my company is in the process of changing 401k providers to Fidelity.Their new rules mean that i must make trades longer than 30 days. I get three times per rolling 12 months to cut a trade shorter than 30 days.There is no brokerage option, just the usual 10-12 funds to choose from. So given the new rules, i am wondering what the best way to manage the account might be. I have been swing trading in outside accounts, with moderate success, for about 2 yrs. now, so i do have some experience there. This is what i see as my options. 1. swing trade the weekly charts of the funds,saving my 3 times for getting out of busted trades.The biggest problem with this option is potentially missing out on a extended move. Hard to fill up those forms when the cement truck is on the sidelines! And i could be stuck with a bad trade if i didn't have a "stop" available.A more surgical approach than option 2, but has it's own problems. 2. Go to some form of momentum based fund-switching technique.That is, be in the market almost all the time,except when the bond or mm fund surpasses the stock funds in the ranking. I could divide my money between 3-4 stock funds initially,so the transition between stocks and cash might be incremental.In a bull market, i think this option might be hard to beat.I think i would get beat up more when the market transitions to a cyclical bear, than with option 1. I realize people here are really much more short-term oriented, but this board is where i think i can get the best feedback.At any rate, thanks for listening.
with your limited options (ie no stocks) I'd just pick one or two of the funds offered and buy & hold. Spend your swing trading effort in other accounts where u have full flexibility (either taxable or roth). I'm not a fan of swing trading funds since you won't know the sales (or purchase) price until after hours. Also, add to that the 30 day rule. Momentum may be possible, but I'm guessing all the funds you'll be offerred are broad market funds (maybe targeted, value, growth, small, mid, large cap, bond/stock mix) and not sector funds (which would be the best to position trade).
Sector Rotation is a popular strategy among mutual fund switchers. The "Formula Research" newsletter has published several fully mechanical systems that trade this way and appear to produce attractive returns. Average holding period is about 3-6 months (but can vary of course). To find and buy their backissues use the google search string "Formula Research" AND newsletter If you're interested in backtesting mechanical trading strategies on historical mutual fund data, the consensus favorite seems to be Fast Track at www dot fastttrack dot net http://www.fasttrack.net since they are mutual-fund specific (unlike Worden Bros or CSI or Yahoo).
Average into 2 or 3 Sector funds and 1 index fund. ONLY look at it at the end of every Quarter. Rotate in or out accordingly each Quarter. Aggressively trading your 401K is a waste of time unless you are able to flip RYDEX funds in and out!..........(or have no holding restrictions) Good 'ruck.