Move 401(k) to Cash in a Recession? Here’s What Experts Say

Core Insights - There are doubts regarding the S&P 500's ability to achieve a third consecutive year of twenty percent gains, with Wells Fargo's Scott Wren predicting a more modest return of around ten percent by 2025 [1] - An investor's anxiety about an imminent recession has led them to consider shifting a significant portion of their 401(k) into cash, highlighting a trend of fear-driven decision-making among investors [2] - The stock market has experienced a strong run, but skepticism about future performance is warranted, especially given the rapid gains seen in 2023 and 2024 [4] Market Performance - The S&P 500 has increased by 28.3 percent since the late 2021 peak, which is considered strong but aligns more closely with long-term market expectations when factoring in the 2022 bear market [5] - Comparisons are being made between the current AI-driven market surge and the late 1990s, indicating a potential for unsustainable growth unless a correction occurs [5] Investment Strategy - It is advised against making sudden portfolio changes based on fear of a market correction, as predicting recessions and their timing is notoriously difficult [6] - Investors are encouraged to remain calculated in their investment strategies rather than relying on emotional responses to market fluctuations [6]