Inevitable Coronavirus Post

Coronavirus under the microscope

I wanted to do the second part of the self-experimentation series today but I can’t concentrate, it feels too weird. I’m glued to the markets and virus updates, just like everyone else.

This is the first time I’ve written a blog post reacting to current events. I’m breaking the rules just this once because the occasion calls for it, and this whole mess falls right in my wheelhouse—not the epidemiology of viruses, of which I know diddly-squat, but the principles of risk management, of which I know quite a bit.

The last month has been deeply weird, in the sense that I was increasingly convinced COVID-19 was a Big Deal, at the same time as most people were dismissing it as ‘just another flu’. Being ahead of the narrative had a few practical benefits, but the slight sensation of smugness has been massively eclipsed by the horror of what that actually means in practice.

Here’s the main takeaway from the piece I wrote for Stuff and the Sunday Star-Times:

While it’s tempting to dismiss coronavirus as just the latest in a long string of overblown epidemics, that would be a big mistake.

It doesn’t matter if it turns out to be no worse than the seasonal flu: better to ‘overreact’ and risk looking a bit silly, than be unprepared when the big one comes along.

That’s doubly so when there are simple, low-cost measures you can take to prepare for unlikely but ruinous events.

I wrote that column a month ago, back when certain journalists were sneering at people for (sensibly) stocking up on basic supplies and dunking on tech-bros for (sensibly) avoiding handshakes. One part of me is very angry about this: if they muddied the narrative in such a way that it delayed the necessary responses by a single day, they have blood on their hands (see the section on exponential growth later).1 But mostly, I’m just bummed out. My faith in institutions keeps being stripped away; I can feel myself becoming bitter. It’s really not attractive. But it might be adaptive!

The truly horrifying part of becoming an adult is the realisation that other adults don’t know what they’re doing. Remember the feeling of falling asleep in the back seat while your parents drove you home? You will never, ever experience that kind of security again. There’s just an endless string of disappointments as you discover that no-one is infallible: not your parents, not your teachers, not your personal heroes, certainly not your politicians.

It’s dangerous to rely on the judgement of ‘grown-ups’, or to wait until someone gives you permission to act. Sometimes you have to take the initiative, even if it means doing slightly goofy stuff.

How to Beat Coronavirus

I am not a doctor, blah blah blah, insert useless disclaimer. Anyway, there are exactly two ways to beat COVID-19: washing your hands, and staying away from people. That’s it! That’s the whole strategy.2

flattening the curve
a handy gif explaining why this works from the good folks at The Spinoff

This is called ‘social distancing’, and South Korea is using it to bludgeon the virus into submission. When I called a friend in Busan two weeks ago, she said it was like living in a post-apocalyptic movie: deserted streets, loud-hailers announcing the latest case, who might be at risk, where the no-go zones are.

China did something similar—an insanely impressive containment effort which probably saved millions of lives—albeit with the advantage of an authoritarian regime able to get shit done in a hurry.

This is the example that other countries need to follow. Whether or not we succeed depends partly on the competence of our governments and the people around us, but there are also some things within our control.

These steps are based on five ideas which come up a lot here on the blog:

  1. Always cap the downside

  2. Respect exponential growth!

  3. Be willing to be weird

  4. Sacrifice for the collective

  5. Know thyself

A lot of what follows is probably already well-known, especially considering I’m tossing this out into a veritable ocean of COVID-19 content.

But I’ve been getting a few messages like this…

covid-19 screen
ask and ye shall receive

…and it only cost me a few hours to write this up. If it helps in some small way, it’s worth it.

Always Cap the Downside

optionality is finding an asymmetry of risk and reward

Which statement is true:

1. The new coronavirus will probably end up not being much worse than a bad seasonal flu; the current reaction will prove to be over-the-top.

2. It makes sense to take precautions as soon as possible, just in case the worst-case scenario comes to pass.

My readers, who happen to be unusually smart and good-looking, instantly spotted the mistake: these statements are not mutually exclusive! Personally, I’d put money on both of them.

In the language of optionality, what we’re looking at here is an exploitable asymmetry. There’s a small chance of an open-ended downside risk—a black swan event—that would bring about ruinous consequences.

It’s asymmetrical, in the sense that we only have to pay a small premium to cap this large risk. Chances are our efforts will be unnecessary, but if the shit does hit the fan, the pay-off is essentially infinite.

empty supermarket shelves
empty shelves = instinctive drive to cap tail risks

This is why the people who emptied shelves of toilet paper and other necessities are not so dumb. You don’t stock up on toilet paper because you think there will be a global breakdown in toilet paper production. You stock up because:

a) you predict that other people will also stock up, and

b) you know the only way to beat this thing is social distancing: every time you go the grocery store, you enter an enclosed space with a bunch of other shoppers, hand money or cards to a cashier and bagger who have interacted with hundreds of people, touch baskets, trolleys, products, etc.

