Coping with Coronavirus Crisis


Since March 24, 2020 Collin County, Texas has officially implemented its seven-day shelter-in-place law. Even before this order, residents in North Texas have been coping with the crisis that has drastically changed their lives.

Historically significant news and data used to come in once in a while now have come in almost daily since the end of last February, causing global financial markets to swing up and down wildly. And the word “unprecedented” has been used many, many times to describe the simultaneous global health crisis and financial crisis.

The speed of interest rates dropping was unprecedented. “Unprecedented” is this time that investors flight to cash abandoning stocks and safe haven assets like US treasuries at the same time. The number of Americans filing for unemployment benefits skyrocketed to a record–breaking 3.283 million for the week ended March 21. Consensus expectations were for 1.64 million claims. The previous record was 695,000 claims filed the week ended October 2, 1982. We are indeed living in an unprecedented time.

Amid this historical backdrop the central banks, especially the Fed, had adopted extraordinary measures to fight the financial fallout caused by this health crisis. And the Congress had just passed an unprecedented 2.2 trillion rescue/stimulus bill to relive financial burdens off Americans’ shoulders.

Based on a report by the Wall Street Journal, the bill will provide one-time checks of $1,200 to Americans with adjusted gross income up to $75,000 for individuals and $150,000 for married couples. Individuals and couples are eligible for an additional $500 per child. The one-time payment will be reduced by $5 for each $100 of income over those thresholds, completely phasing out for individuals whose incomes exceed $99,000, $146,500 for head of households with one child, and $198,000 for joint filers who don’t have children.

If you have recently filed tax return and the IRS has your refund account information on file, you can expect the direct payment into your refund account as early as in three weeks. It will take much longer to receive the payments by checks. The income figures above are based on the adjusted gross income from the 2019 return, or if that return hasn’t been filed, the 2018 return, said Jeff Levine of and Buckingham Wealth.

According to the bill it expands unemployment insurance to cover freelance and gig workers. The current unemployment assistance will be increased by $600 a week for four months.

The bill also includes $350 billion in loans to small businesses that can be used to cover payroll expenses, rent, and interest on mortgage obligations.

The IRS has also taken some steps to relieve Americans’ tax burden. It has officially postponed the deadline for filing income tax returns of year 2019 by 90 days. The new deadline will be July 15, 2020. “All taxpayers and businesses will have this additional time to file and make payments without interest or penalties,” said Treasury Secretary Steven Mnuchin in a recent tweet.

In an article written by Ben Werschkul for Yahoo! Finance, the IRS announced that it “will generally not start new field, office and correspondence examinations” during this period (April 1-July 15). The agency also announced that field collection activities will be suspended from April 1 to July 15. Liens and levies will be suspended during this period, too. However, the IRS underlined “field revenue officers will continue to pursue high-income non-filers”.

As this crisis rages on, there has already been some debate of whether the eventual recovery will be V shaped or U shaped. Given the unique nature of this economic crisis, whether the recovery will be V shaped or U shaped will largely depend on the progress of the medical research on effective treatment/vaccine against coronavirus. If the medical breakthrough comes earlier we may see a V shaped recovery. If not, we may see a U shaped recovery. Another interesting point made by Robert Rodriguez, former CEO of First Pacific Advisors in a latest interview by ThinkAdvisor pointing to a stock market rebound in the shape of a “lower-case “v”, not a rocket ship capital “V” — because of factors such as stock buybacks by companies benefiting from the fiscal stimulus will be banned.

Others like Jeremy Siegel, professor of finance at Wharton School of Business echoed a call by some financial professionals of rethinking the traditional “gold stand” of “60/40” portfolio strategy. Last Wednesday during a market update webcast sponsored by WisdomTree Asset Management he argued for the “need to pivot to a 75/25” portfolio strategy from the traditional 60/40 strategy “because interest rates are going to stay lower.” His point is based on historical real return index data from January 1802 through December 2019 showing that the real return from stocks was 6.8%, 3.5% for bonds, 2.6% for bills, 0.6% for gold and -1.4% for the dollar.

As with crisis in the past, there are opportunities for investors amid the market rout. For one, with the recent market sell-off, you may have a smaller tax bill if you convert your traditional IRA assets into Roth IRA. However, you need to consult your financial advisor before the conversion as the move is non-reversible and potentially complicated. For another, there are some solid companies priced attractively after the recent broad-market sell-off. But, I agree with what Peter Mallouk, president and CEO of Creative Planning said in another ThinkAdvisor interview that some of the worst things investors could do include getting into an industry that doesn’t recover, like energy, or betting on a company that can’t recover.

In the meantime, how do we as individuals go about our daily lives? I would like to share my personal experience of living through the coronavirus crisis.

I try as much as I can to keep my family’s pre-crisis routine . While staying at home, resist making too many trips to the pantry, though it is easier said than done. I make sure everybody in the family stay healthy by taking multivitamin supplements besides eating healthy meals, exercising at least 30 minutes daily and sunbathing for 15 minutes whenever the sun comes out. I sip water throughout my waking time almost daily. Since we do not need to commute to school or work, it is easier for us to get plenty of sleep everyday, another boost for our immune systems. To beat the feeling of isolation we get in touch with our friends as much as possible. We also spray letters and packages with disinfecting spray and wash our hands thoroughly after handling.

As a parent I would like to point out that now is an opportunity to teach our kids life lessons and build characters such as resilience and patience. It is also an opportunity to show solidarity among our neighbors and communities. If we are unable to volunteer, we can donate to local charities such as North Texas Food Banks. For those of us who have pets, we will have more time spent with them. Maybe, half an hour of dedicated play with our pets will strengthen our bonds. If your dog likes being touched, a little massage would be nice, too.   

Last, I want to say that generations of human beings have gone through and prevailed over wars, pandemics and financial crisis. Scientists worldwide are racing towards creating vaccines against coronavirus. If history can be of any indication I am confident that we will pull out of this twin crisis, too. Most importantly, we will have gained invaluable lessons and be better prepared for the future.