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Crisis Management, Personally

Updated: Jul 20, 2023

I’ve been posting quite a bit of stock market analysis recently, and this week seems like a good time to get back to some nuts-and-bolts financial planning basics. The fiscal rescue checks for many people started arriving this week, and the reality is that they won’t be enough for most people. I’m hopeful the government will send reinforcements, but at this point, we should all be planning on getting through this more or less on our own. Higher unemployment benefits will help a little, but they too are a very short-term and minimalist sort of fix.

Everyone’s financial situation is different right now, which means your neighbors are probably handling their finances differently than you are. Some households have been devastated while others are experiencing difficult times or minor annoyances while others, like David Geffen, are enjoying a lovely quarantine while sipping Krug and noshing Osetra caviar on their $500 million yachts in the Grenadines. How you’re able to respond during this period and what you’ll be able to accomplish when it comes to your investments will have a lot to do with your personal financial situation-- and most of us are not David Geffen. The reality is that the vast majority of financial worries for most households have nothing to do with the S&P 500 right now. People are worrying about how to feed their families, how to maintain (or perhaps even re-invent) their careers, and how to keep their parents healthy. For most of us, that’s it.

If your biggest stressor at the current moment is trying to determine whether you want to buy more AAPL or if maybe TSLA would be better, well, you are a very, very fortunate person. Take it from me; I deal with a lot of fortunate people every day, and yours would be a very unique position among my family, friends and clients. Many people are grappling with short-term liquidity issues and working to prevent them from becoming long-term issues of overall solvency, and stocks are meant for investors who have ten-year investment horizons, period. So, consider yourself well-off if you’re stressing about your long-term needs as opposed to the short-term ones.

At this point, people need to perform an honest assessment of where their jobs stand and how their businesses could be impacted by an economy that will continue to operate at less than full capacity for many months. Jobs that have been disrupted this month will probably remain disrupted for quite a while; I think that’s definitely what people should expect as they map out the rest of their financial calendars for 2020. For most people, financial advisors will become increasingly valuable.

As will cash. For most people, having a year’s worth of emergency funds is a pipe dream--if you have it, you’re probably better off than three quarters of the people you know. However, while we’ve all been spending like crazy at the grocery store, most of our other expenses are down, and for many households this will be an opportunity to raise cash. Given that none of us has been to a bar, restaurant, concert, sporting event, ski resort or… anywhere for quite some time, it might be wise to funnel some cash into savings. Of course, if you’re like me, you’ve gone shopping for two weeks’ worth of booze three times in the last week of quarantine, but that’s another story.

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