“The truth is that even our politicians do not understand the exponential infection rate of COVID-19. For example, Hubei province went from 44 confirmed cases on January 23 to 4,903 (11X) that number a week later. Another week later, they were at 22,112 (4X). Italy, Iran, and South Korea have seen the same insane infection growth.”– Neal Bawa, computer scientist, and professional investor.
On March 11, The World Health Organization declared the coronavirus a pandemic. This declaration, while it came very late in the game, in my opinion, bolstered the fears that many people here in the United States have had for weeks.
As I write this, a profound realization has set in here in the US.
Most people, despite what politicians are telling them, now see that the coronavirus is real. The outbreak is growing at an alarming rate, and it will have potentially devastating human, financial, and political consequences from which it could take years to recover.
The Devil is in the Math
As someone who formerly worked in the technology sector, I understand mathematics and data perhaps a little better than the average person. However, my love for analytics and numbers was one of the things that led me to start a career in financial services.
Most people lack training in the subject of exponential math. That’s one of the reasons explaining compounding to financial clients is sometimes challenging. It’s also why it can be challenging to convince people about how quickly this virus is spreading.
On March 8, the confirmed number of US coronavirus cases was at 500. On March 11, it was 1,000. On March 12, that number had risen to over 1,300. I believe this number is low ONLY because of a shortage of test kits. Once kits are made more available, I expect to see those numbers dramatically increase.
According to several reliable epidemiological studies, the number of cases in the US will double every six days unless drastic intervention occurs.
So, let’s look at the math here. Using a conservative baseline estimate of 2,000, and barring the introduction of some miracle vaccine or draconian isolation measures, the numbers play out like this: 1 million US cases by the end of April, 2 Million by May 7, and 4 million by May 13. The “miracle” of compounding at work…
While it is true that only a small percentage of these coronavirus cases are fatal, many cases do require hospitalization. With a healthcare system already at near capacity before the outbreak, we can expect an unprecedented strain on our healthcare system. It doesn’t take much imagination to see where this could lead.
So, what do I do?
• Get informed and stay up-to-date.
If you haven’t already done so, watch as many videos and listen to as many podcasts as you can from qualified medical and financial professionals. Find non-emotional, factual websites staffed by physicians, epidemiologists, and data scientists.
As Warren Buffett recently cautioned, it’s never a good idea to make money moves based entirely on headlines. Remain calm, consult your financial planner, CPA, or other professionals before reacting. I know it’s hard to think about finances when so much else is at stake. However, I feel we will eventually get a handle on this and that there could be many assets available at bargain prices. For some, this will be an opportunity to shore up their financial positions and be on top when things return to normal.
Real estate investors could especially benefit, especially in light of the Fed’s recent interest rate cut.
• Prepare for the inevitability of some drastic quarantine measures
There is always hope that a vaccine will be developed that could radically slow the spread of coronavirus. However, I don’t think that will happen for at least several months. Officials will be forced to consider a quarantine along the lines of that which Italy recently enacted. This quarantine will be in addition to the recent moratorium on flights from Europe. You don’t have to think long about what that will mean, even in the short term.
• The bottom line: Take care of those you love
Politicians have been hesitant to tell us the truth about the extent of this flu. They have desperately tried to keep the populace in the stock market, in the mall, and on vacation, but people around me are beginning to grasp the situation.
In big box stores around the country, shelves are being emptied of essential items like toilet tissue, rubbing alcohol, and first aid supplies. It’s now nearly impossible to find face masks, laetrile gloves, or other protective gear. Unfortunately, many people know what lies ahead.
Right now, the least you should do is to prepare for lockdown. Gather food, water, and essentials to last at least 4-6 weeks. Such measures may sound alarmist, but it is a perfectly rational thing to do when you think about it. After all, many of us live in areas where hurricanes, tornadoes, floods, and earthquakes are always possible.
Preparation makes sense, whether or not the US declares a quarantine. The worst that could happen from being prepared is that you and your family will have a lot of canned food available for other types of natural disasters or to donate to your local food bank.
If you have any questions or concerns about how you can make your wealth safer in the face of multiple threats, please contact me.
