Unmasking Coronavirus: Keep your hands clean of stock market panic and stay the course
A review of the facts, fears and positives surrounding the Coronavirus pandemic
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There’s a lot of hearsay, fearmongering and even minimizing going around about the Coronavirus right now. While it is very serious, we need to stay light-hearted, arm ourselves with the facts and remain calm.
OK Elon… 🙄
🤦♂️
First things first: Despite what 38% of Americans might believe, the Coronavirus has nothing to do with that watered-down beer from Mexico.
In fact, Coronaviruses have been around for many millennia longer than the beer. They are actually a group of viruses named after their round shape from the Latin word corona for crown or halo. According the World Health Organization (WHO), the official name for the virus that has the world on the precipice of a global pandemic is SARS-CoV-2 (severe acute respiratory syndrome coronavirus 2). The disease that it causes in humans is called COVID-19.
You might be thinking, “what the heck do beer and viruses have to do with sustainability and personal finance?” Bear with me, I promise I’ll get there. Except for the beer—I’m done with that now.
As I’m writing this on Saturday March 7th, 2020, global fatalities from COVID-19 have just crossed 3,600. Is that a lot for something like this or a little? It depends who you talk to. A sensationalist would say that the number of deaths is already five times greater than SARS-CoV, the 2003 severe acute respiratory syndrome coronavirus with which we all associate the name SARS. A skeptic would say that the common flu (influenza) kills 290,000 to 650,000 every year, globally, a number that makes COVID-19 look like a drop in the bucket.
Again, it depends on who you’re talking to. A different sensationalist might say that COVID-19 has a mortality rate of 1.5% - 4%, somewhere between 10 and 50 times greater than influenza (<0.1%), while another skeptic might say that SARS was way worse, with a mortality of almost 10%.
The reality is that a combination of many intrinsic and extrinsic factors determines how bad an outbreak will be and there is no single statistic to compare one infectious disease with another. Of course, it depends on the virus’ or bacteria’s genetics, how it is transmitted, how long the host is contagious without showing symptoms, and how it affects the human body. The severity of the pandemic also depends on how quickly it is identified, how well the government and the public respond, how healthy the population is, the quality of healthcare they receive, and even in some instances, the time of year. These things all contribute to how contagious the disease is.
The total number of cases outside of China is growing in an almost perfectly exponential fashion—this is not the kind of math you want working against you. However, it seems China has been able to get a handle on the outbreak and factories are reopening and children returning to school, though it’s unclear if the data coming from China is completely accurate. China did implement rapid and extreme measures to curb the spread of COVID-19 and it just may have worked! We know that it’s going to get worse around the globe, but how much worse, only time will tell.
Coronavirus and the economy
Given the stock market sell-off that has occurred over the past couple of weeks, the number of event and trip cancellations, and the frantic purchasing of toilet paper, masks and hand sanitizer, we have obviously found ourselves in a global panic. Airline stocks are way down on the speculation of how much financial damage they will endure from reduced travel, while cleaning materials and vaccine stocks are up. It seems that the majority of the global impact of the Coronavirus so far has come from the way people are acting and not the virus itself. As usual, Andrew Yang says it best.
If you’re worried about your investments, as always, it’s important to ask yourself “what’s the worst that can happen?” Well, we could go into a recession. So, what does that mean for your investments? They could go down somewhere between 10% and 55%.
We also know that there have been many recessions and the markets have always gone up over time. These recessions from peak to trough have not lasted more than 15 months—and more often 3 or 4 months.
Nobody can know where the stock market will go from here—how much further it will fall and when or how fast it will recover. What we do know, is that there have been countless epidemics, wars, economic and political disasters and we have always come out the other side. This time will be no different. My advice to you is to not panic, stay the course with your investment strategy and continue to keep your eye 10, 20 or even 40 years down the road when thinking about your investments.
COVID-19 and the environment
Of course I wish there was no global pandemic and that everyone was healthy, but there are a few very interesting positive outcomes that have come of it, especially for the environment. Air travel is expected to decline 8.9% this year, an unprecedented change for the industry. This will lead to a 100-megaton reduction in CO2 emissions—more than the amount that 134 of the world’s countries emitted last year.
There will be some other very large one-time emissions reductions from global manufacturing, shipping of goods and delivery of services. We’re likely to see a measurable dip in the world’s global emissions this year, but these things will surely return to normal soon enough. There will, however, likely be long-lasting positive changes for the environment, as well.
Already over 60 tech conferences (including the one that I was supposed to attend this week) have been cancelled, postponed, or are going virtual. This is happening across all industries—from art auctions to tradeshows to academic conferences, just to name a few. Not all, but many of these events will continue to be virtual for years to come—meaning less air travel, wasteful conference booths, materials, business cards, etc. In addition, thousands of big and small companies, all around the world, have quickly embraced remote work over the past couple of weeks. As someone who works remotely, I know they are going to be pleasantly surprised with the amazing tools that are available, like Slack and Zoom, plus increased efficiency, reduced costs, and improved worker happiness.
Of course, the shift to virtual work means much less commuting and fewer cars on the road, less wasteful office space and less travel. It’s still too early to say how big of a shift there will be and the realized positive effect on global emissions, but I’m very bullish on remote work and I think COVID-19 is going to be a huge global catalyst in the right direction for remote work.
Do everything you can to stay healthy and positive as this plays out. It’s going to be a bumpy road and the world will change in many interesting ways, but we will come out the other side!
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