Need some help - freaked about the market - should I pull out?? 401K/IRA only

[savingtofreedom]

Ok so I understand that at a high level to make some money in the market long-term I can allocate my 401Ks and IRAs across some low cost Vanguard funds following the Bogleheads approach.  I read some last week concerning this approach and rebalanced funds in my husbands' 401k and one of my IRAs.  I didn't really think about the current political climate (heading into an election) and the associated volatility that may produce.  With the Sandy superstorm coming into play I am concerned that this was poor timing on my part.

So  am a moron if I pull out and reallocate the funds back to bonds/money market account???  I know it is really hard to time the market but this is making me kind of sick to my stomach - Mint.com can be a problem if you look at it everyday.

This the current allocation today in husband's 401k  (also note, I know I am not following Bogleheads to a T - this is a work in progress and partially due to limitations in what funds I can invest in - I am looking to rolling over all of my old IRAs to Vanguard - I only changed two accounts listed below recently)

I am 32, husband is almost 35 - I would like to retire in 8 years or so - although obviously won't be able to touch this money until some time thereafter.

Husband's 401K - approx 100K (Husbands expense ratio stinks - I am going to have him talk to the person that manages the 401k program - they are a small company so may have few options)

25.01% - Allocation Amount - 1.49 - Expense Ratio
                  Small Cap Growth Index Fund41
       Investing solely in Vanguard Small Cap Growth Index Fund (Investor Class) Managed by Vanguard Group, Inc.
                  Ticker Symbol+: VISGX

24.88% - Allocation Amount - 1.35 - Expense Ratio
                 Growth Index Fund98
       Investing solely in Vanguard Growth Index Fund (Signal Class) Managed by Vanguard Group, Inc.
                 Ticker Symbol+: VIGSX

 24.86% - Allocation Amount - 1.35 - Expense Ratio               
                 Value Index Fund98
       Investing solely in Vanguard Value Index Fund (Signal Class) Managed by Vanguard Group, Inc.
                 Ticker Symbol+: VVISX

25.25% - Allocation Amount - 1.45 - Expense Ratio     
                 Short-Term Federal Fund15,83
       Investing solely in Vanguard Short-Term Federal Fund (Investor Class) Managed by Vanguard Group, Inc.

My IRA - Approx 50,000

15.20% - Allocation Amount - .11 - Expense Ratio
                   Fixed Income
                    Vanguard Intermediate-Term Bond Index Signal Fund

32.83% - Allocation Amount - .05 - Expense Ratio
                    Large US Equity
                    Vanguard 500 Index Signal Fund (as of 10/26/2012)

14.95% - Allocation Amount - .10 - Expense Ratio
                     Small/Mid US Equity
                     Vanguard Mid Cap Index Signal Fund 

15.01% - Allocation Amount - .16 - Expense Ratio
                     Small/Mid US Equity
                     Vanguard SmallCap Index Signal Fund

21.98% - Allocation Amount - 1.00 - Expense Ratio
                      International Equity
                      Oppenheimer Developing Markets Y Fund

Any feedback will be greatly appreciated.  If I do move the funds would fixed income Vanguard be the best bet?  I can list out the options to move to if folks think I should.

Thanks!!
                   

[COguy]

First off I would say to take a deep breath.  Read this by a fellow mustachian and boglehead:

http://jlcollinsnh.wordpress.com/2012/04/15/stocks-part-1-theres-a-major-market-crash-coming-and-dr-lo-cant-save-you/

Read the rest of the series if you have not already.

Then read this by one of the most badass investors under thirty (just my opinion, but I like what he writes)

http://www.joshuakennon.com/how-to-remain-detached-from-the-stock-market-and-treat-your-investments-like-private-businesses/

If that does not help, think of it this way.  Basically, the markets know the election is coming and there is a hurricane.  It is already priced in.  One could argue the market could go either up or down from here.  By the way down is good because you get better prices on future investments which it sounds like you will be making.  Neither you nor some highly paid analyst at Goldman Sachs will be able to time this with any accuracy, you are both speculating, not investing.

Now to your question of changing to a money market.  If you are following a boglehead philosophy, I would encourage you to write out an investment policy statement.  Then for situations like this when emotions are running high, you take the action that your investment policy statement tells you to, not the action that your emotions tell you to.  You need to do this yesterday especially since you seem to be a very emotional investor.

I hope that helps

[savingtofreedom]

COguy,

Thanks for the advice.  I contacted the investment companies and even if I made a change it wouldn't take into effect until end of day which would be after the market likely is impacted by the hurricane.

I need to perform a more thorough reading of the Bogleheads philosophy and stick with it.

Thanks

[grantmeaname]

I just started a book for a class today called Stocks for the Long Run (here, but get it from the library). If you're a numbers type, you'd find reading the first two or three chapters really reassuring. What it boils down to is that stocks' returns show reversion to the mean, and bonds' returns show aversion to the mean, so as the time horizon lengthens holding stocks becomes less risky and holding bonds becomes more risky. The author notes that there are some secular trends that emphasize this observation, but that even without them it remains accurate. I'd highly recommend it, if you're a numbers type and you have the time to read 25 pages of a finance book.

[Aloysius_Poutine]

No advice for OP; just wanted to thank COguy for these great reads.

First off I would say to take a deep breath.  Read this by a fellow mustachian and boglehead:

http://jlcollinsnh.wordpress.com/2012/04/15/stocks-part-1-theres-a-major-market-crash-coming-and-dr-lo-cant-save-you/

Read the rest of the series if you have not already.

Then read this by one of the most badass investors under thirty (just my opinion, but I like what he writes)

http://www.joshuakennon.com/how-to-remain-detached-from-the-stock-market-and-treat-your-investments-like-private-businesses/

If that does not help, think of it this way.  Basically, the markets know the election is coming and there is a hurricane.  It is already priced in.  One could argue the market could go either up or down from here.  By the way down is good because you get better prices on future investments which it sounds like you will be making.  Neither you nor some highly paid analyst at Goldman Sachs will be able to time this with any accuracy, you are both speculating, not investing.

Now to your question of changing to a money market.  If you are following a boglehead philosophy, I would encourage you to write out an investment policy statement.  Then for situations like this when emotions are running high, you take the action that your investment policy statement tells you to, not the action that your emotions tell you to.  You need to do this yesterday especially since you seem to be a very emotional investor.

I hope that helps