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Weekend reading: The alchemy of turning uncertainty into risk

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What caught my eye this week.

When we look back on lockdown in a few years’ time, we’ll each have different memories.

For some of us the period will be marked by the loss of a loved one to Covid-19, or by commuting to essential work on near-empty roads and trains.

But for a majority, these strange weeks will be reduced to a mental mood board made up of just a few memories.

Chatting with friends and family on Zoom. The novelty of virtual drinks over video. Trying to teach the kids something other than how to turn off their screens. Joe Wicks’ workouts. Unlimited Internet porn. Quiet walks around the neighborhood. The birdsong and the incredibly clean air.

I suppose I’ll remember listening to the Ninefox Gambit on Audible while taking my daily wander, marveling at the British weather’s knack to deliver sunny stretches at the most inconvenient of times. I’ll definitely remember Skyping my mother to finally show her the progress of my garden (she’s into week six or seven now of a self-isolation spent mostly in hers). There was that friend’s 50th birthday on Zoom when this was all new, and several dozen of us crammed into the screen like a University Challenge episode on steroids.

Cooking too much as if my friends were coming over for dinner, and then missing them when of course they don’t…

Once in a Lifetime

That’s the sort of stuff memories are made of.

But in reality – as suggested by the number of relevant links below – I’ve spent 4-6 hours each day digging into Covid-19, consuming everything from Tweets and news stories to research papers (or at least their abstracts!)

If you’ve been following the comment threads that have followed Weekend Reading these past few weeks then you might be the same. We’ve had hundreds of contributions, suggestions, and counter-suggestions. Great stuff.

However some readers – and my friends and family as usual – think I’m crazy.

They are happy (or commendably humble) enough to leave Covid-19 to the government experts. They don’t want to second-guess the consensus.

They’re passive pandemic-ists.

Whereas I like to believe that I’ve been trying to figure out the virus in part to inform my naughty active investing.

Or that’s what I tell myself.

Really, I’m sure it’s also my way of coping with Covid-19, just the same as other people are drinking too much or working out twice a day or pressure cleaning the patio.

As Arthur Brooks wrote in The Atlantic this week (my bold):

At present, Covid-19 is more of an uncertainty than a risk.

Will you get the virus? What happens if you do? When will the crisis end? Are we creating an economic depression?

People can opine and make informed guesses, but no one really knows the answers to these questions.

It’s natural to try to convert uncertainty into risk by gorging ourselves on available information.

And I’ve definitely been doing that.

Brooks thinks it’s futile and only liable to make things worse. It makes me think of my late father, who if he were still here would be both vulnerable and sanguine.

I’m sure he’d have quoted the serenity prayer at least once. You know the one:

“Grant me the serenity to accept the things I cannot change, courage to change the things I can, and wisdom to know the difference.”

But I can no more do that then I can sit in a tracker fund, however sensible. It’s not me.

Stop Making Sense

One comment asked last week why I’ve not written an article about the virus, and fully outlined and sourced my hypothesis?

(Which for what it’s worth has basically been that it’s more widespread and not as deadly as commonly believed – all less controversial now than a few weeks ago, I’d suggest – and that an ongoing extreme lockdown could do worse to us via economic damage, including health-wise, so we should phase out of the justifiable emergency measures ASAP, and more directly focus on protecting the most vulnerable.)

The first reason is the one I gave him, which is I have no expertise at all in this area. My hypothesis was simply where my reading and hunches were leading me, and I was happy enough kicking that about with readers.

But the other reason is that word ‘hunches’. It’s perhaps also another reason why I don’t write about active investing here anymore. (The main one being that most people will definitely do better investing passively!)

People want certainties. They want to know sunlight does or doesn’t slow the spread of the virus. They want to know that low P/E stocks will do better than high P/E stocks. They don’t want to wonder too much why one city has had thousands of deaths from Covid-19 but a similar city has not. They want to be told that investing for the long-term is better than being tactical and trading, or vice-versa, and they want evidence to show it.

Me, I’m very comfortable with fuzzy, nuance, intuition, and changing my mind – for good and for ill.

Life During Wartime

One day we’ll know all about this virus and everything will be proven, but by then it’ll be too late to do anything.

And one day we’ll know if the FTSE 100 at 1990s-levels was the buying opportunity of a lifetime, or the opening bell on a multi-year bear market that sloped in ahead of a looming depression.

Again, by then it’ll be too late to do anything about it.

I’m not saying I know what will happen, obviously. I’m saying I’ve got to try to guess. Doing so will be my memory of 2020, in the end. Each to their own. (And incidentally I’m very glad I don’t have to decide for the nation. All governments have made mistakes, but these are crazily difficult times.)

How are you coping with the coronavirus uncertainty and life under lockdown? Let us know in the comments below.

From Monevator

How diversification worked during the Global Financial Crisis – Monevator

The reality behind investment trust reserves – Monevator

From the archive-ator: How to build a risk factor portfolio – Monevator


Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!1

Rates at 0.1% until end of next year due to deepest recession for ‘possibly several centuries’ – ThisIsMoney

UK labor market outlook is ‘horrendous,’ economists warn – Bloomberg

140,000 UK companies apply for coronavirus job furlough scheme – Guardian

Retail sales ‘obliterated’ in record fall over coronavirus – City AM

Coronavirus furlough scheme: what you need to know – Which?

