
My Thoughts About the Coronavirus: Ray Dalio - rubayeet
https://www.linkedin.com/pulse/my-thoughts-coronavirus-ray-dalio
======
rayshan
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.

Here's the full dataset of 1363 mid cap + stocks that traded during the 2008
recession, and their performances: [https://shan.io/writing/learnings-from-
the-2008-great-recess...](https://shan.io/writing/learnings-from-
the-2008-great-recession/)

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tomerico
That is super interesting. You should probably submit it as a separate
submission!

~~~
rayshan
Thank you! I did a while back, will see if HN lets me do it again. Feel free
to AMA!

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Apocryphon
> 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.

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?

> 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.

So it sounds like we didn’t learn much from 2008. Will we learn from 2020?

~~~
js8
> So it sounds like we didn’t learn much from 2008. Will we learn from 2020?

I am busy, right now I am trying to learn that humans will never learn from
history. I vaguely remember somebody mentioning that to me in the past, but I
dismissed it as a nonsense.

(But I am not really that pessimistic. Somebody mentioned that the Spanish flu
was a big impulse for providing national health care services. I think it can
have a similar effect, somewhere.)

~~~
bcrosby95
They have learned: privatize gains, socialize losses. The government is so
fearful of meaningful corrections they will do whatever is necessary to make
the people at the top whole instead of letting them suffer catastrophic
losses. So party on.

There are ways to go about this and wipe out investors without causing
complete economic collapse (e.g. nationalization and orderly dismantling) but
"we've" already decided not to go that route.

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tomerico
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).

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.

[1]
[https://www.worldometers.info/coronavirus/](https://www.worldometers.info/coronavirus/)
(Sort by new cases) [2]
[https://www.cdc.gov/flu/weekly/index.htm](https://www.cdc.gov/flu/weekly/index.htm)

~~~
rmolin88
Very true! But the second wave, when winter returns in October, hit even
harder [0]

See Deadly second wave section in the Spanish Flu [0]:
[https://en.m.wikipedia.org/wiki/Spanish_flu](https://en.m.wikipedia.org/wiki/Spanish_flu)

~~~
koheripbal
This time, though, we will see it in advance as it tears through the Southern
Hemisphere.

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lbj
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

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vsareto
>We learned how poorly we are prepared for a pandemic

I've heard mixed things about China's reporting on it. It's more difficult to
trust authoritarian regimes by default, but even good preparation can falter
if there isn't honest information. Everything sort of followed China's
information in the initial stages.

Everyday citizen preparation could be affected by social media manipulation
(political manipulation tactics repurposed), but democratic government
agencies wouldn't likely trust those sources, although they have to make sure
their voice is the authority for citizens and not social media.

So can you effectively prepare for an outbreak when communication is
deceptive/less effective/manipulated? I think it's very difficult.

~~~
Leary
"So can you effectively prepare for an outbreak when communication is
deceptive/less effective/manipulated? I think it's very difficult. "

By getting enough testing kits ready so you are not in a situation where
hundreds/thousands of possible infections have occurred in Washington state
while you've only diagnosed ~100 people.

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gist
> 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.

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't exist back in 1918.

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'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.

~~~
ptah
good point, everything is too optimised and there's no slack anymore

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yodsanklai
It'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'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.

After reading _a lot_ 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'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'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't shake hands
and so on.

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.

