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Post by mrclondon on Feb 6, 2020 2:27:13 GMT
The cruise ship 'Diamond Princess' moored in Japan might be the turning point for public sentiment outside China and the markets over the next few days. Out of around 3700 passengers and crew 300 have been tested. Yesterday evening the first 31 test results were announced, with 10 positive. This evening another 71 have been announed, with a further 10 positive. So 20/102 with almost another 200 tests outstanding.
Various observations in no particular order
- Japan's throughput of these tests seems unbelievably low at around 70 per 24 hrs. - This has been transmitting on the ship for many days - Most passengers are from wealthy countries, many will be elderly, and lots already talking to the media (free wifi and calls are being provided)
- 20 passengers evacuated already for onshore treatment ... this will be beginning to stretch local helath care resources, though Tokyo itself is not far away - Japan already had 25 confirmed cases before this
- Press reports suggest passengers are being quarantined in their cabins, many will be internal with no natural light. Almost all will be tiny. Exercise will be an issue
- The aircon system will still be running - There are other cruise ships affected (one moored at the new HK cruise terminal may be be very similar, but with less English speaking passengers) - The Olympics is not that far off
Whilst not wishing to downplay the horror unfolding in mainland China, esp in Hubei province, this ship is a potential disaster which will resonate loudly with western media. Japan would I think normally be regarded as being able to offer first class health care, but the scale here could be ovewhelming.
I keep looking at the markets and wondering whether I should bite the bullet and liquidate. Trouble is I know the historical stats are strongly against attempting to time the markets. But for the DJIA to hit an all time high today is just nuts.
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Post by bernythedolt on Feb 6, 2020 3:25:58 GMT
[…] For the purpose of extrapolation - the purpose of the exercise after all - I posit he'd be better extending the parabolic fit to at least the last 6 (say) data points rather than 4. He'd then get f(d) = 151.07d 2 - 3301.9d + 20398, still with R² = 0.9999. As you say, an R 2 coefficient of that magnitude represents a near perfect fit, but being based on more data I suspect this would be a better predictor than the four data point version he's published. I notice the guy producing these graphs came to the same conclusion shortly afterwards, and I quote from his Tweet, " Last 8 points fit a quadratic with an R^2 of ~0.9999". At current infection rate over 1 million will be infected by end of the month  Do you have a source for that figure? Not sure it's rising at quite that rate? The Tweet above, if we accept his figures (and they do seem to match what we're hearing each day), suggests a best-fit quadratic close to the one I derived above. From my (six data point) function:- - f(0) (i.e. substitute d=0 into the equation) represents confirmed cases on 3rd Feb of ~20398.
- Two days later (substitute d=-2) it predicted this would grow to f(-2) = 27,606 cases by 5th Feb. Actual value reported on the news was 28,000. So it was a good predictor for two days ahead.
- It's notoriously difficult to extrapolate accurately long into the future, but on 28th Feb the same function predicts f(-25) =~197,000 cases.
So at the current rate of infection, this model would predict something closer to 200,000 infections. Tweeter guy is checking daily how accurate this model is as a predictor.
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benaj
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Post by benaj on Feb 6, 2020 6:40:17 GMT
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djay
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Post by djay on Feb 6, 2020 7:33:44 GMT
[…] For the purpose of extrapolation - the purpose of the exercise after all - I posit he'd be better extending the parabolic fit to at least the last 6 (say) data points rather than 4. He'd then get f(d) = 151.07d 2 - 3301.9d + 20398, still with R² = 0.9999. As you say, an R 2 coefficient of that magnitude represents a near perfect fit, but being based on more data I suspect this would be a better predictor than the four data point version he's published. I notice the guy producing these graphs came to the same conclusion shortly afterwards, and I quote from his Tweet, " Last 8 points fit a quadratic with an R^2 of ~0.9999". At current infection rate over 1 million will be infected by end of the month Do you have a source for that figure? Not sure it's rising at quite that rate? The Tweet above, if we accept his figures (and they do seem to match what we're hearing each day), suggests a best-fit quadratic close to the one I derived above. From my (six data point) function:- - f(0) (i.e. substitute d=0 into the equation) represents confirmed cases on 3rd Feb of ~20398.
- Two days later (substitute d=-2) it predicted this would grow to f(-2) = 27,606 cases by 5th Feb. Actual value reported on the news was 28,000. So it was a good predictor for two days ahead.
- It's notoriously difficult to extrapolate accurately long into the future, but on 28th Feb the same function predicts f(-25) =~197,000 cases.
