May 13, 2020
Investing During the New Normal
Challenging times call for a steady approach.
I typically reach out to you when the markets are going crazy. Most times, they are reacting to temporary noise, and the moment passes.
But I wanted to take some time now to address the “new normal” during the Covid-19 pandemic, to explain what’s happening.
Market volatility has become an everyday occurrence. We’re seeing huge swings in indexes like the S&P 500, the Dow Jones Industrial Average, and the Nasdaq. The Dow, for example, will be up hundreds of points one day and down by an equal amount the next. In fact, stocks just had their biggest month of gains in April since the 1970s. That came after the biggest drop they’d experienced since the financial crisis of 2008, in March.
So what’s going on here? As you all know, the novel coronavirus has sparked a global pandemic which, sadly, has sickened millions of people and led to the deaths of hundreds of thousands of people. As a protective measure, countries around the world have issued stay-at-home orders to protect people from getting sick. Those stay-at-home orders have also affected businesses. Everyone but essential workers–those involved in medical care and treatment, people who stock grocery store shelves, and mass transportation workers, among others–have been ordered to stay home.
That’s had a profound impact on the economy, not just in the U.S., but around the world. (Thirty million people are now unemployed in this country—and if you’re one of them, Stash is here with resources that we hope can help you.) Industries like air travel have seen business plummet by 95%. In April, the price of oil produced in North America fell so much, due in part to lack of consumer demand, that companies that drill for it actually had to pay purchasers to store it.
In spite of all of this, I’m very hopeful that the economy will start to recover soon, as companies in the biotech and traditional pharmaceutical world rush to develop treatments and vaccines. And as states and cities begin the long process of safely reopening and getting back to work, I’m confident about the strength of this country, its businesses, and its workers—including all of you—who are among the most innovative and creative in the world.
What should you do now?
Here’s what else I know. Markets go up and they go down. It’s the nature of investing. That’s why we’ve developed something we call the Stash Way. It’s our three-step investing philosophy that involves regular investing, diversification, and investing for the long-term.
When markets go down, we think you should stay the course. Specifically, consider investing in your Mix and turn on Auto-Stash. Auto-Stash can be your best friend right now. I want you to look back at this time in a few years knowing you picked up investments during all the market cycles. Your Mix is a diversified grouping of bonds and stocks that are global. (There are three types of mix: conservative, moderate, and aggressive.) You can find the mix investments by searching “mix” in the app or in the balance section of investments. If you already own the mix, bravo—keep adding to it on a regular basis.
In addition to buying one of the Mixes and sticking to the Stash Way, here are some other tactics to consider.
- People often flock to gold and other precious metals, in what’s called a flight to safety. Why? Gold is gold–it’s a hard metal that always has value. (A word of warning though, gold prices can also be very volatile.)
- You can also consider bonds. Did you know that a generation ago, when people talked about investing in the stock market, that mostly meant they were investing in bonds. Believe it or not, the bond market is much larger than the equities markets, and can provide a measure of stability, acting as a counterweight to stocks. In fact, bond yields often stay stable when the stock market drops.
- Fall Back Funds (search for it in the Stash app) is an option if you want less “ups and downs” and a lower risk investment.
Investing aside, we realize this is a tough time for everyone, particularly workers in the gig economy whose pay may not be as consistent or dependable as full-time workers. If you’ve been furloughed or have experienced a drop in your income, you may still be eligible for unemployment benefits. (We discuss that in detail here.) Remember, you can always have your stimulus check, unemployment money, and your other income direct deposited into your Stash banking account.
In the Stash app, we’ve built a financial home that brings key aspects of your financial life—spending, saving, investing, advice—under one roof. All these pieces work together to help you follow the Stash Way, and ultimately achieve financial security.
We are all in this together, and Stash is here for you, to help you meet your most important financial needs and goals during these very challenging times.
Keep on Stashing!