Inertia behind 401(k) stability

Of nearly three million 401(k) participants at Vanguard, 16 percent were 100 percent invested in stocks at the end of 2008, down from 17 percent in 2007. At Fidelity, which serves about 11.2 million participants, 15 percent of investors had all their money in stocks. Automatic contributions make it even easier for investors to distance themselves from managing their 401(k) accounts.

The Journal warns against the buy-and-hold – and hold-and-hold – strategy. “It worked well in the 1980s and 1990s, and again over the past six months as the market partially rebounded from its collapse. For the past decade as a whole, it hasn’t worked well. So investors should be patient, but not catatonic; they should rebalance annually to sell some of what has gone up and buy some of what has gone down.”