Monthly Update #19 – March

Well, it all kicked-off in March! COVID-19 escalated rapidly from mild concern and “just wash your hands” advice for most just a few weeks ago to “curve-flattening” measures not seen in living memory. Rising death tolls, enforced government lock-downs and rationing in the supermarkets now the norm. With no end in sight and ‘working from home’ a new, semi-permanent reality, it really has been an eventful month! Time then, to see how much punishment was taken in another monthly update.

Pursue FIRE - March 2020

Personal Life – What’s Been Happening?

Well, like everyone else on the planet, my life has been impacted by the growing COVID-19 crisis a crisis that really escalated during March. Ironically, I had the flu in the first few days of the month, or at least I thought it to be the flu at the time. Looking back, it may well have been something else, even potentially Coronavirus. Of course, I have no way of knowing that for sure, but I was wiped out for a good week and it was very different from any prior flu-like illnesses I’ve experienced 🙁

Living with my wife and three children, they too have all had illness over recent weeks, each with different degrees of potential symptoms. What is clear in following the crisis closely, is that symptoms and the extent of those symptoms do vary considerably. Thankfully, we are all in good shape now and the hatches are firmly battered down at home with just occasional outings to source food or a dash of fresh air.

Working From Home

With that has come the en-mass working from home. With my flu spell, I managed an earlier head-start than most at working from home. This began with setting myself up on the kitchen table – a place of relative calm with two of my three children at school all day 😉

However, once it was confirmed that the school was closing I had to make a more permanent shift to a different location in the house in order not to disrupt the kids too much. I think they have been somewhat thrown by my presence every day in an “I’m here but not really’ kind of way. They want to play and engage all day and, while I do my best to join them during breaks, I’ve got quite a challenge to meet in keeping up with the work-load.

At work, I have the benefit of two large monitors which give me ample screen real-estate to be running all sorts of programs at the same time. Trying to replicate that via a 13″ laptop and ‘Citrix-lag’ has certainly been a headwind.

After a few days of frustration, I decided to buy two monitors so that I could replicate (as best as possible) my desk at the office. I’ve taken command of the spare bedroom in our basement and the added tech and dedicated space have been a game-changer. With this limbo potentially lasting a few months or more, it was a wise decision that will (hopefully) keep me in gainful employment.

Blog Posts

Somehow I found the time to be a little more active on the blog during March – nothing to do with working from home of course 😉

Here is a quick recap of the posts in case you missed anything:

  • Monthly Update #18 – February – I kicked off the month with a look back at February including a look at the growing fear in the market (VIX Index) and what was clearly a pre-cursor to more dramatic falls in March.
  • When Markets Wobble, Don’t Look Down – I briefly updated and re-posted this article I wrote just over a year prior, following the dramatic drops markets suffered during the 4th quarter of 2018. It seemed a timely reminder of why a focus on the long-term pays dividends.
  • How to Trade the Opening Set – In amongst the market crisis, I had some escapism in writing the first in a series of tennis in-play trading guides. This one focuses on trading the opening set, the safest place to get started.
  • Playing the Long Game – Having updated ‘When Markets Wobble, Don’t Look Down’, I refreshed data through to the end of February 2020 in taking a pragmatic look at market declines and their impact on longer-term annualised rates of return, even had you invested on the eve of some of the worst periods in recent memory.

Net Worth Snapshot

So, time for the usual numbers…, well I say usual, but the changes from last month will no doubt be anything but 🙁

Here is a snapshot as things stood at the end of March. I break down my current financial assets as at the end of the month and compare these to the previous month (February 2020) and then also relative to 1-year ago (March 2019) to see how I’m doing.

So, all those days watching the market swing violently in either direction (but mostly down) have resulted in this picture above. Let’s cut to the chase and confirm that my total net worth (having reached a record peak of £665,903 last month) was poleaxed by 8.0% for March, cutting that figure down by a mammoth £53,178 to £612,725. Excluding property, that translated into a decline of 9.2% to £332,153.

Of course, market declines were unprecedented in March so the damage was done via exposure to the equity markets in my pension and savings pots. While it is clearly painful to see falls of this magnitude, I’m wise enough (at least for now!) to know that this is no time to panic. I’ve lived through a few market crises (2001-2002 and 2008-2009) to know that I have ample time on my side to ride this out and benefit from the eventual market recovery. Had this happened to me at age 60 I’d be in a slightly different frame of mind!

VIX Update

Last month, I highlighted the VIX Index – a closely watched measure of market sentiment which represents the market’s expectations of 30-day forward-looking volatility. As we saw, the VIX was starting to spike up significantly from its normal levels of around 20 to around the low 40’s. While a concern, we remained far off the levels of prior crises.

The long-term view of the VIX as of 4th March 2020

As we know, March really saw an acceleration in market volatility. Here is how the VIX evolved over the month. You can see that the VIX recorded its highest-ever readings at 85. That really hammers home that we are in unprecedented times. It has eased back to the mid-50s level and experience tells me it will remain elevated for at least the next several months.

Pursue FIRE - VIX
The near-term view of the VIX – the recent peak surpassed all prior crisis events (chart as of 1st April)

So, there is no other way to say it other than March was a proper shit show! Markets worldwide tumbled almost vertically. In fact, the S&P had its fastest ever correction on record. There was a large rally in the final week of March which helped to soften the blow somewhat, but it was still one of the worst quarters on record for stock market returns!

Fun fact: Never before has the S&P 500 Index hit its low in less than 6 months when it has drawn down 30% or more during a recession. On average, it has taken 11 months to find a low, given the size of this shock.

S&P 500 over the last year. At least a relief rally softened the pain in March, but still one of the worst quarterly returns on record!

