s&p turns down and hits 1160 I will again take some defensive measures.

This is where the buy and hold followers go astray. They have problems knowing when to get back in so they advise their clients to never get out. It really is not that hard but in my experience (over 20 years) most financial advisors are more interested in gathering assets and making commissions than managing your money.

13 Years of Buy and Hold

So they have been telling you to just buy and hold-no one can time the market -what have they told you about this? You put your money in an s&p index fund in your 401k and you did nothing over 13 years--this is where you stand

S&P 500 Index Wed, Nov 23, 2011

Closing Price: 1,161.79 Open: 1,187.48 High: 1,187.48 Low: 1,161.79

Now, let's take a 13-year trip back in time, shall we...

S&P 500 Index Wed, Dec 16, 1998

Closing Price: 1,161.97 Open: 1,162.83 High: 1,166.29 Low: 1,154.69

Why do you make it so hard on yourself?

You have $300,000 in your 401k.

The market declines by 15%-so you lose $45,000 and now have $255,000

To get back to your $300,000 your going to need to earn 18%

Instead if you have $300,000 and the market declines 15% but you were smart and listned to some good advice and took 1/2 of that $300,000-$150,000 and moved it to moneymarket

You still lost 15% but you lost that only on the $150,000 still invested--$22,500. So you have 277,500.Now to get back to that $300,000 you only need to earn 8%

You've been thru this drill before in 2008-

Buy and Hold--WHY???????????

The 2 basic assumptions of advisors that advocate buy and hold as an investment philosophy are 1) that most people either aren't smart enough to know when to get in and out of the market or 2) they the advisor fit into reason #1.

If your paying an advisor that either advocates buy and hold or rebalancing WHY? Isn't that something you can do on your own?Why would you pay a fee for that?

Now don't get me wrong , this has been a very difficult market but does it make sense to just sit there and watch your money, your 401k go down day after day What possible harm could you do if you moved it to cash until the trend changed.

And please don't believe that line that the advisory business perpetuates, if you get out you won't know when to get back in. You can't time the market.

No one is trying to time the market. But when the ship is sinking don't you think you should get off?

Another drop in stock market-Are you going to watch your 401k take another beating?

Do you remember what happened to your 401k in 2008?

Your not going to let that happen again are you?

No one knows if this is 2008 all over again but wouldn't you feel better if you were protecting your principal?

Take a look at the funds your invested in with your 401k-Are there any that haven't performed very well/ Move the money to cash.

Weren't you sorry you didn't take defensive action back in 2008? Please don't let that happen again

Is this your stockbroker?

I've worked at major brokerage firms--I've seen these guys--This is so true!!!!

http://iheartwallstreet.com/2011/03/15/your-stockbroker-the-alpha/

Market Volatility and the Priorities of an Adviser

http://blogs.wsj.com/financial-adviser/2011/11/17/market-volatility-and-the-priorities-of-an-adviser/

Be very careful--Could be Big Danger ahead

Hitting 1220 on the s&p 500 just now is not a good sign.

I would be extremely cautious here-and once again I am looking to lightnen up considerablt.

I've harped on this before but I am moving to a higher percentage of cash with a lot of my accounts especially 401k's and IRA's where ther are no tax consequences.

Wary savers get mixed signals from advisors

Article on what advisors are recommending

http://www.reuters.com/article/2011/11/16/us-column-personalfinance-idUSTRE7AF2E620111116

Would you stick with a losing football coach?

If your a sports fan and the coach of your team has one losing season after another would you want to get a new coach? In fact most fans are even more impatient than that. If your a Maryland fan you might already be calling for a new football coach after one season. What effect does it really have on you? But you've been investing for however many years and how many winning seasons have you had? So why do you stick with a financial advisor that has a game plan that has one losing season after another ?

Are you making these mistakes with your 401 k?

I have been an investment advisor for over 30 years. It is astonishing to me that the mistakes I see individual investors making in the management of their company 401(k) accounts. These common mistakes most time fall into the following three categories.The first mistake is not taking the time to be aware of “what they own now” in their company retirement plan account. Many of the new prospects I talk to about providing retirement plan advice don’t even have a clue about their current investment holdings.These retirement plan participants don’t remember the reason their in the funds that their in. They also can’t tell you what kinds of stocks and bonds these mutual funds own.
Most importantly, they think their diversified but in a lot of cases own different mutual funds in their 401 k plan that own the exact same stocks and bondsThe second mistake I see is that company retirement plan participants think that they have the financial expertise to make the right investment decisions in their company retirement plan account.In truth, the vast majority of individual company retirement plan participants don’t have the necessary investment knowledge and experience. Even if they did, the day-to-day gyrations in the stock market take much more time to monitor than most company retirement plan participants can commit to.When you car needs repair, you take it to an automobile dealership. When you don’t feel well, you go do the doctor. In a world full of specialists, investment management decisions should fall into the same category.The third biggest mistake I see in talking with hundreds of company retirement plan participants over the years is that they think they have to remain 100% invested in the stock market at all times.As I have written about in this space before on several occasions, the “buy-and-hold” mutual fund myth has cost individual company retirement plan participants upwards of 40% of their company retirement plan value twice in the last three years.When you go to the casino to gamble, the casino wants you to “play every hand” you possibly can. The reason is that the more times you gamble the better odds the casino has to eventually take all your money away.The stock market many times is the same way. If you stay in the stock market 100% of the time, the better the odds are that you will be fully exposed to stocks at the top of the next economic or stock market cycle.

Your 401 k is no different than your House

Does it make sense on any
level to be out of stocks when the market is rising, or in stocks when the
market is falling?

