In our last article, we mentioned how these are some very scary times that we are in right now.
People are quarantined. People are stocking up on everything from beans to toilet paper.
However, it’s not all bad and there are many reasons to be scared, maybe even giddy with excitement about opportunities that this presents.
That being said, let’s talk about the top 10 financial reasons to be EXCITED for the Corona virus.
Here are the top 10 reasons from my perspective…
Reason# 10: The average bear market has a -38% to -40% bottom. We are well over half way to the average bear market (currently -26% as of 3/12/20).
Reason# 9: There are tons of great deals to be had --- everything from lobsters at the grocery store (https://www.latimes.com/business/story/2020-03-11/coronavirus-lobster-prices-fall) to various luxury vacations to amazing hotels. Many businesses are hurting and if you have extra cash, you can enjoy some luxuries at crazy low prices.
Reason# 8: Interest rates have never been lower! The 10 year treasury is below 1%. 15 and 30 year mortgages are going for 3% or even 2.5%. You can lock in an amazing low interest rate.
Reason# 7: On top of #8, other asset prices like houses and commercial real estate are softening up. This is turning from a seller’s market to a buyer’s market. If you’ve been hesitating to buy real estate, you now have more negotiating power and could potentially buy at a lower price. Take your time and be selective. Look potentially for distressed sellers that NEED the cash you can bring. It’s like a double-win!
Reason# 6: Road trip!!! Gas prices are super low and likely to drop more because oil has fallen so hard. Maybe you can’t go overseas, but you could go to Yellowstone or Yosemite or some place out in the wilderness and enjoy getting away from populated cities. Your gas bill could be crazy low.
Reason# 5: You have a bunch of money in cash and/or fairly conservative bonds. You can get more aggressive and take advantage of this downturn
Reason# 4: Lots of stock in a bunch of sub-sectors like travel, energy, restaurants, hotels, and banks are down more than 40%. Some are down 60%+. Shopping season has begun!
Reason# 3: Lots of high quality companies that have little to no debt have been punished by the market. Think tech companies and high growth sectors that are transforming our economy.
Reason# 2: If you are currently working still, you can dollar cost average every month and buy while things are down
Reason# 1: Opportunities like this don’t come around very often. We just saw that there’s only been about 10 bear markets in the last 100 years. This is literally a once in decade opportunity if we do it right.
In short, the corona virus and the fallout can be really concerning for some people’s financial situations.
Here are a few questions to consider asking yourself as you review over your finances:
- Have I saved up enough to cover a few months of expenses?
- Is my portfolio well diversified among various stocks and bonds? Is it appropriate for my age, risk tolerance, and income needs?
- Is my job at risk? What can you do to position yourself to be indispensable or what skills to become that way?
On the other hand, it is also a HUGE potential once-in-a-decade opportunity…
- Have you been positioned fairly conservatively? Could you shift some money from bonds to stocks?
- Do you have extra cash? Splurge in some luxuries and take a road trip!
- What is your current interest rate on your mortgage? Look at refinancing
- Look at buying assets of various sorts--- stocks, real estate, and anything that’s beaten up. Take your time and be selective and find distressed sellers with good assets.
What are you doing to position yourself for this market?
What is your strategy?
If you are feeling excited about this market and you’d like to consider working with me and for me to consider working with you, feel free to give me a ring at (952) 831-8243.
Material discussed is meant to provide general information and it is not to be construed as specific investment, tax, or legal advice. Individual needs vary & require consideration of your unique objectives & financial situation. Please consult with your accountant or tax advisor for specific guidance.