From February 19th through February 27, the S&P 500 fell more than 11%,  In contrast, the Bloomberg Barclays U.S. Aggregate bond index —the benchmark tracked by core bond funds— is up 1%. If you are using Treasury bonds in your portfolio, you’ve likely seen a bigger gain of approximately 1.78%.

The coronavirus induced market collapse shows how using a three-bucket strategy can make it easier to stay the course during stock sell-offs. With a cash bucket and a bond bucket, you can generate the income you need without needing to touch your stock bucket when it is down.

3 Bucket Approach

Buckets 1 and 2 (cash and bonds) buy time for bucket 3 (stocks) to recover. Bucket 3 offer the best shot of delivering inflation-beating gains over the long-term.  Inflation and loss of purchasing power of the dollar are a very real threat for a retirement that can stretch 30 years.

• Bucket No. 1 holds two to three years’ worth of living expenses—reduced by your guaranteed income—in cash or cash equivalents.
• The intermediate bucket—bucket No. 2—should hold three to seven years’ worth of expenses in a balanced portfolio with investments that give off a yield, such as dividend-paying stocks and bonds or bond funds.
• Bucket No. 3 holds longer-term funds that may not be needed for several years. It can be invested in riskier assets, such as 100% stocks.

To read more:  https://money.com/coronavirus-protect-retirement/

References:

1. https://money.com/bucket-approach-for-retirement-income-how-to-use/
2. https://money.com/coronavirus-protect-retirement/

Dr. Anthony Fauci, the director of the National Institute of Allergy and Infectious Diseases, was the guest on the latest quarantine edition of The Daily Show with Trevor Noah, offering his insights on what makes COVID-19 so insidious.

He had particularly pointed advice for younger people about the spread of the virus: “Even though you are young, you are not absolutely invulnerable,” Fauci said. “So, you have a responsibility, not only to protect yourself but you almost have a societal, moral responsibility to protect other people.”

“If you ever hear yourself or anyone you care about starting to express the belief that a problem is permanent, it’s time to immediately shake that person loose. No matter what happens in your life, you’ve got to be able to believe, ‘This, too, shall pass,’ and that if you keep persisting, you’ll find a way.”  Tony Robbins

If we could compare life to walking through a forest, we could say that you pass a lot of trees along the way. And most people tend to obsess over the nearest tree.

It’s just human nature: you focus on the tree nearest to you and you lose sight of that entire forest that is your life.  We must understand that proper planning, deliberation, and insight allows you to step back, see more, and better understand where you are now in relation to where you want to go.

The decisions you make right now should be in the context of everything that’s happening now and the future. You need to understand that the way in which you use your money and the choices you make impact you life now and down the road.

Looking at the forest means taking a step back and understanding how everything is interconnected — and how to make decisions around that.

Henry Ford once said, “Whether you think you can, or you think you can’t–you’re right.” Those who think they can achieve financial freedom can actually do it.

Source  https://beyondyourhammock.com/34/

It is said an Eastern monarch once charged his wise men to invent him a sentence to be ever in view, and which should be true and appropriate in all times and situations. They presented him the words, “And this too, shall pass away.” How much it expresses! How chastening in the hour of pride! How consoling in the depths of affliction!
Abraham Lincoln

At a time such as this, with double or even triple doses of concerning news daily, a little perspective can go a long way.

As troubling as the rapid descent of stocks into a bear market has been, and as much as it can preoccupy investors, we all need to think first about our health and the health of our loved ones. Covid-19, the disease caused by the coronavirus that emerged in China late last year, has been declared a pandemic. The speed at which the disease is spreading has led authorities to take strong measures, including school closures and cancellations of sporting events, on national and community levels.

The disruption to daily lives could be substantial all around the globe. Many in Asia have lived with such disruption, and heightened virus concerns, for several weeks already. It hasn’t been and it won’t be easy, but it’s necessary.

A new, short-term reality

Financial markets clearly are reflecting our new reality, recognizing that the strong response and medicine required to thwart Covid-19’s spread is also likely to blunt short-term economic growth. The result may be a mild U.S. recession, although if it ensues we believe it could be short. We also believe that recession risk is heightened in other developed markets.

In China, where activity is slowly getting back to normal, we expect GDP growth of around 5% in 2020, compared with a reported 6.1% for 2019, with risks to the downside as the coronavirus outbreak plays out among China’s global trading partners.

Read More:  https://vanguardblog.com/2020/03/16/perspective-in-a-challenging-time/

Wesbury 101 – Economic Video Commentary

Updated: 3/19/2020 5:40 pm

A “rainy day” fund is a reserved amount of money to be used in times when regular sources of income (or cash flow) are disrupted in order for typical operations to continue.

