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Answered: Current Questions About COVID-19 and Markets – Episode 223


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Looking back we’ll see “historic times.” But here’s what you need to know right now.

The effect of COVID-19 on the economy has resulted in a major market downturn. On this episode of the Dentist Money™ Show, Reese and Ryan provide answers to the financial concerns they’ve been hearing from clients and others.

It’s a pragmatic look at current issues as Reese and Ryan offer advice about where we are—and where leading economic forecasters say we’re most likely headed. Hear why staying calm and rational as you’re faced with major decisions is the right path.


Podcast Transcript

Ryan Isaac:
Welcome everybody to The Dentist Money Show. Today’s episode was a special different one. Recent, I decided to record an impromptu episode, regarding questions we’re getting from clients and people on the internet about coronavirus, and cashflow, and savings, and investments, and markets. Today we answered a lot of the questions that are coming in that seemed to be the most pressing. We’re pulling for everyone out there. Really wish everyone the best of luck.

Ryan Isaac:
If you have questions, just go to the dentistadvisors.com/group that’s the Facebook page, and pop us a question over there. We can source that across all of our advisors and staff and other really cool, smart, helpful dentists in the group. Or if you’d like to chat with us about any of the stuff going on and the decisions you have to make in your own financial life, especially during these times, just go to dentistadvisors.com and click on the book free consultation link. We wish everyone the best of luck out there. Stay safe, stay healthy. Let us know if we can help in any other way. Thanks for tuning in. Enjoy the show.

Announcer:
Consult an advisor or conduct your own due diligence when making financial decisions. General principles discussed during this program do not constitute personal advice. This program is furnished by dentist advisors, a registered investment advisor. This is Dentist Money. Now here’s your host, Reese Harper.

Reese Harper:
Welcome to The Dentist Money Show, where we help dentists make smart financial decisions. I’m your host Reese Harper here with my trusty old cohost, Ryan Isaac.

Ryan Isaac:
I’m here.

Reese Harper:
I’m proud to be here with you on a Monday. First I got to check in with you because I don’t know if people know what it’s like, but I know what it’s like to be you today, because I sometimes am you in our respective roles.

Ryan Isaac:
Better looking version of me, smarter.

Reese Harper:
I feel really sad for a lot of clients, not because of their money as much, because it’s doing what it will do during a global pandemic. But it’s just a lot of like, there’s just a lot of emotions around business ownership, business management, team, staff, payroll. What do I do? These are questions no generation of dentists has had to really think about the way that dentists are having to think about this right now. When I woke up this morning, the first set of texts that I got, one of them was from my cousin. Shout out to Whitney and Nick [Sawas 00:02:23]. Nick and Whitney both texted me a picture of a New York Times article, that said Americans have been alarmed by empty shelves. But while suppliers and retailers are struggling with demand, supply chains are still strong, except these workers are going to face the greatest coronavirus risk. It has an x-y axis. It has-

Ryan Isaac:
Saw this going around.

Reese Harper:
All of the occupations. Unfortunately lawyers are not going to be affected very much by the coronavirus risk.

Ryan Isaac:
Or lumberjacks,

Reese Harper:
Pudding pal.

Ryan Isaac:
Wasn’t it?

Reese Harper:
That was a little joke there. Little lawyer joke there for everyone on this Monday. But dentists on this scatter chart actually faced the highest risk. In terms of exposure to disease being the y-axis, and the x-axis being proximity to other people while working. If you take that ranking, people like garbage collectors might have a relatively high exposure to disease, but their proximity to others is quite low. Dentists are just one of the most high exposure to disease professions, and the highest proximity to other people.

