In 2008 and 2009 the F/C/S/I funds acted in concert. That is not normal. Those years were very 'AbbyNormal' years. This year is a bit more normal. You can watch the flow of equity assets (C/S/I) into bond assets (F) and vice versa over the year. Rather normal. You can watch assets move to equity November through March and bail out in May. Normal. Normally, your S Fund will average higher than C/I - but will fluctuate more. Normally, the F Fund will move inversely to the equities holdings. The G Fund is almost cash in the bank.
Anyway, the next move should be an equity move.
If you are not tied into the market like Gordon Gekko the best bet is to hold an allocation of funds that fits your risk. If you quiver at a daily loss of a half point don't invest much in equities - but you won't have much in retirement. If you can handle a dump of 10% in a month hold lots of equities - and, you should be eating caviar and oatmeal for breakfast in your golden years.
My guess is that you can accept risk. So here are some Edelman allocations that might suit you (I highly recommend his 'The Truth About Money' and his 'The Lies About Money'):
Normal Allocation (Normal Market)
G: 0%Risky Allocation (Expanding Market)
Average Return: 9%
Average Risk: 11%
G: 0%Risk Adverse Allocation (Crappy Market)
Average Return: 10%
Average Risk: 13%
G: 0%Great Depression Market Crash (2008)
Average Return: 8%
Average Risk: 10%
Average Return: 2%
Average Risk: 2%
Risk is not really 'risk'. It is the normal expected variance (the standard deviation). What that means is that in a normal market with a 'Normal Allocation' you can kinda expect a 9% return - but, it can swing from a -2% return to a +20% return and still fall into expectations. You have to accept a potential expected loss of -2% in any particular year to feel comfortable in the allocation I call 'Normal'.
The big dump we had from 10/2007 through 3/2009 was a -57% in the C Fund. That is 6 standard deviations from expected. That is a crash.
Again, Edelman's 'The Lies About Money' has a very nice quiz to set you to a good allocation that you can play with as you gain experience. His website has something called the GPS which helps you set an allocation that fits your profile. The questions are easy to answer and take minutes.
Playing a swing trader right now will probably guarantee an Alpo/Oatmeal diet in retirement. You have to be able to read the squiggly lines on charts and look at the fundamentals of companies in an index to win at that game.
Finally, set your contributions to buying equities - even in a downturn. Maybe a 40% C, 30% S, 30% I. Very yummy in a market crash. Rubbing belly right now.
Finally, finally, finally, how reluctant are you to spending $15 on a very good book on personal financial management and spending a couple days reading it? It will net you millions. Honest. And my name is neither Ric nor Ray - although Ray Lucia's office is spitting distance (and a scary run across a busy freeway) from my humble abode.
Originally Posted by Nate