Coronavirus Journal Day 24 – how am I HODLing up?

Hi RIP readers,

This is a journal-like post on how I am doing just 24 days after having drown a “bulletproof” plan for our future, which have been “signed off” by our family on the market peak day of February 19th 2020.

Stock Market Overview

Something has changed.

I already documented how I felt nine days later, on February 28th 2020.

Something has changed again, for worse.

We don’t see the light at the end of the tunnel, but we’also confident that THERE IS light at the end of the tunnel. Like Morgan Housel recently wrote, it’s ok to be both scared and optimistic.

This is a flow of consciousness post, I’d like to publish unedited, as it is. The quality of writing will be inferior – not that I’m a proficient English writer anyway – and it will be hard to keep the post structured – not that I’m good at it anyway.

Today it’s Saturday March 14th, 2020.

It’s tough guys…

If you’ve been hiding in a cave (or in a Covid-19 induced digital quarantine) this is more or less what happened:

I took the screenshots on Thursday March 12th. The market bounced a bit on Friday, but I’m too lazy to take more screenshots.

VT is a World ACWI IMI fund that tracks more or less the entire world.

To put things in perspective, in three weeks the world economy is back at May 2014 level.

Well, I actually have a screenshot of VT touching 59.94 in the extended-hours session of Thursday March 12th. Same level of March 2014. And ok, VT share price is not “the world economy”, but I love dramas.

Still don’t get it?

That’s Thursday March 12th overview of the S&P 500 index

Want to pick another day? Help yourself!

Yeah but the great financial crisis…

Shut up!

source: reddit – ok, the great financial crisis was tough. A log descent into darkness that I didn’t witness at all. I was a GameCompany Employee and had no mortgage or loan. For me, it didn’t exist. This one instead is fast, is real, and we see no way out yet.

I was doing more or less ok until Tuesday March 10th, third and last dead cat bounce since the beginning of the fastest descent into bear market ever.

I was holding up both financially, and emotionally.

What about the virus?

The Virus

We’re Italians, and we know what’s happening in our country. We’re a bit puzzled that other countries are not taking very aggressive measures. The level of astonishment grew exponentially over the last week.

On Sunday March 8th we had planned a brunch out with Mr VCF (very close friend) family and another couple of friends. Mrs. VCF switched from “I don’t care about the Virus” to “WE MUST ALL PANIC” on the previous day, so we skipped the outside brunch and proposed “let’s do it at our place!”. We all purchased food and stuff, and had good time together. But it was also weird. We avoided personal contact, and every minor coughing episode generated panic among the crowd.

At the end of the day I was a bit judgmental of Mrs VCF overreaction to the situation: “Cmon, there are few cases in Switzerland, we should not let fear drive our behavior!

Four days later, I find myself complaining with anyone who do not care about spreading the virus! “Look at those runners, why the hell don’t they keep a 2 meters distance? No, go away! Do not shake my hands!

I switched my mind over in a matter of hours.

And now I think we should all #staythefuckhome.

I clapped at latest MrMoneyMustache post a week ago, now I think his reasoning is dangerous and naive.

I think we underestimate the problem, and now we must overreact. Quickly.

It’s like the climate change problem, on a much smaller time scale.

On Friday March 13th the Federal Council took some measures, but they’re still too vague and not restrictive enough. We’re waiting for Cantonal Councils to take more actions.

I don’t think the virus would do me and my immediate family much harm. But we’re playing with thought experiments these days, and we don’t like the questions we’re leaving unanswered:

  • What if I get the virus and Mrs and Baby don’t? How should we interact? What if both of us get the virus, and become very sick but not hospitalized? How would we handle Baby RIP?
  • How to do grocery shopping if we’re both sick? Will there be fight over the shelves at the local supermarket? Do we have enough supplies to survive X days? Is it worth buying some non-perishable items now that life still resembles “normality” in Switzerland?
  • What if one (or more) of our parents/relatives get sick, and goes in intensive care? Would we go there? What if someone dies and we’re here?

