Managing 401(K) Plans

The stock market tanked in October with domestic stock indices falling across the board, making September appear to be a walk in the park. The Wilshire 5000 Equal was the biggest loser at a -36.23 percent, but was closely followed by both the Wilshire 5000 Value at -32.98 percent and the S&P 500 at a -32.84 percent. Foreign indices dropped even more, with the international MS EAFE falling an amazing -44.58 percent as of Oct. 31, 2008. Looking at yields over the long term, the barometer by which retirement holdings should be judged, the Wilshire 5000 Equal did well over the past 10- and five-year periods. But diversification to limit overall risk is clearly needed, and the current financial crisis couldn’t bring that fact more clearly into focus. Over the 10-, seven-, and five-year periods, GICs outperformed five-year Treasuries and bonds. Meanwhile over the three- and one-year periods, five-year Treasuries prevailed.