Mr Covid Market
We have now been living with Coronavirus slightly more than one year now. I am probably not the only one thinking that from time to time, the public debate and opinion seems to be disconnected from any reality that you can observe from data.
But how would you describe this phenomenon & public debate? Perhaps it could be “Mr Covid Market”
- Mr Market: Famous investor Benjamin Graham created the term “Mr Market” to describe irrationality and collective groupthink of the stock market. Followers of Graham, such as Warren Buffet, have emphasized the value (read: “data/fact”) based investing decision approach instead of stock price movements (read: “indicator of collective group think”).
- What do we believe the future will be like: Nick Boström’s essay Future of Humanity that was compressed by Peter Thiel into one illustration in his book Zero to One and can be seen for example in this blog: extinction, plateau, takeoff, recurrent collapse?
- Overton Window: Public debate has had the extreme opinions from strict suppressing to herd immunity described nicely by Overton Window.
Why we see Mr Covid Market to take place?
#1: We do not know what path are we in
If we see a small increase in number of daily cases we do not know if we are in the path that Ireland or Finland continued in December 2020.
#2: We do not know what the situation is right now
Covid-19 cases can grow quickly and in those cases you should act now.
Coronavirus epidemic is not very easy to track, because we never know what the situation now precisely is.
- If you get Covid-19 infection today, you get symptoms probably next week and go to lab results, might end up in hospital two weeks later etc. You could call this diagnosis lag.
Lags of infections, lab results and decisions are nicely illustrated in paper
#3: Nature of public debate
The nature of public debate can be viewed as a distribution of opinions. When Covid-19 epidemy started, the extremes were suppress and herd immunity.
What to make of this?
So we get Mr Covid Market. There is a lot of room for speculation because we do not know what the situation now is. People see the Covid-19 future differently but very few persons are able to quantify their point of view in the “value based investing” point of view.
You can find the Twitter discussion here.