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I Became a Disciplined Investor Over 40 Years. The Virus Broke Me in 40 Days. I Became a Disciplined Investor Over 40 Years. The Virus Broke Me in 40 Days.
(about 5 hours later)
It’s Thursday morning, March 19 — four weeks into the coronavirus crash of 2020. The Dow Jones industrial average has opened down another 700 points, after plunging below 20,000 a day before. It’s down 30 percent in a month, the steepest drop ever, even worse than during the Great Depression.It’s Thursday morning, March 19 — four weeks into the coronavirus crash of 2020. The Dow Jones industrial average has opened down another 700 points, after plunging below 20,000 a day before. It’s down 30 percent in a month, the steepest drop ever, even worse than during the Great Depression.
The fall has been nauseating. Yet I know this is a time to be buying stocks based on rules I’ve developed over decades of investing. But in order to do that, I have to log on to my brokerage account. When I do, the first number I’ll see is the current market value of my portfolio.The fall has been nauseating. Yet I know this is a time to be buying stocks based on rules I’ve developed over decades of investing. But in order to do that, I have to log on to my brokerage account. When I do, the first number I’ll see is the current market value of my portfolio.
Isolated at a farmhouse in rural New York, surrounded by wilderness, I haven’t looked in days. I don’t want to look now.Isolated at a farmhouse in rural New York, surrounded by wilderness, I haven’t looked in days. I don’t want to look now.
I decide I’d better check the weather forecast instead. And then there’s email to catch up on. An hour later, I’ve done nothing.I decide I’d better check the weather forecast instead. And then there’s email to catch up on. An hour later, I’ve done nothing.
I’m paralyzed.I’m paralyzed.
I’ve owned stocks for nearly 40 years. I’ve lived through, survived and even prospered through four crashes.I’ve owned stocks for nearly 40 years. I’ve lived through, survived and even prospered through four crashes.
So I should be prepared. Yet, looking back at the last few weeks, I recognize that I’ve violated most of my time-tested rules. Whipsawed between optimism and despair as the bad news mounted and my daily life was upended, I’ve let emotions influence my decisions. I’m doing it again this morning.So I should be prepared. Yet, looking back at the last few weeks, I recognize that I’ve violated most of my time-tested rules. Whipsawed between optimism and despair as the bad news mounted and my daily life was upended, I’ve let emotions influence my decisions. I’m doing it again this morning.
I first bought a stock mutual fund during the summer of 1982, as soon as I’d saved enough money to invest. My father, a Cadillac-driving sales manager for NBC’s local TV and radio affiliates, had been an avid believer in the stock market, and he’d drummed his faith into me.I first bought a stock mutual fund during the summer of 1982, as soon as I’d saved enough money to invest. My father, a Cadillac-driving sales manager for NBC’s local TV and radio affiliates, had been an avid believer in the stock market, and he’d drummed his faith into me.
It turned out that 1982 was a great year to buy, not that I realized it at the time. For years, I enjoyed the positive reinforcement of a steadily rising market. I loved looking up my mutual fund in the newspaper stock tables. Over the next five years the market tripled.It turned out that 1982 was a great year to buy, not that I realized it at the time. For years, I enjoyed the positive reinforcement of a steadily rising market. I loved looking up my mutual fund in the newspaper stock tables. Over the next five years the market tripled.
On Oct. 19, 1987, I was visiting my brother, who was spending a semester in France. When I left my hotel in Strasbourg early the next morning, I noticed the front pages on newsstands carried banner headlines reporting the Dow had dropped “23.” I wondered why the American market was front-page news in France. I looked more closely and saw the 23 preceded a percentage symbol. The Dow had dropped an unfathomable 508 points in one day. On a percentage basis, it was the stock market’s worst day ever.On Oct. 19, 1987, I was visiting my brother, who was spending a semester in France. When I left my hotel in Strasbourg early the next morning, I noticed the front pages on newsstands carried banner headlines reporting the Dow had dropped “23.” I wondered why the American market was front-page news in France. I looked more closely and saw the 23 preceded a percentage symbol. The Dow had dropped an unfathomable 508 points in one day. On a percentage basis, it was the stock market’s worst day ever.
I felt a powerful urge to salvage what was left of my modest savings by selling. But I was far away and had no choice but to hold.I felt a powerful urge to salvage what was left of my modest savings by selling. But I was far away and had no choice but to hold.
