Oh how it hurts

Have you looked at your 401K lately? I am down -30% YTD. It's mainly attributed to the fact that I am in all stock funds and no bonds. However, despite the staggering paper loss, I would not make a major change to my asset allocation since I feel I am reasonably diversified (within stock funds) and I am taking the long view on all this (err.. make that super long). I know a few people who switched out of their stock funds before the big crash and reallocated a good chunk to bonds & MM funds. Good for them. I didn't market time my 401K as I did with our taxable accounts. In hindsight, maybe I could have reallocated the 401K at the same time as the taxable accounts when the obvious red flags came about and got back into the game when fundamentals looked more promising. Well, no sense in beating myself up over this now. It's water under the bridge. Just have to ride this one out and hopefully make the right call next time. It just hurts cause you realize this potentially sets you back a few years in terms of retirement.

I am still trying to better understand how deregulation (or lack of regulation) in the CDS derivatives market led to this mess. I thnk it's something to strongly consider as we head to the voting polls in Nov.


Edit 10-9-08: After sleeping on it, I've now changed my mind about trying to market time 401K. I think it's true that it's virtually impossible to time the market bottom and if you miss the good "up" days (which you never know when they will occur), then you really take a hit on your long term returns. Also you can't "day trade" 401K like you can with non-retirement equities. 401K transactions take much longer. I remembered again why I withdrew the taxable accounts in March - shorter term goals. I convinced myself again to know our goals, risk tolerance level, and just stick to the plan. While it's not much of a consolation right now, I do think it's good to see the market returning to more sound fundamentals.