The New ‘Normal’

By Judy Loy
Registered Investment Advisor, ChFC® and CEO of Nestlerode & Loy, Inc.

I am having a tough time with this. I wouldn’t think so being an introvert, but it has hit me hard. I still have a job as an ‘essential’ business, I can keep my employees and we are able to work from home other than the need to get mail, deposits, etc.  My laptop with which I work from home died this morning, but our tech guy was able to get it fixed (TekResults, good people). I can count my blessings and I am grateful. I still have a lingering sadness and uneasiness. This brings feelings of guilt because overall I’m one of the lucky ones.

I have been reading articles and uncertainty seems to be a difficult part of this stay-at-home order.  We are used to knowing (to a point) what the weather will be, we can get information on anything with Google and are able to get in touch with anyone wherever they are with our phones. We are now faced with not knowing how long we will be ‘shut-in,’ how bad the virus will get and whether businesses we love will be able to continue. Some of us are faced with uncertainty of where our next paycheck will come from or whether children will be scarred by this. Will college students return to Penn State campus? Will college football return in fall? These are two uncertainties that plague State College, which thrives on these two very large sources of people and revenue for our small town. As of this writing, Gov. Tom Wolf closed K-12 schools for the remainder of the academic school year and the U.S. lost 10% of our workforce in three weeks.

On the plus side, I have heard of plenty of help being offered in these uncertain times. Many real estate owners, particularly in downtown State College, have reduced or eliminated lease payments during this difficult time. Facebook friends offer food and help if you have lost your job and music stars are playing free online concerts from home. Many business leaders, including Bill and Melinda Gates, are funding companies searching for a vaccine. Schools are still providing lunches to those in need. Neighbors are offering to pick up groceries or prescriptions for older or at-risk residents. 

Adding to the discomfort, there are some things you can’t control. The stock market is one of them. Stocks are a leading indicator, which is an economic factor that changes before the rest of the economy begins to go in a particular direction. Leading indicators help market observers and policymakers predict significant changes in the economy. Therefore, the markets will recover before we see a recovery from the virus and in the economy. The stock market is making drastic moves in the short-term based on oil supply news, unemployment numbers and government and Federal Reserve rescue efforts. Volatility is typical of a market bottom. The recovery in stocks over the last two weeks is a nice bounce after a sharp downturn and the consensus is that we will see another test of the lows before this is all over.  While nothing is certain, it looks like the previous bottoms are the low levels in this downturn. 

The government has given some relief in the downturn by permitting investors who must pull their required minimum distributions (RMDs) from their retirement accounts. For 2020, required minimum distributions are waived. Discuss with your accountant and advisor what is the best approach for you for the long-term.

People under age 59 1/2 who are affected by the coronavirus for a broad range of reasons (illness, furloughed, etc.) can pull up to $100,000 from an IRA or retirement plan in 2020 without facing the 10% penalty. The income tax consequences of the withdrawal can be taken over the next three years. I hesitate to mention this during a crisis; sometimes you have to consider bad options. Definitely consult with your advisor or accountant about taking this step as you are stealing from your future. The CARES act also expanded employer retirement plan loan options. 

With any financial decision, take the time to discuss options with an expert before making a choice. It can save you taxes and headaches later. Making rash decisions in the middle of a crisis is never a good idea, so speak to someone who can give an objective outside opinion.  

In closing, I hope you are all staying safe and healthy during this difficult period.   

Nothing contained in this article should be interpreted as a promise or guarantee of earnings or investment results nor a recommendation for the purchase or sale of any security or sector.