Hello everybody it's Sam from Financial Samurai. Special episode today, February 28th 2020, because we have just gone through one of the most violent and the fastest correction in the stock market in the history of the stock market. We've corrected by 10% faster than any time in history because we have now seen four back-to-back 3% plus down days thanks to coronavirus fears.

So if you're wondering what I'm doing with my money, well I'm buying. I always buy whenever the market goes down greater than 2% because generally one standard deviation plus or minus one, the market goes up and down about 1% a day. It's like .8% something like that. So when you see a 2% down day or a 3% down day, it's generally a good time to take advantage.

Now the problem with my strategy is that we've seen four 3% plus down days in a row. So my first three purchases are all money losing. But you know what, that's just the way it is. So long as I have some income coming in, I am going to be sticking to my methodology of investing more than normal every 2% plus days.

So when we're seeing 3%, 3.5% and 4% down days, I'm definitely buying. Now I don't know when the selling will stop, but if you look at history, the selling inevitably always stops because something positive happens and then we go back to normal. And these corrections tend to happen almost every year.

So it shouldn't be a surprise we've gone a very, very long way and correcting is healthy. It will be very interesting to see how central banks around the world coordinate their efforts to try to pump liquidity and bring confidence back to the market. A lot of people say, "Well, that's not going to help given this is a virus." But any kind of confidence from the central banks, just mentioning, "Hey, we're ready to pump liquidity into the system," or "We're ready to cut rates," or "Cut rates should help." Very famous investors such as Warren Buffett with billions of dollars in cash from Brookshire Hathaway saying, "I see this as a buying opportunity.

I am going to be looking at opportunities in various industries that should help confidence." Companies that are cash rich like Apple with their $100+ billion saying they're going to be buying should help. So you just never know. Everything is yin-yang in finance, so when things go down, bargain hunters come out of the woodwork.

I am assuming that global central banks and the Federal Reserve and people with cash are looking for opportunities now. You just never know, but I think something positive will happen. Now on the flip side, we can wake up the very next week and we can have clusters of people exposed to the coronavirus in countries we have never heard of before and we just realize, "Oh, it's just never ending." But I think the more we hear about the coronavirus, the more we get used to the coronavirus and the news and the outbreaks and so forth, and it kind of just becomes part of our daily routine.

So I'm hopeful that things will get better by the summer. Now one topic that came to mind is the feeling of futility. The futility of going to work or doing your side hustles to make money when you're losing more in the stock market on a daily basis. And this thought occurred to me because I made a commitment in 2020 to try to make some more money so I can go back to early retirement by end of 2022 to spend more time with my kids.

Specifically, I'm trying to raise $1.5 million more in capital or generate another $6,000 a month in investment income or retirement income to pay for healthcare and inevitable rising education costs, such as preschool. So here I am trying to do some business development on Financial Samurai, trying to see if there are any sponsors, new affiliates and so forth.

And I'm succeeding, but at the same time I'm losing my shirt in my equity investments, which account for about 20% of my net worth and is probably going down as we speak because the markets are melting down. And it's a disconcerting feeling. It's a feeling of futility, like why am I bothering trying hard to make money when my investments are just taking me under?

Now I was thinking perhaps some of you, or maybe many of you, now that you're listening to my voice, are feeling the same way. You know, why bother going to work to try to pay taxes to the government? That's right, it's tax season right now to add insult to injury and try to make money while your investments and your 401k IRA are going down the drain.

So I took to Twitter. I took to Twitter to see if anybody else feels this way and what they're telling themselves and how they're dealing with it to get some inspiration and some thought. So if you're feeling down, maybe some of these takeaways will help. So Christine Price says, "By working, I bring on income that will allow me to invest in the dip." But I think that's a good way to think about it, right?

If you have cash flow coming in and you're disciplined, that's great. You can take advantage of this sell-off. Another guy says, Jared at 30-some says, "I just keep it in perspective. I've lost a lot in the markets for the last few days, but overall I'm still positive. Nothing great ever happens without a little struggle.

Keep calm and carry on." One guy named Shakiru says, "My couple dollars isn't nothing to what billionaires are losing." So that's some interesting perspective because the mega millionaires and the billionaires own most of our country's wealth and they are absolutely getting shellacked. So this wealth disparity that has been widening over the past 10, 20 years, actually probably forever is narrowing as we speak.

So that's good. Elsewhere, Nick M says, "You only lose if you sell." That is true, kind of, although it's really painful to see those paper losses and red, red, red when you see the screen. Dave Menzi says, "Frame of reference, we're still up about 20% since the start of 2019." Well, actually, probably only up like 10% now.

And he says, "How quickly we forget and adapt to our new wealth normal." And I think that's a really interesting perspective because the Dow has lost all of its gains for 2019 already. The S&P 500 is still up, I don't know, 5%, 10% since January 1st, 2019. So we've come a long way since 2019 and we're just kind of going in reverse.