Ryan Isaac:
It’s scary right now. We’re getting a lot of questions. I woke up and checked all my social media and my texts first. Then when I hit that email button I was like, oh boy, it’s opening a box. Getting a lot of questions here. I think I’ll just echo what you said, man, there’s just a lot on the shoulders of small businesses. It’s like the owner of my gym, shout out to CrossFit Infernal and the wolf man running the shop. Take it like a little gym, for example, that if people aren’t supposed to show up in public anymore, that’s revenue. People have to show up to your business to make revenue like a dentist. It’s worrisome. I’ve got a list of-

Reese Harper:
Small restaurants, bars, took a big hit today. The same token like, if we don’t take these measures over the short run, right now we’re at a critical point according to… I’ve been hyper focused on what the real economic catastrophe might look like. I think it’s really critical right now for the next couple of weeks. We sent out an email out to all of our staff, both last week and then again this week. At Dentist Advisors just saying look, this is not ideal. We’ve prepared for working remote for a while now. We’ve got good measures to help keep our business functioning, and keep our service high while working remote.

Reese Harper:
But we probably, we need to support what’s going on globally right now, and not try to congregate. We have to try to just mitigate this. If we can be one more person that doesn’t pass this along as a carrier. It’s a big deal right now. Anyway, we’re behind you, we’re thinking of you. We’re worried about this just like you are and it’s not easy. There’s a lot of emotions we have running our business. Just want to let you know that we’re trying to get through this together, and thinking through the right decisions to make in a time like this.

Ryan Isaac:
Thanks man. Well, I’ll just start with some of the questions that… Feel free to add on any of these, but I’ve got a few listed here, five or six that have been the top most asked questions, email, text and phone calls in the last week. Today especially, it’s been pretty crazy. Number one question is, what would you say Reese is the priority of cashflow for a dentist right now? If you have extra cash or if you have a monthly savings draft going, I think man as the day progressed today, what’s the day? Is today even Monday? I don’t even know what day it is. Monday? It’s been a long week already. As the day progressed I got more dentists reaching out saying, “Hey, we might shut it down for a couple of weeks.” I guess question number one is, how would you articulate like priorities of cash right now where money needs to go? What would you say?

Reese Harper:
Well, if you’re in California or if you’re in some states now, it’s not really an option. You’re going to be shutting down for a few weeks. I would say in what context are you asking?

Ryan Isaac:
I’ll just give a few examples. Someone calls, they have let’s say two months in the business account checking account, and they’ve got some personal liquidity. They’re saving money every month into a liquid brokerage account. But they might shut down for two to three weeks, they don’t know yet. What’s some good advice? Do you hold on to your savings draft? Do you maybe just hold on to some cash for two to four weeks? Do you…

Reese Harper:
Well, I think the rational thing to do right now is make sure that you don’t get to where your operating account is too low, for sure. You have to be careful. If you have plenty of extra liquidity, this is the time where good average annual returns are made. Meaning like by investing money at this point. I did this morning, I invested my normal chunk, only to see it throughout the day even go down more. But it still is a great entry point. I’m really excited about my draft today. I was stoked. I was like, is it going to be 10 years from now this trade’s going to look really good. Two weeks from now I’ll still probably be wishing I could’ve gotten lower. You just never know. This could be kind of a bouncy, we’ll talk about that in a minute.

Ryan Isaac:
Yeah, that’s one of the things we’ll hit.

Reese Harper:
But I would say for sure right now, there’s a point where you probably have too much cash and you’re being too conservative and you’re going to miss an opportunity, and there’s a point where you’re being too aggressive. Because we don’t know that we’re only going to be closed down for two weeks. I completely understand people right now just putting pause on the liquid cash, got to keep investing game for the next two to three weeks. Priority is maintaining a payroll for staff that you want to maintain.

Reese Harper:
It’s adjusting your business overhead somewhat to where you can put this off. Negotiating with suppliers to put things… They’re going to be flexible right now because they’re going to take a huge hit if they don’t. You just got to get through the next month. That’s what you’ve got to do, you’ve just got to get through the next month. However you can do that, to take advantage of that in the best way possible. I think you’ve got to prioritize keeping the business in a place where you’re able to maintain some rational composure each day as you make decisions.