In countries that are under quarantine, people are already having to queue for groceries, or order supplies within narrow windows of opportunity. It’s not at the gouge-your-neighbours’-eye-out-for-the-last-tin-of-beans level, but it’s a real risk and inconvenience.

To the extent that you can reduce this to zero, you should definitely do so. Here’s what I’ve done, and what I suggest you do too:

1. Prescription meds

Make sure you have enough of your prescription meds to last a while: sitting in a doctor’s waiting room is gonna be a reaaaal bad idea in the next few weeks.

2. Flu stuff

Stock up on common and cheap supplies that will be useful if you do get the flu: electrolytes (table salt and sugar will do in a pinch), paracetamol (for fever and pain), cleaning supplies, hand sanitiser.

3. Food

Buy enough food to last a month or two, in case you have to self-quarantine (pre-emptively, or because you got the bug). I’ve stashed several kilograms of oats, rice, pasta, tinned veggies, protein powder, nuts, seeds, and dried fruit.

How much does this option cost to take out? I spent about $300 on the above, but the real answer is closer to $0. I’m going to use all this stuff anyway; this basically boils down to ‘do one big grocery shop in advance’.

If it costs nothing at all to mitigate a small chance of a big risk, you should probably do it! Ignore anyone who makes fun of you for being ‘paranoid’, and don’t wait for permission.3

Respect Exponential Growth!

We’ve previously talked a bunch about how no-one really understands exponential growth:

As Mark Zuckerberg put it: “Humans don’t understand exponential growth. If you fold a paper 50 times, it goes to the moon and back.”

This is a delicious example, not only because the imagery is so jarring—whoa, a tiny sheet of paper can do that?—but because the Zuck himself got it wrong. If you fold a piece of paper 50 times over, it doesn’t make a paltry return trip to the moon—it goes all the way to the freakin’ SUN. Humans don’t understand exponential growth, indeed.

The few people who come the closest to intuitively getting this tend to be maths geeks, techies, and finance types, which is how they managed to get ahead of this whole thing.

Everyone else, up to and including the President of the United States, was all like, ‘there’s only a handful of cases, the flu kills way more people, so what’s the big deal?’

The new coronavirus is different to existing ones in three important ways:

  • It has a much higher transmission rate
  • It has a much higher fatality rate
  • There’s no existing ‘herd immunity’

None of these effects are immediately obvious in the early days. With exponential growth, it always looks like nothing’s happening… right up until it doesn’t.

Let’s say there are a measly 10 confirmed cases in your country or city right now, with perhaps 10x as many carriers who haven’t been tested. If the doubling rate is four days, there’ll be 1760 cases by the end of March. Six weeks from now, there’ll be 225,000 cases. By the start of June, you have 100 million infected.

When you’re dealing with this kind of curve, the right time to react is always ‘yesterday’. Even a single day’s head start can make or break the trend.

Here’s the number of worldwide cases:

You can see how China managed to level off the curve through massive (and costly) social distancing efforts, before the virus escaped into the world at large.

But outside of China, cases are still very much accelerating exponentially:

We gotta flatten this curve. Once again: react sooner rather than later, and don’t wait for permission. If you can work at home, do so. Don’t attend big events. Every day makes a difference.

Be Willing to be Weird

wearing flu masks on the train
this is fine

There is a cost that comes with being weird: people will mock you, maybe you’ll lose status. But willingness to go against the grain is often a very fruitful strategy.4

There’s no denying that a stance of detached nihilism looks very cool. Coronavirus is coming? Yawn.

If there was ever a time to be unabashedly uncool, this is it. Be a buzz-kill! Cancel events. Stock up on supplies. Do that awkward elbow bump thing instead of shaking hands.

Collective Sacrifice

As a young, healthy person, COVID-19 doesn’t pose a huge threat to me. It would suck to get sick for a couple weeks, especially if it permanently damages my lungs. But I’ll probably be OK.

Now, some people have taken this idea and run with it… in a very creepy direction. Political Types are gleefully talking about how this will finally wipe out the Boomers and level the playing field, or whatever.

To these people, I say: fuck you. You wouldn’t want your mum or grandpa to get sick and die. But everyone else is fair game?

I’m riding this thing out in Mexico City, where I can’t help but notice all the abuelitos wandering around doing cute old people stuff. I can’t begin to imagine the kind of sociopathy it would take to welcome their gruesome, chest-rattling deaths as some kind of righteous Social Darwinism-inspired purge.

The people who are excited about this are defecting against the entire human race. If you are unlucky enough to have them in your life, you should probably do something about that.

The main reason to take precautions, even if you’re young and healthy, is to do your bit to help stop the pandemic. Again, you pay a small, fixed price—some personal inconvenience—for a potentially enormous benefit to the collective.