Also: Six tips for filing your tax return to qualify for the self-employed income support scheme – Which?

The collapse of the energy sector – A Wealth of Common Sense

Products and services

Another mini-bond bust: Blackmore owes savers £45m after promising 9.9% returns – ThisIsMoney

Savings rates fell in March along with inflation, but here’s the pick of the accounts – Which?

Open a SIPP with Interactive Investor by 30 April and pay no SIPP fee until April 2021, saving you £110 – Interactive Investor [Affiliate link]

Furloughed? Pension payments into pots based on 80% of salary will be protected- ThisIsMoney

Zero per cent credit card deals fall to lowest level in three years [Search result]FT

Sign-up to Freetrade via my link and we can both get a free share worth between £3 and £200 – Freetrade

Which was the cheapest supermarket in March? – Which?

Admiral is returning £25 to car and van insurance customers after driving collapse – Admiral

Comment and opinion

Grinding halt – Finimus

Income-seeking investors face an uphill struggle [Search result]FT

When something is taken away – Bunker Riley

Why you don’t feel rich – Of Dollars and Data

How much risk should you take? – JustETF

Merryn Somerset Webb: Bypass retail investors at your peril [Search result]FT

Don’t go it alone – Humble Dollar

Stockpickers failed to take ‘big chance’ in market rout [Search result]FT

What lessons should investors take from the coronavirus bear market? – Behavioural Investment

So much for an inside edge: Senators as rubbish as everyone else at picking stocks [Research]NBER

George Costanza at it again – the leveraged ETF episode – Elm Partners

Naughty corner: Active antics

The day oil went to zero – The Reformed Broker

Oil ETF chaos is like Natural Gas ETF’s 2009 plunge – ETF.com

John Lee: Private investors hit by dividend drought [Search result]FT

Barstool Sports founder switched from gambling to day trading – he’s down $647,000 – Business Insider

Netflix roars ahead thanks to captive audience [Search result]FT

Hedge funds hope the slump will make them relevant again – The Economist

Dispersion and alpha conversion [PDF; Research; aka make hay while the bear growls!]Morgan Stanley

One-factor world – Two Centuries Investments [h/t Abnormal Returns]

Coronavirus crisis corner

Kings College London’s symptom tracker suggests UK Covid-19 infections plunged in April – Covid Radar

Coronavirus: Social restrictions in UK ‘to remain for rest of year’ – BBC

Small survey in NYC finds 21% have Covid-19 antibodies [World shocked; I’d hoped for higher]MarketWatch

…these initial numbers are far higher than the 2-3% the WHO suggested earlier this week – Guardian

This ER doctor’s Covid-19 journal entries are a harrowing read – Facebook

Hidden outbreaks spread through U.S. cities far earlier than known, estimates say – New York Times

Thousands could be missing out on cancer diagnosis due to Covid-19 – BBC

Official UK government information on plan to test 300,000 for antibodies [Slowly…]GOV.UK

US authorities reviewing ‘stunning’ universal testing results from Boston homeless shelter – Boston News

Sunlight, warmth, and humidity can dramatically reduce the half-life of the virus, say US scientists – Metro

It looks like remdesivir isn’t going to be the silver bullet – Guardian

Even if it doesn’t kill you, Covid-19 may produce some nasty side effects – David Lilienfeld via Twitter

What’s wrong with the models? – Peter Attia

Coronavirus detected on particles of air pollution – Guardian

Study suggests on average ten years of life lost to a Covid-19 fatality [Research]Wellcome

Nicotine patches to be trialed on patients after a study suggests smokers less likely to catch Covid-19 – Sky

Recovered, almost: The early Chinese patients unable to shed coronavirus – Reuters

The anti-lockdown strategy – Dr Malcolm Kendrick

Hands-free anti-virus door handles for supermarkets [Video]Reuters

Containment and control strategies for Covid-19 [Research, PDF]Berkeley

Coronavirus: Outcry after Trump suggests injecting disinfectant as treatment – BBC

We used to die of infectious diseases all the time, but we got out of the habit – Morgan Housel

Swedish Covid-19 mini-special

Sweden: Physically distancing but no lock down; virus still declining – John Burn-Murdoch via Twitter

Has Sweden got the science right? – BBC

Stockholm expected to reach herd immunity ‘within weeks‘…CNBC

…though one early survey in Stockholm has found only 11% have antibodies [In Swedish]SVT

‘Closing borders is ridiculous’: the epidemiologist behind Sweden’s coronavirus strategy – Nature

Kindle book bargains

Exactly: How Precision Engineers Created the Modern World by Simon Winchester – £0.99 on Kindle

Gordon Ramsay’s Ultimate Cookery Course by Gordon Ramsay – £0.99 on Kindle

Remote: Office Not Required by David Heinemeier Hansson and Jason Fried – £0.99 on Kindle

Side Hustle: Build a Side Business and Make Extra Money by Chris Guillebeau – £0.99 on Kindle

Off our beat

From the Michael Moore stable: Planet of the Humans [Full movie] – via YouTube

It’s time to build – Marc Andreessen

What if we are wrong, about everything? – Indeedably

Why everybody you know is on Zoom – Fast Company

And finally…

“The effects of compounding even moderate returns over many years are compelling, if not downright mind-boggling.”
– Seth Klarman, Margin of Safety [From a post by Novel Investor]

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{ 172 comments… add one }
  • 101 Naeclue April 27, 2020, 4:14 pm

    @ZXSpectrum48k, surely you must be able to see the difference between constructing an index with 4 stocks and constructing a hypothetical gilt with 20.5 years to maturity from 4 long gilts? Yes it would make a difference to include more gilts, but nothing like the difference it would make to include more stocks. They are not trying to track the cap weighted whole gilt market, just an idealised gilt that they replace each year.

