PODCAST BONUS EPISODE: Coronavirus Opportunities

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Paul 0:01

Welcome to your business, your wealth, where your host, Paul Adams and Corey Shepherd teach founders and entrepreneurs how to build wealth beyond their business balance sheets.

Hello, welcome to your business, your wealth. We’re coming to you with another one of these short episodes on a specific topic make it easy for you to share with other people. And it’s just super topical. This is right top of mind for a lot of people right now and we’re going to talk about how the coronavirus is infecting people’s brains. Now, what we’re not talking about is like viral penetration through the blood brain barrier like none of that is is about the way it’s affecting the way that we’re thinking and how it can make people ineffective thinkers about money about the future and what’s going on. So, last week, we released a video that really just visited when the market has one of these big corrections for whatever effect causes these big corrections. Well, that that the market recovers. And we’ve seen it time and time again in that video. It’s about 12 minutes long, but I’ll take you through some of the big crashes we’ve had over the last 40 years. So you can see what’s happening right now in context. But that having been said,

Cory 1:40

by the way, can I throw a quick context in there since we’ve recorded that New York Times also dropped another article about the s&p 500 and having the worst day and over in a decade, to which I thought the last decade has been the most amazing decade that the market has experienced. So the bar for having the worst day of that decade is pretty darn low and means very little for

Paul 2:06

so being the shortest guy on an NBA team. And, in fact, and people have even misunderstood that I talked to one of our investors just the other day, and she said, and this is not somebody with a small amount of money, this is somebody millions upon millions of dollars. And she said, Well, the market had it’s like the worst. It’s lower than it was in 2008. And I was like, No, no, it’s the worst single day drop since 2008. But that’s what ends up happening. That’s where we’re gonna start is a little bit about why is the market doing this? And, and the main thing that’s impacting the market is uncertainty. Because what the market attempts to do is price in the uncertainty. But here’s like, because we don’t, you know, we don’t really know infection rates, or at least we haven’t up until now. It’s because where have the major infections and deaths been thus far, China communist regime not releasing information, Iran, complete dictatorship and not real great about freedom of information around their citizens or outside their country, like I wouldn’t trust much coming out of either of those countries. And now that it’s spreading to some developed worlds, we’re actually getting a better sense of infection rates, potential mortality, all that. And as of yesterday morning, about 22 people in the United States has died. Okay, like the tragic loss of life, whether it was 22 people who died in a bus that crashed, and I don’t care if they were all elderly people and already sick with co-morbidities situations. Well,

Cory 3:46

this is still the worst year of their lives so far, exactly. wouldn’t have happened without this virus.

Paul 3:53

So it’s horrible. It’s horrible. But now here’s what I want to have everybody. Consider Is that today as you listen to this on whatever day it is that you happen to listen to this short episode is the most uncertain. We are going to be about the Coronavirus period. And then we’re gonna have a little more certainty the next day and a little more certainty the next a little more certainty The next day, we just slowly close that gap because we’re gathering more and more information. now. I’ll give you a sense of it. I’ve got a little bit of a personal experience because I went nearly down for the count. Like last Tuesday, I started not feeling good Wednesday. I had to start canceling meetings and then I cleared everything off my calendar thursday friday, like Cory had flown out from Chicago we’re supposed to have an all day recording schedule. I’m like, I can’t get out of bed

Cory 4:48

now or I could neither that morning so it worked out. But that was because of my German Beckett’s have a niece and nephew not because of anything else.