Let's compare it to the
real estate market. I'm pretty sure most of you knew real estate was valued
insanely high back in 2007/2008. Unfortunately, most of us didn't take advantage
of it and sell our house at that time and rent for a few years because selling a
house is a huge undertaking. But the trend changed, and real estate has pretty
much been falling ever since. Stocks / equities are really no different. The big
advantage is that obviously they are a lot more liquid and easier to buy and
sell.

But just like real estate, there is a definite trend. Doesn't it make sense to ride that trend?
Why, when the trend is down in a liquid asset, would you ever just sit there and
watch it go down? Just suppose for a moment, back in 2008 when the stock market started falling, when the trend was turning down, you sold all the mutual funds in your 401k and put the money into moneymarket funds? How much more money would you have right now? Go back and pull out those 2007 /2008 401k statements and see what the balance was. What's
the balance today? And don't forget to figure out how much you have contributed
since 2007/2008.

There's no reason to buy and hold. Don't believe that garbage. You are way smarter than that. Trends.
You've seen it in real estate; you've seen it in the mutual funds in your 401k.

Take advantage of the
TREND!!

Are You Prepared For The Next Market Decline

We have had 2 major market declines over the last 10 years.

Given today's markets an appropriate question to ask is whether the markets will continue to snap back fromfuture declines so rapidly.

Concern about the state of the world and the fact that governments seem to be running out of bullets to bail out the markets and the economy.

With your time horizon ticking away,can you afford the risk that the next major decline may NOT be followed by a recovery?

Are you prepared to sit there in a strategy(buy and hold,rebalancing etc.) that has failed you during the last 2 major market declines?

You need to find someone that knows how to manage risk more effectively.A strategy that allows you to participate in rising markets and reduce losses in declining markets.

Target Date Funds Doesn't Equal Guaranteed

Here is an article from the Wall Street Journal that references a study that showed that over 1/2 of the respondents thought that target date funds would guarantee that their retirement income needs would be met

http://blogs.wsj.com/totalreturn/2011/11/07/target-date-doesnt-equal-guaranteed/

Isn't it time for you to get real about your 401k?

YOUR 401(K):

It's not a flat tire that you must get fixed immediately in order to drive your car.It's not a broken water heater that must get fixed immediately so you can take a hot shower.

But..... if your 401k is broken, you might not be able to pay for fixing those other things down the road. And down the road comes a lot faster than you think. As painful as it may be, take a look at your 401k statements from 5 years ago, and even 10 years ago. Now, consider how much money you have put in over those years. Are you happy with the results? Over those years, were you proactive or were you only reactive? Meaning did you only do something, like move all your money to a money market after the market was down 20%? ... And then did you neglect to open your statements until the market was back up, 2 years later? I know; I've seen it all over the last 20 years....it's easier to worry about fixing that $1000 water heater, than to worry about that $100,000 401k account that you are going to NEED down the road to pay for that water heater repair!Don't wait, get your 401k repaired immediately. Find someone to give you advice on when to be in the market and when to be out... and not just someone that recommends an allocation, only to never be heard from or seen again.

Who is managing your 401k risk?

One of the great joys I get in this business is talking to participants in 401K's and feeling the relief that they get knowing that they don't have to manage their investments alone.A lot of participants were under the impression that the mutual funds in their retirement plans which are professionally managed,had a built in management strategy in different market environments. They figured that these managers had a game plan to protect their retirement account values when the stock market begins to decline.They seem surprised when I tell them that its not true. These managers don't manage stock market risk . If it s stock fund they are managing stocks ,not market risk. That job is left to you.Unfortunately most retirement plan participants are not qualified to manage this risk. The sad part is that they don't know that until their account drops by a large amount.Its really no different than calling a plumber to fix a leak or taking your car to a mechanic for a tune up. The only difference is that cost is a minor out of pocket expense while mismanaging your 401K can cost you thousands of dollars down the road

Target Date funds

This is a good article on target date funds. My take on them is they are better than nothing but if you have a competent advisor I would think you'd do much better.

It's my strong belief from doing this for over 20 years,that avoiding the big downs and being in the right sectors during the upswings makes a huge difference. i just don't get the target funds because I don't believe in that whole asset allocation thing. It makes no sense to me to be in a bad sector just for the sake of asset allocation pies. It dilutes your growth if your "recquired" to have some % of your assets allocated to a declining sector. Just my opinion.

http://www.thestreet.com/story/11297102/1/is-your-target-date-fund-suffering.html

S&P up over 9% over 20 years-Average Equity Investor up 3%

The Dalbar study, which consolidates data from
the Investment Company Institute, found that over the twenty years ending in 12/31/2010, the average annual equity return for investors was only 3.27%, while the S&P500 was 9.14%.

You can't snooze with this market

Well if nothng else you got to admit that there is never a dull moment with this stock market.

As I write this the market(dow) is down 262 points. The reasons the 'experts" give is anything from Greece to Italy to the collapse of MF global.

The fact remains that the trend for me is still up. The s&p 500 would have to go to 1190 for me to even consider that the trend has changed. It currently is sitting at 1220. For me this is a chance to add to my postions and if I'm wrong my stop point is not that far away.

So here is my game plan. i will be looking to add on this downdraft. If it breaks 1190 than I will have to wait for it to reverse and than I would need to see if it makes a higher high which would mean it would have to hit 1300 or higher .After it reverses, if it fails to hit 1300 and than reverses down again ,it will in effect have made a lower high.At that point I would be moving some money to cash and sit and wait.