Not Your Father's Retirement Strategy, but Better

By Richard Schmitt

NEW YORK (TheStreet) -- "The times, they are a-changin'," Bob Dylan once warbled. Although unlikely, Dylan could very well have been referring to changes in market conditions that should prompt a new look at traditional retirement savings investment strategies. To savvy investors tired of languishing returns of late, perhaps his lyrics could serve to underscore the market's message: move over, buy-and-hold investors; there is a new sheriff in town, and he is 401(k) daytrading.

Conventional wisdom once suggested holding stocks for the long term. After all, the broad stock market rewarded buy-and-hold investors with generous returns in the range of 11% per year on average from 1926 through 2000. It seems investors got used to the powerful engine of economic growth driving outsized market returns over the long term.

Flash forward to today. Long gone are the 1980s and 1990s when upside reward ultimately overwhelmed any downside risk of investing in stocks. Now, bumbling along through a "Lost Decade" and beyond to the present day, the broad U.S. stock market as measured by the S&P 500 index is again revisiting levels first reached some 13 years ago.

Changing on a daily basis that may defy logic at times, the broad U.S. stock market has dramatically flitted twice between some heady exuberance and near despair, all to end up about where it started the new millennium. This new era of market volatility that has somehow managed to balance its gains and losses has sharply reminded investors of the potential downside risk that accompanies the upside reward traditionally offered by stock ownership.

Remember too the day when Mom was busy at home raising the kids, while Dad worked one 9-to-5 job during his entire career until he retired with a good old-fashion pension and Social Security. Then pensions began to wane as 401(k) plans came into favor, and the continued long-term viability of Social Security in its current form came into question.

Now both moms and dads work all kinds of hours to raise a family, all the while left with the task of managing serial retirement savings accounts from their employment venture(s), in the hopes of some day being able to retire with enough to make ends meet from their 401(k)s, personal savings and maybe even some Social Security.

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