Once I was back in the United States, the market seemed to stabilize. But volatility soon returned. In one of those downdrafts, I panicked and sold my entire fund.Once I was back in the United States, the market seemed to stabilize. But volatility soon returned. In one of those downdrafts, I panicked and sold my entire fund.
By September 1989, the market had recovered all its losses. I watched from the sidelines, waiting in vain for a good time to get back in.By September 1989, the market had recovered all its losses. I watched from the sidelines, waiting in vain for a good time to get back in.
I vowed to never again trade in a panic. I made a rule — never sell on a down day — and a corollary: Never buy on an up day.I vowed to never again trade in a panic. I made a rule — never sell on a down day — and a corollary: Never buy on an up day.
That served me well over the next decade’s record bull market, fueled by the tech boom. Times were even headier than during the 1980s. I often overheard personal trainers at the gym boasting about their favorite tech stocks.That served me well over the next decade’s record bull market, fueled by the tech boom. Times were even headier than during the 1980s. I often overheard personal trainers at the gym boasting about their favorite tech stocks.
The notion of diversification was largely unknown to me. In early 2000, when the tech bubble burst and the next crash came, I was fully invested and stayed that way. I watched as the value of my investments shriveled. I stopped looking at stock tables, which at least provided some psychological comfort. I dropped my monthly paper statements into the trash unopened.The notion of diversification was largely unknown to me. In early 2000, when the tech bubble burst and the next crash came, I was fully invested and stayed that way. I watched as the value of my investments shriveled. I stopped looking at stock tables, which at least provided some psychological comfort. I dropped my monthly paper statements into the trash unopened.
But at least I adhered to my 1987 principle: I did not sell.But at least I adhered to my 1987 principle: I did not sell.
In the wake of the two-year bear market, I refined my strategy. I figured that if I bought every time the market average declined by 10 percent from its previous high — the standard definition of a correction — and then bought some more after each subsequent decline of 10 percent, then I’d never be buying at the top of the cycle.In the wake of the two-year bear market, I refined my strategy. I figured that if I bought every time the market average declined by 10 percent from its previous high — the standard definition of a correction — and then bought some more after each subsequent decline of 10 percent, then I’d never be buying at the top of the cycle.
I didn’t think of this as market timing, since I made no prediction where the market was headed. My strategy was a variation of the now-widespread practice of portfolio rebalancing — selling some asset classes and buying others to maintain a steady allocation.I didn’t think of this as market timing, since I made no prediction where the market was headed. My strategy was a variation of the now-widespread practice of portfolio rebalancing — selling some asset classes and buying others to maintain a steady allocation.
I put this system into practice during the 2008 financial crisis. I recall shocked reactions that October when — with the market plunging and others boasting that they’d had the foresight to get out — I said I was buying.I put this system into practice during the 2008 financial crisis. I recall shocked reactions that October when — with the market plunging and others boasting that they’d had the foresight to get out — I said I was buying.
My timing was hardly perfect. The market fell by 10 percent on five occasions — so I had plenty of opportunities to add to my stock positions. The last came in March 2009. In hindsight, the first of those 10 percent declines was a foolish time to have been buying, given that the market went down another 40 percent. But I reaped the gains even on those early purchases during the record-setting bull market that ended this month. Back in 2009, I didn’t have to worry about getting back into the market. I was already there.My timing was hardly perfect. The market fell by 10 percent on five occasions — so I had plenty of opportunities to add to my stock positions. The last came in March 2009. In hindsight, the first of those 10 percent declines was a foolish time to have been buying, given that the market went down another 40 percent. But I reaped the gains even on those early purchases during the record-setting bull market that ended this month. Back in 2009, I didn’t have to worry about getting back into the market. I was already there.
There have been only five 10 percent corrections since then, and each was a buying opportunity for me. None was followed by a second 10 percent decline. The last of these corrections came at the end of 2018. As cash built up in my account, I wondered when, if ever, I’d get another such opportunity. I grew impatient. On Feb. 19, the S&P 500 closed at a record high. No one seemed to see a bear market or recession on the horizon, even as stock multiples teetered at record highs and a strange virus began to spread.There have been only five 10 percent corrections since then, and each was a buying opportunity for me. None was followed by a second 10 percent decline. The last of these corrections came at the end of 2018. As cash built up in my account, I wondered when, if ever, I’d get another such opportunity. I grew impatient. On Feb. 19, the S&P 500 closed at a record high. No one seemed to see a bear market or recession on the horizon, even as stock multiples teetered at record highs and a strange virus began to spread.
