I’m sure that’s a question that’s going through many minds recently. Is the sky falling? Everywhere you turn there’s bad news. The coronavirus continues to spread, unemployment claims are going through the roof, the stock market volatility downward direction is sickening. Is the sky falling? Kind of feels that way.
The graph above shows what’s going on with investment and savings accounts all over the place. You’ve been working so hard on building your FIRE portfolio and in less than 4 weeks what feels like years of progress has been wiped out. The graph is a picture of our accounts. It’s sickening. Is the sky falling? Sure feels that way.
I’m sure some of you are wondering why you’re even bothering to read this post. You’re thinking – if I want bad vibes, I can just turn on the TV and watch all the non-stop coverage. I’m with you. In fact, last evening Mrs. P2F and I turned on the national news and within 5 minutes I had a knot in my stomach and had to turn it off. It’s really hard to keep a positive outlook when all of this is going on.
I for one am not going to focus and look at my accounts for a while. Wait, what? You’re saying “That’s your chart above showing the recent disastrous activity”. Well yeah, it’s a chart of my accounts but it’s not what you think. It’s a chart showing my account from 2003 to 2008. Yep, we’ve seen this before. In fact, I’ve seen it several times before. Don’t get me wrong. It’s not easy to see. Each time you think – game over. I can’t recover. But somehow, we did.
There’s a recovery on its way. I don’t know when. But in my past investing experience, there’s been recoveries.
The green line above shows the slide in our accounts in 2008 but also the recovery from 2008 through 2011. I added the yellow line to demonstrate our tendency to think in straight lines. Between 2003 and 2011, while there were some wild swings to the upside and the downside, the general direction was to the positive. That’s the trend. Sometimes the recovery takes a awhile but it still recovers. That’s what matters in the long run.
What am I doing?
So, for the time being, I’m not updating my portfolio spreadsheets. Not focusing on the market value of my accounts. I know it would make me feel more unsettled.
So, what am I doing? I’m sticking to my long-term plan and not reacting to each day’s market reports. That’s not to say I won’t touch my accounts. In fact, earlier this month I did place a couple of trades.
In February I sold a mutual fund that I recognized no longer belonged in my portfolio. Was it because I was incredibly smart and sold at the right time? ABSOLUTELY NOT – I WAS LUCKY. I knew what I wanted to do with the proceeds, but was lazy and did nothing immediately. AGAIN – REALLY LUCKY. I had no idea what was about to happen.
In the early part of March when there was some volatility, I watched some of the funds I wanted to put the money into from the February sale. The prices of those funds started decline like just about everything else. However, as the market values dropped the yields started to rise. And then I made a couple of purchases to add the investments when the yields were much more attractive. REPEAT – LUCKY.
That’s it. That’s all I’ve done. All together the purchases amounted to about 2% of our portfolio. The purchases didn’t change our overall portfolio allocation. I sold an equity fund and I purchased some equity funds.
In my very first post, Closing In and Looking Back, I included a chart displaying our percentage of FIRE going back to 1988. I told you that chart made me less nervous moving forward with retirement because after each market tumble, there was a recovery. The market invariably moves upward.
Each time you think – game over. There’s no recovery from this. But somehow, we did. Somehow, we will.
Things you can do
So before closing out, I wanted to highlight and repeat a section from my last post. I encourage you to re-read or read if you haven’t seen it. These are some of the things you can do.
During these times we need to support each other and make the best of the situation.
- Reach out to others
- Check in on your elderly neighbors
- Create a new routine
- Be kind(er)
- Do your part
These are the results of my attempt to Create a new routine!
Is the sky falling? Are you reacting to the daily volatility or are you focused on your long-term game plan for FIRE? Let us know your thoughts below.
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