Countdown to Financial Fitness: Investing in the Age of Coronavirus

Countdown to Financial Fitness: Investing in the Age of Coronavirus: The stock market continues its roller-coaster ride, previously solid industries disintegrate, and small businesses collapse like a row domin...

Investing in the Age of Coronavirus

The stock market continues its roller-coaster ride, previously solid industries disintegrate, and small businesses collapse like a row of dominoes. Have we hit bottom yet, or will the freefall persist as more bad news unfolds?

Is it time to buy, or wait for a further decline? Or sell while equities still have value?

Will the aid package be enough to keep the economy on life support until we can get the COVID-19 pandemic under control?

As with any crisis, any huge upheaval, the survivors will be those who can adapt quickly to the new normal. Companies that already have a robust remote workforce—with secure networks, portable tools, and efficient communication systems—face less disruption than those starting from scratch. Companies that sell online training, conferencing software, security packages, and other work-at-home tools have seen a surge in commerce.

Those in the food supply chain and makers of personal hygiene products are in little danger of failing. The consumer staples sector weathers most storms.

Medical provisions are in high demand. But depending on how long the pandemic lasts, companies just ramping up to make ventilators, masks, and other needed hospital products risk being late to the party and stuck with surplus inventory. We could see a rush to invest in companies that are working on drugs to treat this disease or a vaccine to prevent it. If successful, their stock could soar. Otherwise, not.

Restaurants with a take-out and/or delivery system in place are faring better than those that offer a dine-in experience only. They can move staff from waiting tables to taking phone and online orders or making deliveries.

Creative adjustments and reinvention may be called for. I read a story recently about an event caterer whose business dried up with the pandemic. Instead of folding and wringing her hands over the unfairness of it all, she started advertising a new service around town: cooking for and delivering food to individual families.

Some businesses, by their very nature, don’t lend themselves well to social distancing. While you can prepare tax returns or legal documents without face-to-face contact, it’s hard to cut hair or paint nails and stay six feet away from your customer. If you own a movie theater, you’re closed until further notice.

The travel industry is eroding as airlines are forced to cancel flights, reduce capacity, and stop flying to many international destinations. Cruise ships have become floating Petri dishes, and most voyages for the near future have been canceled. No one wants to book a vacation because we don’t know how long this will last. Airline and cruise stocks have plunged in the past weeks. If you buy their stock now at these depressed prices, how long can you wait for it to recover? Maybe airlines will focus on moving cargo instead of passengers, at least for the time being in order to stay aloft. Perhaps idle cruise ships and empty hotels can be re-purposed as quarantine centers or supplemental hospitals.

Widespread job loss has far-reaching effects. The person who can no longer work in his customer-facing position now has to defer discretionary expenditures. That doesn’t bode well for the contractor who was going to handle his remodeling project. The ban on large gatherings means that a wedding is postponed, which takes away work from the florist, the caterer, the bridal shop owner. When the shop owner has to shut down and lose his revenue stream, he can’t pay his rent, which will leave his landlord in a financial bind.

Spending more time at home these past weeks, I’ve noticed neighbors out walking their dogs, playing with their children, doing things as a family. (With schools out, companies that sell homeschooling materials should see some opportunities.) Gyms are closed, so people are walking or riding bicycles. Perhaps there will be increased demand for home exercise equipment. Maybe there will be a surge in sales of board games, home theaters, and other types of home entertainment.

Animal shelters and rescue groups are suffering because they’re unable to hold public adoption events. But with so many people quarantined at home, some are stepping up to foster homeless animals. Maybe the pet food and supply industry will see a surge as temporary foster parents become attached to their animal companions and decide to adopt.

Those who know how to cook are eating better than those who are used to consuming most meals out. Especially those cooks who are flexible enough to experiment with substitutions when the usual ingredients for their favorite recipes are out of stock. Perhaps there will be a burgeoning interest in cooking classes, and cookbook sales will increase.

As an author, I hope people will rediscover reading during this period of social isolation. That’s a bit of a challenge with libraries and bookstores closed, and Amazon.com classifying book orders as “nonessential,” but there are still audio and e-books available. And while most bookstores aren’t open for browsing right now, many will take orders online or over the phone and ship books to waiting readers.

