Since my last post about COVID-19, a lot of things have happened. The World Health Organization officially declared COVID-19 a pandemic, the US and Canadian stock exchanges were halted multiple times due to panic selling, the stock market has been on a continuous downward spiral, and I totally lost count how many times the dead cat has bounced.
A month or so ago, some people still believed that COVID-19 was fake news and thought the virus was only spreading in Asia. As a result, repercussions were not taken to reduce the spread of the virus globally.
And here we are.
The pandemic was declared and COVID-19 cases are increasing exponentially every day. Countries are desperately trying to flatten the curve so their medical systems don’t get overwhelmed. Many countries like Canada and the US are trying very hard to not experience the same dire situation as Italy…
Here in Metro-Vancouver, we are seeing a lot of precautions being taken as well. My work’s HR department has told everyone to work from home until further notice. Municipals have closed gyms, pools, libraries, and recreational centres. Movie theatres, some restaurants, and bars are closed and banks are either closed or have reduced branch hours. BC has announced that K-12 schools are closed infinitely.
I thought people wouldn’t be hoarding supplies, but I was totally wrong. Pandemic profiteers emerged and emptied supplies like Lysol wipes and hand sanitizers (they make me sick and so angry!!!). Fortunately, online retailers like Amazon, eBay, Craigslist, and Kijiji have removed postings and even suspended seller accounts. When I went to Costco the other week for the usual grocery shopping, the parking lot was jammed packed. Inside, people were orderly for the most part but it didn’t take me long to notice that there was no toilet paper or hand towels in stock. Pasta and many non-perishable items were also low on supply. The other day when I went to Superstore to pick up some last minute produce, out of curiosity, I walked around the store. I was surprised to see that toilet paper was completely gone (there were 2 per customer signs all over), the entire poultry section was empty, shelves of flour were gone in the baking section, and there were only a few packs of pasta left in the store.
Panic buying is becoming hysterical!!! Come on people, please stop!
For the most part, even though we have been confined to our house, not much has changed. We didn’t stock up anything extra because of COVID-19. We have the usual supplies of pasta, canned tomato, flour, sugar, oats, toilet paper, tissues, chickpeas, canned coconut milk, etc. Life continues, and we are making sure that we wash our hands regularly and practice social distance. Mrs. T has cancelled all the playdates that she previously organized. We even postponed Baby T2.0’s birthday party.
While we stay at home, try to reduce the spread of the virus, and attempt to flatten the curve so we don’t overwhelm the medical system, there are many things we can do to help other people and improve our financial lives…
On helping elderly & young families.
If you have elderly neighbours now is the time to provide a helping hand. Check up on them and offer to purchase groceries and other supplies for them, so they don’t have to head out. It is probably a good idea to offer help to your parents and grandparents too. For example, my parents are in the higher risk age group (60+) so I have told them that whenever we buy groceries, I could pick up stuff for them and deliver to their home.
Similarly, if you know families with young kids in the neighbourhood, you can help them out by leaving groceries, diapers, etc on their front door to help out. That way the family doesn’t have to go out to shop.
On helping local small businesses
Many small businesses are suffering big time because folks are staying home. Therefore, this is the time to help out local small businesses. One of the ideas that has been circulating on the internet is to purchase gift cards from these small businesses to give them some cash flow and use these gift cards later. Mrs. T and I have decided to bulk buy from local cafés and restaurants and take the stuff back home for later consumption. The other day I went to one of our favourite local cafés to buy some drinks and a few days worth of treats. The owner whom we talked to regularly, thanked me for coming in and showing support.
Taking small steps to improve our financial lives
One of the most important things that we can all do during the turmoil time is to take small steps to improve our financial lives. Canadians have some of the highest household debt levels in the world. Some Canadians are living pay cheque to pay cheque or have very little buffers in their monthly budget. Therefore, instead of hoarding toilet paper, hand sanitizers, disinfecting supplies, meats, etc, we should all take a serious look at our finances. Can we increase our debt repayments by reducing expenditures somewhere else? For example, cutting back on the cellphone/cable/internet bills? What about reducing the monthly grocery bill? Working from home and not driving to work anymore? Take the gas money saved and use it to increase debt repayment. Maybe it’s time to get a credit card with a lower interest rate. Layoffs are already happening. Businesses are suffering because of the COVID-19 pandemic. It would be a great idea to top up the rainy day fund and have sufficient cash saved up in case of a layoff.
If you are having trouble paying your monthly bills, phone your bank, internet service and cell phone providers, utility companies, municipality, etc. and ask for assistance.
It is essential to take these small steps now and be proactive rather than wait for things to unfold and get caught in a surprise layoff. Being proactive will pay off in the long run.
What about the stock market?
The stock market remains extremely volatile after the last few weeks. Governments have lowered interest rates and introduced multi-billion stimulus packages, but these actions have not stopped the market from sliding. We have seen our dividend portfolio value dropping as much as over $200,000. The stock market is certainly not for the faint of heart. As a result, it is especially important not to invest with money you will need in the short term (i.e. investing with your rainy day fund is a very bad idea).
What do we plan to do with our investment portfolio? We plan to continue buying dividend-paying stocks regularly, just what we have been doing for the last nine or so years. While it’s easy to continue holding cash and waiting for the market to bottom out, it is nearly impossible to know exactly when and where the bottom is. Rather than waiting and waiting, invest regularly and take advantage of the power of dollar cost averaging. The lower stock prices also mean we’d be able to DRIP more shares whenever we receive dividends. Taking advantage of dollar cost averaging is a good thing.
And let’s remember, time in the market is far more important than timing the market!
So we plan to continue buying dividend-paying stocks like TD Bank, Royal Bank, CIBC, Bank of Nova Scotia, Bank of Montreal, Bell, Telus, Rogers, National Bank, Canadian National Railway, Canadian Utilities, Emera, Fortis, etc. Given the low crude price, I would be a bit weary purchasing oil & gas stocks right now. It is likely that some oil & gas stocks will cut their dividends. It will be interesting to see whether the likes of Enbridge, Inter Pipeline, and Suncor cut their dividends or not. For now, we are busy reducing our monthly expenses, so we can save more money for investing.
I am all for buying for the long term and becoming a share owner of companies that produce things that people will need on a daily basis. Last time I checked, people will need natural gas to heat up their home, people will need to rely on banks for financial services, people are using their cellphones to talk to people and get the latest information. Companies will suffer in the short term, but eventually things will recover, and they will start making profits again.
As the wise Warren Buffett once said before…
Be greedy when others are fearful.
I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.
Listen to Buffett!
PS If you are feeling overwhelmed, breathe. It’s OK to feel overwhelmed during a global crisis. Take the time to take care of yourself. Once you feel more grounded, start focusing on one thing at a time, take a few minutes each day to perform this one thing. Small steps do add up!