Ask Doc I'm getting agitated...
It's hard to believe that we're eight weeks into the coronavirus crisis and the subsequent lockdowns... but here we are. I'm growing more confident that we'll get clear of this virus, though the economy is another matter.
Once again, I recorded an informal discussion with my senior analyst Matt Weinschenk to look at both sides of the issue, answer readers' questions, and explore the economy in more depth. But as the conversation continues, our viewpoints are getting stronger...
We also cover:
- More questions about the quality of the data
- What happened at a choir practice in Washington state
- The success (or failure) of the Swedish experiment
- The trouble with experts
- How states' reopenings have gone so far
Every week in this saga seems to be different. Though we haven't seen much news in the real world, it's another week of life spent waiting for answers about the future. We'll help with what we can.
You can watch the video and see if we've answered your question, right here.
Now on to this week's Q&A...
Q: Can you send me the name of the site that finds money? – C.B.
A: There are several sites you can use to find unclaimed money in your name... Subscribers have found tens of thousands of dollars in lost money using www.missingmoney.com. But don't limit yourself...
Each year, more than $7 billion in life insurance benefits go unclaimed. That means when the policyholder dies, no one files to collect as a beneficiary.
If you think you might be a beneficiary on a forgotten policy, you can find out. Request a free search through the National Association of Insurance Commissioners. The trade association searches through about 400 insurance providers for records in the name of the deceased.
Since insurance companies eventually must turn over unclaimed property to the state, you should also contact your state's financial office (which may be the comptroller or treasurer). Find out how to contact your state on this website.
Q: My question is about the seasonality of the viruses. If the variances are seasonal, mostly due to temperature is the thought, do viruses migrate like Canadian Geese! What I mean is if is winter in northern hemisphere and the virus has bloomed here has the same virus slowed in the southern hemisphere in its summer?
Also, wouldn't it be possible to study the influence of temperature relatively easy? Take a look for example in hot dry climates such as the Middle East compared to Canada. – A.T.
A: Viruses don't migrate, people do. So anywhere that folks travel – if they carry the virus – they'll spread it. And since many folks with coronavirus ("COVID-19") have few (if any) symptoms, that means it spread everywhere.
Now, some viruses, including common coronaviruses that we see every winter, thrive in colder, drier environments. Coronaviruses have a protective membrane around them (hence, the "corona" in their name). That membrane in most coronaviruses can't stand up to higher temperatures. Note, that's most, not all. So far, we're hopeful that the COVID-19 virus follows this path as well.
Right now, the Southern Hemisphere has few COVID-19 cases... but that could change very soon as they enter their winter season. You can read more on what we said about temperature and COVID-19 in the April 16 issue.
However, temperature is just one factor in how quickly the virus spreads. Behavior plays a big role. And we also know that folks with preexisting chronic illnesses (like COPD and heart disease) are more likely to get severe cases. Matt and I dive into questions like this every week in our COVID-19 Conversation series. You can find all of our recordings right here.
Q: Been with you guys for two years now and love the advice and recommendations.
I have a question about using stops. [In Retirement Millionaire], when you recommend to place a hard stop on a stock of 25%, do you mean to set the stop price at 25% below the purchase price?
Or are you recommending to use a trailing stop of 25%? – D.B.
A: Generally, in Retirement Millionaire, I recommend using a 25% hard stop. Here's why...
Hard stops allow us to let our winners ride. Because we used a hard stop and not a trailing stop – which is a type of stop loss that calculates your stop from the stock's recent high price – we aren't forced to sell because of regular market volatility. Recall that a hard stop is calculated based on your original purchase price of the stock.
Let me show you why we use such wide stops in our long-term Retirement Millionaire portfolio with a former holding: aerospace engineering firm Boeing...
The August 2015 recommendation was a huge winner for us. We sold it this past May for a 151% gain. We earned about 55% a year, which doesn't just happen every day. But if we had used a trailing stop instead of a hard stop, our results would have looked a lot different...
We came within a couple dollars of hitting our hard stop in February 2016 as Boeing shares fell. If we had used a trailing stop, we would have sold for a loss. We would have missed the chance to more than double our money when Boeing shares tore higher in 2017.
Hard stops give our investments some room to play out.
Should we use a 40% hard stop? A 50% stop? A 10% stop? You could make the case for all three. Each has its own advantages and disadvantages. We feel comfortable risking 25% on the downside, and we also feel 25% gives our recommendations some breathing room, so we're not forced to sell too early.
Keep your questions, suggestions, and comments coming our way... [email protected].
What We're Reading...
- The Southern Hemisphere's winter might tighten COVID-19's grip.
- Something different: Why folks are turning to this video game during the pandemic.
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig and the Health & Wealth Bulletin Research Team
May 15, 2020