Stock Market Cycles Control 401k Investment Strategy

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Finding a defensive stock market strategy is tricky but can be done with the right information that is learned from Lee Smith, creator of 401kinvested.com.

John M. Shelby, analyst of stock market statistics, is now providing a defensive strategy that dictates the cycles of the stock market. Before a recession begins, investors are able to exit the market when it is at a 1 year low and enter after a recession when the market is at its 1 year average. These are the only two phases the occur when the market corrects itself because there can only be one low point and one average point over any time period.

In a interview with Lee Smith, "A stock market cycle is when the S&P 500 Index goes to a 1 year low, it will continue to go down until it stops. Once it moves up and crosses its 1 year average, the stock market as a whole continues going up until eventually the next 1 year low. The chart of this Index tells you when to enter and exit mutual funds."

The leading indicator for stock market collapses by professional Mutual Fund Managers and Wall Street Advisors is the S&P 500 Index. According to Morningstar Inc., money managers do not beat the Index on a long term basis causing it to be used as the bench mark for the overall market.

The index consist of 500 of the biggest companies in the world. Their stock prices rise and fall depending on their earnings which is a reflection of the economy. The companies in mutual funds are the same in the S&P 500 Index.

Mutual funds in a IRA or 401k had seen a huge decline in their value in 2008. The last time the stock market dropped this far was in 2001 and 2002. Financial Planners state, "Avoiding stock market collapses is the number one priority for retirement. If there is no defensive strategy that protects against losses then expect a substantial decrease in account value."

To see when the stock market will collapse next, visit the website below.

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