My chess player brain can’t help but go deep with second/third order consequences, reaching topics like Health Care system and insurances, worldwide economic halt, public order crisis, energy and clean water.

In a word: prepping.

Now that I see it, I’d rather die as a hero than survive a week on this food!

All of this because an asshole ate a bat.

No Panic

In this scenario, paradoxically, I’m not scared much by the stock market.

Really? Aren’t you scared, RIP?

Are you joking?

Guys, this is what we were preparing since forever!

This is the confirmation that “optimizing your ETFs TER” is very very low (but still important) in your risk management chain! That the psychology of investing is what determines your financial success.

Quoting Morgan Housel again:

The majority of your lifetime investment returns will be determined by decisions that take place during a small minority of the time.

This is one of those times.

(Btw, yesterday I discovered that Morgan Housel is publishing a book on this subject. I can’t wait!)

We were preparing for this since forever.

We ran simulation, followed “4% studies”, and SWR series on Big ERN blog because we were preparing for such scenario!

What a normal people call “the end of the world”, we call it Thursday.

As J.P. Morgan himself once said:

In bear markets, stocks return to their rightful owners.

People buy high and sell low because they confuse nouns with verbs.

When markets go up, the narrative of wannabe investors is “markets are GOING up”. Nope, they WENT up.

When markets go down, they say that “markets are GOING down”. Nope, they WENT down.

That’s the reason why the average investor buy high (let me jump in, markets are GOING up) and sell low (holy shit, markets are GOING down!).

I was there in dotcom bubble, and the above sentence fit my younger self perfectly. I bought at the top, and sold at the bottom. I’m not doing the same today.

I’m scared as hell – I’m also quitting my job in 2 weeks – but what should I do? Calling shit on years of mental training? No, I’m as much ready as one can be for this moment. I’m also underexposed to stocks since November, which is a bless right now.

What would a dumb investor do now? Sell stocks.

What would a smart investor do now? Buying more!

What would a wise investor do now? Nothing.

I’m not wise/dead yet, thus I’m at least trying to not be dumb. Which means I’m buying more stocks. Given the crash, I’m still less exposed to stocks compared to a month ago even after the ~100k USD I threw at VT during last 3 weeks.

So far, I’m catching a falling knife. And it seems predictable (but it never is) that this is not the bottom. We don’t see room for good news at the moment. Winter is coming, and it will be a long one.

But I’m still buying, almost everyday.

Am I dumb? Maybe.

Am I timing the market? I wouldn’t say so, I’m just accelerating 20k per month DCA as per my December strategy. I’m buying a bit (100-120) of VT stocks at every unit of price decline since price per share crossed 70 USD (it peaked at 83 on Feb 19th, it temporary bottomed below 60 on March 12th).

I still have 115k USD on IB waiting to be invested, and I’d like to invest more while prices are low.

Am I bottom fishing? Well, not exactly. Everyone I know who’s trying to predict the bottom agree that this is not the bottom. I don’t know, I don’t want to be the overconfident guy who plays this game. I’m ok if I can get VT shares at 25% discount from the peak. If I buy a bit every day, I’m sure that I’ll get the bottom and its neighborhood.

For those who want to fish the bottom: there will not be signs saying “hey investors, this is the bottom! We’ll keep prices low for a couple of days. Take your time“. There will be a bottom, then maybe a +5% rebound. And you might say “ouch, that was the bottom… let’s see if tomorrow the markets go down again” and then it goes up again by another 5% and you won’t know when to put your money at work anymore.

To time the market you need to be right twice.

I’m happy I didn’t put all my money back into the market in December 2019, but decided to DCA over the year 2020. Now I see the power of “risk reduction” that DCA offers.

Will I turn this catastrophe into a positive investing experience?

I don’t know. Too many factors at play.

I’m still keeping my stock exposure at 30% of our NW. If I want to be more brave, I should raise it.

But I need cash, I’m quitting my job. I can’t be too aggressive.

