I have ~$61,000 in self-directed, tax-deferred money in Principal stock mutual funds- 50% blue chip, 20% international, 20% midcap, and 10% international small cap. The overall performance (including expenses, 3.75% front load) has been abyssmal. I want to switch to a 500 index fund and/or Foolish 4, but several "experts" tell me that these stocks are significantly overvalued and do not recommend buying large caps or index funds at this time. Should I be patient and give my midcap and intl funds time to recover, or should I switch to a foolish approach now?
Only you can decide how patient to be in the face of abyssmal performance.I'll just point out that you've got some of your money in large cap stocks right now. I'll bet that blue chip fund is mostly large caps.Michael
I listened to those "experts" all through 1997 and 1998, while the overall return of my portfolio remained well below the S&P 500. Switching to a "foolish" portfolio and discount "e" broker late last year has improved my return four-fold.Remember that the experts that are claiming that the large caps and S&P index funds are over-valued are the same experts that probably reccommended your current portfolio and "abyssmal" return.Don't hestitate, be "foolish".
IMHO you should impliment an investment strategy when YOU are comfortable with the strategy; market be damned. If you are ready, do it, if your not, study it some more & impliment when you are psychologically ready. Otherwise, should you impliment & it goes sour for a while; then it's some one elses fault; whereas, if you impliment when you are ready & it goes sour for a while; you will have the fortitude to ride it out.
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