Model Allocation Changes: Jan 2, 2024
KEVIN’S COMMENTS:
Happy New Year!
I hope that 2023 was a great year for you and 2024 will be even better!
New year, new you - lol
The markets had a volatile year but proved to be profitable.
See the year end market returns below*:
13.7% - DOW
24.2% - S&P
43.4% - NASDAQ
6.38% - BONDS (PTTRX)
*market results via cnbc.com
Obviously, we have no idea what 2024 will hold.
However, I do expect more volatility as we head later in the year due to the Presidential election. The markets don’t care what party takes over the house or Senate or who becomes president.
But the markets hate uncertainty.
Also, if the campaigns are going to be run like the past, we will hear a lot of negativity until the election is over. One side will say how bad life is and it is the other’s fault and if elected (or re-elected) they will make everything better.
These negative messages add to the uncertainty and (my prediction) increased volatility.
This is to be expected and I have seen it many times over. Usually with the same moniker of, “this is the most important election you will ever vote in”.
FUTURE CONTRIBUTIONS:
Future contributions are money that is added to your plan with every paycheck.
We monitor the future contributions monthly and are looking to direct these monies into investments that are on sale.
This month we are advising that you use the following:
LONG GOVERNMENT
REAL ESTATE
TECHNOLOGY
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.
We have uploaded rebalancing instructions for all five models which have the following Stock/Bond splits:
(20/80) Income
(30/70) Conservative
(60/40) Moderate
(80/20) Aggressive
(100/0) 100% Equity
(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:
THERE ARE NO REBALANCE CHANGES FOR THE TACTICAL MODELS AT THIS TIME
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.
There are no changes for the Semi-Tactical models.
(Last Rebalance was on Wednesday, November 1st)
The S&P 500 started a rally on October 30th and has continued to go up through the end of the year.
Our tactical models got caught in a technical “glitch” due to the rebalancing that occurred on November 1st. Since most 401k plans have “short term trading” restrictions, we usually hold all changes for at least 30 days after a rebalance.
Since December 1st, the Relative Strength Indicator (RSI) has been in an “oversold” position (except for only 4 days (12/4/23 – 12/7/23). The RSI usually predicts short term market movements based off the market being “overbought” or “oversold”.
Usually when the market has been “overbought” we get a quick move downward. This allows us to deploy cash we have sitting on the sidelines.
Unfortunately, we have not seen a quick move downward in December, so our tactical models have been holding more cash than normal.
So, we will see what 2024 holds, as all our indicators start fresh with the new year.
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
As always, we appreciate all our advisers using Plan Confidence with their clients.
Do not hesitate to let me know if you have any questions or comments.
And from my family, to yours, I wish you a Happy New Year!
I hope that your 2024 exceeds your wildest dreams!
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).
#401kAdvice #403bAdvice #TSPadvice #BeConfident #got401k