    There are often kludges in index construction. Just look at the DJIA or Nikkei. Even the S&P is committee selected.

  • 102 Naeclue April 27, 2020, 4:21 pm

    It would be good to see more stats, such as the comprehensively sampled prison stats done for care homes. That should easily be possible to do.

  • 103 The Investor April 27, 2020, 4:52 pm

    @Vanguardfan — All that’s fair enough, and I agree it tells us that the virus spreads easily in confined populations.

    However I infer more than that, because the article says these 95% of these very large populations were asymptomatic. (i.e. Not even ‘mildly suffering’. Asymptomatic. Notwithstanding the caveat that some may become ill later).

    You may recall back in early April you asked where the likes of me and @Snowman were getting our concept of large numbers of infections from? One notably rancorous board contributor predictably replied “wishful thinking”.

    The reality was I was inferring the strong likelihood of lots of more infections from data snippets such as this. Now it’s surely undeniable.

    Even if the virus spreads much less rapidly in a crowded city like London versus a prison, it suggests the cases/symptoms we were seeing were almost a drop in the bucket, assuming the 95% asymptomatic held true in wider population. (A big assumption I know).

    If we go back far enough the early estimates were that *maybe* 20% of virus carriers were asymptomatic. Later it because c.50%. Now we have 95% asymptomatic in this particular prison, which is another rare instance of a whole infected population being tested at once.

    I don’t claim it’s a model for understanding how the virus spread through Putney or Wolverhampton. I say it tells us that vast numbers of people can demonstrably be asymptomatic, and we can infer things from that.

    Of course as you say it suggests that when the virus gets into crowded situations (certainly a prison, possibly a tube train) it spreads rampantly. And since we are testing live virus infections here, you would have to ‘catch’ it at the right time to see the high infection rate. Because mass testing is still rarely being done on entire populations, for reasons I don’t understand (we had 20K-a-day spare testing capacity as of last week) we don’t have much data on that. However similarly strongly positive samples have been seen before (e.g. In that Boston homeless shelter).

    Presumably testing a couple of weeks later (perhaps after someone died?) would show just the tails of those infections, and far fewer infected, and we’d be back to thinking a lower number were asymptomatic.

    It also suggests to me (with less confidence) that where the infections have been contracted in care homes and hospitals, these probably weren’t a few unlucky people who got the virus as it snuck through a cordon of steel. I suspect that many will have had it. This would be important if true because it could mean many of these places are over the worst.

    All this matters because we’re a country in lockdown blowing up our economy on the grounds we’re stopping transmission of a virus based on the prevailing and uncertain view of the virus of mid-March. At least as I read it there’s a different still-uncertain view now; I don’t think anyone seriously believes there hasn’t been *massive* amounts more infection than was officially thought likely on the understanding of the virus back then, the question is how much?

    In 6-8 weeks time hopefully we’ll have better antibody data, gathered in the way you suggest.

    If I was the US government I would want to test all those prisoners who tested positive for Covid-19 for antibodies, for example. We can then see how far away from 100% antibody creation we’re seeing, for instance.

    Anyway, at that point I suspect we’ll all know and agree that e.g. London saw a very high level of infection, a couple to a few million, mostly asymptomatic. But we’ll be debating some other aspect of the virus as being uncertain and people will again be asking for strong proof and evidence.

    My attempt here (not least as an active investor) is to figure out what’s going on ahead of time.

    And of course my view here could certainly be wrong — I’m no expert, and I’m not seeing enough antibodies in NYC for my liking, as I’ve said.

    However I continue to think the understanding of the virus is moving in my direction — far FAR more infections than was realised, lower fatality rate, less need for a continuing *full* lockdown (no argument with doing it initially as a precaution), more of a case for shielding, continued physical distancing (the status pre-full lockdown) until we know better, and perhaps easing out of lockdown in stages and seeing what happens.

    Also, we have giant new hospitals lying empty in London and Birmingham based on a different set of uncertain assumptions (and a sincere hooray for that) so let’s not pretend clueless observers like me have a monopoly on fuzzy estimations. 🙂

  • 104 Simon T April 27, 2020, 4:53 pm

    Can anybody do a article on the FCA Investment Pathways and the implication. (from what I can see – it kills the choice in SIPPs when you go into drawdown). Luckily it’s being moved til next year.

  • 105 Linda April 27, 2020, 4:54 pm

    I am loving this thread, coronovirus with a smattering of finance. Helping to pass my solitary day without too much boredom. Thanks everyone.

  • 106 The Investor April 27, 2020, 5:05 pm

    p.s. @Vanguardfan — In my enthusiasm I forgot to say that I found that post of yours a very helpful addition to my understanding of biases etc in sampling and testing, so thanks for that.

