The Full Motley: 1Q 2011

Well, well, well, the markets hit the ground running in 2011.  I am expecting the markets to rise less than 10% this year, which means the next 10 months are going to be extremely mediocre or we will experience a serious retraction.  For those familiar with the Halloween indicator, it would seem as though this year is going to be one in which the theory to "sell in May and go away, buy back on St. Ledger's Day" (which is an English holiday around the time of Halloween) will be beneficial.

Personally, I am banking on it.  Literally.  I am directing all of my IRA contributions in those months.  I can let you know how it turns out in the fourth quarter, but so far, this year is in the red all over as the Dow even surpassed 12,000 in the past couple weeks.  Well, not all over.  Remember, my "Double Bubble" expectations.  After the first month of the year, the Vanguard Precious Metals & Mining fund showed a YTD return of -9.72%.  Conversely, the Vanguard Total Bond Market Index fund wasn't doing too bad -- or too good.  In fact, it isn't doing much of anything with a flat YTD return of .08%.

In terms of my new foray into active management, the Vanguard Total Stock Market Index fund is showing a YTD return of 2.19% at the end of January whereas the Vanguard PRIMECAP Fund is showing 2.71% for the same time period.

For the specifics actions required for my maintenance of my 401k account for this quarter, here is my breakdown:

Fund # - Real / Current / Target
Fund 24 - 26% / 10% / 25%
Fund 29 - 4% / 0% / 5%
Fund 59 - 16% / 50% / 25%
Fund 84 - 9% / 0% / 10%
Fund 85 - 36% / 35% / 25%
Fund 113 - 10% / 5% / 10%

Based on these numbers, the rebalance was simple enough.  I moved $500 from Fund 24 to Fund 29 and $800 from Fund 85 to Fund 84 (I didn't want to touch Fund 59 yet since I am still building it to its target).

Obviously, the biggest issues facing the Dow right now are overseas in Egypt.  While it seems to have had a minimal effect since the markets have been positive so far, but the adverse impact is questionable since it could have limited the gains, but I have to think this recovery has been so fragile that any adversity should send it downward.  Then again, it could always happen tomorrow.