So at the current rate of infection, this model would predict something closer to 200,000 infections. Tweeter guy is checking daily how accurate this model is as a predictor. The extrapolation makes many assumptions, If the Chinese government actions have had any effect new infections should diverge from this trend within the next 7 to 10 days if not earlier.
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Post by mrclondon on Feb 6, 2020 11:33:28 GMT
All very valid points @wallstreet. As it happened I did carry out a periodic review and adjustment of sector allocations etc just before this broke in mid January. By way of additional context of my situation, the vast majority of my equity exposure is via single priced funds so sell/buy with no market movement is zero cost. I'll need to liquidate 25% in 12 months time when I move into drawdown.
I started this thread by saying I'm a glass half full sort of person, and events don't generally faze me. And yet I'm reading this event as totally different to anything in my lifetime, things could get really bad. The physcology though is once the markets have dropped 10% there will be a reluctance to sell even though further steep falls could be inevitable.
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r00lish67
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Post by r00lish67 on Feb 6, 2020 12:15:12 GMT
All very valid points @wallstreet . As it happened I did carry out a periodic review and adjustment of sector allocations etc just before this broke in mid January. By way of additional context of my situation, the vast majority of my equity exposure is via single priced funds so sell/buy with no market movement is zero cost. I'll need to liquidate 25% in 12 months time when I move into drawdown.
I started this thread by saying I'm a glass half full sort of person, and events don't generally faze me. And yet I'm reading this event as totally different to anything in my lifetime, things could get really bad. The physcology though is once the markets have dropped 10% there will be a reluctance to sell even though further steep falls could be inevitable.
It could do, but then (from an investment perspective) the Iran situation could have got really bad, the Ukraine conflict could have got really bad, SARS/Bird flu etc could have got really bad. And probably many more recent news events that escape me. As you've well illustrated, even if one is totally correct that this story is being underplayed and much worse than it seems, even then the markets screw you (as well as DJI, global markets overall up 5.2% in the last 5 days) by being irrational for longer than you. If the chance of a huge drop in Chinese shares makes one feel like selling up, well this event doesn't change anything for me. It make it seem more proximate, but shares in different geographies can and will fall and rise hugely and totally unpredictably anyway (especially in EM), so what's the point of trying? All the above said, my conclusion is the same as yours. Stay invested, take an opportunity to rebalance a little if it makes one feel more comfortable. Outside of the investment world, the papers seem to have lost interest. The Guardian leading on a politician texting boys, bbc news talking about Trump, Daily mail talking about a storm and a robbery. Indie talking about flu, but only because Stanley Johnson is an idiot. I just note this for interest, not that it means you're not right to worry (as if the papers are a good guide to anything!)
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michaelc
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Post by michaelc on Feb 6, 2020 13:09:13 GMT
Putting aside completely any humanity issues, in pure market terms wouldn't this actually help the economies of those countries that are or will be affected since it largely targets the unproductive? Its a genuine question as I'm no economist.
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cb25
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Post by cb25 on Feb 6, 2020 13:35:16 GMT
BBC reports "Third coronavirus case confirmed in UK ... The individual did not contract the virus in the UK"
If the UK death toll (zero to date I believe) gets into the thousands, I might start to worry. Until then, doesn't bother me at all.
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Post by mrclondon on Feb 6, 2020 13:51:12 GMT
Putting aside completely any humanity issues, in pure market terms wouldn't this actually help the economies of those countries that are or will be affected since it largely targets the unproductive? Its a genuine question as I'm no economist. Interesting question but I think the premise that the unproductive are a burden on society is misplaced at many levels. Two examples. I learnt a lot from living with my grandparents for a few weeks each summer as a kid. I'm mostly unproductive these days (and as a 50 something male, with longstanding respiratory problems an obvious target for this virus) but HMRC clearly doesn't think I'm a burden on society, quite the opposite.
China/Vitenam/Cambodia/Thailand/Laos/Myanmar are possibly 20 years behind the rest of the world (excl Africa, not sure about South America) in terms of wealth distribution vs age, but the prevelence of middle aged Chinese in tour groups across the world is worthy of note. The world economy is a little too dependent on consumer spending, and it is the "unproductive" that have the surplus funds. However, it may be the case that Chinese in their 70's and beyond contribute little economically, but still contibuting pastorially to younger generations.
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Post by mrclondon on Feb 6, 2020 14:01:19 GMT
BBC reports "Third coronavirus case confirmed in UK ... The individual did not contract the virus in the UK"
If the UK death toll (zero to date I believe) gets into the thousands, I might start to worry. Until then, doesn't bother me at all.
