Coronavirus: The 'Cure' Is Worse Than the Disease

* Everyday flu effects millions of people * Everyday flu kills many thousands of vulnerable souls * Politicians' reactions to coronavirus have been excessive Politicians and bureaucrats often do much more harm than good. They feel obligated to do something just to avoid being accused of not doing enough. That was certainly the case just ahead of the New Year's Day 2000, when fear of Y2K effects on computers was running rampant. Whole industries were formed, and billions of dollars were wasted preparing for damages that never occurred. Surely the world's foremost computer could have simulated the effects by simply setting computers' clocks ahead and checking what was going to happen? Instead companies and governments were scared into spending huge amounts simply to avoid legal liabilities if they didn't, and negative effects did play out. Smart individuals, organizations, government agencies and businesses that took absolutely no Y2K-related actions were the big winners. The thinking taking place now in outsized and insane actions regarding containing the spread of the coronavirus are likely to prove just as wasteful as all that Y2K preparation. The deleterious effects of governments' responses will be huge, and suffered through for months or even years to come. America's Centers for Disease Control and Prevention estimates that from 34 million to 49 million U.S. residents contracted the common flu from Oct. 1, 2019 through Feb. 29, 2020. And 16 million to 23 million of those people ended up being treated by physicians. Around 350,000 to 620,000 required hospitalization. From 20,000 to 52,000 flu-related deaths are anticipated when the season is completed. Most of those dying were patients who were older and physically compromised already. Did you stop going to work? Did you keep your children at home rather than risk sending them to school? Did businesses, sporting events, conventions and so on shut down simply to avoid exposing customers or employees to infected flu cases? Of course not. Despite thousands of deaths, flu season comes every year and people deal with it in rational ways. Now look at the recent data from worldwide, not just American data, of cases of coronavirus, deaths and recoveries. At around 108,000 cases, it represents just a tiny speck of the world's population. At 3,661 deaths, that pales in comparison to the numbers killed by normal flu, auto accidents, suicides and other disease-related causes. The vast majority of Covid-19 cases are mild, and make full recoveries. Treatments consist of mitigating symptoms. That is mainly reduction of fever and rehydration. There is no cure other than that and rest. The CDC said that through March 5, there had been only 67 cases of coronavirus in America since Jan. 12. More are certain to come, but the number pales in comparison to everyday flu cases and their likely number of fatalities. Cutting off travel from overseas infected areas into the U.S. was a good move. We didn't need to import clearly risky people into our country, inviting a much larger problem. Responses since then, however, have been nothing short of insane. Whole segments of the world have shut down normal day-to-day activities. That cripples the ability of billions of people to live normal lives. It also created panic in the financial markets, taking trillions of dollars of value out of worldwide stock values. As of March 6, the fear factor among investors was similar to what was in effect on Christmas Eve 2018, after a full month of stock market carnage. The index actually dropped even further, to just three out of 100, after the Monday, March 9 carnage. The good news is that periods of tangible fear tend to mark market bottoms. Previous similar times, like Dec. 24, 2018 and early October 2019, proved to be launching points for major stock market rallies. Actual economic losses and the expenses of the emergency measures now being put into place are far greater than doing nothing and simply letting the coronavirus play itself out, just like the everyday flu does, each and every year. Don't expect politicians to do the right thing. Common sense does not reside in their heads. They feel obligated to take action, perhaps simply to avoid being called out for not doing so. Unfortunately, we are at their mercy. Three, six or 12 months from now, it's likely that the coronavirus will be old news, like the Ebola, SARS, MERS and other medical scares of past years. Keep calm, buy some bargain stocks, which have been knocked down to a fraction of their true long-term values, and wait for resolution. Buying into stocks which have already declined sharply makes for outstanding profit potentials. Media talking heads love to scare people. They delight in telling us that after a 50% fall, stocks would have to double just to get even. They then trot out the old, stocks average about 9% per year implying it will take a decade to recover your losses. What they're not telling you is that stocks often plunge by large percentages only to fully recover within months, not years. Hundreds of stocks do that each and every year. Even more do it after huge sell-offs like the one we've just experienced. The table below illustrates the tremendous returns possible for those establishing positions in good companies after they've fallen by 25% to 60%. The further the drop the more exciting the recovery potentials. Value stocks started the day at their lowest relative valuations in more than a decade. That trend is destined to reverse with a vengeance in the foreseeable future. Here's a dozen of my very favorite stocks at their Tuesday closing quotes. Many have been especially hard hit due to coronavirus-related concerns. Stocks on the list are now offered near their most favorable valuations since the very dark days at the bottom of the 2008-2009 financial crisis panic. We all regret not buying more back then. Don't waste the current opportunity. Let's hope our leaders come to realize that committing worldwide, financial hara-kiri to protect against something which must run its course, is futile and self-destructive.

Coronavirus: The 'Cure' Is Worse Than the Disease

Instead, keep calm, buy some bargain stocks -- which have been knocked down to a fraction of their true long-term values -- and wait for resolution.

Columnist Conversation

AAP Podcast on the Fed Decision!

Fed Hikes Rates 25 Basis Points

This Weekend on Real Money

COLUMNIST TWEETS

Please Join or Log In to manage and receive alerts.