Just had my broker on the phone in a bit of a flat spin. He tells me our investments are 7% down with this scare over Covid19. By way of context, the Market overall has plummeted 24%. Ouch, right? Now you know why capitalism doesn’t work Bill, got the message? No. We’re not wiped out, we’ve just taken a heavy knock, that’s all. Only lost 7% when others have dropped almost a quarter? I’d say we’re doing pretty well all things considered. The Canadian Dollar has just taken a big hit too, so what we had is worth less. If the markets burn completely then we’re all fucked, royally so.
However, money is like river water, it can evaporate, but then comes down as rain. It can get polluted, but can be filtered and boiled. It has flows and currents but you can’t ‘destroy’ it except by electrolysis. Making it is hard. Hanging on to what you make is harder still until you learn to use the flows to your advantage.
In the meantime Capitalism is working just fine for me. The markets will rebound in a month or so and I will have ploughed a chunk of reserve capital from last years gains back in as the markets bottom out, therefore in the medium term will make quite a handsome profit, the tax man’s bite notwithstanding. For the moment we’re biting the bullet and not doing the headless chicken thing like all so many others.
My investment strategy is fairly conservative anyway and relies on recouping any potential share value losses from dividends, rather than relying on the ups and downs of share value alone. Any paid dividends are saved in a cash reserve and reinvested when the market takes a big hit like about now. It’s not dragon magic. Read the Tao of Warren Buffett. Very enlightening. We did exactly the same over the 2017-18 new year market ‘correction’ and made back well over double our losses.
As for being around when any rampaging pitchfork toting mob comes to call (Sorry, the capitalist pig isn’t in – try the next street over), looking for ‘wealthy’ (Or even modestly well off) people to asset strip, we won’t be. Firstly, we’re three parts of the way up a nice steep hill in a fairly anonymous suburb, so any rampaging mob will be just about having their second heart attack by the time they get to our relatively modest door with the ‘quarantine’ sticker on. Secondly we’ll have faded like a Cheshire cats smile into the background, having moved all our kit out the week before. Thirdly my broker, lawyer and accountant get well paid for protecting and shifting our hard earned. They do their jobs. We make them money.
We’re good at being light on our feet in our family. For background; Mrs S once got caught up in the 1990 Taylor coup in Liberia and I’ve lost the roof over my head a couple of times, so we’re not exactly amateurs at this game. Once bitten etc. All you really need is a light backpack, a spare credit card, a laptop and a few sets of fresh underwear, then take the back roads to the nearest ferry, airport or safe haven. The rest is only stuff. It can be replaced.
What I’m trying to say is; this too shall pass. Don’t lose your heads. Covid19 is nasty but it’s not the Black Death. For perspective; in the UK the excess Winter deaths 2017-18 were about 23,000. Out of a comparable population of 60,000,000, that means a total extra death toll of a smidge over 3,000, which compared to the overall stats is but a pimple. Not much fun if you suffer the full effects, but 88% of those infected may not even notice, or pass it off as a seasonal sniffle. Still, it pays to be cautious.
The economic pain we’re getting at present is only going to last until Spring. Yes it’s unpleasant, but it’s not the end of the world, no matter what the lamestream say. To quote one US President; the only thing we need to fear is fear itself. I say; hang tough and sit it out, then wait for the first person to say “What was all the fuss about?” That’s when you’ll know it’s all over.