Brighton. Now transfered to one of the central London specialist hospitals.
Deaths outside China/SE Asia should be minimal, and for now I'm not particularly concerned about health issues. However I am very concerned about the impact on global supply chains. China is being isolated from the rest of the world, and will be for months ahead.
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Post by bracknellboy on Feb 6, 2020 14:20:10 GMT
BBC reports "Third coronavirus case confirmed in UK ... The individual did not contract the virus in the UK"
If the UK death toll (zero to date I believe) gets into the thousands, I might start to worry. Until then, doesn't bother me at all.
Brighton. Now transfered to one of the central London specialist hospitals.
Deaths outside SE Asia should be minimal, and for now I'm not particularly concerned about health issues. However I am very concerned about the impact on global supply chains. China is being isolated from the rest of the world, and will be for months ahead.
Where did you get Brighton from ? That isn't currently showing in the BBC report.
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Post by mrclondon on Feb 6, 2020 14:22:47 GMT
Brighton. Now transfered to one of the central London specialist hospitals.
Where did you get Brighton from ? That isn't currently showing in the BBC report. Guardian live blog - scroll down to 13:23 entry
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michaelc
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Post by michaelc on Feb 6, 2020 15:01:40 GMT
Putting aside completely any humanity issues, in pure market terms wouldn't this actually help the economies of those countries that are or will be affected since it largely targets the unproductive? Its a genuine question as I'm no economist. Interesting question but I think the premise that the unproductive are a burden on society is misplaced at many levels. Two examples. I learnt a lot from living with my grandparents for a few weeks each summer as a kid. I'm mostly unproductive these days (and as a 50 something male, with longstanding respiratory problems an obvious target for this virus) but HMRC clearly doesn't think I'm a burden on society, quite the opposite.
China/Vitenam/Cambodia/Thailand/Laos/Myanmar are possibly 20 years behind the rest of the world (excl Africa, not sure about South America) in terms of wealth distribution vs age, but the prevelence of middle aged Chinese in tour groups across the world is worthy of note. The world economy is a little too dependent on consumer spending, and it is the "unproductive" that have the surplus funds. However, it may be the case that Chinese in their 70's and beyond contribute little economically, but still contibuting pastorially to younger generations.
And thoughtful answer. I wasn't trying in any way to imply older, wealthier people in any way contribute less than anyone else. I was merely wondering if you suddenly force their wealth to be passed down to "productive" (in the traditional workplace sense) what happens to the economy? That feels like a question any economist should be able to answer with ease but perhaps its dependendent on other factors such as what sort of economy we're talking about in the first place. So I'd start with China.
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cb25
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Post by cb25 on Feb 6, 2020 15:36:13 GMT
John Hopkins University provide a handy (almost) real-time Coronavirus map here |
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Post by mrclondon on Feb 6, 2020 15:40:21 GMT
I wasn't trying in any way to imply older, wealthier people in any way contribute less than anyone else. I was merely wondering if you suddenly force their wealth to be passed down to "productive" (in the traditional workplace sense) what happens to the economy? That feels like a question any economist should be able to answer with ease but perhaps its dependendent on other factors such as what sort of economy we're talking about in the first place. So I'd start with China. These issues are hard to get our head around because by definition users of this forum tend to be significantly wealthier than avaerage, and we see the world through rose tinted glasses a lot of the time. I also think its hard because it comes down to individuals/families and how they see the role of inheritance. Many are now skipping a generation so the inherited wealth formally goes to down to those in their 20's / early 30's which tends to mean its ploughed back into property . Even where the inheritance is passed to the children not the grandchildren, the children gift signficant proportions down to their children. Others on receiving an inheritance will consider retiring and becoming unproductive themselves, or at the other extreme use the funds to retire from emplyment but start a business employing others. When you look at SE Asia though, the current 70's plus seem to have in general relatively little accumulated wealth .... they give the appearance of being more like my grandparents generation, than my parents generation. Inheritances will be small, and are unlikely to make much of an impact on those recieving them. I think possibly this is missing something critical ... a huge proportion of China's elderly are still centered in rural vilages who should be less likely to be hit by a virus epedemic. It feels as if the greatest risk is to the oldest cohort in the cities, those in their late 50's and 60's who are still productive, and in many cases in crucial leadership roles. That said, I'm not sure it really differs that much here ... I'd put my odds of being caught up in a virus epedemic here in inner London significantly higher than that of my parents in a rural village elsewhere in England. Once caught it then becomes a lottery as to whether the specilist care needed is available.
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