Paul 4:56

Yeah. But I mean, and I was like well, I probably have Coronavirus When I’m young, I’m healthy. I’m not, I’m not young. I just sorry. I just realized with all of you, my audience, I think I’m middle aged now. And yeah, I just had that realization while talking to all of you. Okay, so I’m middle aged and healthy. And I’m not in a vulnerable group from you know, any perspective. So in that, I’m like, I’ll probably just be fine. And I was, you know, 22 hours a day in bed and just just totally smoked Sunday. My Saturday my fever start started to spike higher and my wife said, Hey, I think we need to go get you screened for Coronavirus because we don’t we need to know if the whole house needs to be locked down. So okay. But I said really, she’s what we’re going to go down to indigo, which is one of those fast service, you know, clinics where you know, they treat you well, you can make coffee, they’re all modern design and, you know, you get in right away and she saw a service instance. Item

Cory 6:00

health care. Well, that’s right. Yeah. Ever heard

Paul 6:02

of these? I know. So she so we walk we I said to her, I said, Yeah, but they probably don’t even have testing kits. And she says, actually, of course my wife would do this. Actually our re called. And they do. I said, Oh, no, which number one, the first surprise I had is like, all the media is like, oh, there’s

Unknown Speaker 6:16

a shortage on kits, and they

Paul 6:18

can’t get it up. I’m like, this random clinic in this relatively small town that we live in on the outskirts of Seattle is like, Oh, yeah, we got kids, no problem. And so to like a rando that called in. So we go down. And I, you know, I go through the screening procedure, all that and there’s like five risk factors they look for. And I think you have to have at least three to even qualify to have the testing kit and I didn’t even hit those like, my temperature wasn’t high enough. I wasn’t a risk case. I hadn’t traveled internationally, my blood pressure was high enough, like, all the major criteria that you look for, and they’re like, you, you just have a bad flu. And it’s normal. Don’t worry about you’re not a risk. Probably you’ve already Had it like four or five days, you’re gonna be like tomorrow the next day you’re gonna be alright. And so I wasn’t worried about it. We just need to know if we need to put the house on lockdown. But a couple things number one when I first walk in, even though they knew I was coming in get screened for Coronavirus. Do you know how many healthcare professionals had masks on? None. And as soon as I got there, they took out a mask and gave it to me. So I was number one like that was like, Oh, that’s different than what that’s the

Cory 7:24

number one for everyone walking through the airport by an $80 mask and it should cost a quarter. It’s a mask is more useful to keep you from spreading it. There’s so many other ways that the virus gets in like through your eyes and the airborne that in it. This is a great lesson for these. Yeah, right.

Paul 7:45

Your hands what’s your for work? Just audition. Oh, well then that’ll Yeah. So it’s a little bit of background there. So So then we’re, it was kind of nice, like the clinic was busy at all. So we just got a chance to sit there and talk to the doctor. And a few things came up that were super interesting. And I went and later I’m looking at the CDC stats now for this year’s flu season. Now the flu and the Coronavirus are not the same, they transmit a little bit differently, etc. But this is really clear. Number one, the Coronavirus is new. We don’t know about it. That’s why we’re closing the gap on uncertainty all the time. What people don’t think about and what the doctor spoke to us about is like, actually, the flu is pretty darn new every year. Hundreds of millions of dollars are spent every year by companies researching the newest vaccine that’s required for every flu season. Sometimes they get it right. It’s really low flu seasons, sometimes they don’t. And when they don’t, we have many, many more deaths. But here’s the amount of deaths so far this flu season. I’m giving a slightly high estimate from the CDC of the range that they give because these are preliminary numbers as they stand right now. This is through February 29 of 2020. There’s been between I’m just giving you the highest mints because lilies are about 49,000,049 million 49 million people infected 23 million flu medical visits 600,000 flu hospitalizations and over 50,000 deaths since October 1 of 2019.

Cory 9:26

Now, it could be somewhat lower like they’re, you know, there’s a little bit of wiggle room,

