I am noting for my future self that yesterday, Sunday March 22, 2020, was the day that my mood shifted fairly markedly from gloomy about the mid-term 3-9 month window to optimistic.
SHORT TERM (0-2 months) things will get tougher, and media gloom will accelerate as the wave now hits NYC. From a life and death, risk and economic standpoint, there is much pain ahead of us to endure. But mid-term (3-9 months) to long-term (9+ months and more), things, I think, start to look bright again.
Relative optimism about these latter two timeframes is new for me, because I did not have that feeling even a few days ago.
DISCLAIMER
I am not a physician. I’m not a scientist. Nor do I have any medical training. I’m simply Very Online, and I read a lot. Like a lot of us, I enjoy building, I plan, and I invest. I generally find I need to have a mental model of what the next 0-24 month time horizon looks like in order to build and plan and invest successfully, and I work pretty hard at trying to have a good guess about that near to mid-term horizon. I love future-forecasting. It’s been a major part of my modus-operandi ever since I’ve been about ten years old — what does the future hold? What do I predict? And then, what actually did occur? Was I right or not? And… update mental model. I’m constantly updating mine.
I’ve been wrong about some very big things, like the election of 2016. That taught me a number of things, particularly that my own filter bubble of a deep-blue Facebook feed living in one of the deepest-blue cities in the nation, was really quite narrow. I’ve also been right about some pretty big things, like Microsoft being uniquely positioned in 1989 with the likely winning platform to benefit tremendously, many events throughout the telecom and Internet wave. And most recently, I felt the odds for a major “black swan” event in 2020 were quite high, and expressed those on Facebook more than a month ago.
With respect to the 2020 coronavirus pandemic specifically, I felt far more worried than my friend group and family about what is now called COVID-19 starting in about mid-January, a little too afraid to blast those serious fears online for fear of being labeled a tinfoil hat-wearer. I saw the alarming data from the initial papers and scientists on Twitter. I reasoned that a virus doesn’t really care much about a nationality or a border, that we have pretty significant trade with China, that air transportation multiplies the interconnectedness of nations. It was pretty clear the Chinese government and state media weren’t telling the full story. I was alarmed when I read in some early research papers that virus-carriers are asymptomatic for several days, 2-4% observed overall mortality rate (high among elderly, very low among youth), R0 of about 3 initially, etc. It was all becoming clear that this had serious chance — actually a likelihood — of becoming a new pandemic. And I saw the relatively dismissive public attitude by national political figures toward it, which was worrying.
Maybe you were one of those people too that started to develop a sense of real alarm in mid-January. I didn’t really encounter many here in Seattle very concerned about this in January, in the week or two after the Seahawks wrapped up their season with a disappointing 23-28 loss to the Green Bay Packers.
I shared that concern and those fears privately at home multiple times in January and early February, and particularly with good friends like Brian A., an investment professional in my neighborhood, who also was developing the very same concerns. Greg W. saw it very early and was also an exception. (He accurately predicted the 2016 Election as well.) Brian A. was quite concerned starting in mid-January, and he and I communicated often about this from mid January on.
I occasionally noted my concerns on Facebook — e.g., when the Diamond Princess incident first happened, and when the sheer scope of the Wuhan outbreak and its dystopian landscape became clear, but largely stayed away from being a doomsayer, because much of the conversation had already been cast in the context of presidential politics.
I did share one joke/non-joke about it:
In truth, I had already taken action that day, ordering a very small supply of wipes and sanitation equipment, sensible sanitary first aid supplies and more. I started organizing our pantry, and bought a few long shelf-life foods, but no more than a couple weeks’ worth. A week or two later, I posted a gentle/friendly note to friends to think about homestay supplies (and not to hoard) a week before “work from home” and private school closures started getting rolled out, and about three weeks before Seattle Public School closure announcements rolled out. I had been following Trevor Bedford on Twitter (of the Seattle Flu Study), who had been sharing very useful and alarming information.
I backed out substantially of a few market positions in late January and early February. I’ve never been a market timer, but a wave seemed to be highly probable and worth (relatively) protecting against. My wife can attest to the fact that in January and early February, my actions seemed a little crazy, and my mood quite dour. We finally aligned a bit in our perceptions when the schools started closing here.
