At the beginning of 2020, we were living in sunny San Diego, California as I finished up my 4th assignment during my Coast Guard career. My team had recently gotten back from a week of exercises up north in Port Hueneme, California amidst the backdrop of the very beginning of the Covid-19 pandemic going into full-swing.
I walked into the Jersey Mike’s near the office for lunch that following week, into a crowded-shopping center, just to run in and grab a sandwich to-go to get back to work. As I came into the store, all the tables and chairs were moved into a corner and stacked on top of one another, inaccessible, and airport dividers were set up delineating the line for the sandwich line. As I asked for a #13, Italian sub, on rosemary bread done up ‘Mike’s way,’ I was berated with, “No mask, no sandwich!” by the young lady working behind the counter. Caught off-guard, I had accidentally forgotten about donning the cloth mask that was in my pocket prior to entering the sandwich shop. Covid-19 was just hitting the news cycle and while I understood the level of fear that existed from this unknown virus, I failed to realize how long-lived it would last. Over a year later is when I would receive my first vaccination, turning the tide for the pandemic. I quickly responded, “Oh, sorry, one second.” as I pulled my mask out of my pocket and donned it over my nose & mouth. “May I please have a #13, Italian, on rosemary bread, ‘Mike’s way,'” followed thereafter. I paid my bill and headed back to work, sandwich in-hand.
Covid-19 practically erased 2020 in terms of any form of normalcy. While we did move from San Diego to Germany in the summer of 2020, it was not without its challenges. I assumed incorrectly how quickly Covid-19 turned from a personal hygiene and medical problem into a political wrecking ball, forcing the hand of governments, both locally and nationally to implement widespread social restrictions around the world – altering life’s landscape for everyone. Call it naïve or pin it on my views on life in general, but I assumed that this thing was going to be a media blaze, to which it was, but that it would fall-off the radar after a few weeks or a month or two. Which directly ties into why I allocated $17,000 into the US stock market from April – June of 2020.
The last time I remember the market tanking as hard as it did in March 2020 was during the 2008 financial crisis. I had just entered the market the year prior, 2007, opening up my Individual Retirement Account (IRA) that allowed me to contribute $4,000 towards retirement. With 2007 as my starting point in investing, I chose some funds (that I can’t even remember now) that had performed well purely based on chart performance leading up to my purchases. The adage, “prior performance is no guarantee of future results” had never come across my mind at the young age of 20-years old. I’d learn what that saying meant the following year as well as the subsequent years until I made the effort to understand why 2008 happened and what I was doing with my money. The funds I purchased into would be decimated 50% in 2008. I never sold those funds until much later, after realizing how much USAA ripped people off with their exorbitantly high expense ratios, so I was able to recover the losses and some. However, if that money was reachable and not penalized on withdrawal, I would more than likely have cashed out and forever held ill-will towards the investment advisors that recommended I opened an IRA account up in the first place.
The mental anguish and stress that came from 20-year old me looking at a $2,000 loss on $4,000 initially invested was pretty high, as that was a large sum of money for me to place into someone else’s control (the markets). Due to equities being decimated in 2008, gold funds skyrocketed. Little did I know at the time, that gold has historically been viewed as a safe-haven when equities are in turmoil. Gold-fund charts were all the craze, so what did I do? I 100% invested into gold funds in the couple of years post-2008.
I am 100% responsible for my own financial decisions, especially due to the limited amount of research or thought I put into those early investing decisions. I went with the limited amount of information I had at the beginning of my investment journey and it took me a few years to understand what I was doing with my excess savings. Needless to say, I’m in a much better and balanced position these days than in my early investing days. I made it a point, through reading, researching, curiosity, and purely wanting to understand why my initial investments were reduced by 50% to both learn about the markets, the underlying risk in investing, and too lastly not allow myself to make the same mistakes in the future.
2020 allowed me to apply those lessons learned when it came to the markets.
After the market tanked in March of 2020, I allocated ~$17,000 into specific US equities that I had confidence in paying off amidst the market turmoil.
Delta Airlines: 173 shares at $23.30 ($4,030) currently valued at $7,859 (95% return)
United Airlines: 112 shares at $27.20 ($3,046) currently valued at $5,798 (90% return)
Tesla: 25 shares at $180.70 ($4,517) currently valued at $18,252 (304% return)
Palantir: 447 shares at $11.49 ($5,136) currently valued at $10,017 (95% return)
Total invested: $16,729
Valued today: $41,926
+150% Percent Return in a 13-months span
S&P 500 Return since March 2020 lows: 86%
The airline plays were purely Covid-19 related and I plan to off-ramp these in the near-term (held at least for a year for the long-term capital gains tax rate vice short-term) but Tesla and Palantir are both longer-term plays for me. When I initially piled into the airlines, a friend said to me that I’d probably be better off investing in other companies, and with hindsight he was correct. I opted to pursue a safer bet and lock-in some guaranteed money, but hindsight is always 20/20 as they say.
In addition to this, we were able to save away enough too maximize our Roth IRA and 401(k) contribution limits for 2020 via pure index funds tracking the overall market and S&P 500.
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I’m not a stock picker genius, I purely found the opportunity too vast to not play on the movements the markets made heading into this pandemic. 90% of my investing is done via boring index funds ($VTSAX) to be exact through my IRA and 401(k). The additional 10% is money that does not have a tax-advantaged account to sit in, so I attempt to beat my index funds via individual equities I purchase in my brokerage account. Once again, to reiterate a lesson I was too late to learn on my initial investing journey: “Prior performance is no guarantee of future results.”
I have complete faith in and follow the Bogleheads philosophy of investing, and I recommend you pursue the same if you’re interested in my investing philosophy these days.
