From the moment that the general character of this virus became known (high inclination to spread, bad-cold/flu-like symptoms for 90% of persons, risk of mortality focused on those whose 5-year survival rate was already under 50% due to either chronic illness or advanced age), it was clear that...
1. we were facing a crisis caused by a Transition To A New Normal;
2. that damage and suffering would be either caused or avoided, according to whether the transition was Abrupt or Gradual;
...and we're currently trying to make it more gradual simultaneously in two areas, which unfortunately conflict:
(a.) We want a more gradual slide into the new, lower rate of business growth (that it's gonna level out at over the next 12 months)
(b.) We want a more gradual infection rate, to reduce the hospitalization and death rate (that threatens to overwhelm health care workers)
The solution to (a.) is to tell people not to panic so that the markets slide slowly not quickly.
The solution to (b.) is to tell people to hide in their homes and not come out...which they don't really want to do except when they're panicking!
What we've learned over the last 3 days is that those 2 solutions conflict, and can't both be done at once. Also, the economic damage is largely done. (I don't mean we've seen it all yet; I mean merely that it's no longer avoidable.)
Since avoiding economic damage is now a lost cause, we should put all our eggs in basket (b.): Make the spread of the virus more gradual, even at the expense of economic problems (because we're going to get them anyway).
Re: The Economy:
The economy will not collapse; but stocks have lost value (and will lose a bit more), some businesses will close, and jobs will be lost. Let's look what that means, 12 months out:
If you own shares in a company that closes, that's bad. But there's no reason for most companies to close. Airlines are hurt; cruises are toast; and things related to large-crowd-entertainment are toast. Certain medical stocks will obviously benefit. If you have diversified out your portfolio like they tell you to do in school, then the value you had in November will return, eventually. Also, sometime soon the panic will begin to subside, and that's when you should see UNDERVALUED stocks and buying opportunities.
In another 12 months, we will have arrived at The New Normal in terms of the virus' ubiquity. Most folk alive will have had it once and gotten over it. It will bounce around the population the way that normal cold viruses do (perhaps seasonally, like flu; or perhaps year-round). Like colds, over a 5 year period everyone will have had it.
In fact, the first emergence of one of the viruses that cause "the common cold" probably looked like this. But everyone walks around expecting to get a "cold" now and again: It became the New Normal. To be sure, people occasionally die of the common cold precisely because their bodies were already weak (from some chronic illness) and it turns into pneumonia and other secondary infections, which overwhelm the body, causing organ failure, septic shock, and death. That's how COVID-19 kills (when it does); that's normally how flu kills (when it does); and it's how the common cold viruses kill (when they do). In a decade, COVID-19 will probably be categorized as yet another common cold virus. But for the moment, its newness is the problem.
Right now COVID-19 is more lethal than it ever will be in the future, not only because the virus will mutate over time, but because of its newness, our newness at identifying and fighting it, and because the transition to The New Normal is happening uncomfortably quickly.
In Italy, the "estimated death rate" it's 6-ish percent...but when you normalize by ages, it's really more like 2%. And that's WITH a health care system that's already overwhelmed, in one of the more polluted countries in Europe.
Re: "Normalize by Ages":
The virus is at a stage of general community spread: Everyone is getting it.
But (mostly) only those who show up in ERs on the verge of dying from the viral pneumonia "phase" are getting tested. That's why we see data like this:
"Avg. age of population of Tuscany: 46yrs; Avg. age of those tested for COVID-19: 64yrs."
When we look at the number of persons who died, and divide it by the number of persons who were tested, and tested positive, we get 6%+.
But, seeing the difference of average ages, we realize that the Sample Set of persons being tested is an invalid sample: It isn't reflective of the whole population. To "normalize it" means to weight the younger persons in the sample more heavily, and the older persons in the sample less heavily, until the average weighted age matches the average age of the general population.
When we do this, we find the death rate drops a little under 2%.
Likely U.S. death rates:
So, if the U.S. has 350 million people in it, and if (nearly) everyone is going to get COVID-19 by this time next year, should we assume that the dead will number 6% of 350 million people?
No, because the average age of the U.S. population isn't the same as the average age of persons who tested positive for Wuhan Flu in Tuscany!
Will it be 2%, then?
No, again...because the average age of the U.S. population isn't the same as the average age of the Tuscan population! Tuscany is full of older folk, not a lot of kids. The U.S. mean age is (from a quick Google search) 38 years.
So the only realistic estimates are those under 2%.
Other Factors:
Normalizing for Pre-Virus Healthiness?
Another thing to consider is that there's a difference between the pre-virus-healthiness of people who show up sick enough to get tested (and who then test positive), and the pre-virus-healthiness of the general population.
Above, I have described how we normalize by age. That's easy, because age is a number, and we know what that number is for everyone.
To get an estimate of the death rate of the general population we should also normalize by pre-virus-healthiness, since we know that the population as a whole is not only younger than the population showing up to be tested in Tuscany, but also less full of chronic illness than the persons tested for COVID-19.
But normalizing our sample set by pre-virus-healthiness is impossible: We lack the data, and have no way to condense that data into simple numbers which we could use as a basis for weighting the sample set. But you can't get an accurate general-population death projection without doing that.
So we know that 2% is overstating it. We just don't know by how much.
Normalizing for Already-Collapsed Healthcare System?
The Italian system is already in rationing mode. The U.S. system will probably get there at some point in the most seriously-impacted locations (e.g. outbreak area in Seattle) but may never get there nationwide. If you're living on a farm in Nebraska, your local hospital may not see more than one confirmed case a week.
Now, rationed care in an exhausted, overburdened system is surely worse than that in a system that's more or less normal. So, again, we know that 2% is an overstated death rate for the U.S. population, for that reason...but by how much? We can't know.
Best Guess:
I suspect that, at worst, we'll see a 1% death rate of the general population over the next 12 months, from COVID-19. The slower that it happens, the less economic shock. The faster that it happens, the more economic shock (and general distress).
Best Plan:
Stay home, except to get groceries.
Buy stocks -- IF you're into that; but this is not investment advice and I hereby declare that you should never take investment advice from some guy posting logorrhea in a web-forum! -- as soon as you think the panic has lowered the prices sufficiently...but don't buy cruise lines, or businesses that try to entertain or transport large numbers of people at once. Maybe look at stocks related to work-at-home technologies? A lot of people are going to get a lot of remote-work experience over the next year, I suspect.
Oh, and DON'T PANIC, unless somehow, perversely, panicking makes you do something helpful that you wouldn't otherwise be inclined to do. (Not sure what that'd be.)
But if panicking just elevates your heart rate and suppresses your immune system and makes you irritating to others, why bother?