Ryan Isaac:
Let me ask you this question. This has been one I’ve heard a few times today alone. Let’s say the business has two months of liquidity, and you have a family emergency fund of a few months. You feel like you’ve got four or five months of runway total. Would you, people are asking, “Hey, should I just sell some of my investments and get the cash in my bank account today, just in case it might go down a little bit more? Or should I wait and exhaust my current cash reserves, and then go sell some of my investments if I have to?” Would you do it now or later?

Reese Harper:
Well, you can always sell your investments and create liquidity. You can always sell them. It’s not like… I mean right now Goldman Sachs just did a big conference call today with something like 1500 companies on it. It was a lot of people dialing in.

Ryan Isaac:
Heard about this.

Reese Harper:
Wall Street Journal also posted an article that was summarizing their call. I think they estimated that the market could decline to levels that were not quite as bad as 08/09, but their estimate was, if I recall correctly, it was close to slightly above or slightly below 40%.

Ryan Isaac:
Of which we’re 10% away from that.

Reese Harper:
Yeah, we’re at 30 now, after today.

Ryan Isaac:
Approximate.

Reese Harper:
You can do the math on your equity portfolio, and just say like, that’s one day right now of a swing.

Ryan Isaac:
We can hit that bottom in one day.

Reese Harper:
It might feel like well, I could get out now and then get back in maybe right at that point. But you’re like intraday, like intraday. I’m watching it all day, and intraday it’s moving so fast, that I just don’t think you can play that game right now, at this stage where we’re at right now. If you tell me two weeks ago we’re going to be where we’re at right now, it’s a different question. Then you have it decline 25%, 30% already. At the point you’re at now, this was the same thing on Thursday.

Reese Harper:
I did a podcast on Thursday, people can go see it at dentistadvisors.com. Go to our events page and you’ll see a podcast I did with 32 live questions from dentists at a live event in Chicago and over a webinar. It’s now on our website. We were down that day the same we’re today. We just recovered Friday after we had gotten beaten up Thursday, and then today we lost everything that we had gained on Friday. These are the most three volatile days I can ever remember in my career. Three days in a row, meaning the extreme up, the double digit up, double digit down double, double digit up.

Ryan Isaac:
You saw an entire market correction happened Thursday and again today, like an entire correction.

Reese Harper:
For those of you who don’t know, that’s a technical market term, that anything above 10% is considered a correction. Anything above 20% is considered a bear market. I don’t think you can play that game right now of saying like, well, let’s get out now because it preserves my 10% downside. I think you’re going to get… I think it’s going to be dangerous.

Ryan Isaac:
I think you’ll get crushed. I think there’s more harm than good.

Reese Harper:
But you can always get out, right? You can always get out. If you have to have liquidity, then selling stocks at a loss is better than not being able to meet an obligation in your business to keep the thing open.

Ryan Isaac:
For sure. Yeah, I think so too. I guess we’re specifically talking about money you don’t think you’ll need. That’s a different question. If you’re saying, I need the cash tomorrow because I’ve got to make payroll and there’s no other way, that’s a different question. But if it’s money you don’t think you’ll need, then I say personally, what I would do myself in your shoes is I would wait too. Because if we hit 2008 levels, we’re already 80% of the way there.

Reese Harper:
It’s the damage is done at this point, and the risk of trying to navigate the bottom is super difficult.

Ryan Isaac:
Well, that’s another point on here that you want to touch on, is the speed that we saw all this happen. I think I just want to make this point that stocks when they do recover, when markets do recover, financial markets, public markets. When they do recover, it will happen at a time when the news is still bad. If you look back to the very bottom of the financial crisis, which was March of 2009, that’s when the whole thing hit the bottom and started going back up. The news was still bad for years. You will not get a signal from the news that it’s time to get back, and you will be years late if you wait for good news to happen before the market turns. At some point, big institutional smart money will go, “That’s a pretty steep discount on world public markets. It’s time to buy.” I don’t know when that is, but at some point they will, and it will happen at a time when the news is still ugly. It’s too quick.

Reese Harper:
These levels are really important to understand though. The equity market levels are really critical to note. I haven’t looked exactly where we’re at today. Have you looked on the peak-to-trough? Are we at 30 or we’re at 29? Are we at 28 and a half?