If virtue doesn’t do it for you, you could always try shame. South Korea was so frickin’ close to nipping the whole thing in the bud. They had the first 30 cases locked down tight. Then the infamous Patient 31— a ‘super-spreader’—ignored advice to attend a religious cult gathering, and proceeded to spread the love around the whole congregation of 1000 people.

The Seoul government has filed a complaint against the cult, accusing it of murder. On one level, this is absurd. But, you know, there’s a real sense in which that one person is responsible for dozens of deaths, and god only knows how much economic damage. Don’t be that person.

Know Thyself

Markets are absolutely bricking themselves right now, which goes some way to explaining the run on toilet paper.

If you came here looking for a post on what to do when the stock market crashes, ta-da! Here’s one I prepared earlier:

If you wake up one morning and see tens of thousands of dollars missing from your precious retirement fund, all rational thought tends to fly out the window. You have to know yourself: when the crash comes, can you brave a 30 per cent decline without flinching? What if it happens in the space of a couple of days? How will you sleep at night? Do you have an ulcer? No? Do you want one?

I think it’s a good idea to visualise these kinds of scenarios in as much detail as you can, and really try to ‘feel’ it. Be honest with yourself about how you might respond in a crisis. Maybe it makes sense to take some money off the table, or have a portfolio that isn’t 100 per cent in stocks, even if it’s technically not the best strategy.

I wrote this post in July last year, and I have basically nothing to add to it.5 If you followed that advice then—or at any other point during the 10 years of good times—you were ready for the current situation. If you didn’t, and you’re trying to decide what to do now, it’s already too late. For the love of sweet baby Jesus, don’t try to conjure up a ‘strategy’ in the middle of the market mayhem, while your amygdala is quivering like a jellyfish. You will almost certainly end up doing something stupid.

If you’re in the market for the next several decades, you know the drill. Ride out the volatility, and this will end up as nothing more than a blip. Keep buying steadily all the way down to the bottom, and all the way back up. In the fullness of time, the current prices will look like bargains, etc, etc.

If you need your money in the next five years or so, the situation is much worse, because you shouldn’t have been in stocks to begin with.

What happens if you pull out now? Maybe you avoid yet more damage, or maybe you lock in a huge loss before the recovery. I don’t know; no-one knows; anyone who claims to know is lying or deluded. There is literally no ‘good’ strategy for escaping in one piece, other than praying to the deity of your choice. Good luck.

Heads I Win, Tails You Lose

The frustrating but kind of funny thing about this situation is that the only possible outcomes are a) looking stupid, or b) looking corpse-like.

If the COVID-19 curve is successfully flattened, and ends up no worse than a particularly bad seasonal flu, a lot of dumb people will gleefully point out how everyone over-reacted. And because there is no such thing as cosmic justice, these people will not suffer in the least for their opinions.

Most risk accumulates silently; most risk is attenuated just as silently.

And so, if I end up feeling embarrassed about this post—for breaking my rule against writing about current events, and buying into the hysteria—well, that would be a fantastic outcome!

I sincerely hope that’s what happens. That the prepping was for nothing; that working from home was unnecessary; that not going to concerts and events was silly; that I end up with egg on my face.

Because the alternative is much, much worse.


  1. I think many (most?) mainstream media outlets are doing an impressively thorough job now, and I’m extremely grateful to the reporters who are putting in the hard yards. Like stock price movements, media events are subject to momentum: there’s an initial underreaction, followed by an overreaction. In this case, the ‘overreaction’ couldn’t come a moment too soon.
  2. More seriously: this post is only meant to cover a few underlying principles. For the object-level details, which are constantly evolving, you should keep an eye on trustworthy sources; if you know of especially reliable ones, please post them in the comments.
  3. On March 10, the Health Ministry of my country advised against stocking up. Shop as usual, they said. This was astonishingly bad advice: not only because it undermines social distancing, but because the best thing we could do to avoid empty shelves is stagger demand over many days or weeks, so as many people as possible are prepared before the ‘official’ mandate to quarantine triggers a last-minute rush.
  4. This is what I was originally meant to be writing about this week, and now here I am writing about… the same thing that everyone else is writing about. Hmm.
  5. OK, fine. I’ve written a slightly more helpful post—slightly!—expanding on what all of this means for longterm investors.
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3 months ago

Thanks for the post Rich. It was thoughtful and probably does a lot more good than some of the stuff coming from media and politicians.

I have been lurking on your column for sometime (will subscribe finally) and it never ceases to amaze me the interesting articles you have produced.

I initially found your blog through your minimalist packing guide and I wonder if that has changed since your travels and in particular the Chromebook which by now must almost have reached end of life (Google patching support).