Paul 9:30

a little range, but but by the way,

Cory 9:32

that’s like 30 Yeah,

Paul 9:34

that and but but flu season is not over. Right, number one. And number two, let’s just think about that. That’s 3000 deaths a week. 3000 people in this country that we’re living at the beginning of this week could be dead by the end of this week from flu. Something it’s been around for as long as we have like modern recorded history anyway. And we are fun. We’re just fine with it. We’re fine. But it doesn’t matter because what do we have 50% of every new cycle is 100% committed to this Coronavirus. And because it’s 100% committed to the Coronavirus, it has all of our attention. And at least as of yesterday morning, there’s about 22 deaths in the United States, which is really tough. But compared to 3000 people a week, who are moved on to eternity, because of a virus that’s been around that we’re used to. Now, this causes emotional responses. There’s a part of our brain called the amygdala, also known as the lizard brain. It’s considered the most primitive part of our brain, and it’s the one that deals with fight, flight or freeze. And what it does, it causes us to react and we get bad news we think threatens us our future and our family. So when this goes off, we can make decisions that are rash, emotional and unreasonable. Now we’re seeing some of that in the market because just pause for a moment. All of you listening, you’re likely gonna have to be investors for another, you know, 20 3040 years, depending on your age, maybe 60 plus years, depending on how long you’re gonna live, because we have to continue to have money for the rest of our lives. If that’s the case, and you’ve got to have money that long, do we really think that the company’s like the market has gone down a bunch over the last two weeks? Do we think suddenly, that the companies that we owned before are worth 20% less now than they were that like, over our lifetime, they’re going to be worth that much less for the next 20 years? No, I don’t think so. I don’t think when you pause and think about it’s like, well, no, but that’s how people react. And to give a sense of how bad that can be, just think about how many people ran out and about water.

Cory 11:51

Water

Paul 11:53

in the midst of a virus. Now buying water in the midst of a virus doesn’t make a whole lot of sense because Cuz it’s not like the if the person doesn’t show up because they’re sick for work at 8am when they hit the water switch down at the water department, your water still gonna flow. All that stuff is pretty darn well automated now. So for you in your life, it could make sense at what I need to do is prepare for. Like, maybe I get quarantined, I should have a couple weeks worth of food. But to say that what I need is a pallet of water. In a time when I don’t think taps are going off. We don’t have a hurricane. We don’t have tornadoes. We’re not expecting a huge earthquake, but here’s what people are doing. It’s like I’m not prepared for an emergency. So I’m suddenly going to do is prepare for all the emergencies. And I’m going to buy a year’s worth of food and I’m going to buy a bunch of water and toilet paper, toilet, tons of toilet paper, like here in the Seattle area. It’s like stores are running out of time. Toilet paper.

Cory 13:01

Really?

Paul 13:03

Like I don’t know if that means that a whole bunch of this reaction is full of crap or not. But I think it starts to feel that way when people are buying this much toilet paper. So because they’re in and and and that’s our generous response is that people are saying, Oh my gosh, I’m not prepared for a disaster. But you know, people like do you think they’re reflecting going on not prepared for a disaster? No. What they’re doing is they’re just responding emotionally. And there’s an inner wired part of us. And we can go three days without water. And it’s like, something might be missing from my life. I need to buy water, even though it’s the least rational thing to have to spend money on right now. So the same thing happens in markets. Like Cory, you were just talking about that like how people like I’m not prepared for any disaster. I need to prepare for all the kinds of disasters and then about people’s investment strategy.

Cory 14:02

It’s all the it’s all the Americans, which is millions, that really were not in the appropriate place in the market enemy, they were probably chasing rates of return, instead of building a strategy that’s going to move them forward to the future. So this little blip, hasn’t realized, shoot, I’m not ready for this little blip. And in fact, I’m not ready for a host of financial events. I’ve got a panic. And that’s all it is. So if you’re a person who’s got a strategy inside of the market, you’ve got resources, like cash on the sidelines that were supposed to be there and money in the market that’s supposed to be there. There’s probably relatively little that you need to do right now.

Paul 14:43

Unless in here, this is a serious recommendation. If you got an advisor right now that’s not returning your phone calls. If you’ve got somebody that’s not talking about this yet, somebody’s not writing papers about it. If you got somebody it’s not. And by the way, if the people you’re listening to are the ones like oh my gosh, this is the crash I’ve been talking about I’ve been Chicken littling for the last 10 years that it’s all gonna come down. And this is it. Like that’s also something you should seriously question because that’s not the kind of action that people who make serious money in the market do. That’s the kind of action that people make serious money selling books, TV shows, right and or their specific, actively managed strategy say?

