While I am writing this, the first vaccine shots have been being provided in Germany already yesterday. Despite a relatively strict lock down including a curfew from 9pm in my home town Munich, in general the mood seems to a certain extent upbeat compared to a few weeks/months ago. Time to do a “2020 Covid-19 recap” with another installment of the “Panic Journal”.
Recap: This time was different
At first, like many “Westerners”, I thought that Covid-19 was not our problem. Like SARS in 2002/2003, MERS in 2012, Ebola 2014-2016, Zika 2015 or the Avian Influenza , this again looked like a “Third World problem”, where the Third World includes China. The first documented cases in Germany at car supplier Webasto seemed to have confirmed this: The infected persons were identified quickly, isolated and all recovered pretty fast. Webasto actually issued a press release in early March that all infected employees were healthy and eager to go back to work. So “Business as usual” with this “Exotic virus scare”.
Just a few days ago we had a total different situation when I wrote my last panic journal entry:
Covid-19 infections went parabolic again, lock downs had already started, the US election was still in front of us, there was really bad weather and markets were in a suddenly very depressive mood.
Just 8 or 9 days later, things look different: Joe Biden has won and The German-American Duo Pfizer-Biontech released very promising (early) results of its Phase III Study.
As I am not a vaccine/Virus expert, I’ll link to a post on how to interpret the results and try to summarize them:
Back in lock down mode
Four weeks after my first post of “season 2” it is pretty clear: Wave 2 of Covid-19 is definitely here and growing.
In contrast to my assumption and the general feeling 4 weeks ago, Europe is now back in lock down mode. Certain areas in the UK, Spain, France, Italy and Belgium went into different forms of lock down already a few days ago. Here in Germany I think many Germans got the message, when the German Health Minister Jens Spahn had to announce that he got infected a few days ago.
A “lock down light” will come into force in Germany on Monday with restrictions on contacts and closure of Restaurants and Bars. Austria just announced a harder version which for instance disallows any private visits after 8 pm which in effect is a 8pm curfew under another name.
What’s different this time compared to the first lock down ?
Two and a half months after the end of “Panic Journal Season 1”, it seems that “Season 2” is about to start (or has started already in some areas like Madrid or Israel, or never ended as in the US)
Time to summarize what from my point of view has changed or been confirmed since season 1:
+ Vaccine efforts are well on the way. AstraZeneca, despite a short interruption still seems to be a forerunner and end of 2020 seems to be realistic for a functional vaccine to be available
+ although the US had many days with more than 1000 deaths a day, overall the ratio of deaths to reported infections seems to go down in most parts of the world
It is now 14+ months since the “Covid-19 panic” set in and that I started the “Panic Journal” mini series. After season 1 and 4 episodes of Season 2, I think it is now time to close the series. Of course, Covid-19 is not over yet and currently in India the Virus is rampaging as never before.
However for the stock market it seems, the Virus and the pandemic is “last year’s news”. I think there is some small risk that some of the virus mutations could be a problem, on the other hand, the “magic” of the mRNA vaccine seems to be a decent risk mitigation factor.
So looking back, what are the major learnings/surprises for me from a investment perspective ?
- Buying the dip has worked again beautifully
A whole generation (or even two generations) of investors now has first hand experience that for the market overall, buying the dip always works. Personally, I have started my first “baby steps” in 1987 and even back then buying into the crash was a good opportunity.
When Mike Tyson was asked by a reporter whether he was worried about Evander Holyfield and his fight plan he answered; “Everyone has a plan until they get punched in the mouth.”
This is how the current crisis developed so far for me personally and that is why i decided to do this more frequent “Panic journal” in order to document my actions and to hopefully learn a thing or two.