Dark Times

“In a dark time, the eye begins to see.” - Theodore Roethke

A pandemic looks like dark times. Social isolation, death counts, being out of work, financial worries, loved ones working medical services, first responders, sick friends, and definitely loved ones we worry about. Concerns about our own mortality arise. Lots of prayers are going around.

During my 6 decades my older relatives & friends have always talked about hard times. Our concerns have never gone away. Easier in good times not to think about them.

What is important doesn’t change: people, challenges, caring, work and charity. Look at all the volunteers working now to help. Society has always been built by small groups of people who want to better the world. This pandemic will pass in months. Then what? Emotion leads to motion. 

Look at our future you want to build. What are you going to do different after these months pass? Who are you going to care for? Time to plan and act.

Corona Virus Will Pass Too

‘This Too Shall Pass’ got me through many hard times. Will get us through SARS Covid-19.

Feels weird - schools closed, restaurants closed, stores closed, movies closed, social distancing, no sports, church on Facebook, shelter in place, and working from home. Today was my first day of many to come. Usually talking with coworkers and mechanics. Now have the window office on grandpa’s ~100 year old rolltop desk.

Over 200 deaths, 15,000 confirmed cases and probably 150,000 unconfirmed. No one knows really. Pandemics are really scary. Staying safe is important, especially if your immune system is weakened.

Humans have survived world wars, other pandemics, famines, the industrial revolution, computers, and so far social media. We can shelter in place or quarantine ourselves for a few weeks. Next year this will be over. God is still in charge.

Use the time to plan that vacation. Read a good book or rent a movie. Better yet, call your family and friends. Run errands or go shopping for neighbors or relatives. Donate blood. Kindness rules.

Recession or Bear Market?

Thursday the stock market was down ~25% from peak. Oil fell to $31 per barrel. Even Gold fell this week to $1,528 per ounce. Then Friday came and the stock markets went up ~5% and Oil recovered to $33. Covid-19 is everywhere and this is a Bear market.

Between the sensational news, stores out of toilet paper, poor press conferences, and canceled schools, colleges, events, church services and sports - would conclude this is a Panic. Stock markets are really driven by investor psychology and groupthink. Friday’s recovery shows not all is predictable.

However being this is driving by a new disease which is stopped international trade and travel. No one knows how long this will go, and vaccines are months away. Once the market has picked a direction, it tends to continue longer then we expect it will. Bear markets often lose 20-40% or more. Suspect the market will overshoot as it often does.

So what do we do now? Depends on your situation. 

If you are over 5 years from retirement, you have the option to do nothing and keep contributing to 401K. Second choice would be to move 10%, 25% or 33% from stocks to cash or bonds, and keep contributing. The worse choice would be to move 100%, and then see the stock market recover.

If you are in or very near retirement, make sure you have liquid funds for the next 3 years, and keep the rest invested to recover what we lost.

Problem is bonds are returning a very low interest rate, and rates are so low not to fall much further raising the value of your bonds. Cash earns very little return. Where can you invest? 

Dividend stocks, real estate and commodities like Oil and Gold are used to diversify portfolios to improve returns. Real estate has been high priced for a while. Gold and Oil may return to normal after the Covid-19 subsides. Saudi Arabia’s move to grab market share will not keep the price of oil down over 3 years. Where will oil be in 10 years?

Professional investors are searching now for good profitable companies that stocks prices fell lower than the company will be worth. Do you think all cruise lines, airlines and hotels will stay down for long after the pandemic is over? Where will the world be in 5 years? Expect the world economies to be growing again.

Warren Buffet and Charlie Munger are sitting on a pile of money, and have not been happy with the price of businesses. They and their investment managers are looking at businesses they would like to acquire or buy stock at their new lower prices. Warren and Charlie look for a good price on wonderful business and take advantage of opportunities when others are fearful. Suspect they will lend money at a profitable rate to companies that need it.

Consider working an additional year or two before retirement. If like me your business is adversely affected, you may want to improve your skills in case you need new opportunities.

“This Too Shall Pass” had gotten me through many of these situations over the years. Stay calm and healthy please.