It’s Monday evening at the Minneapolis airport. It’s only 7pm, but if you were to look around the terminal you would have guessed it was 2 am. With only a few people around in what should be one of the busiest areas of the airport it’s clear something is up.
I paid $79 for this direct flight to Dallas, my rental car cost a whopping $23/day on my trip. It’s clear demand is low for travel right now. Why?
A few things are going on.
COVID-19 is getting worse, with more and more cases popping up in the US and beyond. They announced today the entire country of Italy is under quarantine.
Also, Russia and Saudi Arabia are now in an oil war. Oil prices had their worst day today since the 1991 Gulf War.
As a result, our 11-year bull market is now over. At one point today the DOW dropped 2,000 points, this is the single biggest drop since 2008.
I have a very travel intensive job, and as an arborist my work isn’t really able to be done remotely. What will 2020 look like for me if coronavirus becomes widespread and I am unable (or unwilling) to travel to perform my work?
Beyond the initial wave of worry and unending “what ifs?” I start to think less reactively, I think about all of the opportunity that comes in these “trying” times.
I traveled to MN to clear out my mom’s rental home which went under contract a couple of weeks ago. The equity she holds has a lot more buying power in an uncertain market like the one that seems to be on the horizon.
Despite major losses in my investment portfolio today, I thought about how much more my monthly 401k and Roth contribution will be able to buy (in terms of shares) in a future, more downtrodden market.
Uncertainty has made me re-evaluate what gives me joy in life. Most of my hobbies and past-times are free. If air travel becomes a concern, I thought of all the fishing and hiking destinations within driving distance I could visit.
I felt a wave of positivity, maybe even excitement come over me when I thought of the great opportunity of having a calm head in a panicking world. Tragedies aside, I think the world will re-emerge from COVID-19 and this economic dip better off than before. Allow me to briefly explain.
-Remote work will increase as coronavirus gets worse. So many business meetings and corresponding travel is unnecessary. We are wasting our lives flying cross country to attend meetings that can be done on Zoom or Skype. (Or could just be cancelled all together)
-Homeschooling will increase as a result of coronavirus, we have long known that the “industrial revolution” model of schooling our kids is impersonal and outdated. When schools are shut down in the US, and work is suspended; parents will see the value in homeschooling. When the dust settles they may want to reconsider their former lifestyle of spending all day away from their kids as the “system” educates them on things beyond just math and grammar.
-Automation will increase. Technology that already exists will finally be implemented in the marketplace by necessity. A workforce stuck at home will force the hand of companies to use automation and robots will do tasks that was once done by a now quarantined employees. American will be more technologically advanced and efficient.
-A lackluster economy will reign in consumer spending habits. Credit card debt was at an all time high in Q4 of 2019. An almost 11 year bull market in the US just translated to Americans spreading themselves even thinner. Proving that more money does not translate to greater financial security in the mindset of “enough is never enough.”
-The wise will be rewarded. Your monthly 401k contribution will having more buying power in 2020, lean businesses will win out as slow-to-adapt competition falls at the wayside in tougher economic times. You as an investor will also have more opportunity to acquire assets during this time period.
The next day: Re-reading what I had written last night at the airport. I realize this list sounds insensitive and inconsiderate to all but the slim few who will benefit from these changes. The people who financially benefit from a recession is always a slim minority. Not everyone has the option stockpile cash even when times are good. That said, I do believe we can all strategically position ourselves for this season ahead. I also think the social and lifestyle changes brought on by coronavirus are in some cases overdo and will hopefully benefit us when things return to “normal.” The lessons I learned as a teenager in the 2008 economic collapse have stuck with me 12 years later and are still a major factor in how I choose to live my life today.
In summary, I believe that coronavirus will produce a more unified, frugal, technologically advanced America that prioritizes time with family more greatly. Not discounting the negatives and tragedies, this is a possible silver lining.