Six weeks ago tomorrow my mother passed away very suddenly at 95. That evening I wrote my last posting entitled "What A Difference A Day Makes" since she had been fine just 24 hours earlier. But the "difference" that July 25th had made for me went far beyond my mother’s passing. For me it meant my whole life changed, some for good, some for bad. While it was true that the nursing home bills now stopped and I no longer needed to be immersed in the daily process of generating capital to pay the bills, it was also true that I no longer had an unspecified period of time for wrapping up estate business. Indeed, now it was painfully specific and the several weeks that have followed have been a whirling dervish. What a different place we were in just one month later.
What made the difference? Well, the timing of mother’s death could not have worse. Not that there’s ever a good time to lose a parent, but our case proved to be exceptional. On July 25th, the stock market had reached a 3-month high and was actually just a little off the nearly 3-year high it was at in May when the Dow hit nearly 13,000 - a number all the cynics had said we wouldn’t see for another ten years. But we saw it in May, continuing the biggest bull market we had ever seen in history. From the implosion of the subprime mortgage market in the latter part of ’07 to early ’09 the market lost 50% of its value. Though this was still nowhere near the Great Crash of 1929 to 1932 when the Dow lost 95% of its value, and though we have had a number of very serious recessions since World War II, it was still by modest margins the largest drawdown since the Great Depression. But since the bottom in ’09, we have been in this huge bull market which by May had doubled the Dow. In just 25 months, it had doubled.
Then it dipped a little again but on July 25th hit a 3 month high. But on July 26th, hysteria took over the market and we literally began a pattern of huge 500 point swings almost every single day, sometimes twice in the same day. One day there would be a report that says "no signs of a recession" and the Dow would shoot way up. The next day there would be another report that said "signs of possible recession" and everything would drop through the floor again. This went on throughout most of August, a rollercoaster of such volatility that we had never seen before in the entire 150+ year history of Wall Street. And on August 19, the last market day before the 4 week anniversary of Mom’s death, we hit a new low when the Dow sunk to 10,817 -- a whopping 15% drop from July 25th.
If this had happened just two weeks later, there would have been no problem. What was the problem in our case? Just that our entire life savings was hanging in the balance and for the first time in my life, there was a legal requirement that I sell everything at the earliest practical moment. In forty years that I’ve been investing, I’ve always had the comfort and security of "buy and hold," the time-tested traditional philosophy that if you just ignore these temporary vagaries and ride out the storms, you will ALWAYS eventually get it all back and with a nice return.
But with mother’s death, I could no longer do that. I no longer have the luxury of just riding out the storm. I do have some discretion but certainly not the liberty I’ve always had to just wait for things to settle down. No, I have suddenly been compelled to watch the market every day and wait for the first signs that the hysterics of the last several weeks have been shaken out. Every single week the pundits have told us that the next week will tell. Every single week, they’ve been wrong. This has not been fun.
Yes, if it had happened just two weeks later, everything would be fine. When I met with our lawyer on August 5th, if the market was still holding steady, I could have easily dissolved everything right then and there. As Woody Allen has said in a couple of his movies, "If only life could really be that way." Anyway, we did have significant rebound last week and on Thursday I sold off a very large percentage. Then on Friday the market tanked again. The market always tanks just before Labor Day. I’m hoping that’s all it is and that we can finish all this off next week.
The unprecedented hysteria in August was the largest part of the headache but not all of it. I have a long task list now of legal requirements that must be fulfilled to close out the estate, much of which must be done within the next month. I will be very busy. Just to give a hint, there is a clause in the will that says all assets must be divided into five equal shares. You would think that would be straight-forward. But it’s not. Not even close. The legal definition of what constitutes an "equal share" is so complicated that I left the office on August 5th with two months of full-time work just to be able to define what is an "equal share."
There have also been all kinds of legal hiccups such as accounts being closed because there is a legal requirement that a dead person’s account cannot remain open. Of course, I thought there was a reasonable period of time for keeping the old accounts open, at least enough time to open the new accounts and get new checkbooks. But suddenly checks were bouncing and the credit card was being declined so we had to open a new emergency account to get us through the transition. I’ve also had to redo all the AutoPays which got automatically shut off on July 25th. These are just a few of the headaches that come with estate closure. The latest: a letter yesterday from the IRS saying the POA has be filed again. They’ve done this every single year for six years. I’ve filed, they tell me they don’t have the POA documents so I have to file again. Then the next year they once again claim they don’t have the POA documents. I have refiled the POA documents seven times now. I’m glad this is the last year I’ll have to deal with that one.
I still have to finish tackling taxes (which I’ve been within hours of completing for two weeks except something even more important gets in the way everyday), expense reports, commodity valuations, and a great deal of file organization and auditing that still lies ahead, though I’ve really gotten quite a lot done this past month. I’m hoping the bulk of it is under control in the next two weeks. Then I can write a new posting titled, "What A Difference 40 Days Makes."
When all that's done, we start on the house. That'll be major but at least we can take our time with that one. For now, I’ll conclude the way I started – What A Difference A Month Makes!
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