  • 107 Vanguardfan April 27, 2020, 5:12 pm

    @TI just in brief, on one point. The timing of testing for antigen is very important. All infections start asymptomatic, for a median of about 5-6 days. So if you want to estimate the overall proportion of infections which are never symptomatic, you have to do longitudinal (ie repeated) testing within the population. I believe this is how the Vo study was done in Italy. I haven’t read this prison study so can’t comment in any detail on the possible limitations.
    I’m not arguing any particular stance here, I’m just trying to explain a little of the methodologies which make data interpretation not straightforward. In any study, you have to look at the design and understand what it can tell you, and what it cannot (and what the range of possible explanations for the observations might be). It is important to keep an open mind where the range of possible explanations consistent with the data is very wide.

    @naeclue. In general, widespread testing is not done in nursing home outbreaks, because once you have established that there is an outbreak, further testing doesn’t change the necessary control measures. So as a matter of policy only a few cases will be tested, then other symptomatic cases will be presumed on a clinical basis. In this current outbreak, I think the priority for any increased testing in nursing homes should be the staff. Even now the practical barriers for care home staff to access testing are considerable, and this is one of our most serious failings in my view. That and the lack of proper PPE and training and support in care homes.
    So yes, you could test widely in homes, but I think you’d have to have a clear purpose for what you’d hope to learn, particularly in a context where testing resource is scarce and needs to be prioritised.

  • 108 Vanguardfan April 27, 2020, 5:19 pm

    Btw yes I agree that a good follow up study in this prison would be an antibody study. That would tell you what proportion of infections (in a population like this one) generate antibodies. Then of course what you want is a re-exposure to infection…..

  • 109 Vanguardfan April 27, 2020, 5:42 pm

    @ti, there was never a cordon of steel around care homes, not even so much as a flimsy ribbon. On the contrary, there was a policy decision to discharge patients into homes to free up hospital beds, knowing that some of these would likely be carrying the virus, and without any testing. Care home managers were just left to fight the fire with inadequate training, support or equipment – these are not hospitals but they’ve been expected to provide care way beyond their capabilities. Our care homes death stats are looking pretty ugly.

  • 110 The Investor April 27, 2020, 5:53 pm

    there was never a cordon of steel around care homes, not even so much as a flimsy ribbon

    @Vanguardfan — I agree, I was being facetious. From the start I’ve argued the focus should have been on protecting the elderly/vulnerable. You may remember my post from mid-March where I bewailed that in that ‘voluntary’ state of lockdown in mid-March I was seeing 60-80-year olds milling all around my area of West London, chatting and foraging. By that point my mum was already in self-isolation on my instruction. That should probably have been the case for all of them, as much as possible.

    I realize these weren’t care home residents milling around. I do think though that a reluctance to officially and boldly state this is overwhelmingly a disease that kills old people — if for an understandable reason, to try to enforce full lockdown and its aims — hasn’t helped their cause. (Last I looked over 50% of deaths were over 80s, and the vast majority over 70/80, and there weren’t that many over-80s, relatively speaking, to begin with.)

  • 111 ZXSpectrum48k April 27, 2020, 6:12 pm

    @Naeclue. Of course I see the difference but you don’t seem to see that constructing a hypothetical 20.5 year (and any maturity) bond from a small selection of bonds just isn’t an index. How exactly are you going to take account of the cheapness/dearness of specific bonds, repo effects, supply-demand etc. Why 20.5 years and not 15 years or 11.11years? Of course it makes less difference on bonds but why not just do it correctly? It isn’t even a good method by which to construct hypothetical par bond of a certain maturity. If you wanted to do that you’d use a two-stage curve spline: construct a best-fit zero forward-forward curve from all the traded Gilts and smooth it with a parabolic or exponential spline.

    I suppose I’m sick of all these so-called ‘investment experts’ who do their asset allocation analysis using full indices for equities but somehow then decide that govt bonds can be replicated using the 10-year Treasury with some back of the envelope approximation for the return.

    I know at the end of the day, no one on this site cares about bonds or anything other than equities. Active investing can’t possibly ever work. It’s all a zero net sum game or other nonsense that isn’t actually true. I’ll wander off …

  • 112 Penelope April 27, 2020, 7:50 pm

    Elvis has left the building.

  • 113 Snowman April 27, 2020, 8:28 pm

    Don’t know if anyone’s still watching the daily briefing. I’d resolved not to watch it again because it was irritating me so much. But anyway I watched it today.

    They are now answering questions from members of the public. First question from a member of the public was from Lynne in Skipton and what a stonkingly brilliant and powerful question it was

    “I am missing my grandchildren so much, please can you let me know if after the 5 criteria are met, is being able to hug our family one of the first steps out of lockdown?”

    I have to say that blew me away.

    We do need to think a bit about how we are going to allow people to met their families who don’t live with them. If a relative of someone who is shielding has not been out in public for a week or so and let’s keep it simple and say they live on their own, it must be reasonable for them to visit that shielding relative? And it is for them to decide if the risk is worth it?

  • 114 Boltt April 27, 2020, 10:09 pm
  • 115 Ruby April 27, 2020, 10:10 pm

    @ Snowman – I live alone and that’s what I’m going to do rools or no rools.

    @ ZXSpectrum48k – I have an equity background but (maybe because of that) find you easily the most interesting poster on the board so hope you’ll persevere.

