It's Not What You Don't Know

That will hurt you. It’s what you know for sure, that just ain’t so, that will kill you dead.

I’ve been studying COVID-19 as best I can. It’s now in 60 countries and is now in Lagos in Nigeria, and in Brazil. We are being flooded with happy talk by the government and no honest brokers of real risk.

Today I completed my deep pantry. I bought a chest freezer and filled it with sirloin fish burgers hot dogs and chicken. I also bought some MRE from WISE Foods, the freeze dried meat, which includes rice. We also have some protein powder etc so we should be able to feed our family and a few more for the duration. It was well under 2K to prepare and we won’t have to go shopping for 6 months one way or the other since this is all stuff we would eat anyway. My goal was some food that is shelf stable, WISE and protein powder, and some food like burgers and steak that we usually eat that could be frozen. I wanted to lay in a supply that was packaged before the virus became an issue. I have a well and we also have bottled so we will see what transpires.

Unfortunately you can’t believe what the media is spreading as facts at all. Virus’s work like machines, are predictable and this virus is ruthless in its infectivity and deadliness. Apparently the RNA is stable so there won’t be much mutation. There is a vaccine test going on using a new technique that injects modified RNA instead of protein and uses the body’s cells to make the protein antigen and antibodies, kind of a DIY approach. I think the idea China is on the downhill slope is laughable. US is not seeing cases because they are not testing for cases which means cases are multiplying undetected. It is unclear if there will be a summer pause but when it’s summer here it’s winter there so there will be continued spread.

Not much else to do except follow along and isolate for the next 6 months or so. How bout that market crash! Pretty impressive. I think we are not done with that yet, but the market did close down only 25 pts compared to the usual 100 to 135, so guess we will see. I was actually a bit surprised the market would recover some going into a weekend. I’m also surprised I haven’t heard as much as a peep out of the other bloggers regarding their portfolio performance. For sure everything coalesced into a strong negative correlation, even gold showed some downward push, but far far less than equities making it a means to preserve wealth. Bonds rallied. I’ll have to spend some time looking more closely to the market action.

9 Replies to “It's Not What You Don't Know”

  1. I’m glad I sort of took your advice to heart and started de-risking my portfolio last year.

    I admit there was a little regret when equities had one of their best years ever in 2019 and I had taken a lot of them off the plate and went with bonds.

    I looked at my 1 year performance on Personal Capital and as of today I still show growth of 9.02% (the S&P was 5.8% and the Dow was -2.2% in same time frame).

    B/c of the market drop, I’m almost approaching rebalance parameters as my bond allocation is nearly 10% over my desired %. Curious when you would rebalance and pick up depressed assets.

    I am curious about the Gold having a similar drop. I was under the impression that when the markets get volatile and go down, gold tends to be stable or increased. What are your thoughts on that?

    1. Gold is related to the strength of the dollar and the dollar went down so gold went down. Also it’s related to volatility. The VIX is like 45 up from about 15 10 days ago so the standard deviation and hence the riskiness of the market is much higher. I think the machines went short and many people went to cash and are probably biding their time deciding whether to park the money in gold or “buy the dip”. I don’t think this is a buy the dip event. With the carnage to production soon enough profits will shrink, there will be an economic loss from the scared consumer and jobs will start to be lost. At some point this event will become deflationary and not just a dip and then gold will soar. I don’t think we’ve seen the end of this by a long shot either from a medical disruption point of view or an economic disruption point of view. We’re just getting started. The S&P dropped almost 17% from the high and I’ve dropped a little under 6% from my recent portfolio high so I’m about 1/3 as risky as the market. My trading portfolio actually made 0.5% today mostly from zero coup long term bonds. That’s kind of the point when everything else goes to hell at least something makes some dough. If I were you I’d just add new money to the equities according to the AA and rebalance that way but I wouldn’t do anything as long as the VIX is over 30 maybe even over 20. I am super glad I took mine out of the middle and didn’t get caught holding the bag. I roth converted the rest of my gold last month at a price a little lower than today’s close I’ll Roth convert some more later when I see how low this goes so I can convert more depreciated shares of stock for the same tax dollar, so I’ll make a little on that transfer compared to moving appreciated shares. There is a silver lining to everything. Glad you came through as well as you did.

  2. Hey Gasem,

    I have been buying since I barely had any equities. I would absolutely de- risk if I was about to retire.

    This must be very unpleasant for anyone who is 80%+ equities and actually relying on 3%+ SWR.

    I hope to never need to go there.

    1. I hope you never need to go there either. I wish some of these 90% equity jokers would fess up to their losses and SOR losses. Slow and steady wins the race I’m going to be interested if this is a long term deflation/depression mean reversion event how these real estate crowd portfolios make out. High unemployment could force rent cuts and some of those levered properties may fail.

          1. Personal capital isn’t giving me the granularity to look at everything for just the past week for some reason, but on the month of February looks I’m down 6.7% vs 8.4% for S&P.

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