So how did this impact me personally? My pension pot, having dropped 5.7% (or £18,700) in February, tanked a further 9.1% in value (or £28,008) in March. This masks the true decline somewhat as my firm delivered an additional pension-top up of £7.5k mid-month over and above the standard monthly contribution my employer pays in. I also decided to increase my personal monthly contribution to my pension plan by a hefty 60% going forward.

Naturally, my other investments also collectively got side-swiped by 4.6% – a drop of £2,058. As with the pension, additional funds were added to my pot (£3k in this instance) after the markets had fallen a decent amount, so the actual decline in performance-terms was greater.

So how does this impact the longer-term picture? Compared to a year prior, my total net worth still stands higher, albeit at a much lower rate of change, at just 8.4% higher (+£47,582) and, excluding property, that’s an overall decline of -0.5% (-£1,713). Damage is done.. no doubt about it, but I’m playing the long-game here. I’ve not sold a penny in this downturn and don’t intend too. Things, as always, will recover over time.

Other Updates

Betting & Trading

Sports betting or trading of any kind was severely restricted to the early part of March and was pretty fleeting, to be honest. I managed to have a good week trading the WTA tournament in Lyon, with Australian Open champion Sofia Kenin, running out the eventual winner in what was a great tournament for trading. With no ATP events on that week, liquidity was especially high across this and the other tournament I traded WTA Monterrey (Mexico).

Off the back of that positive week, things were all set and primed for the biggest tournament of the year (outside the grand slams)Indian Wells, sometimes referred to as the 5th Slam. However, shortly before it was due to begin, organisers pulled the plug due to (at that time) a handful of COVID-19 cases in California.

It then did not take long for subsequent tournaments to be canceled in the weeks that followed, and then a blanket ban on all WTA and ATP tennis. As it stands, there will be no tennis until June at the earliest, although even that now looks unlikely. Crazy times!

So crazy that the French Open is now being penciled in to be played in October just one week before the U.S. Open! I really can’t see that happening. Wimbledon is likely to be axed this year and so 2020 is rapidly becoming a bit of a write-off for competitive tennis.

I wonder what the players’ motivations will be in the absence of slams and still heightened concerns over travel and social distancing. Many may just opt to coast for the remainder of 2020 and set themselves up for next season. We will see.

Elsewhere I chose a particularly bad time to get started on Football Index, but surprisingly I’ve managed to grow my portfolio despite the absence of any football matches. It seems media dividends on certain players I hold are doing a nice job at tiding things over until the real action resumes. Thanks to Weenie for the introduction to this fun way of combining football and investing!

In-Play Trading Guide

So, in the absence of any real activity, I took the time to write up the first of a few guides outlining how to trade tennis in-play. The first of these focuses on trading the opening set, easily the safest place to get your feet wet in tennis trading.

Pursue FIRE Tennis Trading
The first of the series can be found here 🙂

It was nice having the time to write this up as its been on my list to do so for a while. Like everything right now, my timing was impeccable – launching an in-play trading guide just as all tennis was suspended for a few months 😉

Still, I’m hoping it remains of some use to anyone interested in the interim. Once the action resumes I’ll complement this series with some video in-play examples as well as complete the ‘set’ (boom…boom) with guides on 2nd and 3rd set trading.

Aside from tennis, I was all geared up to test an exciting horse-racing bot via a fellow FIRE blogging friend of mine. We got started with a sizeable pot of shared cash but were immediately restricted within a day so sadly so it never really got the chance to get going. It may not have mattered anyway as horse racing (in the U.K. at least) was also suspended during March for the foreseeable future.

Final Thoughts

Well, I’ll finish there. I hope everyone is holding up okay in what has been a brutal March on several fronts. People are rightly concerned about their investments, but that all really pales in comparison to the health and wellbeing of those we care for and the broader population.

Sadly, I now know of at least one person in my extended family who is currently fighting a confirmed case of the virus. While I’m sure many more of us will get the virus at some point in the coming months, I truly hope that it’s moderate in nature and not the severity that requires hospital treatment.

Like many other countries around the world, it is the pace of cases requiring hospital treatment and ventilators that is the most pressing issue in the near-term. It is sad and worrying to see nearby nations such as Italy and Spain suffer an alarming number of daily deaths and to think the U.K. is still many weeks away from peaking. So, wherever you are in the world, stay strong, stay indoors and stay safe! Let’s hope for an improving picture as the weeks unfold.

Until next time

Dan

This Post Has 2 Comments

  1. weenie

    Hey Dan

    Good to hear that you and the family are fully recovered – who knows (without a test) whether you all had it or not!

    Your work set up sounds sweet – I’m on the dining room table, so have to pack everything away every day but it’s what I would do anyway at work with our clear desk policy.

    Wimbledon has been axed and my tickets refunded. However, I will have the opportunity to purchase the same tickets next year – something to look forward to!
    Thanks for the tennis trading guides – bookmarked to read when things are back to normal.

    And yes, Football Index is providing a small welcome distraction in the absence of football, glad to hear you are enjoying it!

    I’ve written off April – as you say, we’re still weeks away from the peak so lock down will continue. Except that the masses seem to think they are being ‘imprisoned’ in their homes – enforcement is likely to become tougher on those who breach the rules.

    Anyway, stay safe!

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Hello and welcome to Pursue FIRE. My name is Dan and I am the owner and author of all content on this site. I am passionate about personal finance and look forward to engaging with you.
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‘Billion Dollar Whale’ is an incredible book, which they actually tried to ban publishing in Britain. It examines the incredible tale of how one man swindled over $5bn with the aid of Goldman Sachs in what has been described as the “heist of the century”. Gobsmacking how this sort of thing continues to happen.