I’d been handling investment of my family’s 401(k) monies for more than 40 years — very successfully, I can add — but early this year I moved everything under professional portfolio management at Fidelity Investments.
Why? Because for most of those 40 years, moving the invested money into the right mix of stocks and bonds was mainly about keeping up with company earnings, dividends, changes in management and whether some stock was flying too high for its own good.
It involved some discipline but was doable and my wife and I and our daughter did very well.
Then something changed. There was more than just earnings per share or the retirement of a brilliant CEO. Suddenly, market moves were happening on the basis of some political event here or overseas, and maybe whether Chairman Kim fired a new test missile, or didn’t. Or what the Japanese central bank decided to do about interest rates.
Those were things people in New York and Washington knew about well before me in the middle of the Pacific ocean. They were in a stock/bond or out while I was still asleep.
So I decided I needed Fidelity’s experts. Their headquarters is in Boston, but that’s close enough to Washington and on the same time clock.
But like everyone else now with the virus disruption, our portfolios are taking a hit. It’s scary, especially when you’re old and will need the money.
A close friend I’d advised periodically over the years about investing called to ask if she should think about selling. I said no, because you’ll lock in losses that right now are just on paper and probably miss the moment to buy when the market recovers.
Then I had a second thought. It might be tax advantageous to take a big loss if you will also have some big income gain this year and want to offset it with a deduction.
And maybe the market won’t recover!
Other than that, it seems that “steady as she goes, mate” is the best course. If we can’t get this virus under control by fall, however, we’re in the deep doodoo! It will make the tumble so far seem like small stuff.
So at some time it does become incumbent on oldsters like me to consider selling some of what’s left and tucking it under the mattress. If you’re very old, you’re unlikely to live long enough to have that cash eaten up by inflation.
And the economy may even be far too weak to have inflation.
Now I’m going off someplace quiet and think about this.