Has the stock market finally turned around?

Is it safe for investors who retreated in fear to jump back in? Will 401(k) retirement plan participants finally be able to look at their quarterly statements without feeling nauseous?

Tempe resident Kim Stewart said she stopped keeping track of her 401(k) after seeing statement after statement reflecting losses.

"It would be a relief to see it get better, but at the same time, you’re not stress-free," she said. "You’re just thinking right now it seems OK, but you never know if it’s going to slip back into that down mode."

Some East Valley brokers say there’s reason to feel cautiously optimistic about the rally that has pushed the Dow Jones industrial average up more than 1,500 points since early March.

"There’s no question that there’s still going to be some uncertainty in the market," said Dino Goegan, an investment representative with Edward Jones in Chandler. "However, with all the stimulus, with the tax cuts and the interest rates being so low, I think people are finally starting to feel a little more confident in seeing which way the economy is going."

If the surge continues, more people will begin investing more money, whether putting it in the stock market or increasing their 401(k) contributions, he said.

"But certainly any big moves up or down are concerning," Goegan said.

With all the changes that have taken place in the world, there’s going to be volatility in the market, so investors should stick to putting their money in a particular company or sector on a long-term basis, said Lori Marks, vice president of investments at an office of US Bancorp Piper Jaffray in Scottsdale.

Because she expects continued volatility, Marks said she doesn’t ever like to call a "bottom." She said she is excited about the tax relief plan. "We’ll have employers beginning to adjust withholding in July, and that will provide a boost to consumers’ paychecks."

Goegan said it’s a good time to buy stocks, but it’s important to be selective. He recommends companies that pay dividends, particularly because of the new federal tax cuts on dividends.

Investors appear to be more reasonable this time around when it comes to expectations, Marks said.

"They’re not picking (any) company with absolutely no earnings because they feel they can get a triple out of it," she said.

As for 401(k)s, there has been a slight decrease in participation since the market downturn, but most participants didn’t do anything, said David Wray, president of the Profit Sharing/401(k) Council of America. Participants wary of negative quarterly statements probably can expect to see improvement when they receive their next statement in July, he said.

"It’s probably early to expect employees to be responding to (the rebound) because most employees do not follow this on a daily basis. I’m sure people will be pleased with what they see (on their statement)."

One problem that has arisen is fewer new employees are signing up for 401(k)s, Wray said. He blames the decrease on the inaccurate portrayal in the media and other areas of 401(k)s as failing because of short-term investment declines.

People cited declining account balances or ones that remained flat due to contributions as evidence of failure in the system, Wray said.

"What we try to point out over and over again is that this is a long-term system. They haven’t really lost anything."

To those 401(k) participants with 20-year time horizons, the market downturn didn’t mean anything, and now that the market is moving upward, many are likely to increase their contributions, he said.

A large number of employers, at least temporarily, dropped matching contributions, said Jim Jaffe, director of external relations for the Employees Benefit Research Institute. But that hasn’t lead to any exodus from 401(k) plans, he said.

"If you look at what’s happened over the years, you see that the amount of money people put into stocks has remained basically the same, which doesn’t seem to reflect that people seem to be burned, particularly," he said. "They haven’t embraced any more conservative investment strategy."

In the meantime, Kim Stewart, who is not anywhere close to retirement, doesn’t view her 401(k) as anything more than a little extra money for retirement.

"I look at it like it will be money there, but it’s probably nothing near what you would need to retire," she said.

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