So it's funny how used to the wealth we feel and how bad it feels to lose so much money. You know, there's a lot of studies that says it takes two times as much gains to feel one time amount of loss. So we just basically feel twice as bad losing money than making money, which is why I've talked so much about the number one rule of financial independence, which is to never lose money because once you've got the money, once you've got enough livable income streams and so forth, you don't want to go backwards.

You don't want to lose it because you've tasted the sweet nectar of freedom and you don't want to go to the salt mines. Another piece of advice from Mike Zaccardi, who seems to have a CFA and a CMT, I don't know what a CMT is. He says, "You need to have the mindset of bucketing investment gains and losses and income." And I think that's really smart.

So you compartmentalize your investment gains and losses and you attribute them to the markets and you make sure they're set up in a proper asset allocation way so that it matches your risk tolerance. And then you just go from there. You ring fence it off. And then your income is your income.

It's dependent on your sector, your performance, your company's performance, and their overall markets as well. So you shouldn't let your investment performance negatively affect your income performance. And I think this is wise advice. Unfortunately, it's really hard to do because your whole net worth is made up of multiple components.

And obviously you want to have as many cylinders firing as possible. So this goes back to the beginning of my question. How do you deal with, let's say, performing well in your job or your business but then you're losing money in the stock market, for example. And so it's hard.

But trying to ring fence, compartmentalize these two is really, really important because you don't want one to negatively affect the other. They're two separate things. Another person, MS Stange or M Stange says, "I love my job. Today is payday, which means 401(k) contribution with company match." And that's great actually.

That's actually a perfect time for payday. 28th, dump it in your 401(k) and IRA because you should have a long-term horizon. I forgot about this because I don't have a consistent payday since 2012. Jesse Smith Jr. says, "I'm telling myself to keep going and love the process as long as I can be productive, I can make money.

I'm too young to worry." And that's great. If you're young, if you're under, let's say 40, 45, you should be feeling okay. Okay that there's a masker in the market and you should be buying. You should be buying for 10 to 20-year horizons, maybe longer. Professor Fireblog says, "The part-time job and consulting side hustles completely eliminate the need to withdraw any funds from my investment accounts.

A safe withdrawal rate of 0% is pretty useful when the markets are in panic. It enables me to keep adding to my S&P 500 positions with confidence. Therein lies the value." And I agree with that absolutely. A 0% safe withdrawal rate is the ideal withdrawal rate in retirement. So you're just living off the income from your investments and you never touch principles.

So hopefully that principle goes up over time, which it probably will over a 10 to 20-year time period. And of course we're going to see these yearly 5, 10, maybe 15% corrections and you just got to roll with it. One guy by the name of Guy on a Buffalo waxes on and waxes off and says, "Price is temporary, shares are forever." Which kind of makes sense.

Another fellow by Basil, "Customers' yachts faulty," says, "Man plans, God laughs." I think that is true I guess. A woman by the name of MPD is a mom now, says one of the biggest cliches in investing, timing the market is less than time in the market, which I think is true.

It always comes back, don't freak out about short-term losses. I think that's true, but if you feel what you feel, you can't help what you feel, right? And then I got a whole bunch of other responses if you want to check out my Twitter feed @financialsamurai with no I.

And the reason why there's no I in the handle is because there's a character limit. Ah ha. And let me tell you my number one way I feel better about the stock market correction is that I look at my children and I see how awesome it is that I can fund their 529 accounts on a 14%, 15% correction.

Because I had been pretty hesitant about funding my daughter's 529 plan this year, super funding it with 75,000 because the market was at an all-time high. But now we're back to January 2019 levels and I'm thinking to myself, "Hmm, this sounds pretty good." So I've been contributing to her 529 plan and nothing is giving me greater joy than contributing to her.

Not the money that I'm contributing to myself, into my SEP IRA, SOLO 401k, and my after-tax investment accounts, nothing. Nothing feels as good as being able to contribute to my children. And I think the secret weapon that our children have is that they just have time. So a lot of us might be scared or freaking out because we feel that we're losing time or we don't have enough time to gain back or to live the lives that we want.

You know, imagine the person who's about to retire this year, lose 15% of their money because they were mostly in stocks. I mean, that's going to hurt. Let's be frank, right? But if you are a baby, if you are nine weeks, 10 weeks old, you're looking at this drop and you're like, "Hallelujah." And so you just contribute to the account because you truly do have 18, 20 years.

And so if you elongate the time and you transfer that elongation of time to your children, if you're blessed to have children, or maybe it's your nieces or nephews or whatnot, I think that really, really helps during these times of volatility. So that's it, folks. I hope this episode has given you some kind of solace and some kind of hope.

I'm always hopeful. I'm actually a perpetual optimist and it can get kind of annoying, I got to admit. But you need that optimism, baby, to get to financial independence and do what you really want with your one and only life. So let's hope for good things from those biotech companies and those companies that are looking for vaccines.

And let's hope for good things from our great leaders of the world to come up with a plan to give us confidence. And let's hope that this virus somehow disappears like we always see in horror movies like War of the Worlds and World War Z and all that just suddenly at the end, "Oh, sorry, it's gone." And let's hope for a V-share recovery.

Thanks so much, everyone. Talk to you guys