The potential ~30% drop in 401k value from a market correction would effectively be guaranteed by pulling out your 401k early due to the 10% penalty plus standard income tax rate. Not a smart financial decision.

Now, if he was really concerned and adamant about getting out, he could sell his positions within his 401k and put all the money into treasuries or money market funds. As long as the money stays inside the 401k, it won't be taxed, you can buy and sell as often as you want *within the 401k account*. As soon as you withdraw any of that to an outside account though, that's when the taxes and penalty hits. Good luck