Until a week later.Until a week later.
Stocks fell, slowly at first, then gaining steam. By Feb. 25 the S&P 500 had dropped 7.6 percent from its peak.Stocks fell, slowly at first, then gaining steam. By Feb. 25 the S&P 500 had dropped 7.6 percent from its peak.
From a financial standpoint, I wasn’t worried about the virus. Infections were leveling off in China. There were a few cases in the United States, most in a single nursing home in Washington State. Everyone was saying we had better medical care, better air quality and more effective means to prevent its spread than China. As an investor, I’d lived through many virus scares — SARS, MERS, swine flu, Ebola — and their ravages had no discernible impact on American stocks. Even the devastating AIDS epidemic had little effect on the broader economy or booming market.From a financial standpoint, I wasn’t worried about the virus. Infections were leveling off in China. There were a few cases in the United States, most in a single nursing home in Washington State. Everyone was saying we had better medical care, better air quality and more effective means to prevent its spread than China. As an investor, I’d lived through many virus scares — SARS, MERS, swine flu, Ebola — and their ravages had no discernible impact on American stocks. Even the devastating AIDS epidemic had little effect on the broader economy or booming market.
So I bought stock (a broad-based index fund) on Feb. 25, jumping the gun on my own 10 percent buying target. My pent-up eagerness and optimism overwhelmed my disciplined strategy. I didn’t make a conscious decision to violate it. I didn’t even think about it in my haste to take advantage of what I assumed would be a fleeting opportunity.So I bought stock (a broad-based index fund) on Feb. 25, jumping the gun on my own 10 percent buying target. My pent-up eagerness and optimism overwhelmed my disciplined strategy. I didn’t make a conscious decision to violate it. I didn’t even think about it in my haste to take advantage of what I assumed would be a fleeting opportunity.
Stocks dropped a little more the next day. Then, on Feb. 27, the S&P plunged nearly 5 percent. Now the market was officially in a correction, its fastest ever, down 12 percent from the peak the prior week. The coronavirus had spread globally, including to the United States.Stocks dropped a little more the next day. Then, on Feb. 27, the S&P plunged nearly 5 percent. Now the market was officially in a correction, its fastest ever, down 12 percent from the peak the prior week. The coronavirus had spread globally, including to the United States.
I realized I should have waited. I felt foolish and guilty for violating my rules. I vowed not to do it again.I realized I should have waited. I felt foolish and guilty for violating my rules. I vowed not to do it again.
But how smart I felt the next Monday. The S&P soared nearly 5 percent, amid rumors the Federal Reserve was about to cut interest rates.But how smart I felt the next Monday. The S&P soared nearly 5 percent, amid rumors the Federal Reserve was about to cut interest rates.
The high was short-lived. By the end of the week, the S&P had erased Monday’s gains. By now I was worried, too, but I’m not an infectious disease expert. I figured stocks had priced in the risks. What I did know was that they were now deep into a correction, and so I bought more.The high was short-lived. By the end of the week, the S&P had erased Monday’s gains. By now I was worried, too, but I’m not an infectious disease expert. I figured stocks had priced in the risks. What I did know was that they were now deep into a correction, and so I bought more.
My buying may have been premature the first time, but now I was back on track, sticking to my playbook. At a time of soaring uncertainty on so many fronts, I felt like I was taking charge of my destiny.My buying may have been premature the first time, but now I was back on track, sticking to my playbook. At a time of soaring uncertainty on so many fronts, I felt like I was taking charge of my destiny.
That was the last time that buying stocks felt good, like I was pouncing on a fleeting opportunity. It soon became a source of profound anxiety.That was the last time that buying stocks felt good, like I was pouncing on a fleeting opportunity. It soon became a source of profound anxiety.
Over the first weekend in March, headlines were all about the explosive spread of the virus in Italy. Photos of deserted piazzas drove home the gravity of the situation. What had seemed a distant threat now seemed close to home.Over the first weekend in March, headlines were all about the explosive spread of the virus in Italy. Photos of deserted piazzas drove home the gravity of the situation. What had seemed a distant threat now seemed close to home.
