Did you test it by doing the 25/25/50 rule about getting back in, or was it an all or nothing move at the 200 MA? I agree with you that the simplicity is a bit concerning, but I'm not sure I see anything wrong with a simple system, as long as you don't just put it on autopilot, but actually pay attention as well and identify when the system has stopped working.

There is never a simple way. Just look up performance of LAZY portfolios

Andrew

Really liked this show and as Chris mention above my ears perked as well when Tom went over the 401K strategy. I especially like how simple it was – everybody should be able to adhere to that in one form or another.

Actually I tested it out with some of the index over a 5 year period and was quite amazed with the results. In that period I only calculated 5 or 6 times where you would have to go out of the market – to avoid a downturn before getting back in. Even tested it on a stock as well (NOK) and found that it would have worked well during 2008.

However concerned about it's simplicity… Wouldn't be surprised if there is a gotcha under some circumstances. For future podcasts I would love to here much more about how to manage risk in our 401k.

Keep up the good work and look forward to listen to all you 2009 and beyond podcasts.

Cheers,

Peter, Vancouver CA

1. 529 plans with their funds are also very vulnerable like the 401(k) plans; no way to play the downside. Do you have any thoughts on those?

2. In 2008, I moved 2/3 of my 401(k) to cash in April/July so it really limited the loss to about 14%. I am contacting our 401(k) rep asking them to give us bearish funds and/or ETFs. Since we're not bankers we don't get bail outs for investments that go bad on us.

3. One good thing about American Funds is they were smart enough to be selling out of Fannie while others like Fidelity were doubling down.

1. Perhaps you plan to get to this in part 2 (or perhaps I just missed it), but it didn't seem like there was much in the show on how to actually use ETFs in our portfolio, just more on why they were better then mutual funds. I would be very interested in hearing strategies on how to use these in our accounts.

2. It is funny, but this was the first time I have heard anyone on the show really mention a strategy on how to avoid major drops in our 401Ks. My ears perked up when Tom mentioned his strategy of moving out when the S&P drops below the 200 day MA and slowly back in when it creeps about the 50 day MA. Andrew, you were asking for thoughts on what we would like to hear more about, and I must say this would be my first choice….how to develop and use disciplined investing strategies in our 401Ks where we only have access to mutual funds, some index funds, and bond/interest funds. Since this is where many have their major savings/investments wrapped up, it would be beneficial to discuss strategies for them on occasion (obviously not all the time, as it is limited what you can do in 401Ks at this time).

Looking forward to a great, new year of TDI.