Using Politics for Personal Gain and a Question of Ethics

I do not like to talk about politics publicly. We each have our views, believe in what we want to, and support who we feel has our best interests in mind. The reason I do not talk about this stuff publicly is that people cannot just accept that we have different views. Sure, I will listen to what you have to say, but I will not berate you for it. Unfortunately, too many want to berate others so I just keep it out of the public conversation. All of that to say, this will not be a political post, but rather just some thoughts about politicians and using their office for personal gain.

If you have not seen the news, Senators Richard Burr (R-NC) and Kelly Loeffler (R-GA) both received classified briefings about the severity of the coronavirus currently wreaking havoc on the world and it's economy. Shortly thereafter, they began dumping stocks and profiting millions of dollars ahead of the dramatic downturn in the stock market; a downturn that has slowed down a bit, but may not stop anytime soon. Even after dumping their stocks, they continued to reassure the American people, their constituents, that everything would be fine; echoing President Trump's word. Why, then, sell large portions of your portfolio?

There have been cries about insider trading and calling for these two to resign. But, is this really insider trading? It is really hard to say. As I understand it, insider trading has more to do with executives, like a CEO, selling off large shares of stock because of information he or she knows about the company they lead and that it would have a negative impact on the company's stock price. The information is not readily available to public shareholders and, based on that, it is insider trading. Burr and Loeffler certainly are not CEOs of major corporations; they are senators. Thus, I would be reluctant to say this is insider trading. However, when it comes to ethics, now we have an argument.

I really have not seen much on Burr's transactions, but Loeffler has put hers out on twitter and her senate page for the world to see. Now, here is what is interesting about the transactions in February. There was a gradual sell-off of a few companies over the course of a few days and then they drop a few full sales of all shares and, interestingly enough, this included Exxon Mobil. On the same day as the Exxon Mobil sale, she purchases shares in Centrix and Oracle. On the surface, it may not seem like that big of a deal, but here is where ethics comes into play.

On or around February 13, there was a classified briefing which Burr had attended. I have not been able to find if Loeffler attended the same briefing. The mass sale of Exxon Mobil shares occurred on February 14, the same day as the mass purchase of Centrix and Oracle shares. Obviously, we are seeing that the coronavirus is causing oil prices to plummet. Coincidentally, Centrix and Oracle are two companies that would stand to profit greatly off of the working from home, or teleworking, concept to prevent the spread of the virus. I leave it up to you to make up your own mind. Was this unethical trading? Did the information she obtained from either the briefing or, perhaps, Burr persuade her to make a move?

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.