March 16th, 2020
In 2016 I read a book called “The Great Depression: A Diary: Benjamin Roth,” which was a first-hand experience of one lawyer’s perspective of the markets during the Great Depression. At many points in the book, Roth (of no relation to the tax-advantaged investing account here in the States) mentioned numerous times throughout the multi-year ordeal that he saw ample buying opportunities. He didn’t have the capital.
I’m going to journal during these tumultuous financial and epidemiological times spurred by the exponential growing coronavirus.
It’s just before the market opens on Monday, March 16th, 2020, and we’re expecting yet another red day. Potentially even circuit breakers are pausing trading for 15 minutes; within a moment of the market’s opening.
I’m expecting another 5% drop in my traditional investments today, and potentially another very red week. (PS, markets just opened, and VTI began 10.9% down!)
Last night, the Feds announced a series of measures that the futures markets didn’t take too kindly. Many are saying, “the Fed has no more ammunition” about the tools they’ve got to handle this crisis. At this point, I perceive they can only further devalue the dollar by printing more money. Here are the Feds plans (as of 3/15/2020):
- US interest rate is now in a range of 0 to 0.25 percent
- Banks required to hold 0% in reserve (down from 10%)
- Buying $500 billion in treasuries
- Buying $200 billion in mortgage-backed securities
Maybe in another journal article, I’ll go into the repackaged collateral debt swaps that crippled the US markets in 2007, and how they’ve made a resurgence in 2020. There may be a connection with the $200 billion in mortgage-backed securities the Fed is purchasing.
Yesterday, I bought more Bitcoin at $5,300 and woke up to a $4,600 price. I still feel like I’m catching the falling blade, but I also don’t want to miss buying Bitcoin at these prices. I’ll likely continue buying more on the way down and allocating some extra capital.
Despite all this madness, I’m very happy to have an investment plan that I’ve been following religiously for the past five years. It’s quite simple: dollar-cost average. Every payday, I put as much money as I’m allowed by the IRS into tax-advantaged accounts. Currently, I’m invested in the Total US Stock Market Index (VTSAX), Total International Stock Market (VGTSX), and Vanguard Real Estate Index Fund (VGSLX).
The only thing I’ve been fighting is the urge to plow more money into the markets, which is something I didn’t expect when establishing my plan five years ago. I’d always anticipated I’d be afraid of losing capital, but my experience has been the opposite.
If this downturn is anything like the Great Depression, then I’ll likely have ample opportunity’s to buy.
I grew up in Miami and have seen many people panic. This mentality is something I’ve carried through this coronavirus scare. I might have been a bit callous in understanding the exponential threat this disease offers (even though I’ve been social distancing, and avoiding crowds)
This is one of the first articles that helped me better understand the nuances of the public health crisis that might loom: https://medium.com/@tomaspueyo/coronavirus-act-today-or-people-will-die-f4d3d9cd99ca
Final thought: Hardcore Bitcoiner’s are talking about potential bank runs. I think it’s a bit overblown, but only time will tell.
Also, yesterday I got into it with an ETH maximalist and was blocked by a Bitcoin maximalist. Irrationality and emotions are beginning to take over.