In my 401k portfolio I do the same old strategy as many other investors do. It is not a play money and the strategy is simple – invest in selected mutual funds (I cannot invest into anything else in my 401k anyway), hold for a long run, and rebalance the account twice a year.
I do that on a regular basis. When some funds run up like crazy, I trim them and use proceeds to buy those which lack in growth.
In the last couple of years I saw commodities and energy stocks run up so I sold all positions which were above my target allocation and bought healthcare and index funds which were lacking growth at that time.
Later it was REITs which lagged and were sold off by crazy panicking investors, so I trimmed my SPX funds and small equity funds and bought more REIT funds to bring them up to speed.
Today, those REITs are up more than 7% from my target allocation while energy funds and commodities are down.
Is it time to buy energy stocks?
Many good stocks are now beaten down by the investors and analysts are expecting them to start stabilizing during next year. And I can see that myself as my holdings in my 401k account are down quite a lot, see the picture below:
(you can click on the image to enlarge it)
And since I last rebalanced my account in June 2014, it is a perfect time to rebalance again this month and take advantage of low prices of energy stocks. So, I am going to sell portions of the funds which are above the target allocation and buy energy and commodity funds to bring them up to the target allocation. And when they recover next year or anytime later, they will make money, which I will again take off the table and reallocate into other funds which will be lacking the growth (or will be behind the energy stocks).
Happy trading & investing!
Way to keep your eye on the ball! I don’t usually get that focused on my 401k mainly b/c it is such a shitty 401k. I don’t have specific funds and all expenses range above 1%+ What I do is move in and out of cash and my broad based funds. Not sure I should be doing even that much, but I do lol
When our plan changed to Vanguard it started to make sense to do the rebalancing, so I started doing it. This is my second rebalance so far in this plan and it pays off so far. Thanks for stopping by.