March 21st, 2020


where to invest

I realize I said you were a jerk to talk about the stock market while people are dying, but on second thought, I have absolutely no control over ANYTHING so thinking about ANYTHING is a welcome distraction to the COVID-19 outbreak.

I was in a lot of reddit groups about investment, personal finance, financial independence - I have left all those groups. people were being stupid, saying oh great this is a time to buy stocks since they're all so low! and when I said no it's not they said "you don't have a crystal ball!" and called me names. OR there were people saying now is a great time to SELL because OMG END OF THE WORLD GET OFF THE BOAT and those people are selling low, and when you look at their post history a lot of them were the types to always predict the next recession - as in, every three months for the past ten years, they've predicted that we're on the brink of the next recession.

I left all the group to ignore all of them.

then I got curious about who's right. what does history really tell us. I found a site that would tell me about all the monthly averages, what were the previous crashes, how long did you have time to buy at the "right price", how long until it recovered? I put them in a spreadsheet.

2011 US Credit Downgrade
August 2011, 11% drop from the previous month.
How long did it take to bottom out? 1 month
How long were we within 5% of that minimum? 4 months
How long until we recovered? 7 months

2008 Housing Bubble
October 2008, 20% drop from the previous month, followed by another 9% drop in september
How long did it take to bottom out? 4-5 months
How long were we within 5% of that minimum? The ultra low point was March 2009, whent he market was 43% below where it was the previous year, but then it really started bouncing back. There were a good 6 months decreases leading up to that.
How long until we recovered back to where we were? S&P 500 didn't get back above 1200 for two whole years... 26 months.

2001 Dotcom crash
9% drop in March (dot com bubble) followed by an
11% drop in September (9/11) followed by another
11% drop in July 2002 (more dotcoms? worldcom scandal? who knows).
How long did it take to bottom out? If you could from March 2001, 23 months!
How long were we at the bottom? 4 months, around the first quarter of 2003
Hog long until we recovered? S&P was around 1300 before the crash. It hit it again in September 2006. Five years.

so here's why I left all my reddit groups. the posts were basically asking...

when do I invest my money? well, the market will take years to recover, so you've got plenty of time to think about it.

is now a great time to buy? no, we are months away from finding the bottom. if you invest in stocks now, rest assured you are throwing your money away.

I have money, where should I invest it?

the stock market will turn your money into a line in a database that slowly rots.

or you could consider... isn't doctors without borders and "investment" right now? with medical facilities already in bad shape around the world, they have the infrastructure to help the people who have nothing.

or direct relief, who's gone straight into disaster-affected communities for decades, who just delivered 800000 N95 masks to chinese healthcare workers?

or the international rescue committee, constantly helping the people who's lives are shattered by crisis, finding the weakest healthcare systems now to offer aid?

I know that money will build a future. maybe not for me personally, but for the world I live in. My future is uncertain now. My company is hurting. Part of me wants every dollar in my emergency savings account. But I also know that right now I am still getting a paycheck - and not everyone can say the same thing. So I am donating. Not much, but I am trying. And I'm ready to help friends. That's what you should do if you have money to invest. Really invest.