401K Investors Should Move to Cash

EconMatters's picture

By EconMatters  


Actively Monitor 401k Designations


The stock market is so corrupt, such a gamed enterprise it is comical and is no place for 401k type investors to have their life savings and only retirement funds at risk with the lunatics and absolute corruption of the US stock market.


I am an experienced market participant so I know all the tricks from the inside, and even I am fooled by Wall Street shenanigans from time to time, and I have seen it all and have historical data and sophisticated tools that the mom and pop investor has absolutely no ability to access. 


Take my advice and put your incredible gains - you have probably through dumb luck actually performed better than most hedge funds - but take these massive gains and park your capital in a nice and safe money market fund or cash equivalent instrument depending upon your company`s plan options.


Is Janet Yellen Smarter Than Me?


Predictable Risk Aversion & Jobs Report


The recent trend has been to sell off the market before the job`s report, this is ultra-conservative smart money wanting to get out before the jobs number as the market sold off for five days, and as soon as the number comes out and there are no extreme deviations with market implications, to jump right back into the market, the exact same pattern happened last month the week before the release of the jobs number, the same thing happened this past week in markets.  The takeaway -- Markets are somewhat Predictable – think of valuation levels in terms of Predictable Market Timing Strategy.


A Good Enough Level as Any for Exit to Safety


Accordingly take this opportunity of the rally to exit current market holdings and change your monthly 401k contributions which are going into bond and equity funds to now go into cash equivalents. This means all of your Retirement Accounts from IRAs to 401ks are effectively in Cash! These instruments aren`t going to pay you anything literally, and yes you are going to be losing value due to the effects of inflation, but you cannot look at investing in that manner given the current market valuations, your first priority since these are for most of you - your only retirement savings – that Return Of Capital is your real true concern at this point.   


Furthermore, given these valuations in financial assets and the bubbly market forces that have enabled considerably favorable scenarios to take place: From low-interest rates, 85 Billion of Monthly QE Injections, Bond Purchases by the Federal Reserve, Large Stock Buybacks, Lack of Investment Options in Emerging Markets; the associated risks are too great to take a chance on given these are your retirement funds. Put simply the risk versus the reward in financial markets is too great for these funds.


U.S. Structural Jobs Paradigm


Same Market Forces Exist for Pushing Markets Higher


Yes the stock market via many models will continue to rise into the new year if recent patterns continue as fund managers like to push up markets the first four months of the new year to make their numbers, and with even a slight taper there is still going to be at least 60 Billion of Fed Liquidity injected into stock and bond assets each month, so there is more impetus for markets to go higher versus any natural selling pressure.


401k Concerns Different from Big Banks & Players


However, this is not your primary concern because you don`t know when to get out, and the insiders do, and the big players will decide when the party is over, and let me remind you that professional, large players can hedge entire portfolios for as cheap as 5%, something that mom and pop investors just will not be able to accomplish given their limited resources. 


Do These Valuation Levels Compare Favorably to Entry & Exit Points over last 15 Years?


Your primary concern as a 401k Investor should be: Are these valuation levels where I feel comfortable for the long haul holding given the history of the stock and bond markets over the last 15 years? Moreover, in looking back I would guess that most of your 401k has been halved or worse several times over the last 15 years, and some of you have been completely wiped out with many companies going out of business or on the verge of going out of business like Blackberry or JCPenny.


Too Much Oil: U.S. Storage Set to Pass The 400 Million Threshold 


Multiple Expansion Means Not Cheap


 Let me reiterate these are not valuations built on outstanding earnings, these are valuations built pure and simple on “multiple expansion” which is a euphemism for QE Injections into stock markets via Asset Purchases; these are valuation levels that will not hold up over time. 


So sure the stock market can go up another 11% early next year before the full taper, and eventual stock re-pricing occurs, but the rewards of another 11% upside to your portfolio – I mean life savings – isn`t worth the potential of a 25% or more haircut – meaning no return of your capital – if and when the big boys decide to front run the exodus, which they can do at any time, and you will be the last to realize that no one is coming to buy this latest dip in markets.


