This morning at 7:35 a.m. P.S.T on CNBC, for the first time someone in the media broached the concept of ETF’s being in 401k’s. Tom Lydon of ETFTRENDS and Bob Pisani both proposed that they will eventually be part of 401k’s at some point in the future. Considering that 1) ETF’s have been around since 1993, 2) that they account for 40% of the trading on the domestic exchanges, and 3) that they account for 6% of the all assets, it is about time that this idea be discussed. There will be problems though. First, the purposes of the various ETF’s need to be understood fully before they are purchased. Second, having the knowledge of how to use them properly will be used as a major objection to their inclusion in retirement plans. It is this problem that I have tried to address by trying to provide a simple tool for novice investors in WWW.FUNDSWITCHERS.COM to use as a guide for when to move in and out of stock funds or Fundswitching. Fundswitching was the original means of trading an asset class as opposed to the now discredited buy and hold methodology. (Read my page on ETF’s for more on the background on ETF’s and Fundswitching) The major problem was understanding the level of risk in the markets. The Risk Level Indicator was created to address this need. As of late, it has been pegged to the high risk level and is now beginning to move lower. In early March when the market was at 6,500 it was pegged to the low risk level. I believe we should see the market move to the 7,200 – 7,500 level where I think will be an opportunity to move back into stock funds again.
