What do seersucker, flags, and Greek philosopher, Socrates, have in common?If I took a quick poll, I bet most folks would label Memorial Day as the official start of Summer. People who have family members who died in combat have a different perspective because of their personal loss. It's hard to recapture the honorable origins of Memorial Day from it's historical roots. Maybe this year we will reflect on the voluntary loss of freedom in the wake of the COVID "pandemic." The toilet paper shortages are disappearing and the beaches are opening up, but before we get back to our normal "busyness", maybe we can dedicate a few minutes of our families' time to discuss freedom and what it costs.
How were you impacted but the economic shutdown? What part did fear play in your mind and decisions? What was the financial cost to your family? Did the government help you (stimulus, small business loans, unemployment assistance)? Did the government hurt you (extended closures, bad decisions)?
What could you have done differently to be better prepared to navigate through COVID craziness?
The Trial of Socrates offers interesting parallels to the current debate over the limits of our government in the face of a public health scare. The philosopher was associated with the Thirty Tyrants who were overthrown. Socrates was perceived to prefer Technocracy instead of majority rule. He espoused that political decisions should be made based on facts and data that only learned and capable leaders possessed. Only these leaders on Socrates view would be competent to make the best decisions for Athens citizens. Do the names Trump, Cuomo, Fauci and Brix come to mind? Continued at the link...
If you’re like me, you’ve reached the point during your time at home where you’ve cleaned out your closets, re-learned the rules to UNO and redefined how long something will stay edible in your freezer. As you look for something to occupy your time in the coming weeks, here’s a list of five little things that will help your financial and mental health heading into the summer.
Open your mail. Walking to the mailbox each day may be a new part of your routine. I would encourage you to take this time to read your investment statements, insurance documents and other financial information. You may remember that you have a 401k from 2 jobs back or some Disney stock that your grandmother gave you. Take this time to assess what accounts you have and where. You’re likely to find the need to consolidate some of those old accounts and get more organized.
2. Update your beneficiaries. Gather all your insurance policies, retirement accounts, even 529 college savings plans, and verify the beneficiaries on those. They are easily accessible online or by calling the provider. You may have gotten married or had another child. Always a good time to update that information if it hasn’t been done in a while.
3. Develop a monthly budget. You’ve likely been home for going on 8 weeks now. Take a glance at your credit card bills and bank accounts for March and April. The Amazon charges and the grocery bills are likely higher, but what about your other spending? This may give you some insight on what you spend money on and perhaps how you could save more.
4. Keep an eye on your tax return. Many things have changed in 2020 because of COVID-19. Review last year’s tax return and educate yourself on new deductions, income changes and opportunities because of the pandemic. If you haven’t filed your 2019 return, develop a plan to get that done, and if you owe taxes, see goal number 3 above.
5. Write down three things that you have enjoyed during this time alone. It could be time with family, walking your dog, or cooking new food. Write those things down on a notecard or post-it note and put it on your refrigerator or bathroom mirror. Remember those positive experiences and think about implementing them into your life permanently going forward.
I have heard and read about bear markets, but I have never experienced one with ‘skin in the game’ until April. Everything I heard and most of what I read does not even scratch the surface of what I just experienced. Bear markets engulf investors in fear, loss, anxiety, panic, and regret. I experienced all these emotions.
Background: The Escalator Up
On March 9, 2019, the stock market passed the 10-year milestone from its 2009 lows. This bull withstood punches from all over the globe. A U.S. Federal Government credit rating downgrade, European sovereign debt crisis, U.S. – China trade war tensions, Brexit, and interest rate hikes to name a few. With bumps smoothed along the way with quantitative easing (QE), tax cuts, and the daily expressions of optimism from economists; most individuals began to think the longest bull market in history was invincible.
On February 12, 2020, the DJIA, the NASDAQ and the S&P 500 (all major stock indices) finished at record highs. (The NASDAQ and S&P 500 both reached subsequent highs on February 19th).
These highs were short lived.
Bear Market: The Elevator Down
In less than two weeks from the February 2020 peaks, major stock indices were in freefall. Bear markets, defined as a decline of at least 20%, occurred in the S&P 500 (16 days), DJIA (19 days) and NASDAQ (17 days). Since entering the bear market, each index dropped between 32-39% before bouncing.
In 2009, our country emerged from the Great Financial Crisis (GFC). Despite the accusations and finger pointing that occurred, markets declined, homes were lost, and many jobs disappeared. I personally do not recall the turmoil from the subprime lending crisis. I was insulated, sitting in a desk in ninth grade Math and English, and periodically escaping pranks from my football teammates. This put me at a slight disadvantage by not having a first-hand experience of facing the 2007-2009 bear market. Eleven years later, I am sitting behind a desk at LeConte Wealth Management. My position provides me an up close and personal experience of what truly occurs in a bear market.
As a rookie facing my first bear market, here are the top 5 things I learned.Click through to the list.