My 401k has been rather disappointing the last couple of years, I’m sure I’m not alone in that either. I, like everyone else, had a massive drop in value in 2008, got about half of that back in 2009, and it has been piddling along ever since. A big problem for me is the lack of flexibility in my 401k accounts. One of the really cool things about my current 401k is that I am allowed to do my own stock decisions. The ones I had before only allowed me to pick from a handful of mutual funds, now I can pick from any of them or from any stock.
Yes, that has its dangers, but there is a lot of potential as well, especially with the current economic situation. I don’t think that any mutual fund or index fund is going to trend in a positive direction any time soon. Here’s my plan, I am going to concentrate in stable businesses that aren’t going anywhere, have low levels of debt, and most importantly, pay decent dividends. If stocks are going to be going down, I might as well have some that will allow me to add shares so I can benefit when things turn around. I’m still undecided on what to do with my Apple shares. I do think we’re going to continue to go up in value, but I’m always nervous about tech stocks. A large part of me says I should take my profits and pour them into a long term position, but we’ll see when I get my shares…
There are also a handful of speculative stocks that i would like to buy as well. These are are true penny stocks, most of them trading below a buck a share. Here’s the thing, if a share is only 50 cents, a move of 50 cents will net me 100% return, more than that would be wonderful as well… And since they are so cheap, I won’t be risking much money on them. There is an outside chance they could blow up for crazy money, but the key will be the small movements. Once again, low debt, good cash flow, and possible break outs are the keys with those guys. It’s worth a flier in a gloomy economic climate.
It’s also a good idea to keep a certain amount in cash. I am truly, really afraid of big time inflation coming our way, so I am going to avoid CDs for the time being. Instead, I am going to put my money in metals. Gold and silver are expensive right now, but they continue to rise in price. Plus, my worldview is such that even if the dollar does become stronger against the metals I think it would be a good idea to have a position in them.
We’ll see what the future brings economy-wise. I hope that things are not going to be as bad as I think they will be, but I will be prepared if they are. With any luck I’ll be in a stronger position this time next year, wish me luck! Here’s to a return of a healthy economy and a strong dollar!