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Openness is important with everything in life.  Today though I want to discuss a much lighter-hearted topic.  The 401k.  It’s a new year and after getting pounded (like the majority), it’s time to rebalance my portfolio.  My last rebalance was 2 years ago and I was heavy in the international funds (Europe, Asia, etc.).  Those took quite a beating thus far, but it’s time to put the past behind me and look to a brighter future.

Based on where the world is with the recession, I believe the US is further along than the rest of the world.  Therefore I will focus most of my portfolio on US funds.  As for the split between small, mid and large caps — I am on the fence.  For one, recessions seem to “trim the fat” in the sense that businesses with real opportunity, business models, liquid — fail.  The credit crisis also put additional pressure on these companies already strapped for money.  I believe there are innovations to be since in this sector, so I won’t turn my back on it, but I surely won’t focus on this area.  The large caps seem to be getting lots of the action (e.g. bail out money).  Many of them have fallen down dramatically even though they have proven to be good businesses (Johnson and Johnson, Coca Cola, etc.).  I will put extra focus on this group.

I’ve also neglected the “bonds” side of things.  I felt that I could be more aggressive (at 24) and so I went 100% in stocks.  (Note: I do have cash, but we’re talking about the 401k here).  However, I want to change that and add some stable value to my portfolio.  To do that I’m grabbing some of my companies stable value fund.

Here’s the full breakdown: