Wow, what a month, huh?

The historic bull market that we were in came to an end in one of the most dramatic ways possible: with one of the fastest pullbacks in history. On top of all the craziness with the stock market is the even bigger story of COVID-19 (a.k.a. Coronavirus) and how it has shut down so many economies around the world.

Before we go any further, let me just say I hope everybody out there stays safe. Please be diligent washing your hands, practicing good hygiene, and avoiding any unnecessary trips and/or social gatherings.

I’ve been relatively quiet here recently. Sorry about that. There’s been a couple of reasons. In no particular order:

I’ve been busy. The shutdown of schools and office spaces have left me and my family scrambling (along with many others) coming up with ways to arrange for our kids to still learn at home while staying out of my hair as I try to get work done. Additionally, rumors of lock-downs have led to us doing our best to stock-pile medications, food, and other staples in case extensive self-quarantine is needed at some point.

In addition to helping out with the kids, during my free time I’ve been working to publish some podcasts for Paul vs the Market’s sister site: Rampant Discourse. The hope was to provide some content for people to enjoy while stuck at home. You should check it out, we published 3 podcast episodes and one article last week alone!

Lastly, because I still stand by what I wrote before, think it is absolutely still relevant, and couldn’t think of much to add. As I’ve mentioned before, I don’t believe in trying to time the market and keep the Freedom Portfolio 100% invested in stocks at all times. So if I want to buy something, I need to sell something else first. Also, I try my best to not make knee-jerk trades based on (what I hope are) short term situations.

So despite the incredible volatility in the market and the Freedom Portfolio dropping by about a third from its high around 30 days ago, I haven’t done much at all in the Freedom Portfolio. Since February 21st, the only moves that I made were to close out my position in MongoDB (MDB) and use the proceeds to buy Livongo Health (LVGO), a stock which I had had my eye on since the last check-in and was on my watch-list.

Note: I’m not sure when the official start of this pullback was, but since my birthday was February 21st and that seems close to the peak (and is an easy day to remember for me), I’m choosing that day to measure from.

It’s a shame, too, because the Freedom Portfolio was having a ridiculous first month and a half of 2020. I was already prepping my first quarter recap and was eager to brag about how much I was crushing the market (somewhere close to 20 percentage points). Interestingly enough, even though I find my stocks tends to underperform the market during pullbacks, the Freedom Portfolio has been hanging in there and is still beating the market by around 10 percentage points. Some of it are large positions like Amazon (AMZN), Netflix (NFLX), and JD.com (JD) declining less than the market, but a huge amount of it is from Teladoc (TDOC) not just not declining, but actually being up around 25% since February 21st.

So the Freedom Portfolio has been pretty boring, but that doesn’t mean I haven’t been trying to find other ways to take advantage of what I think is the best opportunity to buy stocks at a discount since the Great Recession. Here are some moves that I’ve made outside of the Freedom Portfolio:

Increased my 401(k) contribution – Just a week or two into this pullback, I put in a request to bump up my 401(k) contribution by a few percentage points. It’s unlikely to make a huge difference, since the additional contributions aren’t a ton of money, but the nice thing is that it should allow me to effectively dollar cost average into the lowered market. In theory, one of those slightly higher 401(k) contributions shouldn’t be much further than 2 weeks away from the market bottom.

Withdrew money from CDs – I wrote previously about certificates of deposit (CDs) and CD laddering. I had some of my emergency funds investing in a ladder of CDs ranging from 12 months to 15 months in lengths with APRs ranging from 2.3% to 2.85%. With the Fed slashing interest rates, new CDs have rates closer to 1.5%, which just didn’t seem worth the hassle. I had one CD maturing in March that I cashed out upon maturity and decided to cash out two other CDs early (paying a slight penalty in terms of forfeiting some earned interest). With the proceeds, I bought some shares of companies outside of the Freedom Portfolio.

• Square (SQ) – Understandably been hammered, since many of their clients are likely the kind of small and mid-sized brick and mortar stores that are going to get hardest by this shut-down, but the Cash App has been on fire and just got approved for a banking license.
• Redfin (RDFN) – Also understandably getting punished, but they just had a back-to-back monster quarters and before this all started they had put a lot of work into virtual house tours and other efforts which should pay off handsomely during this time. I think they pick up market share and emerge stronger from this.
• Roku (ROKU) – What are people stuck inside likely to do when looking for entertainment? How about binge watch some shows they didn’t have time for previously? Video streaming services (and the companies directly related to them) are some of the ones that might actually benefit from this shut down.
• Teleria (TLRA) – See above. Teleria is in the connected TV advertising space and was having a really strong first quarter until COVID-19 hit. I expect them to rebound and then some.
• Livongo Health (LVGO) – A subscription based health-care company that I had my eye on before the recent pullback. It seemed to be holding up pretty well so it seemed like a good candidate for buying some more shares of.

Note: These purchases were made over the past two weeks and many of those positions have already had days where they have gone up or gone down by double digit percentages. None of this was an attempt to call a bottom or time the market. I was merely trying to buy, at a discount, more shares of quality companies that I intend to hold for many years.

Does shifting money from a CD to the stock market introduce more risk to my emergency fund? Without a doubt. This wasn’t a decision that I took lightly. I did my best to make sure that they money invested wasn’t money that I expected to need in the next year or more… even in these uncertain times. As always, my intention is to invest for the long term.