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Time to Go to Cash in Your 401(k)?

You can see from the screenshot above that this is still very much a risk-on market, with precious metals, small-caps, mid-caps and emerging market debt at the top of the heap. This is good information to know and to stay on top of in coming weeks and months as it relates to your 401(k) allocations. You can follow me on twitter @billgunderson for changes.

Now let's look at the bottom of the asset class pile:

Data from Best Stocks Now App

When the referee untangles the pile and finds out who is that bottom, he finds inverse funds, the Green Bay safety, and more importantly short-term Treasuries (stable value). Being bearish on the market or sitting on the sidelines in cash has been the worst place to have your money allocated!

I know that your doomsday newsletter tells you that inflation will go through the roof and that you should not touch the stock market with a 10-foot pole, but that has not been very good advice for the last several years. Listening to these doomsayers has been worse than the NFL ref strike-unless you are a Seattle fan.

The S&P 500 is up about 16% year-to-date. You have to make hay in the market while the sun is shining. Missing out on a 16% run in the market is a big setback in a 401(k). Furthermore, the Nasdaq is up almost 22% so far this year and small-caps are up about 15%.

Risk-on has been the place to be. I have kept my followers there for three years now.

How is sitting in cash working for you? I reminded you again back in June of this year that cash was the worst place to be. Did you listen to me?

How about that inflation trade? If inflation was so rampant then Treasuries adjusted for Inflation would be a great investment right now. Let's take a quick look at how they are performing:

Data from Best Stocks Now App

As you can see, TIPS have gone nowhere over the last five years and have underperformed equities by a wide margin over the last 12 months.
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