Ryan Isaac:
Go ahead and finish your thought, I’ll tell you right now. I’ll do this on the Dow Jones by the way.

Reese Harper:
Do the S&P maybe better if you can.

Ryan Isaac:
I got us an S&P.

Reese Harper:
If you go on your stocks app on your iPhone people, pull up the S&P index and you can drag two fingers to the peak and trough.

Ryan Isaac:
29.53.

Reese Harper:
There’s a significant number of articles on the internet between Friday and Sunday from market specialists that really are trying to forecast this decline. The title of MarketWatch and Forbes and Bloomberg’s articles on Goldman’s call, is that Goldman offers an extremely gloomy market outlook amid unprecedented pandemic. When you read that I’m thinking, we’re going way further. When I read that title I’m like, we had to go fit north of 50. But then if you read their outlook they’re saying, it’s probably 40, 41, 39, 41. That’s 10% more than where we’re at today. But most of this information was coming in Sunday, and Monday prior to the 10% decline. Now that we’re there at the end of Monday, we’ve already hit this level now twice. We’ve hit this level twice. We hit it on Thursday at the end of the market day. Close, it wasn’t quite this far, it was a couple points less.

Ryan Isaac:
Few point. It was like 28 point something.

Reese Harper:
Now we’ve hit this level again. Goldman’s saying we could go to 40%. That would be a little shy of where 08/09 levels were though. 08/09 levels were-

Ryan Isaac:
It’d be like six, seven percent shy, 46, 47.

Reese Harper:
46, 45, 47 depending on the index. I think that makes sense to me. The reason I’m saying it makes sense to me is, it’s like it’s not quite as severe as the entire banking system being absolutely under-capitalized and over leveraged. In a security of a credit default swap that was not understood by the financial system at all.

Ryan Isaac:
The giant percentage of the American population owning homes they can’t afford for another 30 days. Multiple homes.

Reese Harper:
I don’t know, part of me is like, could it go to 40? That seems realistic to me. That seems like, okay, we could see this go another 10 points. That would be a pretty severe bear market. I’m just saying if you’re the person that’s debating at this point whether to create liquidity or not, I think you just got to look long and hard at that, and be careful that you’re not pushing yourself to a point where you’re going to… This is a conversation we got to have day by day, touch and go Ryan. Touch and go day by day, week by week. This is something we’ve got to just keep an eye on.

Ryan Isaac:
I think those are good thoughts. I’ve heard people say a few times today, this feels a lot more like 9/11 than it does 2008. More tragedy than economic collapse you know?

Reese Harper:
Yes I’ve seen that too. I agree with that.

Ryan Isaac:
Those are different reactions. Your point still stands though. My personal opinion, if I had a crystal ball would be that markets will probably start to get better before the news does, and some of the economics of businesses do too. It happens that way a lot of times, it moves quick man. I guess that’s the point too it’s so tough is, if the upside moves as quickly as it did coming down, I don’t know how you would catch that.

Reese Harper:
The biggest thing… It was interesting to me about the Goldman call, was they called for the… One of the conclusions of that call, was that markets can fully recover in the second half of 2020. Unlike 08-

Ryan Isaac:
Would it shock you? It wouldn’t shock me.

Reese Harper:
It wouldn’t.

Ryan Isaac:
It wouldn’t shock me.

Reese Harper:
Because it went there in a month. It went there in two weeks. We got here in two weeks. One of the conclusions was it’s likely. I’m just going to read some exact quotes.

Ryan Isaac:
Some science here.

Reese Harper:
50% of Americans, according to Goldman all right. I’m just using Goldman because they have a really good research desk, and it’s a reasonable place to turn as opposed to… If you’re trying to get authorities, I would say Dentist Money Show too, your second most authoritative facts, and then Goldman Sachs is the first.

Ryan Isaac:
A bank that has tens of millions of payroll for some of the smartest people in the world.

