Subtitles section Play video Print subtitles The Dow just had its biggest point drop in history. More than 5 million more unemployment claims last week. Oil prices crashed. Graham Flanagan: Because of the coronavirus pandemic, more than 20 million Americans have lost their jobs. But the stock market remains open for business, and in the last eight weeks, we've seen some of the most dramatic swings in history, impacting people's long-term and short-term investments, and some investors are betting on stocks that are benefiting from the crisis. So, what should you do with your money during the crisis, from stocks to 401(k)s to how to use your stimulus check? Sallie Krawcheck: I firmly believe that, if not 10 years from now, 20 years from now, this is a blip on an upward-trending chart. Aswath Damodaran: If you have liquidity, I think you should think about investing. Flanagan: I talked to two world-renowned financial experts: CEO of the investing platform Ellevest Sallie Krawcheck, and the man known as the "Dean of Valuation," Aswath Damodaran. I asked their advice about what to do with your money during the crisis, but first, let's talk about what you probably shouldn't do. Dave Portnoy: What? What did I just do? I lost 100 grand in the last second. Down a half a mil! Flanagan: That's Barstool Sports founder Dave Portnoy, a multimillionaire known for gambling on sports. Portnoy decided to switch to day trading in the stock market when the pandemic shut down his other hobby. Portnoy: So, I put $3 million to start into my E-Trade account, and that was, like, my day-trade money that I was gonna play around with. I'd never really day-traded before. I think I bought from one stock in my life. Flanagan: When I interviewed Portnoy on April 16, he said he'd lost about $720,000. And what would be your advice to an aspiring day trader? Portnoy: Yeah, my advice would be, never day-trade with money that you can't afford to lose. Flanagan: So, for most people, jumping into day trading probably isn't the best idea. But if you're lucky enough to have a paycheck during this crisis and some extra cash to invest in equities, what should you do? Let's start with professor Damodaran. Damodaran: Don't get overambitious and try to put it all in one stock. Flanagan: Damodaran suggests spreading your bets across four buckets. Damodaran: The first is what I call my bargain-basement bucket. These are companies that you know will be around after this crisis is done. You're gonna be able to get them at a price you could not have got them three months ago. Travel companies, Expedia, Booking, maybe even a couple of the oil companies, Conoco and ExxonMobil. The second is a much riskier strategy. You're buying stocks that are distressed, potentially could go under, but if they turn around, these could be the companies that pay off tenfold, twentyfold. There, you'd include some of the more troubled airlines, Delta, American, United. There is a chance they will not make it. With a payoff, you get a big upside. The third is what I call safe at a reasonable price. These are companies that are safe companies because they sell products that people continue to use, the Apples, the Amazons, the Googles. Unfortunately, everybody is loading up on these stocks, so you might want to go below the top echelon and look at companies like Adobe. And let's face it, Adobe's going nowhere. We're gonna be using Adobe software two years from now. And the last group of companies, it's a tricky one, because there are gonna be certain changes in behavior that come out of this crisis. So, you're looking for companies that you think can benefit from this, Zoom, Instacart, etc. When you talk about online education, take account of, like, Chegg. There are companies that actually come out stronger because of a crisis. Flanagan: So, while professor Damodaran has a multitiered strategy for investing in equities, Sallie Krawcheck has a more streamlined approach. Krawcheck: I would not make sector or company bets. The correct answer is invest in a diversified investment portfolio. Take that extra cash you're privileged enough to have. If you are younger, you're gonna wanna put it in more equities. If you are a little more mature, you're gonna wanna have less equities, more bonds. And I know, again, I know, it's not the advice anybody thinks that they should be receiving 'cause there's this desire to do something. Just keep it boring. Find your excitement elsewhere, please. Flanagan: So, what about long-term investments, like 401(k)s? Against my better judgment, I checked my balance and saw that the last nine months of gains had been wiped out in the last six weeks. Krawcheck: Frankly, given what we've gone through, the fact you've only lost nine months of returns, thank the heavenly stars, 'cause it was, and could be, worse. But typically the advice is do not touch that money in your 401(k). Happily, you can borrow from your 401(k) without penalties right now. So, that was part of the stimulus bill. Typically, don't touch it, but if you need it, God bless. Flanagan: What type of guidance would you have for people who don't have extra money, who are being negatively impacted by this crisis, who are receiving the stimulus checks, in terms of ways to optimize their own finances during this difficult time? Krawcheck: Go hard at expenses. One place to look very quickly is, you know, your credit card debt that's outstanding. If you could take that stimulus check and pay that off, that's gonna have a positive ripple effect of helping you. If you have a mortgage, does it make sense to refinance? For a lot of people, the answer's yes right now. Worst thing that happens, they say no. Damodaran: This is not the time to be playing games, 'cause if you survive, you will have time to build your nest egg back. It is a time where you gotta get your priorities straight.