Above: Our economic health has taken a beating under the coronavirus onslaught. The challege now: recovery.
BY STEVE DINNEN
Hats off to shareholders of Heartland Express Inc., the North Liberty-based trucking firm. When the whole pandemic mess rolled through Wall Street, Heartland shares sagged a mere 27% from their year-to-date high. Contrast that to Winnebago Industries, down 73%, or Lee Enterprises, off 76%, or Meredith Corp., which gave up 67%. All those stocks have recovered somewhat from those lows, but there’s not a single company in Iowa that has escaped the carnage wrought by investor fears over what this COVID-19 means to the economy.
So now what? Now that the share prices are down, what is your next course of action?
At this point you have several options:
- Do nothing. Just sit on your stocks and bonds and mutual funds and ETFs and await better days ahead.
- Liquidate. If you think the situation will deteriorate further, you can sell off your holdings and go all cash, and await better days.
- Speculate. If you bought Boeing Co. stock on March 13 for $170 a share, you probably weren’t happy to see it fall 45% in just one week. Yet one week later it rose 70%, to $162.
- Dollar cost average. While we tend to think of this investing method as a way to average out the cost basis of a stock that is rising in value over time, it works on the downside as well. Buying 1,000 shares of Principal Financial Group Inc. at its 2020 high of $57.16, and then 1,000 more at its low of $23.31, gives you an average cost of $40.23. That can take some of the sting out of being all in at $57.16.
Still, this is a very dynamic situation, subject to change in the blink of an eye as more news unfolds on the scope of the pandemic, and as Washington reacts with stimulus and bailout plans. Earnings guidance from most companies has been scrubbed for 2020 and even into 2021. Analysts have suspended many of their recommendations, or marked stocks as a hold. They’re looking for glimmers of hope, though. Casey’s General Stores, for instance, could be viewed as a defensive stock.
At some point the pandemic will pass, and the recession it towed behind it will fade. Let’s hope, for the safety of our health and our economy, that day is soon.
So How About You?
How are you handling this market upheaval and instant recession? We’d like to hear your thoughts on what you plan to do to protect your assets during the coming months as the nation deals with the pandemic and the turmoil it has created. And we’d like to hear how you think it might affect you if you’re in your 30s, 40s, 50s, or 60-plus.
Send your thoughts to dsmWealtheditor@bpcdm.com. Include your age group and whether we can use your name if we create a dsmWealth story with these responses.