Start With One True Sentence

I don't know what will happen but my goal is to think clearly about what is happening.

This blog, One True Return, gets its name from Hemingway who said that when writing, start with one true sentence and go from there.

The name of the blog also alludes to the fact that I'm I've blogged before, and this is my return to writing. I was first on blogspot as The Stock Surfer and then as Rich on pennyandrich.com (now defunct; Penny is alive though). The first blog was about stock trading and the second was about personal finance. I let pennyandrich expire because I didn't have any time to write. Then coronavirus hit, the markets got crazy, I'm home all the time, and the urge to write has returned. Writing helps me think, and I want to think clearly about what is happening. For good living, for my family, for my mental health, for my investments.

Speaking of investments, the blog name additionally alludes to "returns." So clever.

And of course I want to write honestly. The term "truth" has been battered in our culture but aiming to communicate something true is still valid in my opinion or we are all doomed.

What is Happening

My family is really lucky. My wife and I are home from work for a while, our kids are home from school for a while, and we are healthy. No one would consider us high risk, even if we get the virus.

That last sentence could be in any number of dystopian fiction novels. Crazy times. 

We live in an apartment, so the toughest part about social distancing is that we aren't out as much as we're used to. We normally go to parks and restaurants and the gym. A lot. In many ways we've built our home life around our ability to be mobile, to be close to activities. Staying in is the right thing to do; we take social distancing very seriously, we are avoiding corona droplet spreading. Of course, it's tough for our young boys to get their energy out. We go to the soccer field once a day, mindful of everything we touch, and when we get home we wash our hands and out clothes and then we stay in some more. This will be life for a while. We can do it, hopefully without going crazy. That will be up to us, ultimately. 

It will not be easy. In fact it will be incredibly difficult. Our boys aren't low energy types. They don't sip tea and read books. And now, not only are we supposed to stay in, my wife and I are trying to do some version of home schooling. This may very well be our ultimate parenting test. 

But again we are lucky. Many families have stressors that go far beyond cabin fever.

Investment thoughts ... 

We are still getting paid, at least for now, so we do not have financial concerns. I'm watching the markets like a hawk, looking for opportunities to invest. As I write this, it's no stretch to say that markets have crashed. Almost any market you can think of is in distress: equities, debt, metals, oil, you name it, some worse than others. We all know the catalyst -- the virus has brought whole economies to a halt, and multiple industries are having existential crises. I asked a banking executive recently: How many companies can survive a 6-8 week shutdown? His answer: Zero. 

As a result, governments are taking unprecedented action. Just this morning, the Fed has announced "limitless asset purchases." Ok. Will this succeed? And what, exactly, is the measure of success? Asset prices? Jobs? 

Back to my original sentence: I don't know what will happen ... 

At a personal level the question is how can I invest in this environment? Coming into this crisis, I had very little exposure to stocks. This has been true for years. I've been bearish because I thought stocks were overvalued. I missed out on years of gains. I'm ok with that. I did not want to overpay. In my opinion, part of the reason that this crash has been so severe is that markets started from a point of high valuations. 

Valuations are now getting interesting, and part of the purpose of this blog is to think through opportunities.

With regard to the overall stock market, my plan was to buy on the way down. Something like this:

Market drop: -20%  Invest: 15% of available cash
Market drop: -30%  Invest: 30%
Market drop: -40%  Invest: 50%
Market drop: -50%  Invest: 75%
Market drop: -60%  Invest: 90-100% 

As of this weekend, the S&P 500 was down around 32%. Small cap stocks were down closer to 44%. I've been deploying cash according to my plan. 

I'll have more thoughts on investment opportunities. Even though we've definitely seen some panic, I think we're still in early days as this health crisis has become an economic crisis. 

What I'm Reading ...

The Daily Stoic by Ryan Holiday. I'm finding that Stoicism and Mindfulness / Meditation are hugely helpful. They were helpful before and nearly essential now.

Stoic / Mindful Thought ...

Being properly educated means to learn how to separate that which is within our control and that which is not.

What I'm Listening To ...

The Waking Up app, by Sam Harris.

What I'm Watching ...

CNBC.

Final Thought ...

Let's take this one day at a time ...