Model Allocation Changes: November 1, 2023
KEVIN’S COMMENTS:
The markets have continued to lose momentum in the month of October.
Only one category of the sixty that we monitor had more than a 1% return in the past 4 weeks (Equity Precious Metals 2.85%).
Unfortunately, most 401k plans do not even have precious metals as a category for you to invest your money in.
So, it does not make much difference to your account.
The Volatility Index (VIX) is an index that I monitor to measure the amount of “fear” in the stock markets.
The higher the number, the more perceived fear in the market.
The VIX has been above 19 since October 17th, which is not good.
Anything above 20 is considered too much fear and irrationality can easily take over.
There are tremendous geo-political risks in the mid-east and “The Fed” and their view on increasing interest rates is keeping the VIX high.
Which means you should expect more volatility in the near future.
FUTURE CONTRIBUTIONS:
Future contributions are money that is added to your plan with every paycheck.
We monitor the future contributions on a monthly basis and are trying to direct to invest these monies into investments that may be on sale.
This month we are advising that you use the following:
Intermediate Core-Plus Bond
Foreign Large Blend
Large Growth
The exact amounts you should allocate depend on the model that you are using. These categories may or may not be available in your plan. Please log into your Participant Dashboard to see the exact allocations you should be using as of today.
REBALANCE - STRATEGIC MODELS:
Our “Strategic Models” combine the benefits of asset allocation and “buy and hold” strategies.
These models rebalance quarterly back to their risk “targets” and remain fully invested through all market cycles.
Our Strategic Models rebalance the first trading day of every quarter.
No changes.
(Last Rebalance was on Monday, October 2nd)
The exact amounts you should allocate depend on the model that you are using. These categories may or may not be available in your plan. Please log into your Participant Dashboard to see the exact allocations you should be using as of today.
REBALANCE – TACTICAL MODELS:
Our “Tactical Models” combine the benefits of asset allocation and a “momentum investing” strategies.
These models rebalance periodically back to their risk “targets” and the targets can be changed at any time given the current market conditions.
These models may go through periods of time while holding larger amounts of cash during downtrends.
We have reviewed updated model allocation changes from BlackRock that are slightly different from the August 1st changes.
Those changes are listed below.
There is still an under allocation to the stock market and an over allocation to cash.
The exact amounts you should allocate depend on the model that you are using. These categories may or may not be available in your plan. Please log into your Participant Dashboard to see the exact allocations you should be using as of today.
Kevin’s Closing
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We appreciate you reading this far and hope that you stay confident!
This update has been written by Kevin T Clark, RF™.
All opinions expressed are those of the author and not that of Plan Confidence Corporation nor any other firm or individual.
Kevin T Clark, RF™ is the CEO and Co-founder of Plan Confidence Corporation.
Kevin is an ERISA Nerd and one of only a hundred(ish) Dalbar certified Registered Fiduciaries (RF™) in the United States.
He has been helping hard working Americans invest their money since 1997!
Plan Confidence Corporation is an SEC registered investment firm specializing in providing advice to hard-working Americans investing in their employer’s retirement plans (401k, 403b, TSP, etc).
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