401k Contributors: Should You Get Out Now?

Dow Jones Industrial Average went up 10.88%, closing at 8,175.77, and the S&P rallied over 91 points today to reach 940.51 - sparking new hopes that the market has reached the bottom. If you kept your 401K invested over the past few months by today it must have lost some 20-30% in value. And if you are thinking about taking a loss and moving your money into cash, it may well be too late.

"Generally, selling portfolios after they are down 30% is a bad thing", says Sean Levin, senior strategist at Ameri-Financial. "Because 401Ks are long-term holdings, investors who held on to this point should ignore the short-term fluctuations and continue to stay invested. Holding on for a rebound is probably the best strategy now". That point is supported by Federal Reserve’s expected decision to cut rates to 1% on the 29th following their two-day policy meeting. This may lead to future advances as capital becomes cheaper for banks and stimulates the economy.

The last time the Dow advanced over 10.88% in one day was recently – on October 13. However, prior to that a jump that size has not been seen since 1933, the times of the Great Depression.

By: Jack Sarkissian

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Jack Sarkissian is a senior financial analyst at Ameri-Financial. Visit www.ameri-financial.com/ for news and updates on personal finance that you can not afford to miss. Use our free online tools to establish your financial goals and reach them faster, www.ameri-financial.com/finance-test/personal-finance-test.html.