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Referring to yourself, compare the difference between having to say, "That was certainly a dumb move," or the resigned expression of: "I woulda, shoulda, coulda." Of the two situations, most human beings feel that not doing anything and enduring the consequences is preferable to having taken an action that produced a bad result.

If you stayed the course and remained committed to stocks or stock-oriented mutual funds through the 16-month crash, you can start feeling like a genius once again. Before much back patting, however, consider the possibility that our smart decision to stay put may have been just "status quo bias" - the catatonic inability to make a change.

A relatively small number of 401(k) participants ever make any change from the original investment choices they selected when they joined their plan. This common human behavior stems from the fact that when bad things happen as a result of our inactivity, we tend to shrug off the consequences. Taking no action is a preferred state of being.

Today's confidence-inspiring financial circumstances might prompt some of us to want to tamper with our money, so a review of the basics would be timely. To start, let's hope that we have followed one of the key rules of investing which is to diversify. This means that we have a variety of different types of mutual funds in our retirement plans.

Looking at the rates of return for the past 12 months, we can see that small-company funds have gained as much as 70 percent. Large, value-oriented funds are up 80 percent. The S&P 500 Index is up about 50 percent. A balanced fund that is two-thirds bonds and one-third stocks is up 37 percent while the opposite mix (more bonds than stocks) has gained 28 percent. Finally, an international fund would be up about 50 percent and an emerging markets fund would have gained 100 percent.

This would be the time to consider rebalancing a portfolio. Take a look at the percentage of the total amount that the different funds in your plan currently represent. Compare today's percentage with what each fund represented a year or two ago. Or, compare the current percentages with the percentage allocation that you chose as the way to break out the per-pay period contributions. Make whatever changes are necessary in the dollar amounts of your current assets to get the money spread out once again in the original percentages. When you have finished rebalancing, you will have forced yourself to take a few dollars away from your winning funds and deposit them into your relative "losers."

Doing this on a regular basis amounts to "selling high and buying low." It's the holy grail of investment success, and over time it will generate better results than the "status quo bias" would have delivered. A few percentage points per year can increase a retirement nest egg by 50 percent or more over 30 years. Moving all stock funds into cash would be an act of desperation that rebalancing helps to avoid.

For those who may have missed the ride of the exhilarating last 12 months, there is always the opportunity to enter the market once again by dollar-cost-averaging. This is the practice of moving funds on a regular basis out of cash and into stock-oriented funds. For those who experienced panic, bailed out of the market, and who are now hesitant to return after the amazing recent run-up in values, dollar-cost-averaging offers an automatic means of getting back on the horse by taking advantage of inevitable market drops (so-called "corrections") that will surely occur in the months ahead.

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