“I spend my waking hours thinking about risk.” – Josh Brown

Josh wasn’t talking specifically about the coronavirus, but he could be. Last week I wrote about how we all pretty much on our own when it comes to assessing the risks of the coronavirus and coming up with a plan to live in a world where the coronavirus isn’t going anywhere, anytime soon. I wrote:

You are going to need a plan for engaging with the world moving forward. We are all going to have to assess the relative risks of engaging in certain activities. An acceptable risk for you, may be unacceptable to someone else. The challenge will be sticking to your personal plan in the face of other people, with different information and risk profiles, engaging in activities that all look pretty enticing right now.

In many places around the country, the curve, as it were, has bent downwards. That does not mean that risk has been eliminated. In a very real sense, the risks of contracting the disease in the US are nearly as high as they have ever been. The point is that we have not done a good job explaining the benefits (and costs) of various measures, leaving them vulnerable to misinformation. As Joel Achenbach in the Washington Post writes:

“All of that heightens our instinct to go it alone and improvise our rules, based on something we found on the Internet or heard from a friend shouting from the sidewalk across the street. Most of us aren’t epidemiologists, and we have no innate grasp of how to think about a new virus. And the type of dispassionate, evidence-based calculation that we’re all trying to make on the fly is something our brains are particularly bad at.”

Most people aren’t looking to turn the clock back a few months. That ship has sailed. There is no easy return to how we lived a few short months ago. What people want it actionable ideas on how to live their lives, safely and free of unnecessary fear. As Michelle Goldberg at the New York Times wrote:

We’re left with a patchwork of state responses, some serious and responsible, some nihilistic. In states that are being guided by public health, it would help to have more communication about what a return to a minimally bearable way of life might look like.

We don’t know exactly how various measures, including social distancing, have affected the course and pace of the pandemic. We don’t know all the unintended costs of shutting down the world’s largest economy for the better part of two months. We will only know those answers in hindsight. Frankly we may never know be able to answers these questions with any precision.

In the meantime, you need to understand the risks of engaging in various activities. This explainer by Prof. Erin Bromage entitled “The Risks – Know Them – Avoid Them” is the best piece written for the layman on the currently known risks of contracting the coronavirus. You should read the whole thing but she notes some commonalities between the biggest known coronvirus outbreaks.

“The reason to highlight these different outbreaks is to show you the commonality of outbreaks of COVID-19. All these infection events were indoors, with people closely-spaced, with lots of talking, singing, or yelling. The main sources for infection are home, workplace, public transport, social gatherings, and restaurants. This accounts for 90% of all transmission events.”

By focusing on two variables, viral dose and time, this analysis gives you a shorthand, roadmap to keep in mind as you move about the world. Or as Jason Kottke at kottke.org sums up Bromage’s piece:

“The Michael Pollan version of advice for socializing during the pandemic might be: Spend time with people, not too much, mostly masked and outdoors.”

That is what we know now. There is far more unknowns about the coronavirus than knowns, researchers are still identifying unique symptoms of Covid-19. There is no doubt we will learn more over time, but there are still a host of unanswered questions.

Howard Marks at Oakmark Capital has thought a lot about risk his entire career. In his most recent memo entitled “Uncertainty” he talks about all the uncertainties we face at the moment and the challenge we all face in trying to answer some of these unanswered questions. There is still a lot of doubt about how all this will play out but that does not allow us to hide from the world. Marks writes:

“Few people know what the future holds better than others. And yet investing deals entirely with the future, meaning investors can’t avoid making decisions about it.”

All of us, not just investors, can’t avoid making these high stakes decisions. Inform yourself the best you can. Take sensible risks. And don’t forget we are all, quite literally, all in this together.

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