There are decades where nothing happens, and there are weeks where decades happen.” – Vladimir Lenin
To borrow a turn of phrase from a Russian dictator, “There are decades where nothing happens, and there are weeks where decades happen.”
We may be living through a week in which decades are happening.
COVID-19 finally hit the mainstream and we saw more volatility in the stock market than we have seen in years.
I have started following the Coronavirus (COVID-19) news quite closely.
I am hearing a lot of “this is overblown and it’s likely that nothing will happen.” That may be true, but this analysis ignores the potential impact.
I do not have any particularly relevant credentials to evaluate Covid-19, but I do know that:
- The consequence of being wrong is very bad.
- The cost of insuring against the risk is relatively low (wash your hands, stop touching your face, social distancing, buy a couple extra weeks of food and water to keep at home if you need to self-quarantine, work from home if possible).
Even at very low probabilities, it makes sense to be prepared.
Again, I have no idea how this will play out. But, I do think there are legitimate reasons to be cautious even if the most likely outcome is nothing happens. The expected value of an unlikely but impactful thing is still very high.
Some resource that may be helpful on the personal front.
1. I put together a twitter list of experts to follow.
2. An Australian virologist (Ian McKay) posted suggestions on how to prepare.
3. The Prepared has been doing a good daily update post on what’s going on and has some good prepping checklists.
4. A few years ago, I wrote a post on what I do to prepare for unlikely scenarios.
5. This is a helpful analysis with action steps for individuals.
6. Coinbase, the Bitcoin exchange, also put out their corporate response plan.
TL;DR – Don’t panic but take reasonable and low-cost precautions such as washing your hands more frequently, social distancing, extra food and water at home.
On the investment side, it has been quite the week in the markets. The same logic holds:
1. The consequences of not properly protecting or diversifying a portfolio are quite high.
2. The ability to insure against that in a cost cost-effective is feasible.
To that end, I wrote a post this week on how to effectively diversify your portfolio against “black swan” type events.
A few weeks ago, I announced a new investment project I have been working on which is designed to thrive in these sorts of volatile environments.
Please get in touch if you’re considering options to better protect your portfolio.
Last Updated on July 6, 2020 by Taylor Pearson