Even Sharks Get Eaten Alive in Financial Markets


Wall Street skewers even some of the most sophisticated investors at the drop of a hat, i.e., look at how the big banks and hedge funds made John Paulson liquidate some of his gold holdings in late June of this year during a shorting attack on Gold, and as soon as they covered these short positions Gold went right back up to where it was before the short shark attack at the 1400 level. Gold is retesting these Paulsen Liquidation levels once again in another concerted Gold Shorting attack and even the experts don`t have any real notion of how low Gold can fall if certain technical support levels fail. 


Don`t Fall in Love with Market Exposure


This is just an example to show how one never gets wedded to positions, lines have to be drawn, risk parameters have to be established, and cost benefit analysis has to be modeled even for 401k investors, and the future risks just don`t justify having your retirement savings in equities or bonds at these levels of valuations. 


Safety Concerns & Valid Risk Assessment Means Leaving Potential Profits on the Table


Sophisticated investors can have a better feel for when to get out based upon their vast inside knowledge, market experience and key technical levels but a mom and pop investor who occasionally checks their portfolio once a month at best has no chance of perfectly timing the inevitable market exodus. 


401k Folks Need To Be Out of Market Before Big Whales Start Exiting


The really big players will know when to get out because they are the ones moving the market with their selling, no need to market time when you are big enough to actually move the market, these guys never lose, trust me when they decide to sell, they have puts and derivatives in place to capture immense profit on their exodus of positions.


Therefore, not only does the 401k investor get hit by the big guys exiting large positions in the market, but these guys are shorting the market at the same time, causing selloffs to the market and the 401k investor`s retirement portfolio to be exacerbated and magnified on the way down. 


Yes these guys don`t play fair 401k investor – this is not a safe place or good spot to have your life savings at risk with these sharks playing in your fresh water pond. Salt be damned, your portfolio will see more red in your quarterly statement than you could possibly imagine in such a short amount of time – financial markets often take the escalator up, and the freight elevator down!


Hardest Lesson to Learn – Risk Mitigation Strategy


So sure the market could potentially go up another 11% the first half of the year but just juxtapose this upside scenario versus all the time your 401k has become a 201k over the last 15 years, your AIG and Citi stake has been completely wiped out, and these were legitimate fortune 500 companies not some risky penny stocks.


Markets are corrupt, markets are corrupt, markets are corrupt – this is the first lesson to take to heart as a market participant Mr. and Mrs. 401k Investor – Caveat emptor  – protect yourself at all times!


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BearClaw's picture

Moving to all cash is not a smart way to protect an accumulated value in the long term.

If you're really convinced the markets are going to crash you should short them, or at least be positioned to purchase inverse ETFs.

If you're just tired of constantly monitoring the market and want to protect your accumulation, move it to a qualified fixed index annuity with a guaranteed floor and an 80% participation rate and let the experts hedge for you.

Disenchanted's picture

re: "a nice and safe money market fund"

and what happens if these 'break the buck'?

GlobalCtzn's picture

I was smart enough to see early on the senslessness of both frequent flyer programs and 401k plans. I am a victim of neither.

Teknopagan's picture

When the bank gives a 0 interest rate it is a bail-in already

joego1's picture

I transfered my 401k to a self administered 401k and then I bought some property and rented it out. I can't wait to get the whole thing out of the governments clutches though. I think that after the stock/bond market craps out the gov. will go after what is left of 401k's and turn them into treasuries "for our own good".  You know the line, "So those evil bankster types can't screw us over any more". I'm hoping that I can exit stage right before then.

losingconsciousness's picture

"I am an experienced market participant" means what? Put that on a resume and see what happens.

Lets Buy The Dip's picture

yes I remmber seeing those application at the top of the dot com crash. OUCH!

The thing is this tapering BS will go on and on, and get people short, and to run from their 401k's and its only helping send the market up higher, when they get stopped out.

Have a look at the monthly chart of the SPX here => bit.ly/1bocbZf

This happens all the time, every 7 years the market crashes, but only when everyone thinks the market will never go down again.....and the scary thought is that this is starting to happen again. 