  • 116 Vanguardfan April 27, 2020, 10:12 pm

    @snowman, the principle behind the legal lockdown is to enforce social distancing at a population level – its not about individual protection. So I would expect any continuing ‘shielding’ recommendations for at risk individuals to be advisory rather than mandated. The law is not going to mandate whether hugs are permitted. In making personal family decisions, it would help to have some guidance. Hugs from grandchildren who live with doctors or care workers might not be terribly sensible, for example.
    There will be much more difficult issues, such as how to protect vulnerable individuals who can’t safely return to work, but still need income.

  • 117 The Investor April 27, 2020, 11:23 pm

    New York City antibody rate is now up to 24.7%. I suppose the likeliest explanation for creeping higher from last week’s 21%-ish is statistical noise, but will be very cool if it reflects antibodies having a few more days to develop — and if it continues!

    Still very early days of course.

  • 118 Vanguardfan April 27, 2020, 11:47 pm

    @TI do you have a link to the NYC study? Eg detail of where were they sampling – there is a wide variation in cases in different districts: https://gothamist.com/news/coronavirus-statistics-tracking-epidemic-new-york
    A couple of figures to add in to that – NYC has a population of 8.4m or so, and apparently 21,000 excess deaths (NYT) – official covid deaths are about 16,000 but excess deaths is likely more accurate.
    So if a quarter of people have been infected, that’s about 2.1m and would imply an infection fatality rate of about 1%.
    All very simplified back of an envelope of course, but all quite plausible without assuming anything that contradicts the ‘conventional’ understanding of the disease.

  • 119 The Investor April 28, 2020, 12:09 am

    @Vanguardfan — I’m literally off to bed and just checked comments as usual passing the PC, but just to say these are from Governor Andrew Cuomo’s daily briefing. It’s worth watching at least one of them, they’re better and more grown-up than our briefings IMHO.

  • 120 The Weasel April 28, 2020, 7:58 am

    @Snowman & @Ruby.

    I saw a headline on one of the red tops about how one the exit strategies could be for every household to pick ten close friends/relatives to socialise with and stick to those, hence widening the fence, so to speak.

    That would certainly work with family circles, in my view, as long as everyone keeps taking the same precautions they are taking today.

  • 121 MrOptimistic April 28, 2020, 8:30 am

    @ZXSpectrum. I find your posts interesting, they make a change from the equity fanboy stuff I read on other blogs. Not least they caused me to remind myself about ‘ splines’ and to spend a rewarding 35 seconds looking up ‘ convexity’ .
    I still have a big chunk of cash sitting uninvested. My previous intent was to go 40:60 equities to bonds or something like that, with a slice of cash and gold to pander to my endofdays gloom.
    Bonds were supposed to be the maiden aunt in this ménage but they haven’t been acting in character of late and now I am not so sure about allocations.
    Equity markets seem to be unnecessary at some fundamental level. Would it really matter if we all just stopped swopping shares between ourselves with cash adjustments, and on what are values founded? All well and good to say a P/E of 13 is ‘cheap’ but there is no reason other than history to assert such a thing, and the problem with history is it is always behind us.
    So, what does the current position if the bond market imply for an asset allocation decision which seeks a return of rpi plus 1% ?

  • 122 FlyByNight April 28, 2020, 8:49 am

    @Vanguardfan: Then of course what you want is a re-exposure to infection…..
    Just wondering – is there any data which suggests immunity can be built up? There doesn’t appear to be any at the moment. But this could knock the idea of a vaccine on the head and may mean we have to live with Covid long term.

    Which would leave the dilemma over whether we change society to protect people as they become vulnerable, or accept lower life expectancy.

    Was also wondering if the virus could cause long term health issues? I’m not an expert but couldn’t help wondering this after reading the David Lilienfeld link above. But could someone who is asymptomatic today end up with health issues caused by Covid later? In which case not getting infected (if possible) would be an advantage.

  • 123 Simon T April 28, 2020, 8:55 am

    @flybynight – one of the stories up there in the links deals with long term health I think. From memory 10 years of your life, or did I skim it and not understand it..?

  • 124 Simon T April 28, 2020, 8:58 am

    EDIT – I skimmed it without taking it in. https://www.telegraph.co.uk/news/2020/04/23/coronavirus-cutting-decade-victims-lives-scientists-say/. (must have read another version today because its not in the links), its historical and not future, ie it cut the lives of those who died

  • 125 The Investor April 28, 2020, 9:12 am

    @Vanguarfan — I agree with your napkin maths. While this antibody number is creeping up, it’s definitely much lower than I’d hoped.

    So the ‘many more infected’ thesis as of *now* is shaken (I’d still maintain it was a worthwhile point to make 4+ weeks ago when people were talking far lower numbers, but only in understanding the virus then, not in prognosis for the long-term).

    I suppose the best hope for the ‘much more infectious / less deadly’ theories now currently looks like: R0 falls with summer (likely IMHO but only gets us to autumn) / R0 drops with lower infection numbers/immunity than supposed (no evidence yet I’d say) / virus is so easily defeated by young people that in many cases their macrophages etc are doing the job and they don’t even get antibodies (potentially we could infer this perhaps by the overwhelming lack of notable symptoms in the young, but I wouldn’t call that evidence, and also as far as I know we don’t know what it’d mean for them as future carriers).

