Sunday, May 3, 2020

COVID-19: Stay Safe and Think Long-Term

Everyone, what a time to be alive.

I started this blog for fun, right in the middle of the COVID-19 pandemic, as markets fall and some panicked individuals cashed out investments. I needed something to catch my interest, and stock markets did.

At least in modern American history, this lockdown is unprecedented. Multiple protests have popped up across the nation, leading to some arrests. People want to get back to normal and get the economy cranking again. Not everyone has the luxury of working from home, and millions have instead been furloughed or laid off, worsening the tension. Further, not everyone has received their stimulus checks and unemployment payments from the CARES Act. It's a perilous situation in more ways than one. I count my blessings every day, especially now.

Social media, which was in its infancy during the last recession, has done few favors, and has incited more uproar not just in America, but globally.

I feel bad for the people who are currently retired or are about to retire. Whether you're recently retired or you've long been out of the workforce, there may be significant adjustments to spending and living life in general.

I also feel horrible for the unemployed and for people who were already struggling to get by. It's horrible to discover you have lost your source of income, especially with bills to pay and a family to raise.

I feel worse for anyone who has lost a loved one or a good friend to COVID-19. I'm truly sorry for your loss. Hopefully these words mean something more than just typed letters on a screen.

I also salute all workers who have continued to work while at significant risk for contracting COVID-19. A few of my classmates are healthcare workers, and others I know have taken jobs delivering food so they can pay their bills. And that's just the proverbial tip of the iceberg.

We may never know the pandemic's true numbers. Some people say it's been under-reported, while others say the numbers are too inflated.

In late February, as the virus became more of a threat to society, the market started to tumble, eventually reaching its lowest point around March 23. In March 2020 alone, the first-level "circuit breakers", which halt day trading after the market plunges at least 7%, tripped four times.

Similarly, after-hours trading triggered multiple "limit downs" and "limit ups"; when stock futures moved by at least 5%.

Even with a 12% rally in April, markets resumed a possible fall of some type, falling on April 30 and May 1. As I type this, stock futures continue to fall for Monday's trading.

At one point, the VIX, which measures market volatility, peaked over 80, numbers not seen since 2008-09. A "normal" VIX might be around 15-20, give or take a couple points. After flirting with sub-30s a few days ago, the VIX increased back to around 37 as of last Friday.

For investors, I've seen professional financial planners recommend the same course of action from previous recessions: Stay the course. I have no reason to go against their wisdom. Over the long term, the stock market has always rallied and gone up, even post-Great Depression.

Understandably, there's major concern because it's unknown how long it will take to recover from this recession. For the 2008-09 recession, the market didn't get back to pre-recession levels until around May 2013. But if you continued to consistently invest throughout that entire period, those investments from the lowest point have ballooned exponentially, not to mention the usual gains from any other investments.

Eventually, there will also be a COVID-19 vaccine, and perhaps other confirmed treatments. People will be able to return to normalcy.

Just remember, in the long run, you'll be fine. Until then, please stay safe and stay the course.