Yesterday, I missed another opportunity to rebalance my 401(k) account.  I had this magic number in my head, and once I hit that mark, I swore to myself that I was going to rebalance my portfolio so that it had less exposure to the equity markets.  I was less that $1,500 dollars away from hitting that mark.

So am I going to sell out tomorrow?  No, most likely the market will recover a bit so I’ll hold on.  I don’t know about next Monday though.

I actually like it when the market is a bit choppy for a while, that enables me to buy some more shares at a lower price (dollar cost averaging).  Of course, I still want the general direction of the market to climb upwards…

In my taxable brokerage account, I still have some money on the side, but I’m not in a hurry to jump in, especially so early in the game.

The amounts in my accounts are now much more important to me, I must shift my portfolio so that I am exposed to much less risk in the marketplace.

I will still keep my speculative amount for playing in the market though, but only 10% of my entire balance.

Readers, please consider creating a balanced portfolio (a mix of mutual funds, bonds, and cash like investments) at the beginning instead of just having and agressive equity only portfolio.

-MR

UPDATE: (5/7/2010): Sounds like the problems was worsened by market orders!  This should be a wakeup call to us all that we should always use limit orders when making trades!  The markets still doesn’t know what happened yesterday.  They do believe that with the complex electronic system being used, a cascading effect took place.  I have to wonder if the uptick rule mechanism would have prevented this from happening?  The flaw would still be there, but perhaps the uptick rule would have short circuited the damage.