Participant Trading Spikes on Market Highs

That was the day of the surprise Fed rate decrease, and record 14.2% gain on the NASDAQ as US markets soared.  Participants moved into equities on a net basis on that day, likely buying at a relatively high point for the month, despite recent downturns.

Quiet December
 
In December there was only one “high” transaction day, December 5.  That was the day the NASDAQ notched a 10.5% gain, its largest ever at the time.  Participants headed for equities on a net basis, again likely buying at a relatively high point as the S&P 500 rose nearly 4%.  Major US stock indexes all registered gains of 3% or better that day.

However, in December participants were moving to fixed income on 65% of the trading days, compared with just 30% in January 2000.  They moved into fixed income funds on a net basis on 61% of the trading days in November.

Equities continued to draw new investment, with 76% of December contributions flowing to stocks.  At year-end, 73% of total assets of the plans covered by the Hewitt 401(k) index were invested in stocks, identical with November’s allocation.

Slowing Down

There were 25 above average trading days in the first quarter, 17 in the second, 7 in the third and just 1 in the fourth quarter of 2000.
 
The Hewitt 401(k) index is based on data collected daily from 1.5 million 401(k) participants with approximately $68 billion in collective assets.