As I’m writing this article, I’m stuck at home for about a month now, only going for the occasional walk and the visit to the grocery store. I would have skipped the big supermarkets too but online deliveries are a rare find these days here in London.
I was never a party person, quite an introvert to be honest. Hell, even my own meetups feel slightly uncomfortable to organise!
But even for someone like me, staying at home is tough. I occasionally have the so-called cabin fever and going for walks/exercise helps. Besides the difficulties of trying to work with a baby in the house, I think staying at home for a month changes how we think.
For starters, staying at home makes you realise what you miss and what you don’t. For example, although I was a regular restaurant type, I don’t miss it much, if at all. What I miss are the friends and our get-togethers but not the actual food or alcohol.
My social life is super important to me. I miss the home gatherings. The restaurants, not so much.
We used to cook at home a lot anyway so that hasn’t changed.
Then I miss playing football with friends. We have a great time which relieves stress and gives us a good type of muscle pain for a few days. Watching live sports is another one.
Staying at home forces you to spend so much time with the family. Not everyone likes it. At one extreme, domestic violence has sadly gone up during COVID.
I had never spent all day every day with them for a month and I must admit I quite like it. Sure, I miss some me time though. But as long as there’s a balance I’m quite happy. Even having lunch with them and a short walk in the afternoon makes life better.
I miss going to the office. I can speak all day about how post-FIRE must be better than pre-FIRE but going somewhere regularly still adds value. Maybe, like Morgan Freeman, I’ve become too institutionalised?
I don’t miss getting dressed for the office though.
One can argue that you can always find a regular “office” after FIRE. Can’t argue with that.
I can’t say I miss travelling, as it’s only been like that for a few weeks. But if you tell me I can’t travel until August, I’ll certainly miss that. We just cancelled a 2-week trip that could’ve been a very good experience.
So overall, staying at home makes me realise we live very simple FIRE-y lives. Life is centred around friends, family and experiences which means I should keep focusing there because this is what makes me happy.
What are some things you really missed during the lockdown?
Such a weird quarter. Many people have faced a “personal recession”, either because their businesses lost major income, they were made redundant etc. Which is why it’s so hard to keep investing during the crisis.
If like me, you’re one of the lucky ones to keep your income then you probably have a higher savings rate than usual. And more to invest at cheaper prices.
We experienced a -35% stock market fall. Property Partner has stopped paying dividends for 3 months. This doesn’t surprise me as almost half of UK companies have scrapped payouts too. No place to hide for risky assets. If people can’t pay, they can’t earn.
But the recent crash we experienced taught me that psychologically, I can withstand much bigger losses.
Sure, I was afraid but not too afraid to look at my portfolio, sell or change my strategy. In fact, I kept investing. Does this mean I should probably have a more aggressive portfolio going forward? If I’m not swimming naked, am I wearing too many clothes?
Then a 60% equity allocation is the maximum to go for if you want to FIRE in 5 years or less. Which means that from a sequence of returns risk perspective, I should not change my allocation. I’m not making any changes for now and sticking to the plan.
The unbelievable support of all governments to save the economy has surprised me. Governments around the world pay households and the businesses employing them. In the US, the Fed has effectively guaranteed that it’ll pour money as long as needed to provide bond liquidity. The markets took a very positive stance which is why the S&P 500 is only -17% from its pre-COVID levels. Astonishing.
This all comes at a cost and the magic money tree will have to be paid back probably in the form of future taxes. But that’s necessary as long as we kill the virus first. Can’t spend your money if you’re dead.
Michael Batnick got me thinking. What if the stock market has become less risky going forward?
If the stock market during the worst economic contraction in 90 years can be smoothed out by government spending and Fed actions, does this change the risk-return framework in the stock market going forward?
One can argue that this is a humanitarian crisis so they’ll do everything they can to keep the markets running smoothly. However, what if they don’t let businesses fail next time round when it’s a housing crisis, oil crisis etc? As Gallaway says, are we capitalists on the way up but socialists on the way down?
Should markets be more expensive because of that? In any metric, the stock market is overvalued compared to historical averages. Is the overvalued stock market justified because it’s safer from a 1929 depression-like fall?
All things considered and with negative rates all around us, is this another call for a more aggressive portfolio?
To conclude, I think the terrible situation we’re going through provided us with some positives too:
- Identify what we really value and what to change when we get back to normal
- Fine-tune our portfolio according to our true risk-tolerance
What about you?