“Social Distancing.”
“Flattening the Curve.”
These are phrases that weren’t even on my radar two weeks ago, and now I can’t read one single news article without mentioning them.
“Pandemic.”
Now that’s a word I did know, but only in movies and never in real life… and never in my wildest dreams did I see coming what is unfolding around me.
Sure, it was always possible. And the public’s reaction has been predictable – fear makes people do some bizarre things. But would this really happen in my lifetime?
Nope, not in a long shot.
These I’m afraid, are unprecedented times.
So let’s start with how do I feel?
Am I scared? No. Not really… at least not yet. But I am uneasy.
I like to think of myself as an anxious person by trade but with a calm mind and I don’t feel that I am a fearful or rash person, which I realize is a conundrum because most anxiety is rooted in some form of fear, but we can psychoanalyze all of this on another day. What I do feel palpably, is the weight of the unknown pressing down on me with daily increased pressure.
I have a high-risk tolerance for investing, but I still don’t like seeing the market free-fall. Things were choppy like this in 2008 but today feels different. I don’t remember continuous swings of 5%-9% in the major indexes as frequent or such drastic losses so quickly. It’s been a wild ride so far and I believe it is only going to get more fucking crazy. So buckle your seatbelt boys and girls, Dorothy is no longer in Kansas!
What’s that popular saying, “you haven’t seen nothing yet?”
I wish the worst was over, but I think it’s conservative to say the worst has yet to come.
As of this morning, 54 cases of the Coronavirus have been confirmed in LA County. I know that this number is about to pop in the weeks ahead… and not pop like a bubblegum bubble, pop like the fucking Hindenburg!
We weren’t ready for this. We aren’t ready for this. And the world as we know it will be forever changed.
The supermarket shelves are empty. Costco has become the new zoo of human insanity. Plus, I’m not sure why toilet paper has become the must need item to fight a pandemic? But to each their own. People do some really fucking weird shit when they get all riled up.
Both my parents are in the 70-age range, so I am concerned for their wellbeing. But thankfully each is healthy and I believe they would be okay even if infected – though of course that is my worst case scenario.
My workplace has been slow to adapt, and let’s just say my management team has not been the most intelligent people to deal with this kind of crisis. They believe in the status quo and business as usual in the office even though my entire team can work from home. So as of now, I’m still expected to do my long commute and strap my ass into a chair so that we can all play as if the Coronavirus doesn’t exist. Which it doesn’t, right? The news is just making this shit up?
At least my travel has been finally reduced as of Friday – no domestic flights without pre-approval. Although this is a good thing, it now means I’m driving back and forth to Sacramento and Phoenix. That part really fucking sucks on a personal level, but it’s really no big deal in the grander scheme of things. I still have a job, which many will not be able to say in the upcoming weeks.
When the fear is suffocating, keep your head. You’d be surprised how well humanity can pull together and help one another in a crisis.
This brings me to the second thing I’m feeling, sadness. It’s inevitable now what is going to happen to the economy.
It took only one week to kick things into a bear market and a recession is most likely looming in Q2 or Q3. The spread of the Coronavirus is only beginning in the US. I still don’t think people realize how fucking big this shit is going to be.
But who will be hit the hardest? Hourly workers.
My wife is an hourly worker. She is in the dental field and has patients. Already, people are cancelling and it’s only a matter of time before the office closes for a prolonged period. That’s a big chunk of income that we will be losing, and I’m not happy about it, but that’s life.
I’m also thankful that I’m a salary employee and we’ll be just fine even in a prolonged recession. We have cash reserves and safe investments for a scenario specifically like the one we are experiencing. If you’re pursuing FI, then I assume you should be in a better situation than most of your fellow citizens as well.
But I feel for the hourly workers. They are the ones that are going to suffer while white collar employees simply keep on working from home.
If this pandemic is as bad as I think it is going to be, something major will have to be done so that they can get subsidized during a prolonged downturn.
Did we ignore the systemic symptoms? Not heed the suggestions? Should we have seen this coming?
The signs were there months ago.
I talked to one of my friends the other day and she is in the hotel industry in San Diego. People have been canceling for a while now, the place is empty and layoffs are coming next week. She’s freaked out and should be. It’s clear that the travel and the hospitality industries are fucked and it’s only a matter of time before this bleeds into everywhere else.
I don’t like seeing layoffs, because I can relate. It’s happened to me and it’s one of those things that you don’t understand until you have been through it. If you’re one of the casualties, I wish you the best. Keep your head up and something will eventually come your way.
