Is this a smart idea, to take a loan out of my 401k for?

I am looking at a part time hobby that could be profitable. Unfortunately I would need several hundred dollars of start up cash, and I don’t really have that lying around. So the idea occurred to me to take a loan out of my 401k. The smallest loan allowed is $1000, and I’m looking into whether or not I would be allowed to pay back early (as well as what origination fees I would owe).

Basically the loan would be borrowing money from myself, by selling shares of my 401k and buying them back over the term of the loan (the company facilitating it, Schwab in my case, maintains that you pay with all the same penalties as a regular loan). While it was out of my 401k, it would not grow or shrink based on the actions of the market. The plus to that is that if the market gets clobbered, I don’t lose any money, and when I pay back my loan I’ll actually get more shares than I sold in the first place. The downside could be if the market takes off my shares wouldn’t grow in value, and when I bought them back I would have less than I sold in the first place. Another plus (potentially smaller or larger than regular market growth) is that I would pay interest on the loan to myself, rather than a bank.

My idea is this. I’ve been digging around the internet looking for vintage games (it’s a hobby of mine). What I’ve found is that I could get several video games for 20–30% cheaper on craigslist than I could sell them for on ebay/amazon/etc. The turn around time on this would probably be around a month (I’ve been researching how often specific games sell and for how much, there’s actual sites that follow this info). But since I wouldn’t be making my living off this (it would just be a side hobby), I wouldn’t be in any rush to turn around and sell them, or rake in games to sell quickly or anything…. in other words I could be firm on my prices so as to ensure profit.

Do you think this is a good idea, bad idea, alright idea, etc, etc? Honest opinions/ideas/etc appreciated.