In this hypothetical scenario a 401k account owner thinks that the market might be about to take a turn for the worst and wants to minimize their losses. They choose to do so by temporarily reallocating all of their money into AMUSX to ride out the storm. They then plan to return to a more risky investment stratigy just a few weeks later (after the market hit bottom), is there a fundamental problem here?

For instance, would it cost the investor more money to pull their money out of AMUSX then they would make off of the temporary reprieve or anything like that?

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There is no fundamental problem....IF things play out exactly as you've described in your hypothetical scenario. AMUSX has a 0.67% expense ratio and it doesn't appear to have a redemption fee. Even if it did, those expenses put together will be minuscle compared to avoiding a market crash.

However, as mentioned earlier, this is only IF you're accurate in predicting and timing market moves. Of course, we are in very different waters these days, and i can understand a very reasonable urge to fly to safety. This still doesn't nullify the fact that over a long period of time, someone who buys and holds i.e. lets their retirement ride with the markets (keeping with whatever asset allocation is appropriate for their age/risk profile) will outperform another person who moves positions around constantly trying to predict and time the market.

In summary, as a one time thing, I wouldn't necessarily be opposed to the idea, but in trading and investing, one time things have a tendency to become habits, so be careful.

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