It can take years (and it will) to reach Feb 19th market level. And this time it all looks rational to me. There’s an obvious recession coming, this is not a story like “US-China trade war” or “Brexit”. This thing is real, people are losing their jobs, and worldwide supply chain is getting disrupted.

I would love to quote John Maynard Keynes (“markets can remain irrational for longer than I can remain solvent”), but this time the market time-to-recovery is mostly driven by our worldwide ability to handle, contain, and eradicate the disease.

Then of course there will be greed and growth, but we don’t know when.

My personal bet is that it’s going to suck until at least the middle of next summer, assuming the virus pulls back with the warm season.

What else I can foresee is that luck will play a central role on individual financial outcomes, along with psychological skills. We will one day celebrate people who made smart (in hindsight) moves during this time, forgetting about survivorship bias.

Given that the financial outcome is proportional to risk, we’ll celebrate those who purchased the right lottery ticket today. Luckily, overconfidence would sweep most of them out. Do not forget that luck (in the form of unpredictable events) plays a huge role now.

Ok, Panic!

But as i said, on Thursday March 12th, two days ago, I felt at unease.

A strange feeling of carelessness and meaninglessness.

I must say a huge “thank you” to the MP forum community. I’ve been following this incredibly long thread, and sharing the pain with others. It helped me staying the course.

Random thoughts on Thursday:

  • I should have sold everything on Feb 19th… it was OBVIOUS that the virus would have halted world economy!
  • What the hell, I should have followed my intuitions back in November! I should have sold all my stocks, and put everything in bonds for a while. Why didn’t I do that? Next time I’ll go all in on my intuitions!
  • … But that’s another easy way to create biases and blind spots! Overconfidence. Denial. Nope… Keep your mind open all the time!
  • Holy shit, -40k today… I’ve lost more than 100k so far. This is horrible. MAYBE I SHOULD GET OUT.
  • YES, MAYBE I SHOULD. I still have plenty of money, doubling down on the crisis could impact us more than getting out now.
  • But WTF I’m talking about?? This will pass, and I’ll be proud of myself when the dust settles!
  • But it can take years, and how the hell am I going to feed my family?
  • Look at Baby RIP! She’s laughing, we’re spending time together in our park, it’s a sunny day, why am I feeling so bad? Why am I detached from reality? I don’t want to feel like this! Maybe the entire stock game is not for me…
  • WTF am I saying?? This is of course extraordinary! This is not normal. There’s not been a single day with markets staying within [-2%,+2%] range during the last 3 weeks… this is not normal and it’s ok to feel like this.
  • And we are underexposed… I only have 30% in stocks, if I find the guts to raise my stock allocation and deploy the sitting cash we can turn this situation into “lifelong wealth”.

And the cycle repeats, with minor variations.

Self Doubt

On Thursday March 12th, I received many messages and calls.

On one hand, I feel like people acknowledge me as “an expert” in the field, even though they are mostly looking for someone who tells them what to do.

On the other hand, when even the smartest people around me are selling, I feel alone and I question my behaviors.

When Mr WTF contacted me at noon to validate his strategy of getting out of an actively managed Credit Suisse stocks fund which lost 30+% YTD (that didn’t grow by 30% in 2019), I knew that was business as usual.

But when Mr VCF (whose opinion and actions I value a lot) told me he sold 150k of S&P500 to buy back 50k per month over the next 3 months… I started questioning myself.

Am I the only one who doesn’t want to accept that this is going to suck for a long time?

Someone on MP forum is talking about inverse ETFs (or worse, inverse leveraged ETFs), i.e. shorting the market. Am I the only one who thinks that “it’s not guaranteed that this is not the bottom”?

How many blind spots do I have? Am I following religiously a “moderate” approach which is preventing me from earning big money? Should I feel guilty of not being greedy? Or am I plainly stupid because I don’t see that “it’s obvious that a 3x leveraged inverse S&P 500 ETF is the way to go”?