Whether the stock market is up or down, there are always investment opportunities. Look around you and observe what is trending, what needs must be filled. And try to ignore the hysteria of the crowd. Eventually, this will pass.

What are your thoughts about investing now? I’d love to hear your comments.

Sharon Marchisello is the author of Live Well, Grow Wealth.
Sign up for her newsletter at sharonmarchisello.com

Countdown to Financial Fitness: A New Car Rental Scam

Countdown to Financial Fitness: A New Car Rental Scam: I'm convinced that employees at car rental agencies must earn a commission on selling supplemental insurance. They work too hard to tr...

Countdown to Financial Fitness: New Thoughts on Recycling

Countdown to Financial Fitness: New Thoughts on Recycling: The spread of the coronavirus has forced us to change the way we live and the way we think about what’s economical or good for the environ...

New Thoughts on Recycling

The spread of the coronavirus has forced us to change the way we live and the way we think about what’s economical or good for the environment.

I’ve always been in favor of “recycle, repurpose, reuse.” Try not to waste anything. Avoiding waste saves money; saving money is the first step to building wealth.

Only weeks ago, there was a movement to eliminate single-use plastic items: straws, water bottles, utensils. Bring your own bag to the grocery store. But now, in these times of extreme caution to avoid contamination, how smart is it to wash and refill a water bottle? Or to keep dragging around and handling that cloth grocery bag? I’d even think twice about picking up a gently-used paper napkin to wipe up a spill instead of cracking open a fresh roll of paper towels.

I’m the person who will return a stray shopping cart from the parking lot on my way into a store. In the past, my aim was to prevent said shopping cart from dinging someone’s vehicle. Yesterday, I did this at Costco and then realized with horror that I might have exposed myself to the coronavirus. There were no wipes at the entrance; the staff advised customers they’d already wiped down carts prior to giving them out. But because I had picked up my cart from the parking lot, I’d skipped the sanitation process. Luckily, my husband had some hand sanitizer in his pocket.

Being an avid reader, I love and support libraries. The other day, I mentioned to a friend that I had to rush to the library to pick up a book before municipal and county buildings went on lockdown for the rest of the month. “I wouldn’t touch a library book,” my friend said. “If I want to read a book, I buy it new from Amazon.” She wrinkled her nose, cringing at the thought of handling such filth.

Yes, library books have been touched by many other people. So have new items on the shelves of stores, unless they’re kept behind a glass case. Am I getting paranoid now?

Probably the filthiest item in our lives these days is cash. Think about how many hands have touched that bill or coin in your wallet right now. We’ve been progressing toward a cashless society for a while; will the coronavirus pandemic push us closer?

It’s a new reality, and it’s hard to balance saving money, saving the environment, and saving lives.

How have your habits changed as a result of the pandemic? I’d love to hear your comments.

Sharon Marchisello is the author of Live Well, Grow Wealth.

Sign up for her newsletter at sharonmarchisello.com

A New Car Rental Scam

I'm convinced that employees at car rental agencies must earn a commission on selling supplemental insurance. They work too hard to trick customers into accepting it.

For example, there's the assumptive technique. Last month, we rented a car in Albuquerque and the agent asked us, "Will you be taking the full coverage, or just the basic?" She became less friendly when I told her, "No coverage, thank you." Especially after I'd just declined her upgrade offer. "It's supposed to snow today, and we're almost out of four-wheel-drive vehicles. But you're in luck; I still have one available. Or will you be comfortable with the all-wheel-drive?" Both, we discovered, came with a hefty surcharge, almost doubling the price of the standard rental we had reserved.

On another trip, we had to reroute to Baltimore at the last minute and didn't have time to shop for a rental car in advance. The quote we received from the agent at the desk did not provide a breakdown of charges. When I looked at my paperwork, I saw that all the supplementary insurance coverages had been added to the basic rental fee. No wonder the total seemed so expensive! The agent had just handed me my contract without asking me to initial anything, or even sign my name. When I went back to the desk and questioned him, he told me, "The airline discount rate you're using requires you to accept full coverage." I didn't remember any such requirement but had no way to check at the time.

