The Full Motley: 1Q, 2014

It is hard to believe that we are almost halfway through the first quarter of 2014.  Because, personally, it feels as though we should be further along than that!  Regardless, there have been a couple years in which the first quarter of the year has been so strong that there was not a day in the remaining 9 months that was lower than where the year started.  Obviously, this is not one of those years!

Market fluctuations are part of the game.  The market does not always rise and never falls anymore than people do expect to always be happy and never be sad.  The point, much like life, is to expect things will be better in multiple years to come based on the choices we make now.  Few people are expecting the market to be up 10% by the end of the year (like I predicted it would be in my annual preview) but if the market falls 10%-15% in the first half of the year, then it would have another six full months to gain another 25% when the bears hibernate.  That is not to insure a strong probability, but merely assessing possibility.

Overall, my account is down from where it started this year, as expected, but I was intrigued to see which fund had been performing best so far this quarter (which is to say, it had lost the least).  It turned out to be my actively managed large cap fund.  None of the moves to rebalance equaled 1% of my overall portfolio, but I performed the rebalance in my former-employer's account.

Perhaps the more interesting situation nowadays is that my former-employer's 401(k) account is not my only active 401(k) account these days.  Having been on the job for two full months now, my new employer's 401(k) account is going to grow exponentially.  My hope is that it will grow higher than the markets fall, but when buying into the market, having a depressed market is hardly a bad thing.  Additionally, I would be able to revisit past investment strategies, such as directing all new money into one fund or sector and then rebalance quarterly.  It would make more sense to rebalance that account quarterly and then only rebalance this former-employer's 401(k) twice a year.

In future years, I may need to revisit my rebalancing methodology entirely.  The option to roll my old 401(k) account into my new account exists, but the investment options are superior in my old account, so it is an option that does not appeal to me at this point.  Additionally, I could roll my old 401(k) account into my Roth IRA.  But, as for right now, I prefer having it separated.

It will be more interesting in May to see how my new 401(k) looks since I will have been contributing to that account for six months by that point.  And, of course, it is anyone's guess where the major indexes will be at that time!