Then I discovered the financial articles (which is also an interest of mine) and not the usual get rich quick drivel but enough ideas to navigate into a somewhat dignified life and protect from risky black swan events (Barbell strategy). I revamped my Super asset mix to include more cash late last year convinced the markets were too overheated. Then I switched my Super to hold a more aggressive buy (future funds) as I thought it may take too long to switch when i needed for the eventual recovery and I stockpiled cash. I thought at the time it was a bit premature but now I am glad that I have done it even though my portfolio has been smashed.

And to find a fellow kiwi was writing this fantastic content. Love the ode to Jandals by the way.

Always thought provoking articles. And thanks to you I am reading more and putting more intention into life.

Please keep up the annual spending update – I know you felt the net worth indicator got a bit skewed on paper but I think that it is perfectly fine to still include it out of interest and to baseline.

Stay safe and wish you well.

3 months ago

Great post, bro. Your blogs always make me pause and ponder deep stuff ….

I think you make a good point about each of us needing to take responsibility, rather than just leaving it to our leaders to get it right. “The truly horrifying part of becoming an adult is the realisation that other adults don’t know what they’re doing.” Haha, couldn’t agree more.

As for the markets, I was pretty gutted to read in the news today that, apparently, a bunch of people are freaking out and shifting their KiwiSaver funds from growth to conservative. Maybe it’s the right move, but probably not. Better to just ride it out. I feel sorry for people who are close to retirement or were planning to withdraw funds for a home but, for whatever reason, had their $$ in growth funds.

Jeremy M
Jeremy M
3 months ago

Differs in 5 ways brother mine:
4. There are no proven vaccines or medical protocols that are effective against Corona
5. Asymptomatic transmission in Corona way earlier than seasonal flu.

For latest international news (including from the doctors treating it round the world), preprints of journal articles, and generally good advice and well informed discussion I heartily endorse:

The are volunteers, host no adds, no political views and are strictly independent media.
Well moderated, no conspiracy theories and personal opinions on topics are clearly marked as such.

I’ve spent about $1500 over the last 4 weeks:
– Food – more of the same (alright and some bulk ‘stock food’ grains; oats and barley) + 3 months supply of infant formula and nappies
– Salt – 20 kg to preserve meat from the freezer if we ended up in a sustained black/brown out. Will use slowly in tanning, preserving and making sauerkraut over the next few years is not otherwise needed.
– Calcium hyperchlorate prills “pool shock” to make bleach as needed.
– Vit D and Resveratrol : vit D has good evidence to show a protective effect against Pneumonia and other lung ailments like TB. Resveratrol has been shown to have a statistically significant effect in calming and inflammatory cytokine storm – the immunological overreaction that kills many of the people who *do* die/experience severe debilitation from Covid19.
Worst case overreaction, I have vit D to combat SADS, and a potent antioxident to hep keep me young (lol)
– Standard Meds (scripts for asthma) + ‘Nodoze’ caffeine pills for their vasodilatory (and possible bronchiodilatory) effects (to increase oxygen flow) and standard pain/fever meds. $40 on a basic pulse oximeterto be able to self monitor blood oxygen levels.
– Pneumonia vaccines – given I’m asthmatic it seems prudent Pneumovax 13 ($170) and Pneumovax 23 ($70) 8 weeks later.

Northland DHB has 8 ICU beds. Total. A good number of the Italian case are needing 4-6 weeks of ICU . . .
Here’s hoping that NZ does and EXCELLENT job of flattening the curve and squashing p2p transmission.

Stay well brother mine,

R Hoggarth
R Hoggarth
3 months ago

Remember that every operating theatre has a ventilatior and if this gets serious all non lifesaving operations will stop and theatres will become a second icu. But yes we have very limited beds and nurses – each icu patient has a 1-1 nurse 24/7

3 months ago

Hi Rich! I have followed your blog for years now, and now I have finally quit my job 2 weeks ago after saving a fortune over the past 4 years living in my car…. Supposed to fly out on a one-way ticket to Europe at the start of April… HAHAHAHA! My travel insurance no longer covers anything because of the word “pandemic” , the airline has cancelled my flight to Seoul and given me a ticket to Singapore.- my connection leaves from Seoul.. On top of all that I’ve piled all my money into the markets (a major amount into a certain nz blue chip that has been directly effected) Safe to say this covid19 has changed my life! Did anyone see this coming??

3 months ago

Is it an overreaction to cancel,? I’m suffering from too much information, it’s hard to decide what is risk.. Anyone care to weigh in,? Would you travel to Europe now ?

3 months ago
Reply to  Andy

I would not travel right now. Not only do you run the risk of getting infected, but you also run the risk of having a generally terrible trip because everywhere you go, cities are basically shut down.

On the other hand, you’ll be able to sit anywhere on your flights (and there will be no children onboard), you can see all of the sights of Europe with few other tourists around, and everything should be cheaper than normal. Is that worth risking horrible sickness, death, or being trapped overseas? That’s your call…