Novel Coronavirus, COVID-19: Let’s be financially prepared and Use it to improve

Mar 02, 2020

The 4 Main Points in this blog post:

  • Wow, this is something
  • Health: capitalize on the virus to improve your health habits
  • Psychology & Time Management: how to manage mentally and be time-wise
  • Economic and Financial: learn the right questions for your preparedness

 

Well, I wasn’t planning on writing this blog post.

First off, I’m in the very early stages of blogging.  More precisely I wrote my first real draft blog article yesterday which was a new experience in and of itself. That also kinds means I don’t really have a blog yet.  I’ve been focused on building the website, picking colors, designing logos, writing copy for the site. 

Secondly, I had a different topic in mind, but frankly, I can’t get this coronavirus thing off my mind.

Couple of notes up front.  I’m not a huge politically inclined person so I really don’t have anything to contribute there, and this is in no way intended to be some all-encompassing “how to” get prepared checklist.  I simply thought I would offer a few of my perspectives, thoughts, and practical approaches. For what it’s worth, take what you like and leave the rest, and all that good stuff …

Let’s take the bull by the horns and begin with FEAR.  Wow, sense any fear out there? 

Thursday 2/27/2020 – It started hitting home when on Thursday 2/27/2020 when they closed Bothell High School (25min drive from my house) to verify if a person had contracted it, and they were busy disinfecting the school.  I listened to a podcast from a “semi-prepper”. The markets tanked, etc. etc. I made declaration to my family that this is it, it’s real, and the impact is going to be huge.  Ok, I might have been really late to the party here, but that’s how it unfolded for me.

Friday 2/28/2020 – Then it started hitting a little more. Bothell High School was closed again on Friday. It actually turned out that the individual didn’t have the virus, but what an impact. Markets tanked but then actually held up fairly well by the end of the day. 

Saturday 2/29/2020 – Pushed me over the top … sealed the deal, confirmed my Thursday declaration … the first death due to the novel coronavirus was announced and it happened within 10-20 min drive from my house and the kids school.  The gentleman died in Evergreen Hospital that we have used in the past and have friends who work there. Then, in the middle of listening to some pretty good comedy on NPR they cut over to the president’s news conference.  I spent the next 3+ hours seeing if I could buy hand sanitizer online, and Amazon, Walmart, and Costco were all sold out. Fuels the fire. My daughter says that the shelves at 5 local shops are wiped out, no hand sanitizer.  Ok, how do I make this myself at home … and after 3+ hours I had spent about $500 on freeze dried food for the family, water filters, dog food, and so on.   

One thing that is strange about all of this is that I work with people in China, and they have been in lock down mode for weeks now.  But it took a local incident before it really hit home. Maybe not very smart, but maybe very similar to many people.

I look at 3 main dimensions to this situation:

  1. Health
  2. Psych approach & Time Management
  3. Economic

On the health front it feels somewhat impossible to completely prevent without taking some extreme measures (pack it up and head to the woods for 3-6 months).  So, I’ve landed on the idea that this is another “flu like” virus and at a minimum we need to do the normal things we do to prevent getting sick: washing hands, taking vitamins, doing the “nose flush” with salt-water, eating well, exercising, full sleep, and adding in a little bit of exposure minimization by not going outside the house out as much, at least for a while.

I’m actually capitalizing on this virus by changing my routine when I come home to automatically go to the bathroom and wash my hands.  That’s a good habit to have even if there is no novel coronavirus threat. Also, I’m all over the kids to do the same.  If they make this a habit maybe it saves them 10 to 30 sicknesses throughout their lives going forward. No downside, no big deal to implement, and just general good cleanliness.

If I get the virus I guess I could be quarantined and that would be really disruptive, but probably not life threatening given my health.  But no guarantees, right?  So it’s kind of a calculated risk that my turn out good, but possibly not.

However, it definitely appears things will get worse before they get better. I’m sure people at work will get it, and I’m sure that people at my kids school will get it.  There might be some forced limitations on commuting to work, travel, etc. Of course, I don’t know for sure, but this seems very likely as of now (3/1/2020).