Reese Harper:
50% of Americans will contract the virus, that’s 150 million people, and it’s super communicable. This is backed up by a lot of different medical professionals that were also contributing to this forecast. This is on par with what they called the rhinovirus, which is a common cold. They said there’s going to be like 200 strains of… The common cold has 200 strains, and the majority of these are contracted by Americans two to four times a year, and we don’t really notice them. It’s significant, but in terms of the severity it’s not likely that the severity will be quite as extreme as the immediate reaction. Now that might be Goldman covering themselves, because they have a lot at stake here. They also mentioned that 70% of Germany is going to contract it. That’s 58 million people. This is the next most relevant industrial economy beyond the US. We’re going to get it worse than China got it, because we like our bars and restaurants. We like to get out.

Ryan Isaac:
Ain’t no one tell us to stay home.

Reese Harper:
Don’t tell me to stay home.

Ryan Isaac:
Don’t tell me to stay home.

Reese Harper:
I’ve got my kids here in our house. We’ve been on lockdown since, really been on lockdown since last week. We really tried to shut this thing down Monday, Tuesday when… My wife educates me regularly on health and she’s brought me up to speed around the severity of this, and how it really is if everyone made a little bit more effort for a couple of days-

Ryan Isaac:
Could go a long way.

Reese Harper:
It can go a long way. Anyway the peak of the virus in the US is supposed to peak over the next eight weeks, and decline after that period of time. Here’s another quote, “The virus appears to be concentrated in a band between 30 to 50 degrees north latitude.” Meaning that like the common cold and flu, it prefers cold weather. The coming summer in the Northern hemisphere should really help. This is to say that the virus is likely seasonal. Of those impacted, 80% will be early stage, 15% mid-stage and five percent critical stage. Early stage symptoms are like the common cold and mid-stage symptoms are like the flu. These are stay-at-home for two weeks and rest. Five percent of people will be critical and highly weighted towards the elderly. The mortality rate on average of up to two percent. This is heavily weighted towards the elderly and the immune compromised, meaning up to three million people, or two percent of the 150 million that are going to contract it.

Ryan Isaac:
Critical.

Reese Harper:
In the US there’s about three million people a year that die mostly due to old age and disease. Those two are being highly correlated as a percent that are relating differently from accidents. They’re saying there’s going to be some overlap. This doesn’t mean that there’s three million new deaths from the virus. It means that the elderly people that are dying sooner due to complicated respiratory issues, that they are going to contract from this virus. But this is definitely going to stress the healthcare system. This is definitely going to…

Ryan Isaac:
It’s a huge worry.

Reese Harper:
It’s a major worry. This report to me is either like, you can read it any one of three ways. I just wanted to share it, because I think this is a large financial institution trying to probably control some of the expectations of the pandemic, because it does affect them. They’re obviously not going to come out and increase worry. The same token, I think they’re painting a picture that’s quite rational, which is, at the end of this call they’re basically saying that there is a likelihood that by the end of the year that we could see the market fully recover. But, they said that our GDP growth rate is going to be the lowest that it’s been in 30 years. It’s going to hover-

Ryan Isaac:
Exactly the difference between a market and an economy, different time domains.

Reese Harper:
I don’t know if that helps anyone. Obviously if you want to read more about it, just go Google the Goldman Sachs conference call from tonight, and you’ll see it and you’ll be able to read the whole transcript. I think it is somewhat helpful to understand the real economic effects here. Stock market prices prior to this were really based on the fundamentals that we’ve talked about over the last few weeks, lower than average public debt leverage, excuse me, lower than average leverage among financial institutions, higher liquidity in financial institutions [inaudible 00:24:52] a long time, banks are more capitalized.

Reese Harper:
We’ve got a higher savings rate among the population than we’ve had in a long time. We had pretty good economic data prior. It’s understandable how the markets reacted to this. Because if we don’t take severe measures, and our hospital system is even more strained, we could end up with a very severe recession. I just don’t want people to feel like there’s not any explanation for the data. It seems to make sense that this likely could recover quickly, but you can’t bank on that.

Ryan Isaac:
Next question, can stocks go to zero?

