COVID-19 and the Financial Markets

Market Update from Robinhood

The financial markets are reeling from the COVID-19 pandemic. An email I received this morning from Robinhood shows just how much the market was impacted in the past week alone. And, while President Trump trumpeted the glory of a 2,000 point recovery in the DOW during his address to the nation yesterday, the truth of the matter is that we are likely to see a significant recovery any time soon.

I try not to look at my two investment funds, the Thrift Savings Plan (TSP) and Acorns, too often. After all, they are not brokerage accounts set up for day trading of stocks and bonds. Rather, they are long-term investments. However, I looked at them this morning just to get a sense of where they stand. Let's look at Acorns first, where I have my portfolio set to Moderately Aggressive.

Acorns Moderately Aggressive Portfolio

The Moderately Aggressive portfolio offered by Acorns is billed as ideal for those with a longer-term investment plan and a higher tolerance for risk. As such, it invests heavily in large-company stocks through the Vanguard S&P 500 ETF (VOO); 38% to be exact. And, from what I have noticed, VOO appears to be the biggest mover and shaker in the portfolio.

A Dismal 3-Month Return

Looking at my 3-month return on Acorns is, well, pretty scary. I have "lost" 14.38% during that time. And, I say "lost" because I am in it for the long haul. I will not lose any money until I cash out and lick my wounds. With this downturn in the market, I am not panicking and will hang on to see the recovery. My only hope, as a long-term investor, is that it will stay down just a while longer so that I can buy more into this significant drop and reap the benefits when the market recovers; and, it will recover. We say a pretty stiff drop in 2008 during the recession and, well, my TSP account took a nosedive into previously unchartered territory for me. However, I moved much of my investment there into the high-risk sector and ended up recovering very nicely. Coincidentally, I moved a large chunk of it back to a more moderate approach just a couple of months ago; a move I think I am glad I made.

Speaking of TSP, it has also been taking a beating as the market turns down. Looking at my balance as of Friday, March 13, my TSP account is down nearly as much as my Acorns account: 16.3%. Over the course of the past three months, my TSP has "lost" nearly $5,000 in value. Again, it is not lost until I start selling off shares by pulling money out which, since it is a retirement account, I cannot do without paying taxes on it. So, I leave it to sit and wait for the market to recover again. The only thought I have with my TSP right now is, do I move my money back into the high-risk funds in hopes of a great recovery? The problem therein is that we just do not know when the bounce will happen and, like I said previously, the TSP is not a day trading account.

We all need to face the facts here. The markets are going to be in turmoil over COVID-19 for a while. This virus outbreak is unlike anything most of us have seen in our lifetimes. There have been a couple of large influenza outbreaks globally in the past 100 years, in 1918, 1956-58, and 1968. I am not old, by any means, but I get the feeling that the markets are reflecting a lot of uncertainty with a younger generation who has not seen the effects of something like this on the global economy. That said, I am prepared to sit it out and wait for the long-term to see what happens. I think most of us should. We will recover, just like we have from everything else, and those of us who patiently wait will be rewarded well for doing so; just my personal take on the COVID-19 outbreak and the financial markets.

Thoughts on the Coronavirus Disease 2019 (COVID-19)

Last Thursday, March 5th, a friend in Ohio shared a video on Facebook about the pandemonium of shelves being completely depleted and, interestingly enough, toilet paper. It was a bit later in the evening, around 7:30pm, so I told my wife I would head to Sam's Club just to grab a few supplies; and, ironically, we actually needed toilet paper. So, I headed off to the store.

I was quite surprised when I got to Sam's Club. There was no craziness inside and, as I walked the aisles, I felt that maybe this mass hysteria had somehow skipped over our area. I grabbed the essentials we needed: bread, milk, some meat, and a few other things. Surprisingly, the chicken was extremely picked over while the other meats; pork chops, steak, hamburger, etc. were widely available. Other than that, nothing seemed amiss until I made it to the paper aisle.

When I made it to the paper aisle, which includes paper towels and toilet paper, nearly all of the toilet paper was gone. At this point, I had not even heard about the toilet paper hysteria. So, needless to say, I was taken aback. Here is this large store, shelves stocked full, and the only thing that is nearly completely sold out is, toilet paper? I managed to buy one bundle of Sam's Club's Maker's Mark brand paper which, honestly, is decent toilet paper. With that, we should be set for at least a month. I did not consider shopping for food until I was sitting here Friday night and reading some of the news.

I went to our local Baker's grocery store, part of the Kroger family, mainly to grab just a few things. My plan was to get some Gatorade, cheese, milk, and a few canned goods to make chili and soup a couple of nights over the next week or two. My plan was still intact until I made it to the canned vegetable and canned meat aisle. The shelves were very picked over, so I changed my mind and decided to make this trip one to stock up necessities and food to last us about a month; and, that is just what I did!

So, here we sit, pantry and freezer stocked full, and wait for this COVID-19 concern to resolve itself. Being in the military, I have been directed to stay in the local area and my family, although under the same direction and highly advised not to, could travel to visit family if they wanted to. We were supposed to make a trip together to Kansas next weekend but, well, I cannot go. We are taking this day by day and, with some hope, prayer, and determined healthcare workers, perhaps this will not be as bad as they say. I guess we will see.

I get the concern over this virus. From what I have heard, it spreads very, very fast. We have just had the first confirmed case of community spread here in Nebraska. I have seen people disgruntled over the canceling of events, the postponement of sporting events, and other large gatherings of people. Quite frankly, I do not understand that angst. This, and over viruses, spread through close contact and, well, putting large amounts of people into somewhat confined spaces is not an ideal way to curb the spread.

Am I scared? Not really. I know that there is the possibility of getting sick, just as there is any other day of the week. However, I am happy that community and military leaders are taking steps to prevent the further spread of COVID-19. We will make it through this, it will just take some time. And, if you have to venture out, take appropriate steps to protect yourself from catching this nasty virus. That is how my family and I are approaching it and, hopefully, we will weather this storm without any hiccups.

To close, I would say that, if you are hysterical about this and buying up everything in the stores, step back, take a deep breath, and then relax. As leaders across the country have said, there is no need to buy mass quantities of goods. Should you have enough to last a few weeks? Absolutely. Having a few weeks of food means you do not need to get out and about every couple of days. That will help lessen potential exposure. Then, if you run out, go restock what you need and leave some for the rest of us! Just my thoughts.

Please, try to stay healthy and, if you feel sick, just stay home for a few days. If it doesn't get better, reach out to your doctor and let them know. Let's #FlattenTheCurve!