If that weren’t bad enough, Russia and Saudi Arabia decided to launch an oil price war just as demand was collapsing. Oil prices plummeted, dragging down the entire energy sector.If that weren’t bad enough, Russia and Saudi Arabia decided to launch an oil price war just as demand was collapsing. Oil prices plummeted, dragging down the entire energy sector.
I expected it would be a bad Monday in the markets, but it was even worse. Circuit breakers kicked in to halt chaotic trading. The S&P closed down that day by 7 percent, the biggest drop since Black Monday in 1987.I expected it would be a bad Monday in the markets, but it was even worse. Circuit breakers kicked in to halt chaotic trading. The S&P closed down that day by 7 percent, the biggest drop since Black Monday in 1987.
I summoned the nerve to look at my brokerage account. I was shocked: The stock portion was down far more than the broad U.S. market averages. My international stock index fund was down 20 percent from its February peak, and the emerging markets fund had lost a quarter of its value.I summoned the nerve to look at my brokerage account. I was shocked: The stock portion was down far more than the broad U.S. market averages. My international stock index fund was down 20 percent from its February peak, and the emerging markets fund had lost a quarter of its value.
I thought back to my experience 33 years earlier, when I’d panicked at the headlines in Strasbourg. I tried to remind myself that short-term volatility aside, the long-term trajectory of the market has always been up. When the market goes down, it’s time to think about buying more stocks — a time that came much sooner than I’d hoped or expected.I thought back to my experience 33 years earlier, when I’d panicked at the headlines in Strasbourg. I tried to remind myself that short-term volatility aside, the long-term trajectory of the market has always been up. When the market goes down, it’s time to think about buying more stocks — a time that came much sooner than I’d hoped or expected.
On Thursday, March 12, after President Trump banned most air travel between the United States and continental Europe, and after economies around the world started shutting down, the carnage in the stock market was even worse than Monday. The S&P dropped 10 percent, leaving it 27 percent below its peak a few weeks earlier.On Thursday, March 12, after President Trump banned most air travel between the United States and continental Europe, and after economies around the world started shutting down, the carnage in the stock market was even worse than Monday. The S&P dropped 10 percent, leaving it 27 percent below its peak a few weeks earlier.
According to my own rules, it was time to buy.According to my own rules, it was time to buy.
I hardly noticed. I was busy canceling a planned vacation the next week to the Virgin Islands. I began pondering the prospect of my own isolation, something that even a few days earlier had seemed unthinkable.I hardly noticed. I was busy canceling a planned vacation the next week to the Virgin Islands. I began pondering the prospect of my own isolation, something that even a few days earlier had seemed unthinkable.
Worse, a friend in Spain, a healthy 40-year-old I had just visited in November, had fallen seriously ill with the virus. He was in a coma in a Madrid hospital.Worse, a friend in Spain, a healthy 40-year-old I had just visited in November, had fallen seriously ill with the virus. He was in a coma in a Madrid hospital.
I was worried about the spread of the disease. I wasn’t thinking about the stock market or my rapidly declining net worth.I was worried about the spread of the disease. I wasn’t thinking about the stock market or my rapidly declining net worth.
My strategy for trading isn’t meant to be rigid, only to be rational. It doesn’t matter if I miss a percentage point or two here or there, or if my timing is a little off, or if more important matters take precedence — as they have now. Two more friends told me they have the virus. Still, during the following days, when I pondered the rush of events during some long walks along a country road, I recognized I was running out of excuses for inaction. I knew I should be buying again, with the S&P remaining well below my 20 percent target. But trading was more volatile than anything I’d ever witnessed. The S&P logged a record seven straight days of swings of 4 percent or more.My strategy for trading isn’t meant to be rigid, only to be rational. It doesn’t matter if I miss a percentage point or two here or there, or if my timing is a little off, or if more important matters take precedence — as they have now. Two more friends told me they have the virus. Still, during the following days, when I pondered the rush of events during some long walks along a country road, I recognized I was running out of excuses for inaction. I knew I should be buying again, with the S&P remaining well below my 20 percent target. But trading was more volatile than anything I’d ever witnessed. The S&P logged a record seven straight days of swings of 4 percent or more.
Updated June 5, 2020Updated June 5, 2020
So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.
A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.
The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April.The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April.
Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission.Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission.
