1 Year Anniversary of “Tastes Like Retirement”
Well, it’s been one full year of blogging. I’m not a writer, just a family man trying to get myself to retirement. In this past 12 months, I’ve written 54 articles with 63% of those in two categories: Stocks and Retirement Planning.
I write this blog like only I’m the only one reading (and hopefully my wife and kids too). It’s written for me and them. One day when I pass and discuss stocks and retirement planning in heaven, it’s my hope this blog will be a great historical document for my family.
For those of you reading this that are not in my family, I’m just hoping you can learn from my successes and failures. As teachers often say “if I could only reach one kid it’ll all be worth it.” Well, I’m hoping I can reach at least one reader (outside of my family).
Consumer and Corporate Savings
Was reading something that said nearly 40% of Americans couldn’t handle a $1,000 expense without using a credit card. Sadly, most of the businesses are in the same boat, especially small business. Big companies can handle a $1,000 expense but many are sadly cash strapped. They rely on credit and monthly cashflow to keep the doors open.
The disruption the coronavirus has caused to their cashflow will likely cause many businesses to close their doors and layoff their staff. This is what leads many to think a 30% or more unemployment rate is possible, especially for service-oriented high risk employees.
The bigger question is will those jobs ever come back into the workforce? If they don’t come back quickly, you’ll have many business close their doors forever. This would mean a longer economic impact that could be more historic in nature. Keep an eye out in your neighborhood for real-time data. When several local favorites (restaurants, shops, etc…) that have been around for over 20 years start closing it’s probably a really bad sign of things to come.
Hit Bottom or Still Going Down?
I’m reading so many articles that conflict with each other. Half say we’ve hit bottom and the other half say we will either revisit the bottom and likely go even lower. It just means nobody knows what is going to happen. Heck, we’ve not even peaked with the coronavirus yet so who really knows our direction?
After the recent 20% move up from the bottom, many are wondering what to do next. Honestly, nobody knows but I’m a believer that our recovery won’t be “V” shaped. In other words, my “opinion” is we revisit the bottom at the very least. What happens after that is anyone’s guess. Again, that’s one man’s simple opinion.
I thought this above chart was informative. The argument the author makes is that we’ll likely see a range between 1,463 to 1,876 on the S&P 500 before we move forward. Whether he’s right or not, his opinion is one of many we are reading each day.
For those of us closer to retirement, it makes sense to remain cautious. Now is not the time to be a financial hero. But for those 15 years or more away from retirement, just stay the course and keep buying.
My Sector Focus
After writing an article on Choose Your Sectors Wisely, I’ll probably be using the remaining part of 2020 looking for value in healthcare and consumer goods. Both of these sectors are defensive in nature.
This doesn’t mean I won’t grab an undervalued stock from another sector on my watch list though. It just means my focus will be on healthcare and consumer goods. Pepsi, Coca-Cola, Johnson & Johnson, Unilever, Pfizer, Abbot Labs, etc… will get extra attention.
The point of me writing this is you need plan. The old saying that life is 10% what happens and 90% how your react is very true with today’s market. I have a plan – right or wrong – that I’m executing. That’s about as good as you can do in these circumstances.
Young People Building Wealth
Another proud moment last week. My youngest daughter, with less than two months until college graduation, put some of her internship earnings to work. She bought 100 shares of Coca-Cola at $37.9 (4.33% yield) and 100 shares of Exxon at $31 (11.2% yield).
Both of these quality companies will survive and likely be around in 50 years. We haven’t seen these prices and yields in decades. As a parent, I needed to educate her on this generational buying opportunity and give her a choice. She could have said “No, Dad! I’m saving for a trip to Europe in 2 years.” Instead, she said “I’m game!“
My daughter is young and this market has brought some great buying opportunities. She’ll reinvest the dividends and hold these two stocks for a long time. Though she is graduating soon, her first stock purchases might just be her greatest lesson of all. She learn the real benefits of compounding when each dividend buys more shares of stock.
Once again I say to one of my daughters …. Well done, darling!
Thanks for reading!
Mr. TLR