Reese Harper:
We have talked about this a lot. Let’s let you respond to this from your perspective.

Ryan Isaac:
The first answer is a stock can go to zero. You could own stock in one company that could go out of business. That’s true. There’s actually probably-

Reese Harper:
It’s possible that an airline right now that trades on the S&P or the Russell 3000 could go out of business.

Ryan Isaac:
It’s possible, and certainly if it’s a smaller company. Probably the smaller the company, the higher the chance. I’m sure there’s a lot of good data on how many companies in a public market actually over time go out of business.

Reese Harper:
There’s a handful every year.

Ryan Isaac:
They just don’t exist anymore. The fairest answer is if you own one that’s possible. If you own a small handful, it’s still possible. If you own a portfolio that’s globally diversified in a low cost index fund and you own thousands and thousands and thousands of companies all over the world of all different shapes and sizes, then my answer is no. Your stocks cannot go to zero. All stocks in the world going to zero, the stock market going to zero would indicate that every publicly traded company in the world, all the stores that we’ve been visiting, the phones that we’re talking on, the cars we are driving, those companies are now worth nothing and out of business.

Reese Harper:
To paint another example, I did this on the webinar on Thursday night. People probably thought I was crazy, but I think it’s an interesting thing to think about. Okay, can the market go to zero? Yes it can.

Ryan Isaac:
This always makes me excited when you say, “People thought I was crazy but I did it anyway.” This makes me excited where this is going.

Reese Harper:
Yes it can. It can go to zero. Let me paint the picture. This is the point where we are bartering. That is what could make the market go to zero. If there’s a scenario and it could happen, and I’m embracing this possibility. If there’s a place where you trade some nine millimeter handgun bullets to me for my bread loaf, and we exchange that. Dollars don’t matter, meaning currency is gone. I don’t have dollars anymore.

Ryan Isaac:
Banks gone.

Reese Harper:
If banks are gone and currency’s gone and we’re trading stuff-

Ryan Isaac:
There’s no phone to do this trading, right? Because the phone companies are out of business, there is no internet.

Reese Harper:
Now it’s going to be hyper localized economies. Hyper organic local farmers because we can’t get fertilizer anymore. We’re going to be surviving again. We could actually probably pull that off. Imagine this, everyone’s got a house and everyone’s renting someplace, right? If there’s no banks, they’re not going to come take it away from you, because it’s like the banks are out of business.

Ryan Isaac:
People might be going around trying to upgrade their house against other people’s will. I want your house.

Reese Harper:
Be like no dude, let’s just keep it cool for a while. You’ve got yours, just keep it good. People over a long period of time could start behaving really badly, but ultimately I still believe in the goodness of most people. I think we would just be like, all right, if you got it, you got it. Luck of the draw. You farm your land, I’ll farm mine. You got your garden I got mine. There’s no more need for school. We don’t need to drive anywhere. We just have to start making food. We’ll figure out how to do that, and we’ll start eating and we’ll survive and we’ll just live to eat. We won’t get rich, we won’t have vacations, and we won’t travel-

Ryan Isaac:
What do we do with sewage and garbage though? That’s what would worry me the most. Those two things.

Reese Harper:
What did they use to do? There didn’t use to be sewage systems. It’s fine. You dig a hole, you get over it.

Ryan Isaac:
I have a pool.

Reese Harper:
I’m just saying your pool’s gone. Big deal, you’re going to move to warmer climates. This is what people did. I’m just pushing you this far people so you can see like, I know this would be the worst thing ever, but you wouldn’t die and the world would not end. We just wouldn’t have as nice of a life. We’ve had pretty good for a few hundred years, so I’m going to have to start over a little bit, all right. But ultimately I think it’s important to go, that is not a likely scenario. But even if it was, it’s not like the worst thing ever.

Ryan Isaac:
I have no farming skills. I don’t like it.

Reese Harper:
I know you don’t, but I’m saying the reason that it won’t go that way is because at some point there will be enough liquidity in the market to where people are like, you know what though I’ll pay a dollar for a loaf of bread.