When we got home, I checked. Employees had been advised to decline the supplemental insurance since the American Express card we're supposed to use provides the coverage. I wrote to National and explained the situation; they refunded all my excess charges.

Last weekend, we rented a car in San Diego and faced a new challenge to resisting the extra insurance. When the agent asked us, "Will you be taking the full coverage, or just the basic?" and I replied, "No coverage," he said, "Then I'll need proof of your auto insurance. What's your policy number?"

My policy number? My insurance card was in the glove box of my personal car, parked at the airport in Atlanta.

"I'm sorry," he said. "Unless you can provide me with your policy number and deductibles, I'll have to charge you for full coverage." The CDW provided by my credit card company didn't count, he told me, because "it's just secondary."

After googling our insurance company, calling the toll-free number for the national office (where we were told we'd have to contact our local agent to get our policy number), we finally got connected to our local agent, who was just walking out the door on a Friday afternoon. Fortunately, he was able to find our policy number and reluctantly, the rental car agent allowed us to decline the supplemental coverage.

Now I keep a copy of my insurance card in my wallet.

What experiences do you have with car rental surcharges? I'd love to hear your comments.

Sharon Marchisello is the author of Live Well, Grow Wealth

Sign up for my newsletter at sharonmarchisello.com

Countdown to Financial Fitness: Coronavirus and Your Money

Countdown to Financial Fitness: Coronavirus and Your Money: According to the media, we’re on the verge of a global pandemic. Last week, the stock market returned its worst week in over a decade. Is ...

Coronavirus and Your Money

According to the media, we’re on the verge of a global pandemic. Last week, the stock market returned its worst week in over a decade. Is it time to get out before the inevitable collapse of the world’s financial markets?

When it comes to investing, I’m a bit of a contrarian. I look at a market downturn as a buying opportunity.

On Monday, my brokerage account was flush with cash as several of my positions had been called away on Friday. So, I went bargain shopping and quickly sold slightly-out-of-the-money covered calls on those new holdings.

I’d have paid less for those new stocks had I waited until Tuesday. And I’d have found even better prices if I’d waited until the end of the week.

Some investors might bail out and cut their losses. But I’m holding on.

If those stocks don’t hit my strike prices by expiration Friday, I’ll still own them and try to sell more calls for next month.

All the companies I invested in just released stellar earnings reports. They’ve been paying dividends consistently for years. They’re solid businesses. At this time, I believe their stock prices will recover.

When President Trump took office, the Dow Jones Industrial Average (the main gauge we use for the stock market) had not yet reached 20,000. Before the coronavirus hysteria, it was approaching 30,000. On Friday, it closed at 25,409, still much higher than it was four years ago.

Market corrections (a decline of at least 10%) are normal and healthy. If your 401k, IRA, or pension is invested in mutual funds, chances are you’re participating in the stock market (over 50% of America’s households are) whether you realize it or not. If the dividends are being reinvested in additional shares of the mutual fund, a correction allows you to buy more shares of the fund with each distribution. This is one of the benefits of “dollar-cost averaging.”

The stock market was due for a correction and the coronavirus provided an excuse.

Even though I advise against panic selling, I think a large market downturn or correction should serve as a reminder to review your portfolio. Is your asset allocation on track for your age and risk tolerance? Are your investments diversified enough?

If there’s a stock you’ve been eyeing but it’s been too expensive, now might be the time to buy. But first, do some research. Are the fundamentals still good? How will the coronavirus affect its business going forward? If it looks like the price will continue to fall, maybe you should wait.

If you’re overweight in a stock that could be adversely affected, you might want to set a stop loss or limit order to sell. Any losses will help to offset gains elsewhere when tax time comes around.

Before you leap into the market and start snapping up bargain-priced stocks, remember this caveat: Don’t play with money you’ll need in the short term. Historically, stocks have increased in value faster than any other asset class, so they’re appropriate for the long-term investor. Even so, it’s a roller-coaster, so don’t invest if you’re prone to panic.

What are your thoughts on the market’s reaction to coronavirus? I’d love to hear your comments.

Sharon Marchisello is the author of Live Well, Grow Wealth.

Sign up for her newsletter at sharonmarchisello.com