The crusty fat bastads on wall st never lose. They take their mistress to the hamptons while calling the wife, and telling her to keep the house clean and the kids fed. What a world in which we live! **RANT OVER**

Caveman93's picture

Eh, yeah...so closed every 401K I ever owned to something other than cash.  Umm yeah...cash.

razorthin's picture

I just changed jobs so I immediately rolled my 401b and 403b out and away from NY State and the ING captors.  Fuck their "excessive trading" policy and restricted choices, and no way to short.  And, as MrSteve points out, it won't be long before I can't move in and out of the only MM fund availabe without a big price, if at all.

You are damn straight that it is going to stay in my own IRA and in cash-equivalents until this pig market gets stuck.

mrdenis's picture

Have my entire 401K in North Dakota CD's best bank in the world and NO FDIC to worry about confiscation ......

solgundy's picture

no so, rocket man...401-K is a federal gov't sactioned plan....you'll have your federal gov't sanctioned plan stuffed with US Treasury debt....dittos for IRA's et al

Burticus's picture

Now a 201(f), for f*cked, with the k cut in half too.

As the stocks get toppy, rotate into silver as it bottoms, then hold and you'll be OK.

El Oregonian's picture

Left the market long ago, I worked too hard for what I've got just to lose it to a bunch of thieving unindicted co-conspirators.

effing criminals...
MrSteve's picture

This article would be more interesting if it mentioned the possible changes for money market accounts such as floating NAV and monthly withdrawl limits locking you in for years. If your MMF is held through a 401K, it could be subject to institutional rules (aggregate size influences SEC rule qualifications) that li'l ol' you don't imagine applies to you.You may not be the retail, small holder the news stories write about.

With the $250K FDIC guarantee expiring this Dec. 31 for some MMF, there could be some serious changes in the wind for you.


Iam_Silverman's picture

"This article would be more interesting if it mentioned the possible changes for money market accounts"


You nailed it on this call.  Money market accounts are not going to be quite the safe haven they have been in the past.

So, where to direct the 401K assets?  I have all of mine (what I haven't rolled out) tied up in the only stable value plan offered through our company.  It is managed by BNY-Mellon, and is only barely tolerated by our 401K administrator (Fidelity) because it was stipulated that it would be included when we moved our accounts to them after the buy out by KKR/TPG/GS.

Seasmoke's picture

But I need to risk my retirement in a defined contribution, so I can pay for the public takers to retire at 50 in a defined BENEFITS !!!!

Laughing Stock's picture

Holy crap!

This guy's posts are worse than that Pheonix Crapital dickwad.


brettd's picture

phoenix capital is a schill/fraud/fiction.

See if you can find one pic or vid of Summers 

anywhere on the web....Caveat Emptor. 

SolarSystem1932's picture

Ha! This MUST be him....


Looks like he's moved away from Drones for now.

OneTinSoldier66's picture

"...so I know all the tricks from the inside, and even I am fooled by Wall Street shenanigans from time to time"


"and I have seen it all"


He should try and make up his mind as to whether he knows it all, or not.

pitz's picture

Isn't the dollar (ie: "cash") very risky as well?  I'd rather be holding the obligations of issuers that actually make stuff and create value, rather than those issued by politicians who have never made anything and don't know how to.

therevolutionwas's picture

Yes, I would get out of the dollar period. 

Papasmurf's picture


Yes, I would get out of the dollar period. 

Getting out of the dollar implies getting into something else.  What do you preceive as safer?

0b1knob's picture

Go to cash if by cash you mean a dangerous money market fund?  Is there any way to just hold cash anymore?  Can my money go Galt?

Deo vindice's picture

You could always withdraw it and literally hold some of it like PM's.

At least you can get at it when there is a bank holiday.

Pegasus Muse's picture

Ditch the fiat and seek safe refuge at the base of the pyramid.


"If the American people ever allow private banks to control the issue of their  currency, first by inflation, then by deflation, the banks…will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered…. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs." Thomas Jefferson in the debate over the Re-charter of the Bank Bill (1809)

“I believe that banking institutions are more dangerous to our liberties than standing armies.” Thomas Jefferson

Deo vindice's picture

Moved out of bank/state controlled retirement plan a long time ago.

I looked at the numbers with a 30 year projection and saw the fallacy of the whole scheme.