My Thoughts About the Coronavirus: Ray Dalio

Good insides on what companies can and cannot withstand a once-in-a-lifetime event. My look into the 2008 Great Recession was very helpful with my pattern matching. 98 out of 100 stocks lost money during that recession, but most of them did super well during the longest recovery period in U.S. history. Even AIG made people a bunch of money.<p>Here&#x27;s the full dataset of 1363 mid cap + stocks that traded during the 2008 recession, and their performances: <a href="https:&#x2F;&#x2F;shan.io&#x2F;writing&#x2F;learnings-from-the-2008-great-recession&#x2F;" rel="nofollow">https:&#x2F;&#x2F;shan.io&#x2F;writing&#x2F;learnings-from-the-2008-great-recess...</a>

&gt; this is one of those once in 100 years catastrophic events that annihilates those who provide insurance against it and those who don’t take insurance to protect themselves against it because they treat it as the exposed bet that they can take because it virtually never happens.<p>They said 2008 was a once in a lifetime event, too. So what’s the next black swan that will unsettle the market in 2032? The Big One finally hits California? Mount Rainier erupts? The Yellowstone Caldera?<p>&gt; The markets are being, and will continue to be, affected by these sorts of market players getting squeezed and forced to make market moves because of cash-flow issues rather than because of thoughtful fundamental analysis.<p>So it sounds like we didn’t learn much from 2008. Will we learn from 2020?

Looking at countries with wide community spread[1] the spread is very clearly tied to cold weather (Europe, Korea, and Iran). This pattern is similar to other air transmitted viruses such as the Flu. Warmer countries seem to be resilient despite some having higher density and lower hygiene standards (e.g. India).<p>Given that the default assumption should be the COVID-19 will follow the flu pattern of diminishing rapidly in March up to barely any case in April [2]. This by no means try to diminish actions to be cautious, or the risk it imposes. However, if you are asked to put money on a certain direction, betting on warming up weather reducing the R value of the virus enough to stop it is what I would do.<p>[1] <a href="https:&#x2F;&#x2F;www.worldometers.info&#x2F;coronavirus&#x2F;" rel="nofollow">https:&#x2F;&#x2F;www.worldometers.info&#x2F;coronavirus&#x2F;</a> (Sort by new cases) [2] <a href="https:&#x2F;&#x2F;www.cdc.gov&#x2F;flu&#x2F;weekly&#x2F;index.htm" rel="nofollow">https:&#x2F;&#x2F;www.cdc.gov&#x2F;flu&#x2F;weekly&#x2F;index.htm</a>

Only thing interesting about this virus is 1) It fully stopped all the PR coverage of the Hong Kong protests, and 2) We learned how poorly we are prepared for a pandemic

&gt; The fact of the matter is that history has shown that even big death tolls have been much bigger emotional affairs than sustained economic and market affairs. My look into the Spanish flu case, which I’m treating as our worst-case scenario, conveys this view; so do the other cases.<p>The world was a vastly different place when the Spanish Flu happened. Think of all the things we have today that we depend on to operate flawlessly that didn&#x27;t exist back in 1918.<p>I guess the comparison I would make might be an airplane that is largely analog and manual back then vs. now stuffed with electronics. Take away those electronics and it can&#x27;t fly manually. So much of our life depends on people to keep the electronics working that any impact to those and their functions (say the electric grid) would cause an immense amount of interconnected havoc.

It&#x27;s very hard to have an informed opinion on the virus. Different actors have different incentives. Medias try to sell ads, politicians want to be elected (or not held responsible), institutions like WHO are political (I don&#x27;t really trust them after seeing their treatment of Taiwan) and have their own agendd, even experts have their own biases and are selected by medias. And we are all deeply biased, and tend to look up exactly what we want to hear.<p>After reading <i>a lot</i> of information, my bet is that the virus itself is in the same league as a bad seasonal flu (I heard that from at least two experts, and from my MD), and we&#x27;ll suffer more from our bad handling of the situation, rather than from the virus itself. We should deal with this virus exactly how we deal with seasonal flu. Stay home and wear a surgical mask when we&#x27;re sick, go to see our MD (wearing a mask) if we have mild symptoms, and go to hospital if we have severe symptoms. Generally, avoid close contacts, don&#x27;t shake hands and so on.<p>That being said, better be safe than sorry. I personally will work remotely and avoid public transportations for the following month until we have more information.

I am interested in seeing how much more effective China&#x27;s current system will be at addressing the outbreak vs highly developed western democracies.<p>If there&#x27;s one thing a technologically advanced dictatorship like the CCP should excel at, it&#x27;s this.

&gt; containing the economic damage requires coordinated monetary and fiscal policy targeted more at specific cases of debt&#x2F;liquidity-constrained entities rather than more blanket cuts in rates and broad increases in liquidity.<p>more bailouts? how about letting them take the consequences of their actions? they would have taken the upside so should accept the downside too instead of shifting it to taxpayers. how else will markets stay healthy if evolution is thwarted

side note: all of the comments on linkedin are basically high fiving him. possibly as negative comments on linkedin could be career limiting

so if the way to make money in a gold rush is to sell shovels, what should we do during a pandemic?

&quot; 2) a population that follows orders&quot;<p>maybe

Coronavirus has been circulating for months now. Many of us have already beaten it. That&#x27;s why spread is linear and not gripping the world like it should be at this point: The &quot;spread&quot; is a measurement of panic and vigilant diagnosis. This is most carefully observed cold of all time.<p>I was stocking up on dry goods and such like everybody else. After the past few days I feel like a panicked fool. Almost every single death report: &quot;Had underlying health conditions.&quot;