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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76398  
Subject: Re: Undiversified 401K Date: 2/23/1998 11:42 AM
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Greetings, RCMX, and welcome.

<<I have about 96% of my 401K invested in Contrafund. I am 28 years of age, and have been contributing regularly for the last six years. When I changed employers recently, I rolled the 401k into a Rollover-IRA...leaving everything in Contrafund.

Question:

Should I split some of the Contrafund holdings into something else or should I just direct NEW contributions to funds other than Contrafund?

I wonder if I am better off leaving that large position in Contrafund alone so as to take advantage of the compounding associated with a larger holding.>>

If you're worried about diversification, there's plenty within Contrafund. However, if you're worried about return, you have every right to be. Contrafund is following the pattern of most mutual funds in that it can't keep pace with the marker as measured by the S&P. Over the last five years, it's fallen on some hard times. Here's the data as of Jan 31, 1998:

Name 12-Mo YTD 3-Yr 5-Yr 10-Yr
Fidelity Contrafund 18.06 -0.28 27.48 18.86 22.21
S&P 500 w/Div 26.90 1.10 30.49 20.31 17.67
Vanguard Index:500 Port 26.79 1.11 30.40 20.19 17.49

Stick with the fund if you want to; however, IMHO you would find it easier to go with the Vanguard which consistently keeps pace with the market. Better yet, now that the money is out of the 401k and in an IRA, start thinking about investing on your own without having to rely on funds at all.

Just one Fool's opinion FWIW.

Regards....Pixy
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