Cory 15:27

That’s right, because a broken clocks right twice a day, and at least any person commenting in the market is going to be right, probably once a decade.

Paul 15:35

Well, and by the way, one of the things a lot of those market prognosticators do is they’re wrong, a whole bunch. But when they’re right about a prediction three years ago, what do they do? They say, See this article, you’ll watch it on Twitter, like see this article I wrote five years ago, like I predicted this, I did not predict this. And by the way, given that Today is March 10. There’s another thing that affected the markets yesterday, which is that China or not China. In the Middle East and Russia are having some sort of a member measuring competition with each other about oil prices and not agreeing and they’re both undercutting each other and increasing production make each other angry, and it’s dropping oil prices, which does affect certain stocks. But then people go, oh my gosh, what am I gonna do?

Cory 16:21

I don’t know.

Paul 16:22

drive your car wherever you want. Like, I own a 37 foot Class A RV. I heard the news and I was like Chuck King. Like, I’m gonna go fill my tank. Yeah. So, for all of you listening, yes. Are things uncertain? Yes. Is it going to be a volatile ride? Yes. Except when volatility shows up in the markets. Because of free markets. Here’s what happens fundamentally. The more volatile the market is, the more it is publicly traded companies must produce returns over time for their investors. It’s why when you go back to the other video that we’re gonna link in the description below, and you look at all the past market corrections, some of the highest rates of return we see in the market are after these significant downturns after the crash after the significant correction. And it’s because the public traded companies must reward investors, because if it was super safe, and no problem, then all these companies wouldn’t have individual investors that are expecting high rates of return. They would just go borrow money from the bank right now. 4% like you borrow money on a mortgage. Why do they have to go to the investing public because there’s volatility. And right now what we’re about to see is the biggest wealth transfer that you may ever see this year, this decade. And I’m not talking about the participants in the Democratic National debates. What I’m talking about is the had to Yeah, like we’re just gonna take money from the rich give it to the poor No, what’s happening right now is the free market. taking money from the undisciplined investor and handing it to the disciplined investor. And that’s where we want you to be, whether you’re a client of ours or not, but if you’re a listener of ours, we want you to have built a disciplined portfolio. Have the other parts that are outside of your portfolio, as Corey mentioned earlier, handle this, you know, have sufficient emergency cash appropriately amounts of bills compared to your income, living within your means, like all the things that you should do that are a part of good financial coaching and design, building toward a future that you want not just blindly throwing money into a 401k making sure that all of your investing strategies are aligned not like you have one strategy here. One strategy here in this account, I do some stock spec bring

to you when life surprises you, whether it’s with some market correction, whether it’s Coronavirus, whether it’s a death in the family that you had appropriately planned for because you acquired life insurance, all of that stuff. We can’t anticipate when the bad things gonna happen. But we can build into our plans, harden our mindsets and be in a position of whether something like this without having to encounter the losses, the losses occur when you sell the losses, like for instance, if you held your portfolio through 2008 What are your losses? Like the s&p 500 went down 50% that year from from the very high to the very bottom, not just in from September to December that year from the beginning downturn in 2007 to the end, and you’ll see that in the other video on the market corrections I think the s&p 500 forgetten academically allocated globally diversified portfolio, I think it’s up like hundreds of percent maybe it’s not as much as 500% at its high now to then,

Cory 19:49

like,

Paul 19:52

you’re fine. You’re fine. Unless you took action that screwed you up and Created losses. And all it takes is having your coach bringing the people around you the close friends and family to be disciplined. And then you can be in a position whether something like this stave off the problems in the media with the other video that will link below. So that what you and your family can do is whether this grow your wealth, and put yourselves in a good position of your aims in the future. And as always, we hope this short episode has been a contribution to you being able to design and build a good life.

Transcribed by https://otter.ai

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