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Author: catworker One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 41629  
Subject: Re: How to Rebalance my CAT 401K? Date: 12/13/2005 12:55 PM
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Ok, a few updates:

1. I'm 32, somewhat investment savvy (OK so I've lost a bit on a few tech stocks earlier in my "youth"... who hasn't?) and am not a big fan of diversification for it's own sake but rather prefer to "put all my eggs in 1 basket and watch the basket carefully" (Peter Drucker... I think... maybe WB). I've got other money invested (about equal amounts) in other retirement vehicles (IRA's and the like) so I don't have 60% of my retirement invested in CAT, just 60% of my Cat 401K. I currently put 50% of my new contributions into CAT stock and 50% into a low expense rate index fund. I've decided that the actively managed funds offered in this plan could be better picked by a monkey and a dart board. Right or wrong, I'm not going there. Unfortunately they don't offer an S&P500 index fund (as that would be easier to run numbers for) but those are the breaks.

2. Perhaps I could have worded my question better, but I'm not really looking for "General Retirement Planning Advice". Not that it's not appreciated, but I'm looking specifically for a "BMW Method" view as to how to make this decision. Anyone on this board is probably more qualified than me to apply the strategy, but I'm mostly using this as a test case to make sure I understand how it is applied.

3. The better (hopefully) worded questions:

Does anyone have data for the Russell 3000 index? How far back does it go? Can a reasonble CAGR curve/ chart be run for this? (Please mkline?)

Assuming a chart can be made, I'm going to compare the CAGR of CAT over the last 30 or so years to the CAGR of the R3000 index and try and somehow factor in an expected side slide for CAT given that it is at 2.2RMS (while also looking at R3000 RMS). Some more handwaving and wringing later I'll have a BMW justified (to me at least) decision.

Does this make sense?

catworker
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