401(k) Losses, Markets and Birthdays

Even doing everything right for a “normal” market (large caps, mid-caps, small-caps and bonds), my 401(k) is hemorrhaging.  Scary, yes, as much because my allocation just took a 3 point jump in bond valuation vis-a-vis total portfolio.  That hurts.

This in October, when both my boys have birthdays.  We have one combined party to save on expenses, and I already do the invitations and catering myself (including tables, folding chairs, tents – all either left over from my single, entertaining days or thanks to my sometime duties in marketing communications (I have nifty publishing tools)), but oy vey, it doesn’t take much to add up.  I’ve even cut *way* back this year, and it still feels tight – more so, perhaps, because more went on debit instead of credit, a minor accomplishment.

And now some gurus are suggesting that the pubic sell their utility positions.  I know I said something earlier about cookies, and foodstuffs are not, imo, a bad investments, but when the go-to guys are suggesting that you divest yourself of traditional utilities, then I tend to get a tad more nervous.  Not that I will, necessarily, because I think as long as we have power people will want it, but that’s a fairly old-school sector, which should remain viable, even if diminished, even in the worst of modern times.  The idea that it might not be stable – well, it send more chills down my spine than the dot-com or even the housing bubbles. 

Hitting utilities like this would be akin to Atlantans avoiding bread and milk while being warned of a blizzard; there’s just something fundamentally wrong with that picture.

I changed my allocations today, with slightly more targeted at bonds, because I don’t know how long this crazy, upside-down world will last, but I’m not divesting individual utilities or their suppliers just yet.  Perhaps it’s Pollyanna syndrome, but it’s just so difficult to get a handle on the idea that Americans won’t pay for power (generated in any form), that I can’t give up my positions there wholesale, despite whatever Jubak might have to say.

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C is for Cookie

Staring at the ceiling didn’t really work for long, so in the wee hours I wandered over to NetworthIQ and started plugging in my numbers.  I used my salary only, my cc debt, my vehicle, my 401(k) and 1/2 the house (mortgage and estimated value).

Strangely enough, it’s in the positive, a little over $90k.  I attribute this first to the fact that we got a good deal on our home (purchased well below market several years ago, so we still have equity even in this climate), and to the fact that the first time I was offered a 401(k), I jumped at it, and paid in the annual maximum while I was still single, maintaining a 12% contribution rate after that until the birth of my first child.

Now I’m sitting at 8% contribution, but all of those years in my early twenties socking away that money was one of the things I’ve done right.  The market isn’t helping me right now, of course, but I’m only in my late 30s, years away from retirement, and it’s not panic time for that yet.  I probably should look at moving some of my contribution rates around because I’ve got 30% going to an S&P 500 fund and I’d like to limit any additional exposure to financial stocks.

You know the best thing I ever did with my portfolio?  I bought Nabisco.  Even in the worst times, people still buy cookies.

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