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March 3, 2020 | Living with Stupid

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.

Silly people storming Costco. Hoarding toilet paper. Amassing bottled water. Vacuuming shelves of rubber gloves and useless facemasks. As the media drumbeat about the virus continues and grows louder, all perspective is lost.

Yes it’s new and scary. Germs be like that. But look at China. A country of 1.4 billion with fewer than 80,000 cases, where daily infections are now plunging. The epicentre of Wuhan has 11 million souls, most of the cases and a few thousand deaths. If that’s about the worst it gets – with 99.8% of the population surviving this thing, then are people in Burnaby in a flap and Hoovering local stores?

What drives rational people to speculate two-thirds of humanity could be infected and hundreds of millions fall over?

Fear, of course. Fueled by social media and stoked with ignorance, the virus crisis advances.

“My students are scared to death,” says blog dog Carol, who teaches at a post-secondary institution. “I think you can check the validity of all that I am telling my students – and if true, with your huge following, it might be worthwhile if you could get it out there.  Reducing panic is one of the critical first steps in dealing with this virus when/if the time comes.”

Here is her letter to the students:

This virus has been over-hyped – 1.3 billion Chinese and fewer than 100,000 have contracted it.  About 3,000 have died since December – more people die of traffic accidents every day – Nearly 1.25 million people die in road crashes each year, on average 3,287 deaths a day.  The flu, which you are far more likely to catch, kills 3,500 on average every year in Canada and the 2018-2019 flu season killed over 34,000 in the US – yet no one panics every year as we enter flu season.

Next, COVID 19 deaths, like for the flu, have been largely restricted to the extremely elderly and to the immune compromised – people more likely to die anyways – and to health care workers who are stressed, over-worked, and constantly exposed to the virus.  Driving, by contrast, kills and injures lots of young and healthy people – you should probably be far more afraid of getting into a car than of this virus.

So, if your cupboards are stocked in anticipation of the potential for stupid, and you follow basic hygiene – keep your hands washed whenever you go outside, or someone visits – you will probably be fine.  Don’t bother with masks if you are not ill – they are NOT designed stop a virus from entering your lungs.   The masks are instead designed to keep-in droplets when sick people sneeze, cough or snuffle – so, their primary use is for if you are already sick.  The benefit to a healthy person of a mask is to prevent you from wiping your eyes/nose with dirty hands.  This effect is easily copied – tie a scarf around your mouth and nose and buy a pair of safety goggles from Canadian Tire.  Don’t touch your face with your hands, unless you first wash them well with soap and water.

People are freaking-out because hand-sanitizer is sold-out at their local drugstore. It’s just alcohol … so buy a cheap bottle of really dry white wine or some rubbing alcohol  – put it into a small container – and voila, you have hand sanitizer! (In a pinch, perfume and cough syrup contain high quantities of alcohol, but (a) stink and (b) are sticky.)   That having been said, plain soap (don’t waste money on anything special) and water are far more effective than alcohol in cleansing your hands.

Okay, enough with today’s health tips. Nobody should fear death, since that’s unlikely (from the virus, anyway). But you should be worried about stupid. Hoarding instead of sharing is stupid, for example. Wearing a mask walking the pooch. That’s dumb. So is trashing your investment assets and going into cash. Or vexing, fretting or panicking about stuff you can’t control or influence.

Now, what about Mr. Market and your portfolio?

The news is this: central banks have started to react. As we told you they would. The Fed chopped its key rate a big half-point today and the Bank of Moosehead goes tomorrow. There are more chops coming, with US rates heading down again in the next few months and our guys trimming once more in April. As a result bond prices have jumped and bond yields cratered. The Canada five-year fell through 1% today…

US, Canada bond yields dive below 1% on Fed cut


The G7 finance dudes (including Chateau Bill) shared a conference call Tuesday morning and pledged to act together. Fed boss Jerome Powell had a presser to explain the rate cut. His comments that the mess would last “for some time” sent Mr. Market into a funk, igniting another sell-off since investors want a quick fix for everything. So, as this blog told you last week, the downdraft ain’t over yet.

But here’s the point me and Carol want to make.

You can wash your hands and stay healthy, but you can’t save China or the stock market. Understand that every time there’s a crisis it’s followed by a resolution. And emotion is not your friend. Especially fear. Carol’s students probably have no investment portfolios, and no financial exposure to current events. No jobs to lose. No skin in the game yet. But they’re scared to death – of a germ that even if they caught (unlikely to ever happen) they will survive (of course).

By the way, don’t bother posting scary, emotional comments about looming mass death. I’ve just sterilized my delete finger.

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March 3rd, 2020

Posted In: The Greater Fool

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