~~~
dougmwne
It would be great if you could share your reasoning and information as to why
you think this is just a bad flu. I have been seeing information from China
that says the death rate is 20-30 times higher than the flu and that the
hospitalization rate could be up to 20%. Other than China, most countries
haven't been infected long enough to do studies on the final fatality or
hospitalization rate.

~~~
yodsanklai
Mortality rate in China is overestimated because they tested primarily the
most severe cases. From [1]:

"This suggests that the overall clinical consequences of Covid-19 may
ultimately be more akin to those of a severe seasonal influenza (which has a
case fatality rate of approximately 0.1%) or a pandemic influenza (similar to
those in 1957 and 1968) rather than a disease similar to SARS or MERS, which
have had case fatality rates of 9 to 10% and 36%, respectively."

[1]
[https://www.nejm.org/doi/full/10.1056/NEJMe2002387](https://www.nejm.org/doi/full/10.1056/NEJMe2002387)

Also there were 3000 death in China, and new cases are declining. In France
alone (20 times less people), it's common to have 10000 death annually from
the flu. Of course, China enforced strict containment measures and we don't
know the exact numbers, but overall the death toll seem rather small. Why
should we expect much worse in the West? And finally, it's not sure, but some
experts expect the virus to decline with warmer temperatures. So overall, I'd
say there's room for optimism.

~~~
dougmwne
The reason we should expect worse in the West is because China put hundreds of
millions of people under some level of quarantine control. If we don't enact
those kinds of measures, we can expect higher numbers of infections and
deaths.

I do hope that the death and hospitalization rate ends up being lower and am
awaiting studies based on places like the towns in the Italian red zone where
they tested every resident and the Diamond Princess. If the rates end up
anywhere near the initial estimates, the hospital capacity situation could
become very serious unless we enact quarantines.

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djohnston
I am interested in seeing how much more effective China's current system will
be at addressing the outbreak vs highly developed western democracies.

If there's one thing a technologically advanced dictatorship like the CCP
should excel at, it's this.

~~~
pengaru
Making such a comparison is non-trivial; does any highly developed western
democracy share China's population size and density?

I'm more curious about how this will affect India, where the population
situation is more similar to China's. I haven't seen any mention of the virus
there in the news, yet.

~~~
Apocryphon
Supposedly the climate may impede the virus’ ability to spread.

[https://www.click2houston.com/weather/2020/02/26/will-
housto...](https://www.click2houston.com/weather/2020/02/26/will-houstons-hot-
and-humid-weather-protect-against-coronavirus/)

~~~
jcadam
Part of the reason I had been hoping this virus wouldn't hit Florida (where I
live) until summertime. It's miserably hot and humid down here from about June
to September.

Also, school would be out.

~~~
myself248
I tellya what, Florida real estate just went from bad to worse.

As if sea level rise swamping much of the coastal land wasn't enough, there's
the so-called "silver tsunami" \-- a large wave of Baby Boomers dying, and
their homes being backfilled by a much smaller cohort of new retirees over the
coming years.

If the virus becomes widespread in retiree-heavy areas, it's gonna compress a
decade-plus of mortality into an incredibly short span. All sorts of places
will be affected, but Florida is in for the worst of it.

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ptah
> containing the economic damage requires coordinated monetary and fiscal
> policy targeted more at specific cases of debt/liquidity-constrained
> entities rather than more blanket cuts in rates and broad increases in
> liquidity.

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

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

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

~~~
mighty_plant
I guess invest in anything that "treats" social distancing like medication,
video games, VR, collaboration technology, etc.

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thedudeabides5
" 2) a population that follows orders"

maybe

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crystaldev
Coronavirus has been circulating for months now. Many of us have already
beaten it. That's why spread is linear and not gripping the world like it
should be at this point: The "spread" is a measurement of panic and vigilant
diagnosis. This is most carefully observed cold of all time.

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: "Had
underlying health conditions."

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elicash
Vigilant diagnosis? Isn't the biggest issue for the U.S. right now that we're
not able to test nearly enough people?

As far as stocking up, my understanding was that the reason for picking up an
extra couple items each time you go to the store was in case eventually
certain areas are rec'd to work from home and such. Maybe that won't happen,
but it's not like that stuff would go to waste.

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crystaldev
We're testing people who would ordinarily not be tested already. That doesn't
mean the diagnosis is wrong, or that COVID-19 isn't widespread.

~~~
elicash
I know it's widespread. The extent to which that's the case, unfortunately, we
have no idea because there hasn't been enough testing.

Not sure what you mean by "ordinarily" tested. This pandemic is quite a unique
situation.

