It's not risky, IF you sell high and buy low. It's always those that panic and sell when the market goes down that loose. So, far, I've been able to keep my 401k at it's highest level. If the market plunges while it's in risk and not cash, the smart thing to do is wait it out, like I did in 2008/09. Many people I know paniced at the lows and sold out, including my retired sister, who lost 1/2 of her money. I warned her not to, but she did it anyway. Bought an annuity with almost 100% of her money, which at the time was 1/2 of what she had.
So. Yes, you can loose good money, if you don't know what you're doing. But to make money (even in a 401k), timing the market is the best way to do it when you don't have a lot of time. I subscribe to a site called Stocktiming.com that helps with the overall market timing situation, and I study charts.
It's not the small time traders that cause the market swings, nearly as much as the institutional traders such as mutual funds and hedge funds that trade in enormous quantities. But there is an upside to this for the opportunistic trader and that is market volatility makes him rich. You just trade the huge swings as best as you can.
If I bought SPY (fund that mimics S&P 500 index) in November 1998 and held onto it. Today, it'd have the exact same dollar value as it did in 1998. You can't say that buy and hold works.
One more thing. I have to make this work for me, because it's what I plan on doing for a living after I retire. 8 years of playing in a ROTH IRA has taught me some valuable lessons about how dangerous trading is.
Edited by CatBrat (09/24/11 06:12 PM)