Exercise researchers and physicians have some blunt advice for those of us aiming to return to regular exercise now: Start slowly and then rev up your workouts, also slowly. American adults tended to be about 12 percent less active after the stay-at-home mandates began in March than they were in January. But there are steps you can take to ease your way back into regular exercise safely. First, “start at no more than 50 percent of the exercise you were doing before Covid,” says Dr. Monica Rho, the chief of musculoskeletal medicine at the Shirley Ryan AbilityLab in Chicago. Thread in some preparatory squats, too, she advises. “When you haven’t been exercising, you lose muscle mass.” Expect some muscle twinges after these preliminary, post-lockdown sessions, especially a day or two later. But sudden or increasing pain during exercise is a clarion call to stop and return home.Exercise researchers and physicians have some blunt advice for those of us aiming to return to regular exercise now: Start slowly and then rev up your workouts, also slowly. American adults tended to be about 12 percent less active after the stay-at-home mandates began in March than they were in January. But there are steps you can take to ease your way back into regular exercise safely. First, “start at no more than 50 percent of the exercise you were doing before Covid,” says Dr. Monica Rho, the chief of musculoskeletal medicine at the Shirley Ryan AbilityLab in Chicago. Thread in some preparatory squats, too, she advises. “When you haven’t been exercising, you lose muscle mass.” Expect some muscle twinges after these preliminary, post-lockdown sessions, especially a day or two later. But sudden or increasing pain during exercise is a clarion call to stop and return home.
States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people.States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people.
Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.
Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.
If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)
Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications.Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications.
The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing.The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing.
If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.
If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested.If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested.
That Friday, March 13, stock markets staged a late-afternoon rally as Mr. Trump promised new measures to contain the virus and shore up the economy. The S&P 500 closed almost exactly 20 percent below its peak. Still I did nothing.That Friday, March 13, stock markets staged a late-afternoon rally as Mr. Trump promised new measures to contain the virus and shore up the economy. The S&P 500 closed almost exactly 20 percent below its peak. Still I did nothing.
It was just as well. On Monday, the market collapsed, erasing all of Friday’s gains. The Dow fell below the 20,000 milestone for the first time in three years. Markets were now down 30 percent. It was time for me to buy.It was just as well. On Monday, the market collapsed, erasing all of Friday’s gains. The Dow fell below the 20,000 milestone for the first time in three years. Markets were now down 30 percent. It was time for me to buy.
Having skipped the 20 percent buying “opportunity,” I knew it was time to step up. But I wasn’t going to do it on a day the markets had been in free fall. And in any event, I was back to avoiding my brokerage’s website.Having skipped the 20 percent buying “opportunity,” I knew it was time to step up. But I wasn’t going to do it on a day the markets had been in free fall. And in any event, I was back to avoiding my brokerage’s website.
The next day the stock market jumped higher. I felt a strong temptation to buy, gripped by the notion that the worst might be over. I worried I was missing the bottom by again failing to act on my strategy. But the 30 percent window had closed, and I reminded myself that my rule is never to buy on an up day.The next day the stock market jumped higher. I felt a strong temptation to buy, gripped by the notion that the worst might be over. I worried I was missing the bottom by again failing to act on my strategy. But the 30 percent window had closed, and I reminded myself that my rule is never to buy on an up day.
The next day brought what seemed like good news: New infections in China had dropped to zero. Even so, that morning markets sank, again triggering my 30 percent buying target. This time I was determined to act.The next day brought what seemed like good news: New infections in China had dropped to zero. Even so, that morning markets sank, again triggering my 30 percent buying target. This time I was determined to act.
And yet I dawdled. I checked the news, the weather, my emails. I told myself this was absurd. Whether I looked or not, my portfolio value was what it was.And yet I dawdled. I checked the news, the weather, my emails. I told myself this was absurd. Whether I looked or not, my portfolio value was what it was.
So I looked. It was bad, but not nearly the shock of the last time (perhaps because percentage declines now translated to lower dollar amounts). I still had ample cash on hand as interest and dividends had accumulated over recent years.So I looked. It was bad, but not nearly the shock of the last time (perhaps because percentage declines now translated to lower dollar amounts). I still had ample cash on hand as interest and dividends had accumulated over recent years.
So I stepped in and bought.So I stepped in and bought.
I won’t say I felt euphoric, but I felt better than I had in weeks, at least about my personal finances. I’d mustered the courage to face the truth, however grim. I’d acted according to a plan. I had more cash if needed for the next 10 percent decline.I won’t say I felt euphoric, but I felt better than I had in weeks, at least about my personal finances. I’d mustered the courage to face the truth, however grim. I’d acted according to a plan. I had more cash if needed for the next 10 percent decline.
