It’s been a while since I last posted on my blog, but it has been time well spent catching up on so many things I should have done well before the pandemic, as I’m sure is the same for many of you.
I hope you are all doing well, and that includes not panicking over COVID19; the real pandemic that it causes is stress. As my long time doctor has told me, the ultimate cause of poor health long term is stress.
While I don’t believe our administration for a moment regarding this pandemic, I find all those that are indulging in panic, especially the talking heads in politics and the media, to be irresponsible, causing undue stress.
We need to keep our eye on the long run, an aide to which is a look back in history. Consider a century ago when the worst pandemic of modern times, known as the Spanish Flu, hit the world just as the Great War came to an end – timing is everything.
The world population at that time was about 1.8B. Total cases are estimated at about 500M, and deaths at about 50M. This provides some perspective given an infection rate of 27.7% and a mortality rate of 10% of cases, equivalent to 2.7% of the world population; staggering statistics.
Not to minimize COVID19, but comparatively we currently have a world population of 7.8B; as of today total infections are at 14.3M, and deaths at 603K. That’s an infection rate of .18%, and a mortality rate of 4.3% of cases, equivalent to .0077% of the world population. This mortality rate is close to SARS, while MERS was a staggering 34.4%.
While we can contribute the lower rates to better disease protocols, clearly COVID19 is the lesser of the modern era viral epidemics; here are some things to consider that fed in to this panic:
- Much of the early market sell-off came from large institutional investors like pensions, hedge funds, and investment banks, which represent the majority of investment and employ algorithmic trading platforms that automatically move with headline news. We saw this before with MERS and SARS, two earlier Coronas, but not to this extent; that the media creates headlines that can cause such panic was clear.
- It didn’t help that the FED cut rates drastically as that only added to the panic. Besides, I doubt interest rate cuts cure diseases, has not really helped economically except to keep Zombie companies afloat a little longer, lower debt service for the Federal Government, and feeds Wall Street frenzies, but this definitely hits fixed incomes really hard and does little for the average American worker.
- Stimulus programs sound good, but only work short term and ultimately cause capital dislocations away from productivity; the long results will definitely cause panic.
- The Fed’s practice of monetizing debt will only extend the recovery period as it did with QE in the 2008 Financial Crisis; professing an “all-in” policy is actually a sign of panic, essentially admitting that all you can do is react to whatever comes about, which is no policy at all.
- It only adds to the panic to hear people discount concerns based on false and irrelevant information in the face of simple statistical evidence. When Trump said that he didn’t know that people could die from a virus, it was very disconcerting to find out his own grandfather did! This kind of stuff from the leadership level does not instill confidence.
- Medical experts and history tell us that COVID19, which is particularly contagious, will spread out everywhere, which is true, it’s what viruses do, so I have little faith in containment plans; they may help “flatten the curve” in the short term, but ultimately this virus will run its course.
- What we need is testing, which not only provides reliable statistical information, but critical analyses and medical protocols for treatments and to help develop a vaccine. Would you believe that with all their hype the media failed to report what MIT published, i.e. that the FDA had initially disallowed local laboratories to conduct testing and required specimens to be sent to the CDC? Finally under intense congressional pressure with the release of MIT’s report the FDA relented on February 29th and changed this policy. What was the FDA thinking getting in the way of medical science? Dumb question right, it’s what they do.
- The predictions by experts of millions of Americans dying from COVID19 caused some states to lockdown businesses, depriving many from livelihoods without which they could not live; such panic mongering is even more lethal than the virus itself, but why do we not hear more about the gross miscalculations?
- The hyperbole about vaccine development is causing both euphoria and panic; we need a measured analysis for some clarity on this critical issue.
The list goes on, but I will follow what my doctor of 40 years told me – keep clean, keep good health habits, follow hygienic protocols and don’t panic as that creates stress that will definitely make you sick…..and live your life.
And from my financial advisor, don’t look at your retirement plans for about a year, that will definitely stress you out.