Approximately 6 months ago I came up with a nonscientific plan for my 401(k). At the time I felt that the market was reaching a high it had to come down from and I should put my contributions into cash rather than my balanced portfolio. I would then allocate the cash reserves when the market corrected itself or took dips. If this sounds like marketing timing…it is, and it is not a long term strategy for my 401(k). Notwithstanding, since I have been doing it and since I always want to hold myself accountable I should share the results.
Market Timing with my 401(k)
I have said it in the past, but I am not a particular fan of my 401(k) choices, but since I am getting a match it is what it is. The choices are expensive but overall I am in four funds:
- RGACX – American Funds Growth Fund R3
- OPSIX – Oppenheimer Global Strategic Income
- OPGIX – Oppenheimer Global Opportunity
- CRSXX – Oppenheimer Cash Reverses
- CGRWX – Oppenheimer Value
- QVSCX – Oppenheimer Small & Mid Cap Value
So for the past 6 months or so I put my contributions and match into the Cash and Strategic Income Fund selecting when to pull it into the market. Most of the time I would spread it among the above funds evenly but one or two times they were top heavy to one or two funds. I wish I did it a bit more strategic in terms of how to allocate so I could really measure if I had a positive impact.
In case it isn’t clear from the picture between 11/6/2014 and 5/28/2014:
- RGACX – 2%
- OPGIX – 5.74%
- CGRWX – 7.53%
- QVSCX – 7.67%
If weighted equally the average return would have been 5.735% and the median return would be 6.635%. My actual return was:
While an extra 1% over the long term could be the difference of tens of thousands of dollars over the course of my working career I don’t think this is a long term plan as I already reallocated my future contributions to a much more balanced approach.
Do you ever market time within your 401(k) or retirement account?