    Bottom line, I’m leaning back towards a modified version of consensus of the virus spread (though not quite yet tactics to defeat it). 🙁

    I need(ed) to see NYC antibodies at 40-50% I guess.

  • 126 Ruby April 28, 2020, 9:19 am

    @ MrOptimistic – I would be really interested to see a few thoughts from @ZXSpectrum on fixed interest allocation for passive investors. Currently, all I do, and I suspect many others do the same, is plonk it in Vanguard Global Bond Index Fund or similar and hope for the best. The characteristics of that fund mean one misses out on a lot of other potential sources of fixed interest return – longer duration bonds, index linked being just two. I know the Gospel according to St Lars advises against!

  • 127 MrOptimistic April 28, 2020, 10:52 am

    By coincidence this was in today’s Times ( may be behind a paywall). Also discusses the scars over 50’s carry from the formative years in the 1970s.

    ‘Anyone who claims to know assets are fairly priced now is delusional’


  • 128 Grumpy Old Paul April 28, 2020, 11:05 am

    I too really appreciate ZXSpectrum’s comments in so far as I understand them. Like others, I do have to look up some of the terms he uses though!
    I’d also appreciate his views on bond allocations for passive investors. I use Vanguard Global Bond, Vanguard LS20 and Vanguard Inflation-Linked Gilt index. I adjust my equity holdings to compensate for the 20% equity within LS20 but that is probably a slightly obsessive attention to detail. Yes, I’m aware that LS20 has a slug of Global Bond and inflation linked gilts. I just wanted to get more diversity within my bond holdings with relatively low volatility. I’m aware that inflation-linked gilts are volatile and are very expensive at the moment but I like the fact that they seem to be uncorrelated with anything else and offer me some protection in the event of inflation taking off in the future. I rebalance very infrequently and so have not attempted to take advantage of the wild movements of gilts in March; I also would have had to be very quick off the mark and use ETFs rather than funds for speed of transactions. All way above my pay grade!

  • 129 Snowman April 28, 2020, 11:09 am

    From the ONS statistics released today up to 17th April

    11,854 more excess deaths (relative to 5 year average) registered for week 16 in England and Wales (E&W)

    This adds to the 7,998 excess deaths for week 15, and 6,082 excess deaths for week 14

    So excess deaths in E&W based on the past 3 weeks of data of registrations = 25,934
    (3 weeks is the period over which excess deaths are detectable, you could add in about 1,000 deaths for the previous week before that)

    19,112 deaths are shown officially as covid-19 based on registrations up to 17th April, and
    22,351 deaths are shown officially as covid-19 based on dates of death up to 17th April

    So around 30,300 excess deaths occurred up to 17th April in England & Wales, due to direct or indirect affects of covid-19 (25,934 x 22,351/19112)

    Hospital daily death count was 14,451 in E&W at 17th April, so quite a bit lower than the 30,300 figure.

  • 130 Grumpy Old Paul April 28, 2020, 11:41 am

    I too agree with @Vanguardfan’s napkin calculations. A more widely quoted figure for IFR is around 0.65% (E.g. 0.66% in ps://www.medrxiv.org/content/10.1101/2020.03.09.20033357v1 – not peer reviewed).

    This would suggest that the number of people who’ve had COVID-19 in NYC might be 50% higher than the 24.7% figure cited.

    More generally, I’ve seen no discussion of the proportion of 65+ people who are either asymptomatic or suffer mild symptoms. Anyone have any clues to the answer? Surely, given the proportion of deaths within care homes now evident, there should be some focused epidemiological work on care home residents.

  • 131 MrOptimistic April 28, 2020, 11:56 am

    @Grumpy. Based on what I have read the IFR might be in the 1 – 1.5% range. Wouldn’t that square your calculations and bring the implied infection rates back in line with the actual NYC test results?
    Generally the excess death data seems the best basis we have. The UK flu reports show a very abrupt increase at weeks 14/15. I think napkin calculations would best be based on that sort of data.
    As an aside, with that IFR I would note that the probability of death before next birthday for a 66 year old is just above 1%. So for me Covid implies a risk commensurate with what I faced already ( and didnt spend too much time fretting about, let alone turning the population into house prisoners and juicing the economy). It’s an odd logic. I thought the NHS was there to protect me, not vice versa!

  • 132 The Investor April 28, 2020, 12:04 pm

    Surely, given the proportion of deaths within care homes now evident, there should be some focused epidemiological work on care home residents.

    I’ve just had something of a heated argument with a friend of mine — and Chris Whitty fan — about exactly this.

    We’re blowing up the economy at £2.4bn a day on the powers-that-be’s say-so, and so while I’ve personally been prepared to cut them a lot of slack given the nature of the thing, I still think their actions (or lack of…) should be held to a high standard.

    And this care home situation — in a crisis where the *one thing* we always knew for sure were the elderly were overwhelmingly the most vulnerable — is becoming somewhat frightful.

    Last week we had 20K out of 40K spare testing capacity. Even if it was hard to coordinate e.g. NHS workers to the testing stations to use that capacity, it should surely have been possible to get a few e.g. coordinated army medics out and back in to make use of this capacity and give us more information.

    But Whitty et al seem so reactive.

    Why aren’t we doing mass population tests using the spare capacity in say a single prison or a care home or hospital where there’s an outbreak to get a sense of how widespread a known infection is/becomes?