But I’m not going to lie. It’s going to be hard and you better be ready to persevere. This is not the time to feel sorry for yourself. You need to get after it like a vengeance.
When looking at your investments, be intelligent. Lock in losses where appropriate and buy good value.
So what am I doing financially in these unparalleled times?
Not a whole lot. I keep a level head and play a simple game.
With my retirement accounts (our 401Ks pretax), I don’t touch them. Those things are all in S&P 500 Index funds and on autopilot. I barely look at them and honestly pretend they aren’t even there.
My Roth IRAs are in brokerage accounts and a mix of stocks and index funds, but again these are pretax so I don’t touch them as well. You probably already know this being in the FI universe, but you should keep in mind with risky investments in Roth accounts, that if you have major losses you can’t deduct them on your taxes. Tax free gains cut both ways.
Now, with my taxable brokerage, I’m locking in capital losses to offset gains and buying value where I see it. Obviously, value to me and value to you, can be two entirely different things. So no point getting into it. But suffice it to say, I see plenty of bargains out there and there will plenty of more to come before this thing is over.
The world is not ending, and this too shall pass.
Sure, there will be much inconvenience to come. Our lives as we know them will be turned upside down. We will be asked to do things that are not normal and outside of our comfort zone.
But that is okay. This is why we are a resilient and empathetic species.
There comes a time when human rights must be trumped by human life. You can’t have the former without the latter.
So help where you can. Take care of yourself and your family. And we’ll all get through this together.
See you on the other side.
-Q-FI
P.S. Well, you already know what my question will be, but I’m going to ask it anyway. How is the Coronavirus affecting your life? Having fun dancing in and out of the markets? Blast away below my compadres…
As a sixty something with two separate but significant health issues the virus poses a far greater risk to me than to most people. I’m already self isolating from groups, skipped the St. Patty party last night to the bemusement of my friends, who think I’m overeacting. I am still playing tennis, fishing and running because none of those involve physical contact with others or even getting within 6 feet. And since those are my outdoor hobbies this time of year it hardly feels different from normal. I’m retired so no workplace to go to, my consulting is on my terms and done remotely from home, my charitable boards are now meeting by phone. We have weeks worth of food, not to mention how easy fish are to catch this time of year, and the 800 acres behind the house are full of deer. There is only one other person living within 100 yards of our house.
Money hasn’t mattered for years. So really, assuming I avoid infection, it’s not really changing much for me. But I do feel for others who are now wondering how to provide child care, how to make up for reduced hours of pay or unemployment. And for those living in crowded cities with empty store shelves. No changes in our investments other than moving some excess cash into the market.
Hey Steveark – that is great to hear that your life isn’t affected that much so far. It’s actually comforting to hear that. Here in LA, shit is blowing up, so I’m very curious to see how the next two weeks progress. It feels like a zombie apocalypse movie almost with very few cars and people out and about. The other thing is the weather and timing of all of this could not be worse. We have a week of rain (that never happens in LA) and they have cancelled all the schools. So any place parents would go is shut down, the kids are home, and everyone is stuck indoors from the rain. Hahahaha. Not ideal.
“Fear is contagious. You can catch it. Sometimes all it takes is for someone to say that they’re scared for the fear to become real.”
Figured I start with that great quote from Neil Gaiman as it’s indicative of the tenor of the moment. No doubt the virus and financial situations will get worse before recovering at some point. Even with a spouse who has rare, severe immunodeficiency conditions and elderly parents one of whom is on O2, my biggest concern is people’s inability to control their fear and behaving irrationally. We’ve seen it with the markets and the insane runs on food already.
For solace I look to China. Things continue to look better in terms of dropping cases and the country hasn’t collapsed by way of quarantine. Yeah, this will suck a bit even if people can control themselves and yes business is going to hurt and there will be reduced hours and layoffs. However, I’m hoping the we can buckle down and see some results in a few weeks and the media can stop the fear and panic machine which will help.
Aside from that, we’re already remote, so we’re good. No real changes. Ms Fate is going to LA for treatment next week which does make me worried tho. As for the investments, no changes here. If I weren’t retired, I’d be set to go on a buying spree once we get to the bottom of the market.
In the meantime, I hope you and yours remain safe down there.
Thanks Mr. Fate. Great Neil Gaiman quote and even better points. It’d be great if more of the world had your rationale. I agree with everything you’ve said above and we’ll see how things play out in the weeks ahead. Just very bizarre times we’re living in.