8th Special Update on the Coronavirus: Observations, Safety Measures to Take

ALL POSTS PRIOR TO 2021 HAVE NOT BEEN REVIEWED NOR APPROVED BY ANY FIRM OR INSTITUTION, AND REFLECT ONLY THE PERSONAL VIEWS OF THE AUTHOR.

Scholar Financial’s 8^th Update on the Coronavirus

April 1, 2020

I turn age 62 today, and I am anxious. And I suspect that nearly everyone I know also has a high degree of anxiety, as we battle with the Coronavirus (COVID-19).

It is hard to believe that it has already been a month since my first update (Feb. 28^th) about the Coronavirus. My rapid stream of updates in early March was designed, at the time, to encourage my clients, students, family and friends to “hunker down” and to take social distancing and other measures seriously.

In early March I was concerned that the government and the media were not providing sufficient information about the Coronavirus, and how to respond to it. I am less concerned today, and our political leadership (at both the national and state levels) is largely also now taking the measures required to combat the spread of this disease. (Although some governors have yet to act sufficiently.) And the media reporting has been much better, of late.

In this 8^th Update, I’d like to share some observations, and then share excerpts from two articles. One is about how very important it is to have limited contact with others, as just one family member “cheating” on “stay-at-home” measures can lead to a much greater spread of the Coronavirus. The second article addresses safety measures, if you need to go to the store.

First, some observations about the Coronavirus:

·    The spread of the Coronavirus is happening nationally. It is unlikely that any community will be spared. Current estimates are that 80,000 to 240,000 Americans will die, and many more will be severely ill. We can, collectively as a society, lower these numbers, or see them increase, depending on our own individual commitments to social distancing measures (including “stay-at-home” for those able to do so).

·    The first wave of the Coronavirus will likely peak in already hard-hit areas by late April or early May. Other areas of the country may not see a peak in infections until late May.

·    Hospitals will be overburdened. As health care workers also get sick, patient care will suffer. There will be an insufficient number of hospital beds in some areas of the country. Hopefully, the ramp-up of manufacturing of intubators will meet the need.

·    If we don’t, as a society, adhere to the need for social distancing (“stay-at-home” if possible) and other measures (hand-washing, for example), then our health care system will be even more burdened, and mortality rates will rise substantially. 

·    By early July, it is hoped that transmission of the Coronavirus will be very low. As a result of the measures taken (social distancing), as well as the arrival of summer heat and humidity (which slows transmission).

·    We may be able to “return to normal” in July and August – i.e., return to work, etc.

·    Once the disease reaches low numbers of those infected, the U.S. will be able to deploy an army of individuals to trace contacts of those newly infected, and impose quarantines for individuals who may have been exposed. This is what we hoped would happen early on this year, but lack of testing kits made this impossible to implement.

·    More and more test kits are now available, but tests often take several days to be completed. A new test is being manufactured, that will give results within five minutes.

·    Other tests are being developed to determine if a person has already been infected – i.e., has anti-bodies in her or his system. It is highly likely that, once infected and then recovered, most persons will possess the anti-bodies in their system that prevent reinfection for months, and perhaps a year or two.

·    Global trials of several drugs are underway, for drugs that are therapeutic in nature. These drugs would alleviate symptoms, or perhaps prevent more of those who are infected from becoming severely sick. While some drugs are already being used in hospitals, their effectiveness has yet to be determined.

·    It is likely that the Coronavirus will return in late Fall, in a second “wave.” Hopefully, we will be prepared at that time, and the economy won’t be – in essence – shut down as it is (largely) currently. But it is too soon to tell.

·    Expect schools and colleges to remain closed – at least until late June. It is too soon to make a call as to whether residential instruction at colleges and universities will resume in August, with the new academic year. I suspect that it will, but it is likely that by October student instruction will again be shifted online, and students asked to leave campuses and return home to complete the semester via online instruction.

o   Unless we can find more effective measures to test the many thousands of students (both those who reside in dorms and commuters) who are on campus each day, determine much faster who is newly infected, and devise effective quarantine strategies. It is difficult to combat the spread of a disease in which many of the infected don’t show symptoms – yet are transmitters of the disease – and where groups of 20, 30, 40 or more students are in close proximity to each other (in classrooms).

o   There is much uncertainty here. Hopefully, developments will occur that permit the next school / academic year to proceed normally.