    Why are we not planning to retest exactly the same population in 2-4 week for antibodies to see how many known cases develop them etc?

    Indeed, why is Whitty/the government kicking most of his antibody tests out into the far future? (300K over the next 12 months is the current plan as I understand it. Feels necessary but not sufficient.)

    If Whitty admits we have population-level-good antibody testing now (as he did yesterday) then why isn’t he doing a random antibody sample of say Brent in London?

    Why are we sitting around trying to infer things from the likes of NYC and Sweden when our own gov has the capacity and resources to get us better data?

    Whitty comes across to me as an affable chap giving one of those after work lectures I like to go to at the LSE — but in the middle of a crisis that is still ongoing…

    Perhaps it doesn’t make any difference — Sweden, after all — but I think I’d prefer a wartime consigliere.

    The argument I’ve had back is that the CMO doesn’t have this kind of power, and it’s not his fault, so it should be the government doing it (e.g. Hancock).

    Then this quickly gets political; the suggestion is because Johnson and Cummings purged the cabinet of those with backbone (to get through a No Deal in December) there’s nobody with the sense of responsibility to properly step-up now / when Johnson was recovering.

    I also appreciate some might say getting e.g. population level data doesn’t help us because the diagnosis would be the same — full lockdown ideal, partial lockdown if not.

    But given the retort is so often “we don’t have that data” and we’re losing perhaps £1bn a day in GDP permanently (generously assuming 50%+ comes back in a post-lockdown bounce) you’d think the money and resources could be found?

  • 133 Grumpy Old Paul April 28, 2020, 12:41 pm

    To me the kick-ass arguments for epidemiological studies on the care home population , immediate representative sampling of the wider population and associated longitudinal studies are:

    1) If you don’t know what’s happening in care homes how on earth are all you going to manage the emerging crisis?

    2) If you don’t know what’s going on in the general population, how are you going to find out, in a timely manner, if an incremental step out of lock down threatens to overwhelm the NHS?

    3) If you don’t know what’s going on in the general population, if there is a seasonal fluctuation in COVID-19 infections, how are you going to detect an autumnal upsurge in cases swiftly enough to prevent the NHS being overwhelmed?

    4) Once the longitudinal studies and the associate data capture and analysis are in place, they can easily be repurposed to give early warning of future flu outbreaks and any other future epidemic.

  • 134 Snowman April 28, 2020, 12:58 pm

    The ONS data (w/e 17th April) showing that care homes are taking the brunt (about 40% of the excess deaths).

    Compared to average death figures in these settings for week 16, hospital deaths and home deaths have roughly doubled, but care homes deaths have more than tripled

    Of the roughly 12K excess deaths, roughly

    5K are in care Homes (+ 239.6% vs 5 year average)
    2K at home (+ 95% vs 5 year average)
    5K in hospital (+97.1% vs 5 year average)

  • 135 Vanguardfan April 28, 2020, 1:20 pm

    @GOP, there’s already quite extensive flu surveillance:

    I would imagine the Covid early warning system for the autumn will be tacked on to these systems, especially the sentinel GP practices.

    Incidentally here’s a link to a digest of covid related surveillance data. Some won’t be that helpful right now as normal access via GPs isn’t being used for Covid.

  • 136 MrOptimistic April 28, 2020, 2:15 pm

    @Vanguardfan. I think the flu reports already effectively capture Covid via the reporting of acute respiratory incidents and excess death data. The next UK report is out on Friday but the previous reports tagged the increase in excess deaths and the abrupt rise in care home outbreaks. Of course come the flu season they will need to find a means to separate and discriminate.
    We might be in for an interesting autumn/winter with the threat of a combined flu/covid attack.
    Then, of course, there is H5N1.
    I reckon there will be a shortage of flu vaccine this year not least because everyone has woken up to the risk.

  • 137 Vanguardfan April 28, 2020, 3:45 pm

    @MrO, yes indeed
    This is a better link to the flu reports, they don’t publish as often ‘out of season’.

    @TI, NYC will certainly get to 45-50% immunity, but it may well take another 16,000 deaths…

    On infection fatality rates, worth noting that it’s not a fixed number, even if we could estimate it precisely. It will vary by population, key factors being the age distribution and the availability of health care. Frankly I think ours might not look too great. I’m more and more of the view that the NHS has only ‘coped’ by locking out anyone old and frail. Not to mention all the non covid work. Still, you can’t conjure up doctors and nurses out of nowhere, even if you can build new warehousing facilities for them to work in.

    My feeling is that we will now probably manage ok through the summer, with a gradual lifting of some restrictions (which I think will start quite soon, my original prediction was within 8-12 weeks), but there is likely be another nasty wave coming at us when the weather turns in the autumn and we all huddle indoors again. There is still seems to be plenty of susceptibility in the population, as far as we can tell, to provide the fuel. It won’t look the same as the first wave because we start from a different place, but it could be just as damaging. We might even be back to lockdown again…..however much no one wants it (looking at news from Germany).

    It would be nice to think the government will use the few months relative breathing space to prepare furiously, and competently, but I’m not holding my breath. I expect more of the same logistical difficulties, equipment shortages and rigid over centralised one-size-fits-all policies (part of the issue with matching testing supply with demand is the overly centralised delivery, and lack of integration with local primary care and public health services).