ANY PREDICTION MADE TODAY IS MORE LIKELY TO BE INCORRECT THAN CORRECT
Thankfully, my wife’s not on Twitter, which is both a hell-site and a worry-multiplier. She just doesn’t want to use it, and bring that into her day, and I applaud her for that. It’s probably the right decision for all of us, and certainly the right decision for her. But Twitter is also a great source of early information IF you can view it with the skepticism it deserves, and always double and triple check the information, its source, and hold off on “investing” in it. It shows both the illusions of water on the horizon but also points the way toward oases; it’s often very hard to determine which is which.
Filter Bubbles and Timezones
One thing the COVID crisis has highlighted is that filter bubbles exist not just within information channels (e.g., social networks on Facebook) but between the very channels themselves. That is, these channels attract or repel certain types of people, and they therefore have their own filter bubbles of information.
There seem to be at least five major information timezones. From earliest to latest, I’d label them: Twitter, CNN/FOX/MSNBC/NYT/WashPo etc., Facebook, The View/Nextdoor, and BRAVO. The second such channel, unfortunately, has been really corrupted by all kinds of activist bias. It is increasingly hard to rely upon the information provided there, because from about 2002 onward, every news story is somehow framed as a commentary (either negative or positive) on the administration that helms the White House. There is very little journalism that’s not activist journalism these days.
I take the deliberate risk of being on the earliest timezone, which is an incredibly bad worry-multiplier. And it’s so easy to get pulled into the childish, nasty, meme-driven vindictive back and forth. It’s often unhealthy.
But it can also be quite informative, and connect you with thought leaders, published research papers, and top-line thoughts from people in all walks of life, in all parts of the globe.
All this is to say that it’s best to treat evolving news stories as a Microsoft product from the 1990’s: wait until version 3 before investing. And in late January and early February, many warning signs were telling me to be gloomy, and I’ve stayed very dark and gloomy for a couple months now.
My “Mid-term 2-9 Month” Optimism Is Starting To Return
But that mood is starting to change. For the first time in months, after pouring through some promising initial signs on antivirals, yesterday felt different.
This is not at all to say that the short-term looks rosy. It doesn’t; it looks awful. Short term, in the 0-2 month timeframe, we have a lot more bad news to come.
There will be more deaths — thousands of them — and more overloaded hospitals desperately needing help. These next two weeks will be very rough in many more states. The panic level will rise as the wave is hitting the major media and financial center of NYC right now. And nations like Italy, and those nations and states which have not imposed social distancing and stay-home orders will continue to really struggle.
But I’m turning toward optimism that we’ll have antiviral courses which will work, and sustain us, and allow us to get back to some level of normalcy in the 2-18 month period, until the vaccines arrive.
As a layman, the very idea of having relatively effective antivirals themselves wasn’t even a “likely” to me until a few had shown effective action. Very likely many scientists knew these were possible and even likely. But to me, they weren’t. But there are now some early, very promising signs for a couple of them. One of them is a combination of hydroxychloroquine and azythromycin. But there are other pairs and individual protocols being tested.
They’re almost certainly not perfect, but they’re a pretty good starting point, it looks like. And given the grave consequences to the global economy to keeping everyone at home, the pressure will be substantial to accelerate their rollout after (hopefully) validation that they seem to work. We won’t know whether they do work until larger scale tests are done, which reportedly begin as soon as tomorrow. And then, since COVID has a relatively short and severe course (0-21 days, typically), we might know much more conclusively in, say, 15-40 days what the results are looking like.
So how might this play out in an optimistic, even plausibly likely (knock on wood) scenario?
Short-term, it should be mentioned that we are just entering into a period of maximum panic from a psychological standpoint in the media and financial center of America: NYC. Thus far, it looks like their shelter-in-place measures are inadequate. So things will, from a psychological standpoint, be quite bad for at least a couple weeks as hospitals become overloaded, and the wave of concern that first hit us in the Pacific Northwest a couple weeks ago starts to crest in NYC. NYC has a megaphone both culturally and financially.
One Possible Timeline
I really hesitate to write down my predictions and share them here, because they will almost certainly have errors, very likely, quite significant ones.
As my good friend Adam Doppelt says, “I’ve never regretted writing anything down.” Please don’t take this as investment advice, and CERTAINLY do not take this as health advice — heed your local warnings and directives, ideally sheltering in place per your local guidelines.
