Well, here we are still stuck in social distancing due to the COVID-19 pandemic. Retail shops, bars, clubs, restaurants, and almost everything else are closed for probably another month. Even Major League Baseball is in hiding. Every new day looks like yesterday. The only excitement these days is in the markets. And that is the last place we want drama.
April has been a welcome relief to the March panic—so far. In March, the S&P 500 fell 390 points and in April, as I write this, the S&P 500 is up 338 since April 1. The DOW fell 3,673 in March, and April has recovered 2,548 of those. The charts look like lousy electrocardiograms. Panicking traders and algorithmic programs mock rationality as they move hundreds of points up or down on the flimsiest of junk headlines. Those of us in this for the long haul can only stare in wonder and amazement at the follies.
Anyway, the rant is over! Here are some concrete things we can think about as we go through the rest of 2020.
The CARES ACT (By the way, it stands for Coronavirus Aid, Relief and Economic Security ACT) has been passed and signed into law, and it could have a positive effect for many of our clients. Here are a few of the treats they’ve thrown to us:
They have eliminated the Required Minimum Distributions from IRA’s this year. We do not need to sell any positions that are freakishly down to take money out if we don’t need it.
If you are struggling to get by and you are less than 59 ½ years of age (i.e., too young to take an IRA distribution), the IRS will waive the 10% penalty on up to $100,000 of your retirement savings. Note: There are rules: See footnotes.[i] And you still owe income tax.
We don’t need to file our taxes until July 15th. I’m sure you already knew about this one since the original deadline was a couple of weeks ago. But this also gives you an extra three months to save up for an IRA contribution for tax-year 2019. The contribution must be paid by July 15th.
Congress also handed out over $350 billion to small businesses to keep them paying their employees through the PPP or the Paycheck Protection Program. That money quickly ran out last week, so they’ve just authorized another $484 billion. If you missed the first tranche, start getting your application ready to go again. (You will need to find a better bank if yours dropped the ball on this one.) You can start submitting new applications now.
I believe the government is doing what it can to try and get us through this mess—but hey, this is the same government that forced the redesign of portable gas cans from one that works worry-free, to one that dribbles gasoline all over your shoes. So we must, as always, look out for ourselves. There is no magic wand that is going to pass over us from the powers in charge that will make this go away.
An old Buddhist saying appropriate to the times; “Pain is inevitable: suffering is optional.” (My go-to mantra while running.) We can choose to suffer in our inner thoughts and self conversations, or we can decide to work through this pain and figure out a way to come out better than we thought. (My personal goal is to finish up all my continuing ed for Geneos, my CFP, and Life Insurance license without jumping off a bridge. Oh, how I loath PowerPoint.) This will eventually end—let us not waste time crying in our beer.
Ending this on a high note, our portfolios are looking up. Much better than the March quarterly statements reported but still far from our 2019 end-of-year ones showed. Things are getting better—and will continue to get better once the pharmaceutical industry invents a vaccine or cure. (Funny how that industry turned from ogre to hero in three short months.) We need to hang in there and wait it out. When investing, stoics always win in the end.
Stay healthy and thanks for reading, Marty
[i] You must be diagnosed with having COv-2 or COVID-19 by a test approved by the CDC, or have a spouse who had COv-2 or COVID-19. You must have suffered financial hardship as a result of the pandemic—as in, not allowed to work, furloughed or laid off, work hours reduced, etc.
