Sunday, January 1, 2012

^ 19.03%

at the beginning of 2011 I started contributing to my company's 401(k) plan. first time I've ever participated in one of these schemes. In the beginning it frustrated me how few real options the fund offered. a number of different stock funds, but all of the general variety, no sector or industry specific funds, or anything like that. and then a handful of bond funds, but the only thing I really wanted -- a long duration treasury fund -- was, of course, not offered. so I just signed up to put everything in the Pimco Total Return fund.

so I left everything with Pimco until October 4, when I transfered it all into a small-cap fund. then I put it back into Pimco on October 24.

according to the retirement fund website my rate of return for the year (adjusting somehow for contributions) was 19.03 percent. meanwhile, the Pimco fund returned 3.64% for the year, and the stock market was flat at best.

by comparison, the best performing mutal fund (according to Bloomberg) gained 12.1 percent in 2011.

so my retirement account outperforms the best mutual funds and yet had exposure to stocks for all of three weeks in the entire year. call it luck, but to me it demonstrates that a disciplined approach to market timing may actually have a place in long-only, 401(k) type investment planning. thoughts?