COVID-19 Crashed the Market. Now What?

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Hey guys, like many of you, we’re sheltering
in place. In fact, we’re even separated from each other
while Julia awaits the results of her COVID test. Thankfully, I’m feeling much better, but I don’t wanna get
Philip or the baby sick. But we know that people are looking for financial
info more than ever, so we’re gonna do this lo-fi, and try to answer some of the pressing
questions on top of people’s minds, starting with… the stock market crash. I’m gonna let Philip handle this one and keep
getting rest, but I will be back next week! Remember way back in February 2020? Ah, the good old days — stock market at all
time highs, everyone had a job, all the toilet paper you could ever want. Life was great. The US stock market, measured by the DOW,
has fallen over 35% in a month’s time, wiping away years of growth. We witnessed the worst single-day decline
since 1987, and the exchanges were temporarily shut down three times in a week when
it fell too far in a single day. When the stock market fell by more than 20%,
we officially entered a “bear market”. Bear markets usually – but not always – precede
a recession. Like the stock market crashes preceding the
Great Depression of 1929 or the Great Recession of 2008. Depending on the criteria, there have been
between 10 and 20 bear markets in the last century, and this month, we just entered another
one. This is a scary time we’re living in right
now, I’m the first to admit it. I was worried when Julia came down with a
bad cough and had to get tested for COVID-19. I am hurting for my friends and family who
are experiencing layoffs, slowdowns and closures. This will have a lasting, harmful effect on
our economy, and many people’s lives. But what we’re seeing right now in the markets
is not unprecedented. In the words of investing pioneer Sir John
Templeton “The four most expensive words in the English Language are ‘this time it’s
different.’“ We always think the current crisis is unique. World Wars, nuclear meltdowns, Great Depressions
— even the global Spanish Flu Pandemic that left 50 million dead. The stock market’s long-term average is
accounting for every one of those terrible times. Every time, things seem hopeless. Every time, markets recover. The bear wanders back into the woods, and
markets thrive again. It will happen with coronavirus, and the other
bears in our future too. Selling out of stock investments when a bear
market rears its head turns a bad situation into a worse situation in two big ways. First, you “realize the loss”, turning
a decline in share value into a real loss in your bank account. Think of it like seeing your home appraised
for less, and immediately putting it up for sale. You’d never do that! Second, you’re making nearly certain that
you miss the recovery when it happens. Between 1993 and 2013, the S&P 500 grew by
9.2% annually. But if you take out just the 10 best trading
days over that period, your annual average is cut nearly in half. If you missed the 60 best trading days, you’d
average a -4.39% return! By jumping out after a bear arrives, you seriously
risk missing the wave of the recovery. The aggressive among you may be wondering,
“Well, is now the time to BUY stocks?” Maybe… but with a few caveats. Financial experts discourage investing in
the stock market with any money you may need sooner than 10 years from now. Keep money for short-term needs in safe havens
like cash, bonds, or CD’s. But if you have a nice cash cushion AND you
were already planning to invest that money anyway — yes! Go ahead and continue to invest into the market. By investing in good times and bad, you get
to take advantage of “dollar-cost averaging”, a strategy that, by investing on a regular
basis, allows you to buy more shares on the cheap and less shares as they get expensive. Investing is for the long-term. Retirement or college accounts are designed
to be invested and grow for decades. Don’t let the turbulent news of today make
you rethink a solid long-term strategy. That big mean bear will eventually wander
back home and you’ll be glad you kept your cool and didn’t make him mad. And that’s my Two Cents.

74 comments

  1. People are selling?! 😳 I would’ve thought it’s a great time to BUY (y’know? Prices are down, they can only go up from here 🤷🏽‍♀️)

  2. Just in many of Amazon workers tested positive for the virus 🦠I know were going much lower on the Dow
    The warehouse primarily northeastern
    Region source u tube 3/20

  3. I love how you two insert personal details in your videos, I love the sincerity. I hope Julia gets better soon!

  4. This is a terrible time to put money in the market. The market is nowhere near the bottom. It’s getting a boost right now from the pending stimulus package, but once that is done, the government has no more ammo. ZIRP, endless QE, trillion $ repo operations, they threw everything at the wall to see what would stick. When the job numbers and earnings reports come out, this thing is going to tank, big time.