My renewed confidence survived the next downdraft, which came the very next day.My renewed confidence survived the next downdraft, which came the very next day.
This week I described my recent investing struggles to Frank Murtha, a managing partner of the consulting firm MarketPysch and an expert in behavioral finance. He said nothing I told him was unusual, even among seasoned investors.This week I described my recent investing struggles to Frank Murtha, a managing partner of the consulting firm MarketPysch and an expert in behavioral finance. He said nothing I told him was unusual, even among seasoned investors.
My reluctance to look at my portfolio was common, he said. “Watching yourself have less money is painful,” he said. “It’s not just that you’re poorer. You also feel ashamed, foolish, like you screwed up. One of the toughest things is to separate your money from your ego and identity.”My reluctance to look at my portfolio was common, he said. “Watching yourself have less money is painful,” he said. “It’s not just that you’re poorer. You also feel ashamed, foolish, like you screwed up. One of the toughest things is to separate your money from your ego and identity.”
He gave me credit for gathering the courage to face reality and then to buy. “Nothing relieves anxiety more than taking action,” he said. “You can take small actions that address the emotional need to do something without putting your finances at undue risk.”He gave me credit for gathering the courage to face reality and then to buy. “Nothing relieves anxiety more than taking action,” he said. “You can take small actions that address the emotional need to do something without putting your finances at undue risk.”
Stocks are one of the few assets that psychologically become harder to buy as they become cheaper. “Every decision to buy is met with negative reinforcement,” Mr. Murtha said. Even he missed the great buying opportunity in March 2009. “I was too scared,” he said.Stocks are one of the few assets that psychologically become harder to buy as they become cheaper. “Every decision to buy is met with negative reinforcement,” Mr. Murtha said. Even he missed the great buying opportunity in March 2009. “I was too scared,” he said.
At least I didn’t commit what Mr. Murtha considers the most serious error, which is to sell into a steep decline. “That’s where people really get hurt,” he said. “Once you’re out, the emotional leverage works against you. Either the market drops further, which confirms your fear. Or it goes up, and you don’t want to buy after you just sold. Then it gets further and further away from you. People don’t realize how hard it is to get back in.”At least I didn’t commit what Mr. Murtha considers the most serious error, which is to sell into a steep decline. “That’s where people really get hurt,” he said. “Once you’re out, the emotional leverage works against you. Either the market drops further, which confirms your fear. Or it goes up, and you don’t want to buy after you just sold. Then it gets further and further away from you. People don’t realize how hard it is to get back in.”
Nothing I experienced in the past prepared me for the speed of this market crash. The decline after stocks peaked in March 2000 lasted until October 2002 — two and a half years. The most recent bear market, which started in 2007, lasted 17 months. Nobody knows how long this bear market will last.Nothing I experienced in the past prepared me for the speed of this market crash. The decline after stocks peaked in March 2000 lasted until October 2002 — two and a half years. The most recent bear market, which started in 2007, lasted 17 months. Nobody knows how long this bear market will last.
I take heart from this: During that previous bear market, the S&P was never down more than 50 percent from its 2007 peak. Even in the Great Depression, the worst bear market ever, the S&P dropped 86 percent. Small comfort, perhaps, but it never went to zero. And after those steep drops, the market not only recovered, but eventually went on to record highs.I take heart from this: During that previous bear market, the S&P was never down more than 50 percent from its 2007 peak. Even in the Great Depression, the worst bear market ever, the S&P dropped 86 percent. Small comfort, perhaps, but it never went to zero. And after those steep drops, the market not only recovered, but eventually went on to record highs.
This week brought some good news. My friend in Spain emerged from his coma. Doctors say his recovery will be slow, but they’re optimistic.This week brought some good news. My friend in Spain emerged from his coma. Doctors say his recovery will be slow, but they’re optimistic.
On Tuesday the market soared, followed by two more days of gains. This time I felt no elation. Some of the biggest rallies have come in the middle of the worst bear markets.On Tuesday the market soared, followed by two more days of gains. This time I felt no elation. Some of the biggest rallies have come in the middle of the worst bear markets.
My next target is when the S&P falls 40 percent from its peak. I may be buying again soon.My next target is when the S&P falls 40 percent from its peak. I may be buying again soon.