As goes January so goes the year. Well, that’s the old Wall St. adage at least. If that holds true we are in for a down year I guess. But wait, wasn’t January was flying high until the dreaded Coronavirus started spreading across the globe. So are we now saying a week of panic selling is now indicative of the entire month and in turn the entirety of 2020? You see how ridiculous old adages and knee jerk panic selling and buying can be.
When I see large irrational moves to the downside my first thought is buying opportunity. In fact I tweeted this during the panic selling but I ultimately decided to hold off. I’m not desperate and have committed to a long term strategy that doesn’t involve market timing. If you have planned automatic investment periods the dollar cost averaging will take care of itself. In my younger years I would have probably pumped some cash into a few stocks, but I don’t need to do that anymore. We have already made it and patience is the motto now. Take it slow and let it grow.
Since I am a fan of watching the market here is my current take. People are irrational and emotional. There comes a time in a bull market when people have made a lot of money on paper and their biggest fear becomes losing that gain before they have a chance to cash out. Because of this fear they are holding visual over their investments hoping for more gains, but ready to sellout at the first sign of a decline. All they need is a catalyst to take their cue that it’s time to bail on their positions. That cue, in my opinion, has become the dreaded Coronavirus.
Now, I’m not trying to minimize the disease and it’s potential impact on society. It’s serious and needs to be contained and eradicated. However, when it comes to the mindset of some investors and stock market gamblers this is their cue to take money off the table. Not because of what it is, but because of what it could be. It could impact the global economy and it could cause a global slowdown or even a recession. The bigger question is will it?
This is where we need to slowdown and take a breather as long term emotionless investors and take a look at history. We have been down this road before. Several times in fact. We have had bird flu, swine flu, mad cow disease and SARS just to name a few. There is always some new strain or virus that strikes fear and panic into society’s around the globe. And while these are serious problems at the time, they tend to pass and their overall impact on the global economy and markets is minimal and temporary.
So what are we to do in these uncertain times? Well, I’m doing nothing and I suspect most long term investors are doing the same. What really matters is the underlying fundamentals. The markets were already overvalued so a pullback or correction, no matter the catalyst, is healthy for long term growth. The economy is still growing at a 2% pace and companies are still reporting good earnings. This is more indicative of where the markets are heading in the long term. Could that change? Absolutely. Do I think it will? No, not at this time. I actually believe the greatest risk to the markets is the November election. But this is not a political blog so I will leave it right there.
In other news, January was our best month for the business so far. While I am still not covering my corporate income in full I am bringing in money. Business write offs will also help us keep more of what is earned and lower the bar for us to break even on income in the long run. I don’t know about you, but the idea of working less while keep more of what we earn is very appealing.
In our last blog, Health Life, Happy FI, I wrote about the importance of getting healthy as part of this process. As I enter my third week without meat I’m happy to say that I am pleasantly surprised by the fact that I have no cravings at all for burgers or even grilled chicken. I’ve been mostly eating fruits, vegetables, whole grain breads, nuts and rice. I have on occasion strayed with some dairy products and some items that contain eggs, but nothing that would knock me off track. The only real urge I have is to know how much I weigh, but since the scale went in the garbage that’s not going to happen. I know I’ve lost a few pounds because had to go down a belt loop and the belly looks a little smaller. But there is still a lot of work to be done.
Let’s see where we ended January 2020:
Portfolio- $1,045,089 (Cash and Investments)
Portfolio Goal – $1,500,000
Amount needed to reach goal – $454,911
Our portfolio decreased by $2,428 or 0.23% from the end of December.
Year-to-date our portfolio is down 0.23%.
Net Worth – $1,254,476
This is an increase of $3,591 or 0.29% from the end of December.
Year-to-date our Net Worth is up 0.29%
Our portfolio finished the month flat. We did however enjoy some nice gains prior to the panic selling. But I’m ok with this result as the markets can’t always go up nor should not want or expect them to. I prefer the slow measured climb up the wall of worry with occasional corrections to help shake out bloated expectations.
It will be interesting to watch in February. Will the markets continue to panic and take us into possible correction territory or will they shake off the Coronavirus fears and continue the bull run? A lot of this depends on steps being taken by governments across the world, but my sense and hope is this will end the same way it has in the past. But it’s always possible this could get much worse before it gets better.
In the meantime we stick to our plan and look forward to the future. We are now only six months away from College Road Trip 2020 and after that the real fun begins.
Until next time………………
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