At times, it’s easy to move between optimism and pessimism on this quickly evolving virus story. The economic impact for the next few months is going to be dramatic. A modern-day economy cannot be on lock down and “social distancing” for long without destroying wealth. But there are reasons for hope in the stories below.
Please remember that an optimist and a pessimist show up every day in the stock market. In other words, there is a buyer for every seller – and lately there have been more sellers showing up! Maybe the buyers have been busy buying toilet paper, guns and hand sanitizer. But the point is that there is always an optimist-buyer on the other side of every transaction.
As for the larger investment perspective, it’s important to match your investments to the time when you need your investment funds – i.e., for needs in the next 5-8 years, it’s prudent to hold cash, bonds and income-oriented investments. For needs beyond that, then holding stocks for their capital appreciation and dividends is generally appropriate. For now, I don’t see anything in the COVID-19 virus story to change this investment approach.
As for the virus, here are both divergent pessimistic and optimistic views that I have come across this week.
First, simply watch the news or get your information from social media. Bad news sells – this hasn’t changed.
Second, I am attaching a paper from a working group of apparently very smart people from Imperial College in London. This paper has made a big impact in England and the U.S. this week. It’s not an easy read. But in a nutshell, it paints a grim picture. They believe that this pandemic is most appropriately compared to the 1918 influenza that killed 675,000 Americans (rather than the 1957 and 1968 flues). They are calling for an aggressive interventionist approach. Even then, it will overwhelm hospital systems in Great Britain and the U.S. either in June or later in the fall – later if we implement extreme containment measures now. And without a vaccine, this virus could come in waves and keep us in rolling lock downs and quarantines – not a comforting thought given the economic damage they cause.
First, viruses are clearly beyond my expertise. But having spoken to several medical professionals and doctors this week, I understand that the virus has mutated from its inception and might now be less virulent than initially thought. If so, then it’s possible that the death rate in the U.S. will end up being lower. This might help explain why some younger people were dying in Wuhan when the outbreak began – that, and it’s thought that they were exposed to larger quantities of the virus. Unfortunately, without adequate testing, it’s impossible to know the fatality rates in the U.S. Fingers crossed.
Second, I follow a gentleman named Peter Diamandis. He and his staff are focused on what is going right in the world – and we could use more of that! I am copying and pasting an email that I received from him on March 18th. Here it is in its entirety with links:
How about some good news for a change? There have been A LOT of facts going around regarding COVID-19, and a flurry of “positive news” items to lift our spirits.
Here are a number of major victories from the Pandemic line. I’ve had my team fact-check these wins with links you can follow up on.
(1) Vaccine development: An experimental vaccine developed by Moderna Inc. began the first stage of a clinical trial on Monday, with testing on 45 healthy adults in Seattle. [link]
(2) China’s new cases plummet: China has now closed down its last temporary hospital built to handle COVID-19. Not enough new cases to warrant them. [link]
(3) Drugs that work: Doctors in India have successfully treated two Italian patients with COVID-19, administering a combination of drugs — principally Lopinavir and Ritonavir, alongside Oseltamivir and Chloroquine. Several are now suggesting the same medical treatment, on a case-by-case basis, globally. [link] [link]
(4) Antibodies to the rescue: Researchers at the Erasmus Medical Center claim to have found an antibody that can fend off infection by COVID-19. [link]
(5) 103-year-old recovery: A 103-year-old Chinese woman has made a full recovery from COVID-19 after being treated for 6 days in Wuhan, China, becoming the oldest patient to beat the disease. [link]
(6) Stores re-opening: Apple has reopened all 42 of its Apple retail stores in China. [link]
(7) Test results in 2 hours: Cleveland’s MetroHealth Medical Center has developed a COVID-19 test that can now deliver results in just two hours, rather than in a matter of days. [link]
8) South Korea’s dramatic drop in new cases: After its peak of 909 newly reported COVID-19 cases on February 29th, South Korea has now seen a dramatic drop in the number of new cases reported daily. [link]
(9) Mortality rates inflated? Experts predict that Italy has seen a higher mortality rate of COVID-19 given its significant aging population, as well as its higher percentage of COVID-19 patients with pre-existing health conditions. This might suggest that COVID-19’s fatality rate may have been slightly more inflated than previously thought for the general population. [link]
(10) Israeli vaccine development: More than 50 scientists in Israel are now working to develop a vaccine and antibody for COVID-19, having reported significant breakthroughs in understanding the biological mechanism and characteristics of the novel coronavirus. [link]
(11) Full recoveries: Three patients in Maryland who tested positive for COVID-19 have now been reported to have “fully recovered.” [link]
(12) Isolated virus: A network of Canadian scientists isolated the COVID-19 virus, which can now be replicated to test diagnostics, treatments, and vaccines. [link]
(13) Yet another vaccine in the works: San Diego biotech company Arcturus Therapeutics is developing a COVID-19 vaccine in collaboration with Duke University and National University of Singapore. [link]
(14) Treatment protocols: Seven patients who were treated for COVID-19 at Jaipur’s Sawai Man Singh (SFS) Hospital and Delhi’s Safdarjung Hospital in India have recovered. The treatment protocol will be widely scaled to other hospitals. [link]
(15) Another treatment: Plasma from newly recovered COVID-19 patients (involving the harvesting of virus-fighting antibodies) holds promise for treating others infected by the virus. [link]
Some of COVID-19’s hardest hit nation victims are already emerging strong after peak infection, and biomedical innovators are tackling the virus at unprecedented speeds. IMPORTANT TO REMEMBER… While everyone is concerned about the super-high mortality rate of this virus — which is calculated by the “number dead” divided by “the number who have tested positive” (currently ~8,000/200,000) — the denominator, i.e. the number infected is actually VERY hard to know because so few people have been tested. It may well be that 10x more are infected but subclinical. So is the mortality rate 4% or 0.4%? We will find out as large scale-testing comes reliably online. Wishing you the best. Remember that our most important tool during times of panic and crisis is our mindset. Best, Peter