Well, on Thursday the S&P500 lost 10%, which means SPXU gained 29%… it was obvious in hindsight! Am I stupid for not having seen it coming?

No need to go deeper, you got it.

I’m sure 99.99% of people (let’s leave Jim Simons out) has no clue, but they talk with extreme confidence.

StupidiFI reloaded

I spent the entire day self questioning, sharing my pain on the Covid MP forum thread, replying to people asking me what to do, and… it was a sunny day outside. My daughter wanted to play outside. My wife had other things to be scared about, like the actual pandemic.

The disconnection among our perceived realities (finances, health, and play) felt weird on its own.

This is not the early-semi retirement I was dreaming about.

I will leave my company at the end of March in the most un-celebrative way possible. Without a goodbye lunch with colleagues, without a proper free lunch in each cafeteria, and without consuming all my massage points!

Jokes apart, I envisioned the quitting day from the workplace where I’ve been working for 7.5 years as a bit more romantic experience than… nothing!

The office is not closed, but it’s strongly recommended that you stay at home if you don’t have any strong reason to go to work. And I don’t have any valid reason, so… maybe that’s it.

I will start my adventure into the unknown right on the edge of a financial and economic crisis whose size is not known yet. We only know its lower bound.

The bulletproof financial plan had few weak points, all in the range of “Black Swan events”. One of this was “a pandemic with epicenter in the emerging markets area that would halt the economy on the supply side“. And that’s what happened. Bingo!

Maybe the plan will hold, and we won’t need to go back to Ravenna (or Pioltello) before having had enough time to try building something here. Or maybe not. Time will tell.

Am I wiling to get a new job to avoid that? Holy shit guys, I’m not even unemployed yet! But the fear is real.

I envy all the 20s and 30s crowd, with a stable job they at least tolerate, a nice salary, and a small net worth. You should rightfully be excited by the crash. You have nothing to risk and unlimited upward possibilities. Good luck and enjoy!


You know what’s helping me these days? Perspective.

What’s really happened so far?

This was our NW on Feb 19th:

Not bad…

And this is Today (after a nice trading day on Friday March 13th, yesterday):

I see something red

Net Worth: since Feb 19th we’re down 93k EUR (but just at the end of Thursday March 12th, 2 days ago, it was -117k), and that hurts… but YTD we’re just 33k EUR down. It’s 2.86% of our wealth. Of course NW delta includes earnings (actually it includes savings), but that’s ok, earnings are part of my current life. Ok, I won’t have this kind of salary in a month, but maybe I won’t also have this kind of market returns.

Just looking at our portfolio numbers, we’re exactly 100k down from the peak:

Expenses: more details in the 2020 Q1 financial update, but as a spoiler we’re spending below our expectations in both Feb and March (so far). That’s good! Well, you know… we’re not doing much social life these days. The Corona-thing helps us with frugality 😉

Liquidity: we have a lot of cash, in the range of 300k EUR. Excluding some liabilities like 2017/2018/2019/2020 taxes, we’re at 255k EUR. It’s a lot. I want to start the StupidiFI journey with 150k EUR of cash cushion, which means we can put another 105k EUR (120k USD) at work in the stock market while stocks are on sale! Not bad!

Rebalancing capabilities: we have a lot of money invested in bonds, a very prudent approach. I’ll keep investing cash in stocks these days, but if it won’t be enough and the bottom is not near, I’ll sell bonds and buy stocks. And most of our Pillar 3A is not invested yet. Current crisis is not due to a productivity crisis, I don’t think there will be a stagnation after the crash. I assume there will be a recovery, a phase where stocks will go up from the bottom. It may take years to get back at Feb 19th level, but it might take much less to see monthly returns positive again. If I’ll reach the point of “rebalance by selling bonds and buying stocks”, chances to see good returns in the mid term go up.