  5. Real shit tho we got beyond meat and stuff like that now so can we chill on eating animals? Swine flu, bird flu, and covid-19 being some of the most notable recently. We clearly aren’t responsible enough to produce food out of animals. I used to hate vegans but honestly I think I’m going vegan after this because animal ag needs stricter regulations before I’ll ever support it again

  6. Timely Needed Video. Thank you for good work! Keep it up! And wish Speedy Recovery for Julia! Better if you can do a video about the Economic loss caused by Covid 19 and what do people should do to prevent getting ripped off when this kind of recession arises in the future centering the Health sector.

  7. I hope you two and the baby are doing well!!! My wife and I love your videos. Thank you for posting this video. I hope we can all get through this sooner rather than later!!

  8. Feel better soon!! 🤒😷 we’re all in lockdown in New Zealand. Today is day 1 of a minimum of 28. One of my investments is finishing now, so I’ve been moving the liquid cash from that over to some stocks that have fallen 30% and some even 50%! They have shown historical averages of great consistent growth, even with bears coming out of the woods to spook the bull’s run. So for me, and I am sure many others, these couple of days & weeks right now, it’s like the world is on sale. But still be careful, do your due diligence in understanding >why< investors are spooked. Pulling out of rest home investment shares because you think the elderly are more at risk? Okay, but until someone invents the elixir of life, there will always be elderly, so potentially a viable investment candidate to pick up at a good price. At the end of the day you can still lose money if you invest in a business that does not have enough liquidity or ability to scale back quickly without any permanent repercussions (hence why governments are pumping out the stimulus packages to also help business protect the employees of those companies as well), but we will see a lot of businesses, like small airlines fall. Take care, keep yourselves and your loved ones safe!

  9. The next time I see a sell off, I will watch this again. Thank you. I have always tried to think of my 401k investments like the value of my house. After the crash in home prices in 2008/9 the value of my house has gone a lot higher. The stock market will too. This pandemic won't last forever.

  10. Sorry, it is different this time. Even with defensive stocks dividends are now being suspended, so why stay in? This is just the beginning – we don't have first quarter results or unemployment yet. If you missed getting out last week — oh well. Sit on your cash, you may need it to buy toilet paper.

  11. Buy with caution if it is outside of your regular investment schedule during these times. The rebound from the past 2 days is a minor part of the big picture of this crisis.

    Don't stretch yourself too thin with cash, this is when the emergency fund Philip and Julia have mentioned is most important. If you run out of cash, you might HAVE to realize the loss and pull out some investments.

  12. I have a 8 month emergency fund but I'm also 4 months of being debt free from student loans. I really want to pay off these damn student loans so I can start investing!

  13. True champs! Hang in there Julia!!
    Praying for a speedy recovery for Ya🙏🏼😭 thank u for your hard work 2 cents!

  14. Maybe I'm being overly optimistic, but my gut feeling is that this won't be a long term recession. I think this is a temporary situation. Once this blows over in a month or two, everyone's going to be really fed up with being cooped up inside. They'll want to go out and spend. And then the stock market will go up, businesses will be back up and running, and everything will mostly go back to normal by about this time next year.

  15. What about if you saw this crash coming and sold everything at the peak just before everything came tumbling down? Then rebuy everything at rock bottom prices? Is that the wrong way to do things?

    I told my Nan to sell just before things started to turn negative but she didn’t, and now she’s down $600,000. I’m certain she would’ve made a profit doing what I said, but my parents are saying she wouldn’t because of fees. Am I right, am I wrong?

  16. Always uplifting to see your two beautiful faces. Love the lower fi, just in time, video. ❤️❤️❤️

  17. Blessings from Taiwan ! 🇹🇼🥳

    Thank you for this TIMELY and helpful information !🤓

    Praying for your wife and your whole family to be HEALTHY and SAFE! 🤗

  18. Fingers crossed that results are negative and Julia makes a speedy recovery! Thank you for what you BOTH do on this show <3

  19. You two are rock-stars! Thanks for showing up during this challenging time. Feel better Julia and lil' one. Thanks for holdin' down the fort!

  20. "By jumping out after a bear arrives you seriously risk missing the wave of the recovery"

    If you are not agreeing with this statement then stock market is not your thing. Please leave.

  21. I wonder why China who created and exported the virus didn't crash their market, but got better? I think this is an economic and biological attack from China.

  22. I read somewhere that people who graduate during times of a recession end up earning less than those who graduate during time of economic prosperity. Whats your take on this?

  23. I'm confused so what if you're investing in stocks in a company and the company goes completely bankrupt and no longer exists anymore….

  24. The hardest thing to do in ths world is having an emergency fund and 0 debt. Those of you who read this and actually DO have those two things, I salute you

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