• Giant employers of lower-wage workers like McDonald’s and Starbucks spent and borrowed money for stock buybacks and dividends.
• Now companies are trying to tap credit to manage cash, avoid layoffs.
• Labor unions and experts say all that shareholder money could have gone to worker raises and to shore up the balance sheet during the bull market to better prepare for a financial downturn.
• The tax cuts of 2017 are also now being scrutinized.

Kitchen-table finance begins with one simple rule:

Have several months’ worth of expenses on hand, in cash, in case something unexpectedly goes wrong.

Some of America’s biggest employers are beginning to discover the truth of this maxim as the coronavirus crisis catches them short of cash just as business crashes. Together, the restaurant, leisure and hospitality, and airline industries account for about 17 million U.S. jobs.

To read more: Coronavirus crash shows major corporations broke No. 1 rule of personal finance

The Dow Jones dropped nearly 3,000 points Monday. For the Dow, the drop is its steepest decline as a result of the fear and panic created by the new coronavirus pandemic.

The decline reflects the fear that the emergency measures taken by the Federal Reserve may not be enough to ward off a coronavirus-induced U.S. recession and it underscores the level of worry among investors since the coronavirus pandemic escalated and disrupted supply chains, sidelined workers and infected tens of thousands of people outside China.

On Monday, the Trump Administration has advised Americans to self-quarantine and avoid congregating in groups larger than ten people in order to flatten the spread of the virus. Furthermore, the CDC recommended organizers to cancel or postpone in-person events that consist of 10 people or more throughout the United States for the next eight weeks. Examples of large events and mass gatherings include conferences, festivals, parades, concerts, sporting events, weddings, and other types of assemblies. These events can be planned not only by organizations and communities but also by individuals.

On Monday, Federal workers are urged to work from home and VP Pence this past weekend urged White House staff to wash hands, practice social distancing, avoid physical contact, clean and disinfect, and “Stay home if you’re sick!”

Pandemic compared to Seasonal Influenza

The seasonal influenza impacted 35 million Americans last year, causing over 490,000 hospitalizations and over 34,000 deaths according to the CDC. Without medicine or a vaccine, coronavirus has the potential to be more widespread and deadly than the flu.

Most individuals who contract COVID-19 will have mild to severe symptoms that resemble a cold or flu and will recover. However, a significant number will also require hospitalization. If these hospitalizations occur rapidly, it will overwhelm U.S. hospitals. For instance, emergency room visits for automobile accidents may be disrupted if our system is overcapacity. Therefore, it is imperative that we must limit the spread.

CDC Recommendations

The CDC has an aggressive response to identify potential cases of the new coronavirus and has activated its emergency operations center. The virus, known as COVID-19, is marked by respiratory problems that are usually mild but can be severe, especially in older adults and in people with underlying health conditions.

CDC guidance includes:

• Get a flu shot.
• Take flu antivirals if prescribed.
• Take everyday preventive actions to stop the spread of germs.
• Wash your hands often with soap and water for at least 20 seconds. An easy way to mark the time is to hum the “Happy Birthday” song from beginning to end twice while scrubbing.
• Use an alcohol-based hand sanitizer that contains at least 60% alcohol.
• Avoid touching your eyes, nose and mouth with unwashed hands.
• Avoid close contact with people who are sick.
• Stay home when you are sick or becoming sick.
• Cover your cough or sneeze with a tissue (not your hands) and throw the tissue in the trash.
• Clean and disinfect frequently touched objects and surfaces.

Additional practical precautions

• Do not travel while sick.
• Seek medical care right away if you have both symptoms of fever, cough and shortness of breath and have either recently returned from China or have direct exposure to others diagnosed with Novel Coronavirus Disease.
• Before going to a doctor’s office or emergency room, call ahead and tell them about your recent travel and your symptoms.
• If someone in your house has testified positive, keep the entire household at home. Do not go to work or school.
• If you are elderly, stay home and away from other people.
• If you have a serious underlying health condition, stay home and away from others.
• Avoid eating or drinking in restaurants, bars and food courts. Use drive-through, pickup and delivery options.
• Do not visit nursing homes or retirement or long-term care facilities unless to provide critical assistance.

Sources:

1. https://www.usatoday.com/story/news/politics/2020/03/16/coronavirus-trump-says-social-distancing-may-needed-through-august/5061517002/
2. https://www.cdc.gov/coronavirus/2019-ncov/community/guidance-business-response.html