Fear Versus Risk

Fear is an unreasonable emotion. That once it has you in its grip, can control all of your actions and responses. Risk on the other hand, is the measure of a hazard or loss. These two are as different as night and day. Although they both try to assess the potential downside of any event, one uses our rational thought and control, while the other uses just blind emotion. And ultimately leads us to become out of control, reacting in a manner that really makes no sense, and in fact can do great harm to ourselves. As a nation, our reaction to the corona virus, is threatening to move from a rational risk based response, to the pure emotion of fear.

Fear is an unreasonable emotion. That once it has you in its grip, can control all of your actions and responses.

Risk on the other hand, is the measure of a hazard or loss.

These two are as different as night and day. Although they both try to assess the potential downside of any event, one uses our rational thought and control, while the other uses just blind emotion. And ultimately leads us to become out of control, reacting in a manner that really makes no sense, and in fact, can do great harm to ourselves.

As a nation, our reaction to the Corona Virus, is threatening to move from a rational risk-based response to the pure emotion of fear. And as any investor will tell you, once your strategy becomes dominated by fear, you almost always lose.

Why?

Because emotion is the worst of all perspectives on the world.

In a report released this weekend, Goldman Sachs observed that states containing 80% of our population are now heading back to lock-down. A reaction that is bound to lead to economic hardship.

This is not based on risk assessment, this is based on fear.

Why?

Because there is little statistical evidence either that the virus is getting worse, or that the move to lock down is effective.

In fact, as I've noted before, the central data point in any analysis of the Corona Virus effect on the population ought to be the number of deaths. And here there is no indication that a further lock-down is called for.

The number of Corona Virus deaths peaked at the end of April when we were averaging over 2,000 deaths per day. Currently, we are averaging well below 1,000 deaths from Corona Virus, less than half the numbers in April.


Although we've seen a slight uptick in the last couple of weeks, we are still well below 1,000 deaths per day on average.

In fact, the Center For Disease Control, in its latest report, indicates that only 5 ½ % of the daily deaths come from pneumonia or COVID 19.

Let that sink in 94% of all daily deaths right now come from some other factors, other than Corona Virus.

What's more, the Corona Virus death rate is so low, that the CDC has declared that the COVID 19 infection rate is below the threshold for an epidemic.

Again, a startling fact that you're not likely to see reported in the press.

COVID 19, currently has a death rate so low, that it is no longer considered an Epidemic.

And yet we have governors and mayors across this country willing to place their economies back in lock-down over the perceived future threat.

That's not risk control, that's emotion.

And when our political leaders lash out because of little other than a growing sense of fear, we're likely to suffer the consequences.

As one pundit put it: imagine shutting down an entire economy, for a disease so mild that you have to be tested to find out if you have it!

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