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Do I increase my 401(k) to an unaffordable level?
That's where Cramer put it when the market was at 11,000. I said that it would fall to around 10,000 (was thinking like in the territory of 9,900). This has been very crushing.
The market is now down a full 40%; that means that it dropped 20% to initally reach a bear market and has since than, dropped another 25%. The frustrating thing that I never really understood about this market is that we were only 10-15% over-bought at 14,000 (not substantially like we were in 2000) and we still have a major correction that teters on being equivalent to what happened in 2000 (just that the PE is significantly lower than it was in 2003).
I have a quick thought of rasing my 401(k) to 20% of pay which would be double to what I'm currently contributing. I couldn't really afford that and that would mean about 5-10% margin with a 1-2% growth in margin each month. I'm thinking of panic buying to make up for these losses (by being cheaper shares), but the problem is how long you need to wait to realize the reversal if such a strategy is employed.
Those who don't follow the herd get stuck by people who do! At least my break-even has been falling to much lower levels and I'll benefit from a nice tax deduction.
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