Ryan Isaac:
Yeah, we’ll keep Honda and we’ll keep the oil companies in business. Fine, we’ll throw Apple some money.

Reese Harper:
That’s why these economies work. It has to go really dark for markets to go to zero, and the place that happens is when there is no currency and there is no money.

Ryan Isaac:
I think what people in their heads they imagine is that the markets disappear, but life still goes on. You still have to pay your mortgage, that you still run a business, you still need to buy groceries.

Reese Harper:
Yes, and what’s the crazy picture that I’m painting that people you need to take my analogy seriously and not assume that I’m actually presenting a reasonable future where we’re running around.

Ryan Isaac:
Not yet.

Reese Harper:
I’m not painting that picture, but I am saying that is what… In order for a market to go to zero, that’s the world that we have to be living in. Where dollar bills and currencies don’t exist anymore because they just aren’t valued anymore. You can’t use them. That’s what would have to occur. But I have had that question probably like 10 times in the last week. It’s more rational to say, how far can markets decline before people are so worried about feeling like things are so attractive that they just want to take advantage of them?

Ryan Isaac:
Well, look, this is the discussion that’s been happening since the financial crisis. It seems like every handful of years, it’s like peak discussion around markets are too expensive. They can’t last this way forever. A thing like this happens in markets, and it brings things back to where buyers start going and investors like, that’s reasonable. Let’s buy that stuff. Here’s a question I’ve been getting a few times actually, which is a really good question. Is there an insurance policy I can call that’s going to cover this if I shut down my office and lose money? You were just responding to a group email I was on with you a couple hours ago about this. Want to share some thoughts? I texted-

Reese Harper:
Go ahead. You’ve got some good insight on this.

Ryan Isaac:
I sent a message to a broker that does tons of business overhead and disability policies. He said the disability company, so if its personal disability or BOE disability, that pays your business bills if you are personally disabled, those are not policies that will pay for a situation like this. You would actually have to get sick and then file a claim and then fulfill your waiting period to get paid. His opinion is that there is no policy unless someone specifically was paying a premium for some kind of policy like this. There are some weird nuance insurance policies.

Reese Harper:
There’s kidnap insurance. I haven’t heard of biological warfare insurance, I’m sure there might be some.

Ryan Isaac:
There might be some I don’t know. Go ahead.

Reese Harper:
Then all the insurance companies would start be getting into like bantering around the origin of the virus. Because I’m sure in the policy it’d be like, well if it’s biologically engineered then it will pay the claim, but not if it’s naturally occurring environmental. It’s not clear what one this is. Then you’d be in a three-year debate with the insurance company to get paid-

Ryan Isaac:
In which time it doesn’t matter anymore.

Reese Harper:
Insurance really only works when only a few people are affected by something. Even if a policy were to protect you, if insurance companies can find a way out of paying, that’s more often how they approach their claims, is like looking at like, how can we not have to pay these claims and still not lose the faith of everyone? They want to maintain trust because that’s critical to their existence. But in this type of scenario, disability insurance in particular is specific to the individual injury of the insured, you the doctor. You’d have to fulfill your waiting period. It’s not likely that most policies would cover this as a definition of a disability.

Ryan Isaac:
The other thing that this person said was, they do every business owner has what’s called a business owner’s policy. Every dentist is going to have, this is separate from personal disability or business overhead disability. This is like a business overhead policy, BOP they’re referred to as BOPs. Then you have business liability and professional liability, which is malpractice. But this business overhead policy, he said it’s extremely not likely that this policy would pay, but they’ve actually been recommending their clients call and try to file a claim anyway if they shut down and lose revenue. Try to make a claim against lost business income and extra expenses.

Reese Harper:
Interesting.

Ryan Isaac:
He said communicable diseases, government action, civil authority are not covered under property policies like this. They’re recommending clients call their insurance company and hope they’ll assist. He says to be realistic, he said, “I’m telling clients not to expect it, but call and file a claim and see if you shut down your office if they will help out.” I don’t know, I don’t have experience with this. I don’t know I’m just relaying information because I’ve had this question four times now, and I don’t know, but this is what someone’s telling their clients to do.