·    Vaccine development is well underway. While it has been projected that it will be mid-2021 before a vaccine is ready, one company is already beginning to produce a vaccine that might be made available by January 2021 – if the testing between now and the end of this year demonstrates its safety and effectiveness. Let’s hope that this company, which is taking a huge financial risk by committing to production ahead of safety and effectiveness testing results, will succeed in its efforts.

·    The effectiveness of any vaccine may vary – it is unlikely to be 100% effective. For example, in persons who have less strong immune systems, such as those who are older or who have conditions or medication that suppress their immune systems, the vaccine may only provide a small probability of protection. Everyone will likely need to be revaccinated, every 1-2 years.

·    The huge amounts of money pouring into medical research to combat viruses will likely yield positive long-term results. It is possible that, within a decade, a single vaccine may be developed against the entire family of coronaviruses, and such a vaccine would be much more effective than current vaccines. The advances in genomics of recent decades have laid the foundations for the development of such cures.

Impacts Upon the Economy and the Stock Market.

I feel like the U.S. is now beginning to understand that much of the economy will likely be shut down, as “non-essential” workers are mandated to stay at home, until sometime in June. The “social distancing” that started a few weeks ago, in some areas, and has yet to be mandated in some areas of the country, will likely be mandated in most of the United States, until the end of May in some areas, and until the end of June in others.

Global supply chains have also been disrupted. Companies in the U.S. often secure parts from abroad, for the assembly of products in the U.S. What happens in other countries, with the Coronavirus, will affect our economy in a significant way – both in terms of supplying products to us, and in terms of demand for U.S. products.

A much greater fiscal stimulus will be needed in the United States. While many European countries have provided businesses the funds to pay their employees a substantial percentage of their wages and salaries (thereby keeping persons employed), the U.S. is instead relying on its unemployment insurance system. And some companies – large and small – will not survive, even with the loans made available to them. A significant “jumpstart” to the economy may be required, even after America is able to return to work.

U.S. stocks, despite their decline, remain overall fairly valued, and not undervalued. In large part this is because large company “growth” stocks (high price-to-book ratio, or similar ratio, stocks) remain significantly overvalued. In other words, the U.S. stock market is not (yet) “cheap” – overall.

At the same time, U.S. small company “value” stocks are significantly undervalued. And emerging markets stocks are somewhat undervalued at present, due to price declines as well as the rise in the U.S. dollar vis-à-vis many other currencies.

Expect continued volatility. It is impossible to know if, and when, the stock market will “bottom,” or if it already has.

But – to my clients – we have a plan. It is called “buy low, sell high” through the process of rebalancing. And all of my clients have a sufficient “cushion” of safe assets (fixed income investments, primarily) to power them through a prolonged downturn – should it occur.

I will provide more comments in my regular quarterly newsletter. Until then, let’s return to what you can, and should, be doing to stay safe.

Don’t Expand Your “Chain”: Social Distancing, Families, and the Temptation to “Cheat”

An Emory epidemiologist is said to have written the following:

“[What] we are facing is very good at what it does; we are not failing. We need everyone to hold the line as the epidemic inevitably gets worse … although social distancing measures have been (at least temporarily) well-received, there is an obvious-but-overlooked phenomenon when considering groups (i.e. families) in transmission dynamics. While social distancing decreases contact with members of society, it of course increases your contacts with group (i.e. family) members. This small and obvious fact has surprisingly profound implications on disease transmission dynamics. 

Study after study demonstrates that even if there is only a little bit of connection between groups (i.e. social dinners, playdates/playgrounds, etc.), the epidemic trajectory isn’t much different than if there was no measure in place. The same underlying fundamentals of disease transmission apply, and the result is that the community is left with all of the social and economic disruption but very little public health benefit. 

