As a result of the Trump administration's initial failure to treat Covid-19 as the calamitous threat it would soon prove to be, and the way he has continuously mishandled it, we are on the cusp of retracing the events that transpired during the 2008-9 market collapse. Yet, because the market is ultimately a zero-sum game, many will lose while others will gain. Regrettably, I was one of the losers who had lost a small fortune by the close of 2008.

I lost because I was the typical low-information market investor who played the market as if I were playing Texas Hold 'em seated at the same table as Amarillo Slim and his poker-playing buddies. Later, I was to discover that I was not the exception but rather the rule. The vast majority of market investors truly have no business wagering their hard-earned money in a game they hardly understand. Yet, as those who flock to Vegas and other casino resorts throughout the world, who eagerly waste their money on games of chance where the odds of winning are stacked comfortably against them, market investors do the same, often suffering the same results: they lose far more often than they win.

Because I had suffered losses in the market prior to 2008, I was loath to return until on a double-date I met my girlfriend's girlfriend's date. He boasted of winning in the market by only investing in dividend-paying stocks. He termed it as lending the companies he invested in by buying their securities expecting to be repaid with the dividends or interest these securities paid on a quarterly basis. The smooth-talker soon had me convinced that he actually knew what he was talking about, even giving himself the title of an economist, which I was later to learn he was not. However, I believed him because of my ignorance of the subject matter, nothing more.

Consequently, with his "help," I returned to the market in August 2008. My timing was impeccable. Within a few short months, I had lost at least half of the money I had invested. Worse yet, those healthy dividends I had expected to collect, likewise, by the end of that fateful year, were similarly slashed by an average of 50%. Although the cost was high, I had learned a valuable lesson. When the price of a common stock falls precipitously, the company directors usually cut the security's dividend by a commensurate amount. Consequently, had you purchased a security at $25/share, which paid a yearly dividend of $2.00, you'd have earned a return of 8% on your investment. However, had you purchased that security's whose value had been cut in 1/2 to $12.50/share and you still earned that yearly $2.00 dividend total, you'd be earning a tidy 16% ROI. Of course, the poor sap who bought it at $25 now earned a return of 4% on his investment less the loss of $12.50/share, which the shares were now priced at.

Sadly, the majority of companies in question, during trying times will necessarily have to cut the dividend amount they are paying, and lo and behold, it's usually commensurate with the dollar-loss value of the stock in question. I believe this is done for, not one, but two reasons: The first I already mentioned, the second more nefarious one is that wary, more knowledgeable investors will be skeptical of stocks offering a 16% return, which is unusually high. Much more than the healthy 8% return most will find appealing and might not look too closely at the recent stock's price history prior to investing.

Rather than complain to my new-found "buddy," I lamented my losses, stating that, I was most discouraged by the dividend decreases even more than the money I was losing on the actual prices of the securities I had invested in. Then the "genius," as a throwaway, mentioned that I should have invested in preferred securities. The novice that I was, I hadn't even known such a thing as preferred equities existed, much less know anything about them. Consequently, for the next two months, I did something I had never done before: I decided to study and learn about this preferred market before I would invest another dime as a know-nothing dummy. Serendipitously, by the time I had completed my research, at least enough to take another plunge, the market was about to bottom and soon thereafter stage a remarkable rebound under the recently elected Obama administration. Within a year, now as a reasonably knowledgeable preferred investor, I reversed my losses and by March 2010 I had gained virtually twice as much as I had lost.

Currently, I expect the market, under the Trump administration, to eventually replay its catastrophic fall as it did in 2008-9. His ongoing trade wars and tariffs, coupled with his mishandling of Covid-19, I predict, will deepen the disaster. How far the market will fall and when the recovery will begin is yet to be determined, but when this happens the knowledgeable preferred investor will have an opportunity to do at least as well as I in 2009.