Everybody wants answers today...
They want to know when the spread of infections will subside... when our economy will reopen... and what to do with their money.
I don't have all the answers. But in times like these, I don't spend too much of my time worrying about it. That's because I keep a portion of my portfolio in "chaos hedges"... assets that protect your wealth during times of fear and panic.
For years, I've told subscribers that while cash and stocks should make up the majority of your portfolio, you should also have smaller allocations for fixed income and chaos hedges like gold and silver.
And that's why I want you to keep an eye on your inbox next Monday morning for a special invite...
On Monday, at 9:30 a.m. Eastern time, gold-investing legend John Doody will be speaking to our subscribers for the first time this year.
He's going to answer readers' most pressing questions, talk about the recent surge in gold, and detail his outlook for the year.
We'll send all the viewing details you'll need around 8:00 a.m. Eastern time on Monday, straight to your inbox with the subject line "Gold Rally Kickoff Call."
Now, onto this week's Q&A...
Q: I really enjoy reading your newsletters! As for my question, does the COVID-19 stimulus bill lift any of the penalties for an early withdraw of a traditional 401K account? – C.C.
A: The Coronavirus Aid, Relief, and Economic Security ("CARES") Act made a few changes to 401(k) withdrawals.
Under normal circumstances, if you withdraw money from your 401(k) before you're 59 and a half, you'd face a 10% penalty and a 20% tax withholding. But, for coronavirus-related distributions, the CARES Act eliminates the 10% penalty and the 20% tax withholding. You'll still owe taxes but instead of having to pay them all in 2020, you can spread the amount out over three years.
The CARES Act also increases the 401(k) loan limit from $50,000 to $100,000, but you only have 180 days from the day the Act passed (on March 27) to take out the loan. The increase is optional for employers to offer, so check with your plan to see if it's available.
Q: I live in rural Wyoming. There is no one closer than half a mile to me when I go hiking, if we have a national shutdown, there is no reason for me to stop my hiking is there? – G.M.
A: If you're able, go outside and get some sunshine. Remember to stay away from others if you are older and obese (viruses hit these folks harder). Walking is a good exercise because it not only gets your blood moving, but the sunshine will stimulate vitamin D production, which helps prevent feelings of depression and boosts immunity.
Go out in your garden. Now's a great time to work in the garden, so if you can, get to work.
But as I mentioned last week... If you're going to a park or for a walk around the neighborhood, you don't need a mask unless you could come in contact with other folks (like at a busy walking trail). From what we've seen, most people are fine moving out of the way to maintain that social distance. But take a mask just in case you run into some coughing, obviously sick person who won't give you your space. And if they sneeze, run for the hills.
Q: How are the tests that are COVID-19 positive when the patient has no symptoms different than false positives? I have [a] friend who tested positive without symptoms yet three weeks later his wife and other people, including me, who had contact with him didn't get the coronavirus. – W.M.
A: This is a two-part question. First, we have to understand that the COVID-19 tests (and nearly all tests) do have false positives. And with the variety of tests rolling out, we don't know how high that number is just yet. And just to review, a false positive is when the person doesn't have the disease, but the test says they do.
More troubling, there's been a test from Abbot Laboratories' rapid testing kit that showed a 15% false negative result – in other words, people who had the virus, were told they didn't have it when they did. That's far more dangerous. That means people could think they are safe to go see mom and dad, but instead they're bringing the bug right to them.
In fact, Matt Weinschenk and I covered the false positive/false negative problem in this week's COVID-19 briefing. You can watch it right here.
Second, and more to your story, many people with COVID-19 have few or no symptoms – about 80% of all cases. So, it's quite possible to have it and not realize it. Most folks have such mild symptoms like a scratchy throat and a light cough that they think it's a cold or even just seasonal allergies. Without testing you, I'd guess you probably fit into this same category... you were exposed, got it, but had no symptoms that worried you in any way. If we tested you, I'd expect a positive test just like your friend.
And of course, there's always the slight possibility your friend was one of those false positives.
To review... For most folks the virus is mild: You can test positive with or without symptoms. A few of those who test positive are people who don't actually have the virus – the FALSE POSITIVES (and likely among those who have no symptoms because they don't actually have it). Similarly, there are a few folks who actually have the virus (and might not have symptoms) but test negative... the FALSE NEGATIVES.
If you are exposed to someone who tested positive, monitor your symptoms and stay home as much as possible; at the very least away from those at risk from dying prematurely like those over 60 and anyone with an underlying condition like diabetes, asthma, heart disease, or any immune-system illness. Remember, exposure doesn't always mean you'll get the virus. COVID-19 is contagious, but with proper precautions like handwashing and a mask, you'll cut your risk of exposure.
Keeps your questions, suggestions, and comments coming our way... [email protected].
What We're Reading...
- A breakdown of false positives and false negatives.
- Did you miss it? The debt bubble that's about to pop.
- Something different: If you have an iPhone, watch out for this hacking risk.
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig and the Health & Wealth Bulletin Research Team
April 24, 2020