The Panic Of 2020

The Panic of 2020 is destroying businesses. People’s lives are being upended. Yup, you can smell the panic in the air. There is much similarity between The Great Depression/Stock Market Crash of 1929 and the current stock market crash of today, 2020. According to The History Channel (click here for link to article) this is the reason why the stock market crashed in October, 1929:

There was no single cause for the turmoil. There were many.
Most economists agree that several, compounding factors led to the stock market crash of 1929. A soaring, overheated economy (a.k.a The Roaring Twenties) that was destined to one day fall likely played a large role. Equally relevant issues, such as overpriced shares, public panic, rising bank loans, an agriculture crisis, higher interest rates and a cynical press added to the disarray. Many investors and ordinary people lost their entire savings, while numerous banks and companies went bankrupt
.

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There’s no doubt that the coronavirus and the media are causing many people to panic and clamor for their money, thus the massive sell off in the stock market. With investors screaming at all of us for years to invest, invest, invest in Wall Street, touting there’s no other way to keep up with inflation in retirement unless you invest in the stock market, is it any wonder that almost everyone on the planet invested their money in the foolish and still vile, stock market? Many retirees already made their money and income in the stock market, yet why, when they did, didn’t they sell? It was greed. Everyone wanted more. So, rather than cash out, they stayed in and guess what????? They’re going to lose.

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The stock market is crashing yet once again March 9, 2020

Sure, this time it’s different. The market is always different. Sure the market is going to spring back. It always does. Well, what happens if it doesn’t? There’s no guarantee that two, five, ten years from now, investors will make back the money they lost. Then what? Surely you must know that this panic selling on Wall Street, combined with the uncertainty of the coronavirus is going to cause many companies to collapse. Cruise lines are going to file bankruptcy soon since Americans have been ordered NOT to take cruises. Airlines will suffer great losses as will ALL their employees. Layoffs have already started. Entertainment sources are shutting down, closing their doors to concerts, conferences, mass events. As these businesses close their doors, they also are letting go of most of their employees. Airline pilots can’t work from home.

Many of these laid off workers will file for Unemployment benefits. After all, our American government is solid and strong. And again, I will ask the question: is it really? The Ten Year Treasury note has dropped down to .38%. What does that say to you about the strength of our government if they can’t even pay out a measly 1% or higher on their notes? Click here for more info.

If you’re looking for a bright spot in the economy, that would be in the medical and robotic professions. But not everyone who worked as an airline stewardess can suddenly become a nurse, doctor, biochemist or first responder overnight. Online universities will see a resurgence, but really? Can you actually learn a new career out of your computer screen? It will take a while for the S&P500 to restructure their top 500 American companies as the likes of Apple, GE, Target etc bite the dust.

I want you to note one of the reasons for the 1929 Great Depression was due to an agriculture crisis. Did you know that today, in 2020, American farmers are committing suicide in higher numbers than that of our veterans? According to The Guardian (click here for info) farmer suicides are in the thousands. Over 11,000 as per last count.

The expressed reasons in order of importance behind farmer suicides were – debt, alcohol addiction, environment, low produce prices, stress and family responsibilities, apathy, poor irrigation, increased cost of cultivation, private money lenders, use of chemical fertilizers and crop failure.

Certainly, the tariffs put in pace in the last two years were the final nails in an American farmer’s coffin. I live in farm country and in the last week, I have noted two well established farms in my area are now up for auction. These farms have been in the same families for generations and generations. Now, they are coming to an end. What happens to all of us in this area who depended on these two farms for our poultry, beef and dairy products?

How does this agriculture crisis of 2020 connect to 1929?

While most Americans enjoyed relative prosperity for most of the 1920s, the Great Depression for the American farmer really began after World War I. Much of the Roaring ’20s was a continual cycle of debt for the American farmer, stemming from falling farm prices and the need to purchase expensive machinery. Click here for more info.

There was only ONE thing that ended The Great Recession of 1929 and that was World War II. Here’s a link, click here: On the surface, World War II seems to mark the end of the Great Depression. During the war, more than 12 million Americans were sent into the military, and a similar number toiled in defense-related jobs. Those war jobs seemingly took care of the 17 million unemployed in 1939. … We merely traded debt for unemployment.

