10 Lessons From Peak-COVID Panic Week
We are in the middle of a truly extraordinary time. The situation the world finds itself in is fluid, fragile, and rapidly-evolving. While weeks from now things will be materially different, I wanted to try and crystallize some lessons and ideas I've been observing and thinking about over the past three weeks.
1. This current situation is unprecedented
Years from now, the past week will be written about extensively in history books. Emergency Presidential speeches and Central Bank meetings, extraordinary government responses, mass canceling of nearly all public gatherings, the greatest remote-work experiment in history, and turbulent financial markets are just a few things that happened this week. For perspective, the realized volatility (a measure of the severity of price movements both up and down) of the S&P 500 stock market index was higher than ANY week during the 2008 financial crisis. People will be asking you what this period was like for years and years to come.
2. Exponential events are hard to grasp
Just six days ago, this was the extent of the concern from the President and most Americans. Look at the number of likes on the tweet— 289,000.
In the six days since then, unprecedented measures have been taken across the country and the globe, and more measures are likely to come. The speed at which things transpire during an exponential event are hard to grasp. If someone is reading this more than a week or two from its original writing, they will know exponentially more than I did while writing this.
3. Everything has a narrative until shit hits the fan
If I had told every bitcoin investor that we were in the midst of a global pandemic, global stock markets were falling precipitously, and global central banks and governments were printing money left and right to cushion the economic blow, most would be euphoric. Surely digital gold would be surging in value as people pile into the perceived "store of value." Instead, $BTC is down 50% along with nearly all other global assets that are not physical dollar bills.
4. Everyone is pretending a little bit
This virus came out of nowhere. Nearly every person outside of the medical community had zero understanding of the disease just over a month ago. As individuals dove in, some were quick to skim the surface and emerge with what they believed was a solid understanding, others dug deeper and recognized the potential severity, and further some began to extrapolate to end-of-the-world scenarios. In reality everyone is pretending they know more than they do.
This reminded me of this Wait But Why graphic — how we initially rush into things thinking we have all the answers before quickly finding out how much more complex the situation is. Ask yourself, where are you on this chart?
5. Risk happens slowly, and then all at once
Related to the difficulty of grasping exponential events, both people and markets will discount the chances of bad news becoming reality for as long as they can. The corollary of this is when it becomes impossible to continue turning a blind eye, there is a lot of catching up to do. For context, the speed of the stock market decline over the last two weeks is unlike anything we've ever seen. We've destroyed more wealth in three weeks than we did in the first 250 days of the financial crisis
6. The Pendulum of Groupthink is real
One week ago, our local Trader Joe's in NYC was busy but no more busier than a normal Sunday. At that point in time, the collective concern regarding COVID-19 was quite low. If the center of the pendulum is adequate concern, we were swinging far, far to the left. By Thursday night, that same Trader Joe's had a line through the store, up the escalator, out the door, and up a block and a half. It's likely that people were walking by, saw the line, and simply got in line since if everyone else is doing it, this must be pretty bad. Time will tell whether we have now swung too far to the right, or if there is more room to go.
7. Move Fast, Seek Antifragility
Many of our problems come not from having too little time, but having too much time. Too much time to overthink, to overanalyze, to over-plan, and to put off the real work. This is a byproduct of a fragile world, one where seldom are we required to make split-second decisions during exponentially-evolving events. The countries that will weather this most effectively are the ones that move fast. The individuals that will weather this most effectively are the ones that move fast. The companies that will weather this most effectively are the ones that move fast. Volatile times have a knack for illuminating the important things— follow those.
I can attest that many of the goals I've set and routines I've found myself in were perfectly fine and good when things were calm. It's safe to say they have been shaken up considerably and many are much less relevant, urgent, or essential now. My takeaway from this is you have to build optionality into any kind of personal system you keep for yourself. If your current way of operating constricts you from dropping everything and putting your focus on a new, urgent project, your system is Fragile and your ability to Move Fast will be hindered considerably.
8. Enjoy life while you can
Nick Maggiulli from Of Dollars and Data laid out this story so eloquently.
Imagine someone who has been saving money for 40 years. They have been sacrificing day in and day out so they would have enough for retirement.
They don’t eat out often. They don’t splurge on themselves. They make all the right financial choices.
Then they hit retirement and decide that they can finally live a little. They take a trip to go skiing in Italy in the winter. Nice time of year.
Then it happens. It starts as a cough, but it gets worse. A fever follows. Then they know they have it.
This realization is sadly happening to thousands and potentially many more people each day. We can take our current situation for granted and overlook its inherent fragility. The valuable lesson here is luckily, most reading this will not have this realization today or any time in the near future. But it’s nonetheless important to think about how we would feel if we did have this realization, and how that would change what we do now.
9. This will not be fun
There's no way around it — the next few months and potentially longer are going to be considerably less enjoyable than they would have been otherwise. Sporting events will be cancelled, social gatherings will diminish, the news flow will cast a rather gloomy cloud over most of our days, and we will see our friends and family less. However, the faster we accept this reality and take the steps necessary to flatten the curve, the faster things can return to normal.
10. This too shall pass
There will be permanent impacts from the current situation, both good and bad. More awareness towards health care funding, more flexible work-from-home policies, enhanced online education options, and cleaner public areas are all likely to stick. However, businesses may rethink the global nature of their supply chains, consumers may tighten their spending habits, tourism and travel plans could be reigned in, and, depending on the extent of the virus spread, deeper rifts could emerge across society.
But this too shall pass. Things will change, both for the better and for the worse. But we will adapt, that's what humans do. We will emerge from the crisis as we have from many before with an ever-broadened array of opportunities and challenges. I'm excited to be a part of that movement.