You should perceive your entire family to function as a single individual unit; if one person puts themselves at risk, everyone in the unit is at risk. Seemingly small social chains get large and complex with alarming speed. If your son visits his girlfriend, and you later sneak over for coffee with a neighbor, your neighbor is now connected to the infected office worker that your son’s girlfriend’s mother shook hands with. 

This sounds silly, it’s not. This is not a joke or a hypothetical. We as epidemiologists see it borne out in the data time and time again and no one listens. Conversely, any break in that chain breaks disease transmission along that chain.

In contrast to hand-washing and other personal measures, social distancing measures are not about individuals, they are about societies working in unison. These measures also take a long time to see the results. It is hard (even for me) to conceptualize how ‘one quick little get together’ can undermine the entire framework of a public health intervention, but it does. I promise you it does. I promise. I promise. I promise. You can’t cheat it. 

People are already itching to cheat on the social distancing precautions just a “little”- a playdate, a haircut, or picking up a needless item at the store, etc. From a transmission dynamics standpoint, this very quickly recreates a highly connected social network that undermines all of the work the community has done so far.

Until we get a viable vaccine this unprecedented outbreak will not be overcome in grand, sweeping gesture, rather only by the collection of individual choices our community makes in the coming months. This virus is unforgiving to unwise choices.”

Safety Advice If You Must Visit the Grocery Store

Deliveries are safer during the coronavirus pandemic, but sometimes a store visit is unavoidable. Here are the precautions to take.

By Sumathi Reddy, The Wall Street Journal (March 27, 2020)

(Excerpts)

Is it safe to go to the grocery store?

Try to minimize visits to the store. “The biggest risk factor is really being around other people,” says Benjamin Chapman, a professor of food safety at North Carolina State University.

That’s because the novel coronavirus is spread largely through droplets from nearby people coughing or sneezing. If you must go, maintain a buffer around yourself and try to go at off-hours. (The Centers for Disease Control and Prevention recommends a 6-foot buffer, while the World Health Organization says 3 feet will suffice).

It’s hard to maintain a distance from cashiers, so use self-checkout when possible and use hand sanitizer when you’re done …

Gloves don’t help much if you’re going to touch your eyes, nose or mouth with them. Rather, experts say, wash your hands with soap and water before going out and when coming home, and use hand sanitizer when out. If you use gloves, choose disposable ones and throw them away as soon as you get home.

Try not to use your phone when in the store. If you do, clean it when you get home …

People over 65 and those who have medical conditions that put them at greater risk of hospitalization and serious illness should avoid going to the grocery store, if possible. Try to order groceries online or have a family member or friend deliver them while taking precautions. If you must visit the store, go during hours reserved for seniors, when the store is likely to be less crowded.

When I get home, what should I do with any paper or plastic bags or packaging?

Though there have been no documented cases of transmission of the novel coronavirus through food packaging, a recent NEJM study found that the virus can live on cardboard for up to 24 hours and on hard surfaces such as plastic and stainless steel for two to three days …

Randy Worobo, a professor of food microbiology at Cornell University, says instead of being preoccupied with wiping down packaging and containers, focus on washing your hands. “It’s much better to treat your hands, wash your hands, rather than dealing with all the surfaces,” says Dr. Worobo.

Surgical Masks: Yes, Obtain One.

To these articles about safety, I would add that - if you do need to go out where other people will be present – then try to obtain and wear a “surgical mask.” It will provide some (but not perfect) protection.

(But don’t purchase N95 masks, as our health care workers need them.)

In Conclusion.

Let’s control what we can control. If we all focus on that, then more positive results will follow.

If you have questions or concerns, please drop me a line or give me a call.

All my best. – Ron

Ron A. Rhoades, JD, CFP®

Personal Financial Advisor

Scholar Financial

Email (for clients and potential clients): Ron@ScholarFinancial.com

Email (for students and all others): Ron.Rhoades@wku.edu

Text / Cell: 352.228.1672