Nothing To Fear But Fear Itself

The Novel Coronavirus (2019-nCoV) has rocked the markets over the last few days.  The main reason is due to the fear of the disruption of economies from people either not being allowed to go out (curfews in China or other places) or being afraid to go out (think of airlines and cruise ships especially).  This translates into people spending less money on certain items, and that will have a negative effect on certain industries until this goes away.

I have concerns, too, as 1) I’m invested just like you and 2) I’ll be travelling out of state and out of the country via plane on two separate trips over the next six weeks, with friends and family, respectively, so I wanted to know if I should be worried.  Here are the results of my research, which have bolstered my belief is that this crisis will soon go away:

  • A great resource for keeping up with the status of 2019-nCoV is If you click that link and look at the two charts near the top of the page, you will see an upward sloping line of the Active Cases of 2019-nCoV, as well as the deaths. While the graphs may look alarming at first, it is appropriate in many cases, especially when it comes to virus transmission, to look not at simple growth but at the percentage growth. This is because a virus carrier tends to infect multiple people before their carrier status is discovered; if one person infects 3, and they infect 3, and so on, you have a steady 300% growth; you want to see a slowing down of the percentage growth to know that prevention is becoming effective.  So, on those two charts, click ‘logarithmic’ and you will see the percentage growth shows a levelling off in growth for both active cases and deaths.  This is great news, and may very well mean that the percentage growth will soon turn negative (even though deaths will continue to rise until the virus is fully contained).
  • While people of all ages can be infected, according to China’s National Health Commission, about 80% of deaths were over the age of 60 and 75% of those deaths had pre-existing health conditions such as cardiovascular diseases and diabetes. Note, too, that smoking is far more prevalent in China than in the United States, and 2019-nCov is virus that attaches and grows in the lungs; weaker lungs mean more risk of mortality.
  • Estimates for fatality rate right now are VERY preliminary, but it appears to be between 2-3%, whereas SARS (which caused a scare in 2002-2003) had a nearly 10% fatality rate and MERS (2012) was over 34%! Those were truly scary numbers, and clearly lessons were learned from both.  This virus appears to be much less deadly.  For comparison purposes, the flu has a low (~0.05% worldwide, ~0.0001% in the U.S.) fatality rate, but kills upwards of 600,000 people each year worldwide.
  • China has a population of 1,500,000,000, of which 79,000 have been infected (95% of worldwide cases), which is growing at a slower pace every day (as discussed in the first bullet point) with under 3,000 deaths. This means that 0.005% of their population has been infected. From an economic disruption standpoint this is not a large number.

Bottom line: look at the title of the article. While I’m not an epidemiologist, the data tells me that we are headed in the right trajectory and that this will be all but forgotten in just a few months, just like SARS and MERS which were worse in many ways but were quickly contained.  Until then, fear will rule the day and the markets will be volatile.  Hang on for the ride, wash your hands, and keep your long-term money long-term!

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