Trade The Journey

Trade The Journey

Stay-At-Home: Week Number?

Hope Everyone is secure, safe, and blessed on Easter Sunday.

 

A couple of weeks ago, the California governor issued a stay-at-home order. At first, very few people heeded the warnings of the Coronavirus’s deadliness as the President shirked the reports as well.

The results speak for themselves. The United States leads the world in cases and deaths. And now, the people of the United States are being driven back into the slaughterhouse as Washington seeks to reopen the economy.

Most of the news coverage centers on the Coronavirus, so I try to focus on other things. Around the world, people are facing the same challenges we are. Some countries are fiscally able to handle the effects of the Coronavirus while others are doomed.

With the inadequate response, how will the economy of America fare? It’s shameful to think that the economy is woefully unprepared. Over the years, we moved into a service company with few good-paying jobs for the average American citizen. The average American citizen will suffer both in health and wealth.

Sometimes I wonder if masks and social distancing will be the new way of life. With a vaccine being months away from being produced and distributed on a mass scale, one wonders what’s next?

 

The sage investors are placing their bets in a time of fear and avoidance.

Since the Market has been rising, so have the trades, which are being propped up by the Reserve and news that the Coronavirus is plateauing.

Last night, I watched an old broadcast from 1987 featuring Peter Lynch and John Templeton covering  Black Monday.

 

In late 1985 and early 1986, the United States economy shifted from a rapid recovery from the early 1980s recession to a slower expansion, resulting in a brief “soft landing” period as the economy slowed and inflation dropped. The stock market advanced significantly, with the Dow peaking in August 1987 at 2,722 points or 44% over the previous year’s closing of 1,895 points.

The crash was preceded by significant drops in the prior week. Two events in the news on the morning of October 14 have sometimes been singled out as possible triggers for the crash.[11] The United States House Committee on Ways and Means introduced a tax bill that would reduce the tax benefits associated with financing mergers and leveraged buyouts.[12] Second, unexpectedly high trade deficit figures announced by the Department of Commerce had a negative impact on the value of the US dollar while pushing interest rates upward and also put downward pressure on stock prices.[11]

Black Monday on October 19, 1987[A] is the name commonly attached to a sudden, severe, and largely unexpected[1] stock market crash that struck the global financial market system. In the United States, the Dow Jones Industrial Average (DJIA) fell exactly 508 points (22.6%), accompanied by crashes in the futures and options markets.[2] quoted from Wikipedia.

 

The dialogue centered around the crash and what could be done to mitigate the risks. Both investors were known for their years of consistently earning profitable returns. They spoke of patience, emotional stability, long-term focus, and the simplistic nature of investing when done right.

The years of experience between these two investors, evidenced by the color of their hair and calm demeanor, belied their shrewd nature. How could someone maintain such calmness when most lost their savings, retirements, and livelihoods?

 

  • Their patience, due diligence, and carefulness prevented them from rash decisions based on the stock tip of the month. They watched the news and financial broadcast to stay current not to make investment decisions.
  • They visited the places of business before they invested in the company and spoke with management.
  • They believed that the managers of companies should be efficient, effective, and economical.
  • They studied the financial statements and invested in companies that were easy to understand for them. They took upon investments that resonated with them.

 

The 1987 crash caught most people by surprise, and no one knows what indeed caused it. There are theories, but unless you spoke to everyone who traded during that time, I suspect you’ll never know. This rollercoaster we’ve been on seems like the 1987 crash relived not just one day but multiple days.

Unless you are sitting on capital, it may be a good time to remain on the sidelines, buying what you can when you can. No one knows how long the Coronavirus will last.

With AMC Theatres possibly closing by declaring bankruptcy this summer, this may be the first sign of the times. Unfortunately, it looks like the economic climate may get worse before it gets better. What this Virus has done is to bring the real strength of the economy into the light.

As we can see, it isn’t too strong. I could be wrong, and there may not be a collapse coming. If that were the case, I’d still have my savings to weather any potential storm.

If what I forecasted turns out to be accurate, the capital I intended for investing will be put to its best use. In times like this, everything is uncertain, from investments to the once secure job. So its best to be both cautious and bold.


This week in review:

Most of the week, I stay home adhering to the Governor’s request. Although it hasn’t been easy, it’s been manageable. I feel myself growing into a new person.

Speaking with my mentor helped me to realize that the ultimate goal of the journey isn’t amassing mountains of money but the freedom of being financially free. There will always be challenges, issues, and calamities on the horizon.

Having the freedom to live your life and respond to these events with grace and ease can only be accomplished in two ways: experience and financial freedom.

That is my goal to live a long life on my terms. To honestly say, “I did it my Way.”

 

This past week deserves the grade of a “C”. I made a boredom alleviating purchase.

Stay safe everyone.

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