401(k) Day Trading Turns a Happy 4

By Richard Schmitt

SAN FRANCISCO (TheStreet) -- It seems like only yesterday that my baby retirement savings portfolio came to life. Yet here I am, four years later, looking back fondly at that day in May 2008 when 401(k) day trading started transforming my tiny bundle of joy into a wonderful monster.

I'll admit that when 401(k) day trading came into my life, I was hesitant about entrusting my wee one to a complete stranger. This newcomer had no track record backing its premise of methodically bringing out my precious baby's untapped potential in uncertain times.

With no experience to review, I tried 401(k) day trading and observed closely its effect on the beloved source of my constant worry and affection. I quickly found that 401(k) day trading simply called for some give-and-take through daily transfers from one pocket of my retirement savings to another. Then I followed the book to ensure that my daily fund transfers abided by the retirement savings funds' frequent-trading rules.

With each passing day, I was using the old adage of "buy low and sell high" to build a better future through incremental daily trades into and out of a stock (such as S&P 500) index fund that would set up or reap lasting gains. If stocks were headed down one day, I would buy some stock. If up, I would sell some stock. The amount of each retirement savings account fund exchange needed to buy into or sell out of the S&P 500 index fund just before the market close was simply determined as a fixed calibration factor of my choice multiplied by the daily point change in the S&P 500 index. Even better, the lasting gains resulting from these daily fund exchanges performed within retirement savings accounts were unfettered by immediate taxes and direct trading costs.

At first I worried that tweaking my little bundle of retirement savings joy every day through once-a-day fund exchanges might be upsetting for the tyke. After all, 401(k) day trading's dismissal of holding for the long term seemed a bit removed from what I heard other caretakers advise. But then I noticed that their set-it-and-forget-it approach had done nothing to improve their clients' fortunes since the turn of the millennium.