I have ALWAYS expressed my dislike of Wall Street and of my avoidance in investing in the stock market. I lived through the Crash of 1987 (where I had to file bankruptcy because I was totally wiped out) to the Dot Com Disaster of 2001 (where I owned a computer store for four years but once the Dot Com disaster hit, I had to shut my doors forever and was totally broke. Thankfully, I didn’t have to file bankruptcy again). When The Great Recession of 2008 hit, I was a lot smarter. I lived 100% totally debt free, with an ample supply of cash in FDIC investments and despite DH being out of work for 2.5 years, we didn’t feel one iota of financial pain. Fast forward to today, as a lark I invested 8.4% of my total holdings in the S&P 500 and as we all know, it’s sinking like a stone. It’s currently worth less than what I originally put in. No worries for me because I invested that money, as a risk, as a gamble, with the intention that should the stock market crash, I wouldn’t miss this loss from my portfolio. Maybe it’ll come back. Maybe it won’t. Maybe there will be more loses. Maybe there won’t. In any event, I don’t need the money so yes, I can wait it out. I’m just not planning on its usage any time soon.

My antidote to inflation has always been to find another cheaper solution and lower the costs and expenses to offset the higher prices. My theory still works and its working out just fine to this day. I didn’t restructure my portfolio. I restructured my bills. I eliminated. I cut. I’m doing without. You keep as far away from debt as possible.

Live well and prosper, my friend. Live well and I hope to God you prosper. I hope we all do.

 

 

4 comments

  1. Appreciate your insight, Cindi. This is your area of expertise and I like how you break things down and explain in ways that I can understand what’s going on. Like so many, I am watching my retirement savings drop like a rock. It’s scary to watch the business channels in real time and seeing what’s going on. Brings back memories of the Great Recession. Diane

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    • Diane, we won’t suffer any losses as long as we don’t sell. For me, I don’t ‘need’ the money I invested in Wall Street for at least two years. I’m certain things will improve somewhat in 2 years. I don’t think life will be coming to an end, despite what the media screams. Hang in there. Hold on. Try to wait it out as long as you can. Hopefully, you have other resources you can tap to hold you over.
      I’ve decided to stop looking at my decline. I also decided to stop watching Bloomberg Business News as well as CNBC. Instead. I am playing happy playlists from my (free) Spotify account. Music can cure almost anything. I’m also going to do at least 30 minutes of yoga a day (free off my Amazon Prime Video account) and I’m going to delve back into watercolor painting. Try to find some happy hobby and direct your attention to that instead.
      I left my portfolio numbers intact on a spreadsheet BUT I did add in an extra line and entered my losses there so that I get an accurate total on my bottom line financial holdings. The best thing for me or you or anyone else to do, is wait it out.
      Hope that helped.
      Thanks for your comment.

      Liked by 1 person

  2. As a historian
    There were many more things going on in the 1920s.
    Farming is very strong in the US- but lots of small farmers are choosing to sell to developers. Their children are moving on to other things. It has been an issue for about 30 years. The farms are not “going under”. Suicide rate in the US has been going up significantly for the last few years- love how a British newspaper tags it specifically to farming. I think it has more to do with leaving God and not believing there is something better.
    As an investor and parent
    I have always been conservative- and most of my money has been in CDs for the last few months. It was just too high (what goes up, must come down). The money in, I haven’t lost anything, because I never sold. There is no gain or loss until sell. I believe that my kids are well employed, there is food on the table and only all news is sensational. The markets are driven by Bloomberg machines (actual computers)- that ebb and flow on words. Those people “on the floor” are props. Will it come back? I don’t see Procter and Gamble closing anytime soon.
    As for the virus-
    this too shall pass. Maybe we will lose a number of our super older people, probably not. I’m just being cautious and moving through my life. Since neither of us have to go out- we don’t…but that is nothing new.
    We shall be fine in the end.

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    • Janette, I just adore your attitude.
      As to the NY Farmers, they are really suffering here. The tariffs hit them very hard. Two have just recently gone up at auction and that is not a good thing. Back in The Hamptons, the farmers would sell a few acres per year to developers in order to pay their taxes. Here in upstate NY its a bit different.
      I swear by CDs also. Each day the feds lower the interest rates, I am thankful all the more for my long term CDs.
      I haven’t sold anything yet so learned my lessons about stock market losses. I don’t need this money yet. Probably not for another 2 to 5 years so I can wait it out.
      I didn’t know that about Bloomberg. I know the stock market is controlled by computers but I didn’t know the depth of it.
      As for the virus, Nick and I are staying home on our 3.5 acres, which is great BUT we’re such active people, its going to be difficult not to be able to go anywhere nor talk to people nor socialize. I have a whole list of things to do or day trips to take…….as you say….maybe this too will pass.
      As always, thanks for your wisdom and your comments. I appreciate them.

      Like

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