401k April Update

The first quarter is history and based on the major indexes makes an exit essentially even. I would have to say that is a blessing when you look at all the challenges that faced the markets both domestically and internationally. Thus, we kick of the second quarter with plenty of questions looking forward and the challenge being there are no simple answers and there is no real clarity for investors. First, the economy is slowing. Despite what the jobs reports show the other economic data has manufacturing slowing, services slowing, earnings slowing, and overall outlook for GDP at 1.5-2% for the calendar year. For me there remains a disconnect between the fundamental data and the rumors. Eventually the fundamentals matter it is just a matter of when.

The chart below of the S&P 500 index shows the continuation of the sideways to upside trading range we have established since the October low. Unless we can find some conviction for investors to commit money to the risk of the equity markets the current rotation to other countries and other asset classes is likely to continue. Money moves to where it is treated the best the fastest. We remain patient and continue to take what the market gives one day at a time.


The chart below is the weekly chart showing the longer term view of the trend with an intermediate (9-18 months) perspective. The uptrend is in place and the 1950 level is the support level from this perspective. Still room for some volatility short and still hold the upside trend.



Last, the chart below is the monthly chart which gives our long term (18+ months) perspective for the index and the current allocation for the 401k investment strategy. Unless we break below the 17 month moving average we stay invested currently. The current move off the 2012 test has been a great run for the index and for our allocation in the 401k strategy. Remain focused and don’t let the short term volatility impact your view of the long term trend. Patience is the key as this unfolds short term.


There are plenty of issues ¬†on the table for the US markets and without the need to speculate on what might happen we will let it go with the simple comment… let it unfold one day at ¬†time. If we hit our exit points we will take the exits and hold cash until which time the investment gods align to provide us nothing but the best opportunities. Discipline is the key to sound money management.

A quick look at the returns for the major market indexes in January:

  • Dow Jones Industrial Average – down 2% (March) & ¬†down 0.2% (YTD)
  • S&P 500 Index – down 1.7% (March)¬† & ¬†+0.4% (YTD)
  • NASDAQ Index – down 1.2% (March)¬† & ¬†up 3.5%¬†(YTD)
  • Russell 2000 Index (small cap) up 1.6% (March)¬† & up 3.9% (YTD)
The following is our current allocation for 401k portfolios:
  • 100% of assets allocated to the S&P 500 index funds. For our allocation we are using the Fidelity S&P 500 Index Fund (FUSEX). We continue to hold¬†this position for now.
  • January 1st NAV = $72.85
  • March 31st¬†NAV = $73.52¬†(change YTD = 0.9%)
  • Current Allocations from Paycheck (deposits) = 100% Fidelity S&P 500 Index Fund.

If you don’t have Fidelity S&P 500 Index Fund in your 401k you will have a S&P 500 index fund that is similar with Vanguard, T. Rowe Price, or whomever the assets are managed by. If you need help simply send us an email with your list of available funds and we will tell you the best match to the allocation. Jim@JimsNotes.com is the email address.

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Remember, investing is a journey towards a predefined destination. Sometimes the destination changes, but it will always be about the journey, and the discipline it takes to get there.