In just over a month’s time the federal government has quilted together a complex patchwork of protection for millions of workers and business owners. Here’s just a portion of the growing highlight reel.

Economic Impact Checks: About 150 million checks from the government will be delivered or deposited soon. For those who qualify based on income, you’ll receive $1,200 plus another $500 for each child under 17.

There is a myth that these payments are only an advance or a loan against your tax refund next year. That is false. If you get a payment, it won’t affect your 2020 tax refund at all. However, if you made too much money in 2018 or 2019 to qualify for an immediate payment, but ultimately qualify based on this year’s income, you will receive your payment as a large tax credit next year.

Enhanced Unemployment Benefits: About 30 million people have already filed for unemployment benefits across the country. The filing process has been frustrating for many. However, it’ll be worth the wait as benefits are paid retroactively and they will be bigger than ever before.

To begin, the maximum regular unemployment benefit in Michigan is about $1,500 per month. This part lasts about 10 months. The federal government added on another flat amount of $2,400 per month. This additional part lasts until the end of July. In my view, there is a high likelihood it will be renewed. Importantly, for the first time, self-employed people who didn’t pay into the unemployment system are also entitled to receive benefits.

Paycheck Protection Program: Many millions of smaller businesses have filed to receive loans to help pay their employees over the next two months. Similar to the frustration felt by those filing for unemployment, this program has been equally cumbersome. The first wave of applications quickly depleted the program’s initial funding. Congress recently replenished it. The verdict is still out if it was enough to meet the demand.

If the loan is used for payroll costs and other qualified expenses, it will be fully or partially forgiven. Otherwise, it’ll just turn into a two-year loan at a very low interest rate. Of course, the loan forgiveness rules are confusing. It’s also important to note, to qualify for this loan you must certify that the money was “necessary” to support your business. The word “necessary” is already subject to a heated debate.

As time passes, we’ll no doubt witness the ramifications of this hastily constructed patchwork of financial support. The post-mortem analysis will be both politically and financially brutal. Until then, however, we should be reminded of Roosevelt’s famous quote, “It’s not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better…the credit belongs to the man who is actually in the arena.”

I certainly do not envy the women and men standing in the arena today.

Jason P. Tank, CFA is both the owner of Front Street Wealth Management, a purely fee-only advisory firm and the founder of the Money Series, a non-profit program committed to providing open-access to financial education, for all. Contact him at (231) 947-3775, by email at Jason@FrontStreet.com and at www.FrontStreet.com

Like prisoners etching their time served on their cell wall, my family has chosen our kitchen door jam to mark our social distancing efforts. Six weeks is approaching in just a couple of days. I must say, my long-held belief that April has only 30 days is faltering. 

While I’m not an expert on the medical hurdles we’ll need to clear to safely “reopen” the economy, indications are that we’re still many weeks out. It may happen sooner, as a matter of choice, but it won’t necessarily mean we’ve satisfied the safety criteria. Regardless, it’s becoming clear to me our reopening will only feel moderately different than today. In fact, I’m expecting it to resemble a swinging door. 

Unless you’ve successfully adopted the behavior of an ostrich by quickly stuffing your unopened March investment statements in a drawer, the stock market’s huge rebound might be a perfect moment to take a fresh look at your portfolio. Bear markets often provide investors a few short windows of opportunity to make long-neglected adjustments. Let your concern about your financial condition during the heart of last month’s decline be your guide to making possible changes now.  

Financial markets have absorbed this Black Swan event with lightning speed. The market’s reaction has matched the trillions of dollars thrown out as a lifeline to businesses, households and investors. Right or wrong, policymakers’ vast power to save our financial system is seemingly unquestioned. However, the durability and sufficiency of these actions still remains an open question.

The unprecedented government support is likely not enough. Their solution has been a messy patchwork of enhanced unemployment benefits, forgivable loans to small businesses, cheap loans to larger businesses and small “stimulus” checks to millions of households. The money is just now arriving. Clearly, distributing vast sums of money is tough work. In a crisis, it never feels fast enough. The next phases of financial support that I expect to see in the months ahead will go much more smoothly. The templates of the various programs are being battle tested today. 

With their programs, Congress and the Fed have helped to fill the immediate income and funding gaps at all levels. Nonetheless, they’ve realistically only bought the economy about two-to-four months of time. As we continue to grapple with the ongoing public health policy responses, we should expect negative follow-on impacts to the financial picture of hospitals, schools, municipalities and states. I anticipate a trifecta of program extensions, expansions and tweaks in the months ahead.

For a glimpse of our likely future, we should look to Singapore, Japan and South Korea. These countries have been held up as success stories for their ability to squelch their outbreaks. Now, after sustained periods of containment driven by advanced testing, tracking and tracing tools, each has reinitiated or extended their orders for their citizenry to isolate. Given this, even after we choose to reopen, we need to be aware of the swinging door. Otherwise, it just might hit us in the face.

Jason P. Tank, CFA is both the owner of Front Street Wealth Management, a purely fee-only advisory firm and the founder of the Money Series, a non-profit program committed to providing open-access to financial education, for all. Contact him at (231) 947-3775, by email at Jason@FrontStreet.com and at www.FrontStreet.com

Today’s column is written on trading Day 31 of my internal market timeline that started with the all-time high set in mid-February. A lot has happened in the past two weeks since my last column. It feels longer ago to me. Time is not moving at its normal pace.

