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1/ The pandemic is showing that people have a misunderstanding of risk. Of 22 million known Covid-19 cases in the world, more than 780,000 have died. That’s 3.5%. Many are elderly; tens of thousands are young.
2/ Further, a recent peer-reviewed study showed that 55% of Covid-19 patients still had health issues three months after diagnosis, namely neurological issues. And, “long haulers” still have symptoms months after infection, many debilitating.
3/ Those who caught SARS-CoV-1 and SARS-CoV-2 have significantly been shown to suffer long-term health consequences years later, as did those who got sick but survived the 1918 pandemic.
4/ In other words, Covid-19 has the potential to, of course, kill you (even if the odds are 1% or less for a healthy person, it’s still tangible), or to make your life much less enjoyable after you survive. This is exactly the type of random risk you should avoid however you can.
5/ Simply accepting these risks, and not taking easy precautions against them, is (to tie it to investing) like putting a 1% position in your portfolio that could at any moment bring the whole portfolio’s value to zero. You would never do that.
6/ There are zero instances where not taking precautions against the long-ranging Covid-19 risk makes sense. Being locked-down may not the answer. That has its own problems. But a systematic approach to reduce the risk as much as possible in every aspect of life is essential.
7/ That many can’t be bothered to reduce their risks to Covid-19 shows a fundamental misunderstanding of risk types and risk itself. Being stubbornly macho in the face of this risk is simply dumb. Many have already died for it.
8/ Too many also misunderstand risk as it relates to the stock market. Many people have an all-in or all-out approach (“Are you in the market now?”), thinking it’s all or nothing. When in actuality, historically, stocks are asymmetrically-rewarding the longer you stay invested.
9/ The stock market, even just the indexes, is exactly the type of “risk” you want growing exposure to for your entire life, historically. The risk/reward is so skewed toward reward over long periods that the idea of being out of the market statistically makes no logical sense.
10/ Risk is also defined by your optionality. A nurse who is compelled to continue their career is going to risk being exposed to the virus. A man who chooses to eat dinner inside a restaurant, compared to all the other options he has, has chosen — shall we say — poorly.
11/ For investors, the optionality they have other than stocks should play a role in money decisions, too. For many, stocks are the most available, liquid, and potentially-rewarding option.
12/For those with optionality in life, the Covid-19 risk is one you should avoid at any sensible cost. Especially if you can create a pleasant life for yourself anyway, through new approaches. And, everywhere you go, you should take simple precautions to lower your exposure risk.