 

Next up, Psychology & Time Management.  This thing can eat away at your mental cycles and burn some serious hours (and energy). That’s not good for your mental health and productivity.  Luckily, I have already cut the cable, and even turned off Live Hulu, and limited my news consumption over the last 9 months or so, but look, somehow even I know about this novel coronavirus.  Just some proof that you can cut off a lot of your media in flows, save a boatload of time, and still get plenty of news.   

Having said that, I think it is a constant internal battle to stop ourselves from obsessing on it, wanting to know the latest developments, etc. As for the external battle, maybe this is a great time to do some digital minimization … delete some phone apps, cut off the live TV, listen to podcasts or your music playlist in the car instead of the radio, and so on.

Looking longer term, if this virus continues as a story for the next 3 months up to 2 years think about how much time and energy you will give up to it over that time period.  It’s potentially huge, may hundreds of otherwise life fulfilling and supporting hours. You can thank me later when you tell me you learned a new language instead of tracking the novel coronavirus diligently over the next 12 months.

You can take this virus as a great challenge to take control of your time, your mind cycles, and where you focus your energy during this time.

 

Finally, the Economic and financial aspects. I feel like I was supposed to start with this, but here we are. Most likely, and hopefully, you personally won’t be affected severely by the virus itself from what we told about a 1 to 2% death rate.  But you will most likely be affected by the virus’ economic impact. I would bet the economic impact, based on fear, is going to affect a lot more people than the virus itself. That’s true today, and I think it will be true for the coming months. 

Fear is again a big deal here, but let’s look at it from the economic and financial aspect. First, some people might logically say there is a lot of unfounded fear going around, and I won’t dispute that from a medical perspective.  But don’t let that argument prevent you from seeing the reality of the economic impact of this fear.  It’s powerful, regardless of being medically justified or not.  This can’t be ignored until we start to see some evidence of the fear subsiding.

Last week was probably the kickoff to this journey in the United States.  China, Italy, Korea, and Iran apparently kicked off their journeys’ several weeks ahead of the U.S.

The Fed will probably cut interest rates to help combat the negative economic impact of the novel coronavirus.  So, it’s as if the US and Chinese governments, and most likely other governments, will be combating and throwing punches at the virus as well (not just the homemade hand sanitizer). Will it be enough? Can it be enough? We already have historically low interest rates, and we don’t really want to go into negative interest rates from what I understand on how that is playing out in other countries. So, there is a limit to that lever, but I hope it is enough when combined with all the other efforts going on. Luckily the world is focused on this problem, and we have a lot of tools to crack this problem.

However, in the short to medium term it’s difficult to see a rosy picture ahead.  As new developments come to light, as more companies revise their earnings downward due to the economic impact of the virus the stock market isn’t going to generally react favorably.

So, what do you do financially?

It really brings up a lot of fundamental financial topics.  And the starting point is determining the right questions to ask.

On the defensive side, how is your emergency fund? Do you have life insurance? Do you have multiple reliable streams of income? Do you have a side gig? Is your resume up to date? Is there a local business you could buy that would do well not only during this period but going forward long term? What is your current portfolio allocation exposure to stocks? Do you have a long term view and runway to just “ride it out”?  Or do you need to consider taking some money out of the market, or into bonds, or gold, or another asset not as directly tied to the stock market performance?

On the offensive side. Are you knowledgeable and experienced in selling short? In betting against the market? Do you have a proven system to do this? Can you identify companies that will actually benefit from this virus situation such as the company that will develop the vaccine? Or companies that will supply all the sanitation materials and chemicals?

I can’t answer those questions for you, but it should put you on a good path to start to figure out some next steps, if any.  Again, you can capitalize and leverage the coronavirus to help improve your financial state by diving into these financial questions, getting answers, and making your best moves. It could be a bit like the virus just nudged you to do some financial Spring cleaning.  

 

Let me know if I can help in any way.

 

-Mike

 

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