Monday, September 07, 2009

In economic downturn, most people actually leave 401(k)'s alone!


The Wall Street Journal this weekend offered a perspective in Jason Zweig’s “Intelligent Investor” column, reporting that most 401(k) investors pretty much left their portfolios alone during the Crash of 2008. The link for the column is here. The specific “best title” is “Why do investors sit tight in 401(k)’s?”

There are plenty of explanations of the Suze Orman variety, but a lot of it comes from younger investors able to play the “dollar cost averaging” game. This is (or was) a time to build up your future retirement portfolio with cheap stocks.

I remember December 2001, shortly after my own “layoff” and “forced retirement” arrangement with severance (and, by the way, there is a lot written on the web today about negotiating the best severance – look for it) that I was talking to somebody at Merrill Lynch (the old company) when he, talking me through Morningside, said “well, it sounds like you’re a conservative investor, and you won’t be working.” I was 58 then, but pretty soon I was working, sort of.

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