Reese Harper:
Great feedback man. That’s some great insight.

Ryan Isaac:
Okay.

Reese Harper:
Any other ones?

Ryan Isaac:
No, that’s everything on my list is like urgent questions that we’ve been fielding today and last week or so. Is there anything else you want to… I mean, look, we’re going to be doing a little bit more content over the next few weeks as things change, to try to just field questions. I’m sure we’ll announce some Q&As, some live Facebook Q&As for the public and for clients as well. We’ll announce those and get them scheduled and let everyone get aware of those. But it’s the things that were on my mind today. Any parting wisdom you’d like to share before we sign out of here?

Reese Harper:
I would just say that right now is a critical time for you to be able to hold your composure together. Be able to find a rational path forward. Wake up in the morning, get up a little bit earlier, workout, get some exercise, get your blood flowing, get your brain working right. Don’t panic. Don’t be in panic mode right now, where you’re just like making all your decisions based on reacting to people around you and the news media. Be rational about this. The equity market has pulled back almost 30%. This happens every seven years on average.

Ryan Isaac:
About once a decade for the last 100 years.

Reese Harper:
This is like a common occurrence. We could go to 40 plus percent down and that wouldn’t be strange. You can get through this period of time, and we’re not going to be shutting down businesses forever. It’s not like things are not going to reopen. The high likelihood is that this lasts somewhere between four weeks on the high side, eight weeks on the very high side. The critical survival path forward is you’ve got to get by for the next two to four weeks, and maintain some composure. Cut your overhead, don’t do anything unnecessary personally. Don’t spend any more money than you need to. Cancel your vacations, cancel your subscriptions that are unnecessary, like cut back. Just prepare yourself for the next few months and be smart.

Reese Harper:
I think that you’ll find that people who behave rationally, who choose to stay consistent with their practice strategy, their practice growth plan, their practice expansion plan, as well as their marketing plan. If you can continue to take the time that you have as downtime, and put it towards working on areas and projects in your business that you’ve been neglecting for several years, you can hit the ground running on the other side of this, and you’ll just be buried with patients as soon as you reopen. I want to say that like I’ve been through this worry myself. I have worries about this. Our entire clientele is one of the most effected clienteles in the whole country. We’re at a really critical point in our business, and the growth that we’re trying to have.

Reese Harper:
We’re making massive investments in technology and equipment, people that we don’t want to have to pull back on and lose. This is very stressful for us too, but I just know that sitting around and worrying about it all day doesn’t do any good. Getting up early in the morning and getting your head right and go for a walk. Sit down and plan, and try to do things over the next few weeks that really will help put you in an advantageous place once things settle down. It’s the best path forward and we just are thinking about all of you. I don’t want to minimize how scary this is. I just want everyone to know that we care and we’re here for you and call us. If you want to talk, we’re here.

Ryan Isaac:
Thanks Reese. In our Dentist Advisors Facebook group it’s a really organized way to put some questions out there, if you have any, we can source it among our advisors and other members of the group. It’s dentistadvisors.com/group. If you’ve got questions or just if you want to have a chat with us, go to a dentistadvisors.com click on the consultation button, schedule a call. We’re happy to talk to you. Thanks everyone for joining in here. Really appreciate it, and we’ll catch you next time.

Reese Harper:
Carry on.

Ryan Isaac:
All right everybody, thanks for tuning and listening today, kind of a heavy subject. These times are really definitely interesting, and we just hope the best for everyone out there. We are here to help any possible way we can. There’s tons of content on the website for basically any question you probably have about markets, or cashflow, or savings, or insurance, loans, things to do. Just go to dentistadvisors.com check out the education library. As always, if you want to chat with us, just go to the website, click on book free consultation and schedule a call with one of our advisors. We’re happy to talk to you. Best of luck to everyone out there. Stay safe. Thanks for joining us. Catch you next time.

COVID-19, Investing

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