Let me ask you a question. Would you consider any of the following activities deadly? Driving your car to buy groceries. Walking down a flight of stairs. Checking your email on your phone while going out for lunch at work. Taking a hike in a county park. Walking outside during a thunderstorm. Most of you would probably say that none of these are deadly activities. And yet, there are people that die every year from doing these exact things and many other common activities of life.
According to the National Safety Council, here are the chances of dying in relation to these common activities of life:
- Motor vehicle accident…1 in 114
- Fall…1 in 127
- Pedestrian accident…1 in 647
- Contact with Hornets, Wasps and Bees…1 in 63,235
- Lightning Strike…1 in 161,856
That brings me to the subject of the coronavirus. There’s an elephant in the room that very few people seem to be talking about. And that’s unfortunate because it has significant lifestyle, economic, policy, and investment implications. The elephant in the room is this: the coronavirus is a deadly disease for people over the age of 65, but the coronavirus is not a deadly disease for younger people. I don’t mean that literally. I mean that practically. In the same way that common sense would lead someone to feel safe driving their car or walking down their stairs (when, in fact, these activities lead to a tens of thousands of deaths each year), people under the age of 65 should feel safe making their way through life in a coronavirus world—even without so-called herd immunity from a widely available vaccine.
According to the CDC, here are the chances of dying from the coronavirus in the United States based simply on the attribute of age:
- Under age 65…1 in 7,134
- 65 or older…1 in 461
- Total population…1 in 1,860
The breakdown for specific age categories is even more startling. In the elementary and middle school age group (ages 5-14), the chances of dying are just 1 in 1,416,385, which means that young people are nearly ten times more likely to die from a lightning strike than from the coronavirus. Yes, you read that right.
This may be politically incorrect. It may even offend some people to add age into the equation when it comes to dealing with a global pandemic. Regardless, these are the facts. This disease appears to be deadly to some, but not to others.
As a professional investor, I consider one of my most valuable characteristics that of being a thoughtful, fact-driven person because successful investing over a long period of time requires sound judgment based on facts. And let’s face it: when it comes to health, politics, and the media, emotions can often cloud one’s judgment.
So, what’s my point? Why is it important to know that the coronavirus is not a deadly disease for younger consumers and working-age people? My job here is to focus on the investing implications, although the potential impact of these facts on a wide range of issues could be profound (personal choices in the areas of social interaction and travel as well as public policy choices of school and business openings and where to direct public funds for research, health, and safety).
The first investing implication is this: the economy in the United States is driven by consumers. Common activities are beginning to return to normal as people begin to work, eat, and travel more freely. Why is this? If there was a one in six chance you’d die in a car accident on your way to work today, you’d probably call off sick and avoid your commute. But if your chance of dying in a car accident was very unlikely (whatever the exact chance is), then you would probably live life normally and go to work. I believe younger consumers under age 65 are beginning to make rational decisions about their consuming behavior as they make these subtle, implicit calculations relative to the risk of dying from the coronavirus.
The second investing implication is this: both political parties have an incentive to keep opening up the economy after the election. If President Trump wins reelection, he will continue, perhaps feeling even more emboldened, to push to open the economy. The economy will continue to recover and expand as long as policy does not reverse course and become more restrictive. But if Vice President Biden wins the election, he also will want to continue to grow and expand the economy. The idea of actually back-tracking into more restrictive rules around social distancing and business closures runs counter to the Democrat’s self-interest to generate economic activity that leads to jobs and economic prosperity. My political sense is that Democrats may give lip service to more restrictions and may actually push through certain safety mandates to companies to protect workers and customers. But I do not believe they will implement the types of draconian restrictions that would inhibit meaningful economic activity. The courts have even begun to weigh-in on the constitutionality of some of these restrictions.
I know that the coronavirus has become an emotional issue for so many people, driven in part by the fear of the unknown, the politics of division, and the basic interest in one’s own safety. But take a moment to think rationally about this issue. Set aside those emotions and ask yourself some basic questions: Are you still driving your car to buy groceries despite the chance of dying in an auto accident? Have you walked a flight of stairs in recent weeks despite the risk of dying from a fall? Consumers (which drive our economy) have exhibited the same rational behavior in recent months when it comes to their activities in spite of the apparent threat of the coronavirus. Consumer confidence is already at near-normal levels (98.2 versus an average of 100). As a result, companies’ profits and future growth prospects will continue to expand. In a few years, investors will look back at the incredible buying opportunity the coronavirus presented when fear once again clouded the market’s judgment, if only for a time.