Gratitude: I’m thankful we are in a civilized part of the world, where even in face of a potential catastrophe the basics of civilization will hold. I’m thankful that if I get the disease, I’m in the best place of the world in terms of odds to get it thru without major consequences. I’m thankful I was able to accumulate enough wealth that we’re not even close to any real financial risk. I’m thankful that I learned how to invest and how to cope with its psychological implications. I’m doing great! I’m thankful that I sold a good chunk of stocks in November, and that I decided to not get back all at once in December.

Knowledge, Wisdom, Self Awareness, and becoming a Better Investor

What doesn’t kill you makes you stronger. I’m learning a lot.

I feel I know much more now, and this knowledge will make me stronger over time. In the pure investing space I’m learning that high yield bonds are very risky. IEML, WING, and even FLOT are performing poorly. You want the bond portion of your portfolio to provide stability, not risk. You don’t want too much correlation among your assets. Ben Felix, where were you when I needed this?

The next sanity check would be at -30%/-40%, according to Michael Batnick:

I thought I was doing good, but yesterday Michael posted this and I’m exactly in the -25/-30% emotional range. Holy shit, thank you Michael for showing us what are next psychological barriers!

Next step would be joining the group 3 in William Bernstein investor classification (thanks to Ben Carlson):

If I can pass that too, I can finally talk to Charlie & Warren.

How much am I worried about a big drop in the value of Berkshire?

Zero. This is the third time Warren and I have seen our holdings in Berkshire Hathaway go down, top tick to bottom tick, by 50%. I think it’s in the nature of long term shareholding of the normal vicissitudes, of worldly outcomes, of markets that the long-term holder has his quoted value of his stocks go down by say 50%. In fact you can argue that if you’re not willing to react with equanimity to a market price decline of 50% two or three times a century you’re not fit to be a common shareholder and you deserve the mediocre result you’re going to get compared to the people who do have the temperament, who can be more philosophical about these market fluctuations.

Charlie Munger, 2009.

Now What?

So… in the end, my financial plan doesn’t change much.

I will keep investing during 2020 but not digging into my hefty desired cash cushion.

If things won’t go ultra south, I’ll simply stick with the plan of putting back the USD liquidity I have on IB (115k left).

If things get worse, maybe I’ll rebalance from bonds.

On the income side, I’ll go to unemployment office later this month, and check with them what are my options.

I don’t have a plan yet, I was supposed to not think about generating income for a year at least. A bear market might challenge this assumption, but I don’t have a plan yet.

On the Switzerland vs Italy side, I won’t look at the Ravenna Threat graph for an year as promised.

Well… let’s just take a peek:

Oh shit, the buffer is shrinking 🙁

Found on the Internet

Before I leave, here are few interesting reads:

  • Nick Maggiulli about Lessons from Coronavirus.
  • Bogleheads forum thread from 2008, while the financial crisis was happening. Study, so the story doesn’t repeat (for you).
  • Michael Batnick about herd behavior, panic, and “you should sell”. It helps to have a friendly voice when you are surrounded by panicking people.
  • Morgan Housel about “corona panic” (part 1, part 2). Several gems, as usual. Liked the part “Now is a good time to start a diary”. This series of posts kind of is.

Last, but not least… if only Glina had posted this few days before!

I spot a pattern here… 🙂

Have a nice weekend guys.


(not shitcoins though)


  1. Hang in there. Personally holding / DCAing as per plan. I would have bigger problems if I would need to sell within the next 5 years – as they say “the world only ends once” 🙂

  2. You’re in the stage of denial now. Take your free money and bail out while you still can salvage something. It is amazing how people without any knowledge were playing “investor” for so long. Following your blog ~6 months. Passive investing, getting paid for being lazy (sorry burnout)… shocking how effeminate Europe have become. Still I am truly impressed you’ve made it this far. Seems you could do even better (escaping earlier?), but you’ve got sucked into this quasi religious FIRE thing. Just check all your March posts – do a new post about how you managed (or not) to catch the falling knives? Sorry for sounding so rude, though. In my mind I was much more polite. Must be the corona.

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