It appears the economic impact created by the virus, and the lockdown, will last longer than just a couple months. I expect the recovery will be slow and bumpy. It will likely move from a red light, to a yellow light and then, eventually, to green. And, along the way, we should all expect confusing signal changes. The timing and shape of the economic recovery will be driven entirely by the virus. Given this, the pace and progress will no doubt be frustrating.

We all know how this movie will end. Ironically, that doesn’t make it any less suspenseful. Before a vaccine arrives – which experts continue to project won’t happen for at least a year – our collective efforts to slow the spread of the virus is our only moral choice. Naturally, left in the wake is the economy. The opening salvo to mitigate the economic fallout came in the form of the $2.2 trillion CARES Act signed into law one week ago.

The CARES Act’s main goal is to replace lost income for households and businesses during the lengthy lockdown. It is my view that even more financial support will be needed as we will experience only a slow ramp back to “normal.” This legislation was designed to only help cover lost income until around July. The recovery from a deeper and longer economic hole will require more. If I’m right about the slow pace of things to come, this will become more obvious on or before the end of May.

According to current models, the loss of life in the US will ramp up over the next month before we slowly roll down the curve. I fully expect this to happen in waves as new hot spots pop up across the country. With this, investor sentiment could grow more negative despite the massive financial aid provided. This sentiment shift has already started after last week’s very sudden sense of investor relief.

For now, I will stick with my view that the broader stock market could ultimately decline about 40% to 50% from the all-time high. From today’s levels, now down about 25% as of trading Day 31 on my internal market timeline, it’s very important to either prepare your mind or prepare your portfolio for a sizable additional decline in stocks.

It bears repeating, the discipline of risk management is my total focus. Sanitizing my words through the false prism of being right versus being wrong in hindsight is unimportant. As we all know, there are much bigger things to worry about. For the record, and for the sake of the economy, I do hope I’m wrong.

Jason P. Tank, CFA is both the owner of Front Street Wealth Management, a purely fee-only advisory firm and the founder of the Money Series, a non-profit program committed to providing open-access to financial education, for all. Contact him at (231) 947-3775, by email at Jason@FrontStreet.com and at www.FrontStreet.com

Let me begin by saying that I’ve never managed investment portfolios through the false prism of being right versus being wrong. Hindsight will always be perfect. To me, it is always about the discipline of risk management. This is especially true during a market crisis. This extraordinary moment in history has my full attention.

Over the last few weeks, I have been assessing and re-assessing the level of risk in my clients’ portfolios. Understandably, my process has tied closely to the news of the spread of the coronavirus and, most importantly, on its impact on our economy.

Remarkably, there have been only 21 trading days since the market high was reached on February 19th.

From Day 1 through Day 7, the stock market had suddenly dropped about 13% off its high. The business news headlines at the time were largely focused on the serious Chinese “supply chain” disruptions experienced by large international companies.

From Day 8 through Day 11, the market went sideways in very violent fashion. The focus over these days had begun to shift from business-related disruptions to the potential seriousness of our own looming public health crisis. It was at this moment that I wrote my first column addressing coronavirus and how investors might handle it. My advice on Day 11 could fairly be described as both conventional and prudent.

From Day 12 through Day 16, the fear of the profound economic impact of the public health measures we might face had begun to firmly set in. The mass cancellations of larger public gatherings began in earnest and the announcements of school closures hit the news. The stock market fell about 18% during this short period, bringing the total market decline to about 27%, as measured by the S&P 500 index of large companies. Smaller public companies who are more domestically focused began to fall even faster.

From Day 17 through Day 21, the forced closure of restaurants and bars, along with the voluntary actions taken by many others has now followed. So, too, has the start of massive employee layoffs. During this current phase, the market’s volatile up-and-down churn has added yet another 3% to the total decline. And, again, smaller company shares have fallen even faster still.

As I write this, the S&P 500 index is down about 29% and smaller company indexes are down about 39% from their all-time highs. The speed of the decline is unprecedented.

On the morning of Day 22, what I feel we know is this. The roiling closure of economic activity that we’ve experienced so far will undoubtedly increase. The fallout for small business owners and employees is profound. The federal government is searching for measures to lessen the blow. At this moment, their proposed solutions are insufficient. Their current inability to more closely match the speed, scope and scale of the economic crisis concerns me.

I am currently assuming the complete market trading timeline for this health crisis will run through Day 100 or early July. Every day now will add both valuable and worthless news to absorb. We are now standing on the edge of just Day 22. Over the next month, we’ll know a lot more. By that time, I feel the vast majority of the market’s losses will be in the books. I’m looking through the chaos to around trading Day 50 or so.

It is my current view the stock market has more room to fall. With the many uncertainties I see, along with the likelihood of worse to come for the economy, my current base case is for a cumulative stock market decline of around 45% to 50%. The decline in particular stocks will not be uniform. Given this, my focus is on how to best position and prepare for the recovery to come. As I wrote on the morning of Day 12, and now again on the morning of Day 22, I am still confident that this too shall pass.

Jason P. Tank, CFA is both the owner of Front Street Wealth Management, a purely fee-only advisory firm and the founder of the Money Series, a non-profit program committed to providing open-access to financial education, for all.