Should I put my 401k funds into a money market right now or ride out the imminent recession?

This market sucks! It's getting worse and worse. I'm 28 and I want to maximize my returns. Do I keep contributing and keep my $$$ in my current funds (Contra, Spartan Index, Euro, etc) or transfer it all into a stable value fund or money market?

That money is for your retirement and so you should take a really long-term view towards it. That means keep investing in your current target asset allocation.

Not even market pros manage to time the market precisely (many studies have shown this). If you try to guess when the market's going to turn for the better again, chances are you'll have a *lower* return than just staying in the market. There is a lot of proof that investors earn below market averages when they try to outguess the market by switching to the new hot thing.

That's why investing consistently over time pays off better than jerking your money around from one place to another in an attempt to outguess the market.

Look into putting it in a "bear fund." This is a mutual fund that makes money in a declining stock market, such as the one we have right now. It does this by taking defensive positions and by "short selling," which means that while stock prices go down, the fund goes up.

Ride it out. While the prices are low, the money that is going in is buying shares at lower prices which will make you money in the long run. Keep it out of the money market and in the stock funds. Good luck! It'll be ok. :) You've got lots of time.

I hear Money Markets are in the drink now too. I was asking my bank about them and they told me the returns on them were about the same as a regular savings account. Hard to know what to do, with everything as uncertain as it is.

In response to what Tracker said, don't believe the banks comments about money market funds. Many banks offer very low money market rates. Try a mutual fund company like T. Rowe Price.

Your 401k should be set up for long term investment according to your situation no matter what the market does, You should not attempt to change it in response to what you think markets will do.

Just what Jeff said, leave that money where it is. Not only will you pay the 10% early withdrawal penalty(which you don't want to do, trust me), you will pay ordinary income taxes for nothing. It wouldn't be a good move. Stocks do far better than money markets in the long term. Your contributions will buy more shares of stock now. A down market is exactly what you want. No one runs from the store when things go on sale, so why run from the market. The old adage: buy low, sell high.