Time to Take Some Profits and Rebalance My 401k Again By: Curtis Ophoven 10/7/2009 - 6 Comments Global markets have rallied in the last six months and it’s time to take some profits. Your Ad Here My 401k is up over 36 percent this year, as are many markets around the world.  But I don’t think the rally is justified, at least not in the U.S. with staggeringly high unemployment and a deepening recession. The dollar has begun to sink, but global markets still appear to be coupled together.  I think the U.S. stock market could be headed for a crash and soon.  The question is what will happen to the markets in Asia and Europe?  Global Markets Coupled Together Will they follow the U.S. market crash like they did last year or will they break there tie to the U.S. market and continue the rally?  I don’t think they will at this time.  I think it will take another global stock market crash before foreign markets finally become unglued from the U.S. markets – and the sinking dollar will be the catalyst that causes international investors to pull out of U.S. markets. In light of my market analysis, I have decided to rebalance my 401k and move my 36% increase in profits into a safer place before the crash.  If the rally continues, I will miss out. But if the markets crash, I will have preserved my wealth and will be in a great position to get back into the market at the bottom again. If the markets stagnate for the remaining of the year, then I have not gained or lost anything.  This is also a very likely scenario. If you recall the last time I rebalanced my 401k at the beginning of the year, I chose two sources from my 401k options; natural resources (oil, gold, other commodities) and International markets.  Both have done very well as has the entire global market.  I just want to keep my gains and I’m skeptical of the lack of corporate earnings to support the current rally. Therefore, before the disappointing end of the year results drive the markets into a tailspin, I’m getting out.  As of today, I’m rebalancing my 401k into two new options; a money market fund (basically cash) and a utilities fund (which has not seen much growth this year). The money market fund is risky if the dollar sinks, which I’m convinced it eventually will, but if the markets crash again the dollar will enjoy a flight to safety like it did when the market crashed at the end of 2008. If the market doesn’t crash by the end of the year, I will reconsider my options.  But for now I’m happen with my 36 percent gain for the year and I’m willing to risk losing out of the small chance that the markets will gain any more the rest of the year. Correction: By the time the transfer of my funds was completed, my yearly gain was over 40 percent. Disclaimer I am not a licensed financial advisor, so please consult a licensed professional before making any investment or financial decision.  Related Articles Rebalancing My 401k When the Numbers Don’t Work Out, Change the Accounting Rules Why I Couldn’t Resist Refinancing My Mortgage Again Will America Decouple From The Global Economy? Why Investing in a 401k is a Bad Idea   Subscribe via RSS Copyright © 2010 PennyJobs.com. All rights reserved. << FREE >> Weekly Newsletter... Signup today and start receiving our free weekly newsletter! Reader Comments Comment 1 s Says: on Wednesday, October 07, 2009 5:37:29 PM The demise of the dollar. In a graphic illustration of the new world order, Arab states have launched secret moves with China, Russia and France to stop using the US currency for oil trading. By Robert Fisk http://www.independent.co.uk/news/business/news/the-demise-of-the-dollar-1798175.html In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar. Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars. The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years." Comment 2 k Says: on Wednesday, October 07, 2009 5:38:56 PM SALE! REC SCM220 220 Watt 20v Solar Panel 2200 WATTS http://www.readymaderesources.com/cart/index.php?act=viewProd&productId=3041"The SCM Series is a high-quality series of solar modules designed to meet exceptional system and module performance. REC manufactures its own silicon, wafers, cells and modules and does extensive quality control throughout the completer production process. REC can be depended upon to provide a secure, steady supply of modules that are manufactured to the highest standards of quality from beginning to end." Comment 3 Curt Says: on Thursday, October 08, 2009 7:54:42 AM More support for a stock market pullback "The CEO of one of the world’s leading banks, HSBC, Michael Geoghegan, reckons there will be a “second downturn in the coming months” and is now postponing plans to expand the already global superbank. " "I'm not as convinced we're through the worst as others are. The reality is that profits will be quite reduced,” said Geoghegan. " http://moneynews.newsmax.com/financenews/hsbc_second_downturn/2009/10/08/269865.html Comment 4 Lawrence Says: on Thursday, October 08, 2009 8:13:12 PM Mine has grown quite a bit this year as well but definitely as enough to cover the losses I've taken over the last few years. Comment 6 gold bullion Says: on Wednesday, November 04, 2009 2:34:00 AM Thanks for the article..its very informative Write a Comment Please keep comments civil and on-topic. 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