    Lots of uncertainties of course, not least the extent of immunity, but also factors like the weather, the type of flu season, and the huge pressures to have something like a Christmas season in retail and leisure sectors….and to top it off there’s the end of year Brexit crash out to look forward to.
    I do hope I am being too pessimistic. Eventually of course we will live past this, and life will go on, and we will adapt if needed to any continuing health threat. Who knows, we might even get a vaccine.

  • 138 Vanguardfan April 28, 2020, 3:55 pm

    Btw on lockdown easing. In my neck of the woods there’s a distinct feeling of people starting to get back to work: contractors working outside, garage services, a few more food outlets. More traffic. It’s worth reflecting that lots of businesses and activities that stopped in March are not actually prohibited, and I think we’ll see more activity happening within the current rules, whatever the messaging.
    I’d really like to see schools starting back in June, at least the primaries, but I can sense there will be a huge fear factor here. This is actually the area where I most consider the public health benefits vs costs are not justified by the evidence.

  • 139 MrOptimistic April 28, 2020, 6:02 pm

    Yes definite increase in activity today.
    In medical science, as in investing, in the absence of facts every opinion is valid .
    Since these folks have lowered the paywall it would be impolite not to read it

  • 140 The Investor April 28, 2020, 11:36 pm

    @MrOptimistic — That NY Mag article on how Covid-19 acts/kills is pretty daunting. Will include it in the links on Friday.

  • 141 Vanguardfan April 29, 2020, 7:27 am
  • 142 The Investor April 29, 2020, 7:55 am

    @Vanguardfan — Thanks for that. Good digest.

  • 143 The Investor April 29, 2020, 1:39 pm

    Market popping on news that Gilead’s anti-viral drug Remdisivir is seeing positive news emerging from a double-blind controlled trial with NIAID in the treatment of Covid-19.

    Worth recalling we went through this with the same drug a couple of weeks ago. But the NIAID is described as the ‘gold standard’. Note the study hasn’t been released yet AIUI.

  • 144 MrOptimistic April 29, 2020, 3:54 pm

    @Vanguardfan. ‘Delivery of efficacious vaccines is not a competitive race to the finish’.
    You think ?
    One of the puzzles to me at least is why they doubt post- infection immunity. If the survivor’s immune system didn’t see the infection off with antibodies, how did the patient overcome the disease? If the antibodies were agents in this doesn’t immunity ( to some degree and for some time) come with the turf?
    I always wondered with the flu vaccine why immunity wasn’t for life ( Spanish research paper showed it waning after 100 days). The answer seemed to be that the virus mutated. But getting flu twice in a season isn’t a well documented occurrence.

  • 145 Vanguardfan April 29, 2020, 7:01 pm

    @TI #143 – I find it interesting that the ‘results’ of the US trial were leaked (and unavailable for scientific scrutiny) on the day the China trial (which should no effect) is published.

  • 146 Vanguardfan April 29, 2020, 7:18 pm

    @MrO. Not sure what you meant by that quote? (It’s not my work…)
    I’m not a virologist or immunologist, but here’s what I can tell you.
    Influenza virus mutates frequently, most of the mutations are minor, occasionally there is a dramatic shift which can then spread rapidly, potentially causing a pandemic (as population immunity is low). This is why pandemic flu is a constant threat/expectation. There are several strains of flu virus in circulation at any time. Flu vaccine has to be reformulated every year, to match the predominant circulating strains in the months before flu season. That’s why the flu vaccine is a annual jab. Some years it’s more effective than others, it’s a bit of luck/guess work involved.

    Re doubting immunity. The production of specific antibodies to a new antigen is a relatively late immunological response, I believe it takes about two weeks post infection. It’s not by any means the only way a body fights infection – there are much quicker non specific responses. (I don’t know loads about this, but I’m quite sure the authors of the paper do). Also, antibody levels decline over time. Because this coronavirus is new, we have no direct evidence about whether the antibodies detected by the various tests are effective in actually preventing reinfection, if so for how long, and what levels might be practically effective. Scientists have hunches based on what is known about other corona viruses (the ones that cause some colds) – iirc these tend to provoke some immunity, but not particularly long lasting. (Perhaps an actual virologist will give a more expert explanation…). So the assumption is that there is probably some immunity, but most likely not permanent, and it is likely that less severe infections provoke lower, or perhaps no effective, antibody response. But it’s not yet known, hence caution.

  • 147 Snowman April 29, 2020, 8:01 pm

    Interesting interview with a vaccine expert, Dr Jerome Kim, giving a clear insight into what is involved with attempting to develop a vaccine.


  • 148 Linda April 29, 2020, 8:39 pm


    I worry about schools going back, my son & wife are both shielded, if their children go back to school, they could bring the virus home & kill their parents.

  • 149 The Investor April 29, 2020, 8:56 pm

    @vanguardfan — It is depressing how this is getting politicized. Various talking heads on CNBC were doing victory laps today saying you should trust American innovation and science over the authoritarian system of China. If I had to choose I certainly would, but the last 3-5 years of politics in the US and here has fouled up so much.

  • 150 MrOptimistic April 30, 2020, 9:10 am

    @Vanguardfan. The quote was from the paper. Struck me as odd. Perhaps just academics trying to raise themselves above ‘ trade’ 🙂

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