On Jan. 18, 1815, the United States Army won a decisive victory over the British in the Battle of New Orleans.
The battle lasted just 30 minutes, and British casualties outnumbered American casualties by a factor of 33 to 1.
This battle ironically goes down in history, not because of the tremendous American victory, but because the battle took place after the war was already over.
The Treaty of Ghent, which ended the War of 1812, had been agreed upon by both British and American leaders at the time of the war.
But because news didn’t travel as quickly in the 1800s, the armies in New Orleans weren’t aware that the war had ended.
The story of the Battle of New Orleans comes to mind this week as news continues to break on the coronavirus front.
On the positive side, it’s exciting to see that vaccines have proven effective at preventing the spread of coronavirus while still keeping patients safe from adverse side effects.
But coronavirus cases are still surging across the country, and governments are stepping in to take action to protect their citizens.
In a way, we’re in a scenario much like the Americans faced in New Orleans. The war has been won, but we still need to fend off a major attack from the enemy.
Today, I want to take a look at how this “last battle” affects your retirement. And I’ll give you some tools to protect your wealth.
Bridging the Gap And Looking Ahead
The prospect of an effective and widely distributed Covid-19 vaccine had a dynamic effect on the overall stock market.
Following last week’s vaccine news from Pfizer and a similar one this week from Regeneron, many “reopening” stocks surged higher!
These are companies that will benefit most from people traveling, going out to eat, and enjoying group activities.
While the markets absorb the good news looking ahead, we’re still seeing some troubling signs across the country today.
It seems the coronavirus has not received the memo that the war is over. And cases are surging as cooler weather sets in.
Thankfully, we’ve learned a lot about how to treat coronavirus patients in the last few months. So while case numbers are still very alarming, the mortality rate is better than what we saw at the beginning of the year.
Still, this surge in new cases is troubling. And it has many investors wondering whether they should buy into the reopening narrative yet.
After all, this week New York City Schools closed in-person classes. And other local governments are considering targeted lockdowns.
All of this news leaves investors wondering whether it makes more sense to buy stocks that will benefit from a reopening or wait until the vaccine is distributed.
So what should you do with your retirement investments?
This Is Why We Take a Balanced Approach
Here at Rich Retirement Letter, you’ve heard me talk about a balanced approach to investing.
The idea here is that you never lean too heavily on one area of the market.
That way, you’re never in a position where a curveball (like the potential for another series of lockdowns) will catch you off guard.
As we move into next year, I expect us to have some wonderful profits from reopening stocks. And that’s why we’ve already started talking about some of the best names to buy in this category.
But at the same time, we probably won’t see these stocks rise in a straight line.
There will be days when news of school closings or lockdowns will cause these stocks to pull back.
And there will be other days when news of vaccine manufacturing or distribution will cause them to surge forward.
In a situation like this where we want to carefully build our exposure to reopening stocks, I recommend using a dollar-cost-averaging technique.
This is a simple investment strategy where you start by deciding how much you want to invest in an area like reopening stocks. You might look at your account and say that you want to put $10,000 into these plays.
Then instead of investing all at once, you can spread your investment capital out over time.
I’d suggest looking at the next 10 weeks (through the holiday season) and possibly investing 10% each week.
This way if the reopening stocks surge higher, you’ll still have some money invested and can lock in some nice gains.
But if shares pull back thanks to coronavirus cases, a slower holiday season, or other concerns, you’ll be able to buy more shares at a lower price.
And that will add to your profits when the economy eventually reopens.
So rather than jump all in on an economic recovery, it makes sense to keep some cash on hand, put it to work patiently, and then enjoy your gains as the economy eventually recovers.
Of course here at Rich Retirement Letter, we’ll be scouring the market for the best reopening opportunities and sending them your way.
So stay tuned over the next few weeks as we get more clarity on the vaccines and how the overall global economy will recover.