Monday, March 23, 2020

Coronavirus - This Too Shall Pass?

I started to invest in stocks in the summer of 2001. It's easy for me to remember as I was working in a Chartered Accountant firm during my last coop term at University of Ottawa. Although the technology bubble had burst a year earlier, that didn't stop me from confidently and stuborronly buying Nortel and other former high-flying market favourites. I made LOTS of mistakes during my early years, and finally started to buy into some solid banks, telecommunications companies and REITs heading into 2008. For those of you too young to remember, 2008 was the start of the great recession, during which the TSX lost 35% of its value over the course of the year.

How did I handle that difficult time? After making five buys during 2007, I had no transactions at all during 2008, and then slowly dipped my feet back in the water with three buys during 2009 (the first didn't come until July). As much as it pains me to admit it, I literally amassed unopened brokerage statements each month, and rarely had the courage to look at my account online during 2008. It was simply too painful to see all that red, so I avoided even thinking about my investment holdings.

At this point, during 2020, the TSX is down just over 30% from its starting value. How am I handling the market turmoil this time around? It's still painful to open my account online and see all that red, even if there's some black and green helping to balance it now that I've been investing for almost 20 years. The consistent, material trickle of dividends hitting my portfolio also helps sooth some of the pain from my investment holdings balance being so much less than at the start of the year. Plus, I've kept up with my plan of making two buys a month (even upped it to three so far in March), and that feels good. Don't get me wrong, I fully anticipate some of my holdings will have to cut and/or pause their distributions, but I'm fine with that given the negative impact the coronavirus is having globally.

Despite the massive uncertainty that's prevalent in the world, the anxiety in my stomach from reading negative articles and posts, and the scary images on the news, I'm trying my best to keep calm, and stick to my plan. One of the first days that the markets plunged, a favourite blogger of mine, Dividend Growth Investor tweeted something to the effect of "Today your future retirement income just went on sale" (sorry, I butchered that...bad memory on my part). I related to that tweet since I have quite a bit of optimism in the world economy.

Some would say that we've never seen anything like the coronavirus, and I agree with that to a certain point. However, if you think back far enough, the world economy has survived wars, plagues, nuclear bombs, and lots of other true atrocities. To doubt that the economy will once again rebound, through the ingenuity and intelligence of billions of people who want to better their lives, is foolish. We're going through a time of great uncertainty, but ultimately, I believe in my heart, that this too shall pass.





2 comments:

  1. This will definitely pass, no doubt about it. But it will take some time, patience, and hard work at a community level to slow this virus down. The strangest part of this is the overall uncertainty that we are seeing. How can you predict earnings, dividends, and future cash flow if you don't know when people can return to normal lives, what companies will layoff employees next, and when the economy will turn back on. There are definitely some great stocks on sale, that's for sure. It is the right time to focus on quality, long term investments.

    Thanks for the article.

    Bert

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    1. Thanks for your thoughtful comment Bert. Stay safe!

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