I need a current “default” set of assumptions to work from. So, what scenario do I currently think is most plausible? Keep in mind that I’m mostly writing to my future self, and hoping that by writing down what I’m feeling now about the future, I can look back, see what I under and over-estimated, and perhaps make course corrections next time. That’s a major part of how I operate.
My current mental model of how it might play out looks like this:
| Period | Prediction |
| Mar 23-Apr 20 | * gloom hits NYC in serious form and media/financial gloom escalates * larger scale trials of antivirals * results encouraging, dosages tweaked. side effects noted; there’s risk but risk is deemed acceptable * toward latter half, starts filtering through media and wider culture that an antiviral course might be a stopgap |
| Apr 20-May 20 | * death curve due to COVID starts to bend/flatten in US * markets will begin to do some sporadic relief rallies, but not return to the pre-COVID levels for a couple years, perhaps * media narrative begins to shift toward other stories, particularly the presidential election * rapid tests become widely available dosages tweaked, supply provisioned * various governors start easing socializing restrictions |
| Memorial Day (roughly) | * COVID-19 crisis starts to “feel” behind us, which will NOT actually be reality, it’ll remain a serious concern, just with available supply to test and treat |
| Summer 2020 | * DNC/RNC conventions and 2020 election race news begins to re-take lead headlines I’d like to stay out of national political commentary except to say that I’m not incredibly impressed with either party’s offerings at the national level right now. (I’m Independent, and have never registered with either party.) I am impressed with Gov. Jay Inslee’s approach and that of many state governors. Market starts to rebound in August-October, but most investors will hold off until we get a sense of whether R’s or D’s have the likely nod. |
| Fall-Winter ’20 | We will have serious re-outbreaks of COVID-19 but a combination of antivirals and herd immunity will keep it from being as massive as the Spanish Flu pandemic’s second wave |
| 4Q 2021 | Vaccine becomes available in wider supply. We realize coronavirus has many mutations and patterns and try to build a more generalized platform to deliver these vaccines. |
Antivirals Might Just Work as a Stopgap
Last week and this weekend, I have been reading several very encouraging results from some antiviral pharmaceutical trials, a potential stopgap measure before vaccines arrive. These early results seem to be reaffirmed now in at least four completely separate instances and countries: France, China, USA, and Australia.
A very good summary of what we know so far is here in The Scientist Magazine. There are small-scale trials that show very promising results. There are important exceptions and caveats, such as that ably discussed by Gaetan Burgio:
And there is PLENTY more to learn regarding the hydroxychloroquine and azythromycin trials (and variants), and wide trials to do. New York state goes to its first major trials this week.
I am cautiously optimistic, but optimistic. Nothing that I’ve been able to discover so far refutes this sense of optimism demonstrated in some early tests, though yes, there are -substantial- dangers and side-effects in any over-dosage, including death itself at a 10x+ dosage of one of the drugs.
Unrelatedly, today, Washington State has announced “only” one new COVID-related death. The full effects of social distancing have not yet been baked into the curve-bending.
Mini Black Swans Still Possible… Even Likely
COVID and the cold-reboot of the global economy aren’t likely to be the only major news stories of 2020-2021. We have two septuagenarians who are not necessarily in peak physical condition who will be facing off for national office. We have a growing tension between populist-nationalists and populist-socialists, with the lean-toward-trade-globalists like me largely on the sidelines.
We have two Supreme Court justices who are over 80 years old (Stephen Breyer, b. 1938, Ruth Bader Ginsburg, b. 1933.)
Earthquakes, hurricanes and even volcanic eruptions don’t care about COVID, and aren’t going to put their activities on hold.
We have a highly volatile election cycle, with ardent supporters and haters of the current president battling it out.
Please Do NOT Change Your Behavior… #StayHome #WashHands
But maybe join me in turning toward optimism, if you’re OK with the very possible chance that your optimism may be premature.
NONE of this will change our own behavior in our own household, and PLEASE of course do not let it change yours. We’re doing the right thing here in Washington State, and need to do even more of it. There is still a long way to go, likely several weeks, but I think we’ll get through this. It is all uncertain. Things are fluid and moving rapidly. But my mood is shifting to optimistic today.
How to help?
We’ve identified several of the ways that individuals can take productive action over at bigthanks.org; please drop by to learn how you can take action now.
