people with a 10+ year time frame don't care about short term fluctuations.
Randy, have you ever heard the term "statement shock"? It occurs when 401k investors get a statement that shows them losing ground in saving for retirement - their accounts shrinking. I can assure you that people do care.
I was involved in reviewing and recommending changes to the 401k plan of a company I used to work for and was shocked to find most of the 100 or so participants putting all their money into guaranteed investment contracts (basically CDs issued by insurance companies). When I asked several of them about it, many had experienced losses previously when they tried the stock fund option and said "I don't want to take any chances with my retirement". These were not 63 year olds, soon to retire. Nor were they idiots. They were fairly typical sales professionals, accountants, engineers and other white collar types - typical investors. I'd bet that most of them have every penny in the stock funds now, but that will change when they, again, experience statement shock. People get pissed when they lose money.
Bob
PS: From the 1972 high, it took the S&P 500 eight years to regain the ground it lost in '73-'74. From the 1929 high, it took 25 years. Hell, from the 1928 high, which was before the 50% or so run of 1929, it took 20 years (from 1931 to 1951) before the index reached that level again. I'm not trying to scare you, just trying to inject a little perspective. Good luck. |
