I found an interesting article on Coronavirus this week that sparked a few thoughts that are worth sharing. My blogging has been on vacation for a few years, so this is a first attempt at restarting an old hobby.
The link to the article is here.
If you don't want to take the time to read the article, here is a quick summary:
- The virus spreads exponentially.
- Death rates are higher than flu.
- South Korea still remembers SARS, and the leadership is taking extreme measures. You may think that the government in South Korea could be killing ants with baseball bats, but they are succeeding where Italy is failing.
What is exponential growth anyway? Well, that could mean that two people are sick today, 4 tomorrow, 8 the next day, 16 the next, etc. That doesn't seem bad until day 20 where the number is 1,048,576. One of my friends explained the situation this way. Imagine sitting in a football stadium where one drop of water drips into the stadium every second. The next second, the amount of water exponentially increases. You'll sit there for a long time thinking nothing is wrong until the stadium is 1/4 full. Then, 2 seconds later, you're underwater.
Moral of the story: everything seems fine until it's too late.
Part of my IT training is in risk analysis and mitigation. I was also a Boy Scout. What is going to happen in the next few weeks? Yogi Berra had some good advise. “It's tough to make predictions, especially about the future.”
OK, so I might have your attention now. What are some things to do right now? Well, you have to look at 2 things: impact and probability.
Let's start with the most probable outcome. Supply chain disruption.
Supply Chain Disruption Risk: Medium Impact: Extremely High
People get sick enough to disrupt the supply chain. I don't care what anyone says. If people are panicking and not going to work, the trucks are not delivering to Walmart and cashiers are sitting at home.
That one is easy to mitigate. Buy food. Buy a month's worth of food. Maybe more. Go to the grocery right now and don't wait. If you're looking at risk vs. reward, buying food is easy. If things go bad, you won't be hungry. If nothing happens, that food will get eaten eventually with no financial loss. Simple... my family has already done this.
Power Disruption Risk: Low Impact: High
How many people are prepared for a power outage? Not many. We've not lost power in my neighborhood for a significant amount of time... ever. People on this side of Lexington have something called recency bias. Recency bias says that we've not lost power in the past couple of years, so that just won't ever happen. Recency bias is bad for us.
How to mitigate a power outage? Well, that's easy and hard, so let me explain. First, do you have a propane grill? The answer is probably yes. The simple solution is to head to Lowe's and pick up a couple of propane tanks. The U-haul store will top off the tanks that you have. I've got several propane tanks, and they are all full.
If power is lost for longer than 24 hours, you need to start worrying about refrigeration. It doesn't do any good to have a month's supply of meat if your freezer is offline. Several years ago, I bought a 20 amp generator at a yard sale for $125. If that gen is only used to keep my refrigerator and freezer cold, 15 gallons of gas (treated with Sta-bil) will last for a very long time. What if nothing happens? That gas goes in our minivan. Those extra 2 gas cans will either go on Facebook Marketplace or in my storage shed. Cost is minimal, so no big deal.
One more thing. Batteries and LED lights are also a good idea when it gets dark at 8 pm. Batteries will eventually get used, too.
Water Disruption Risk: Very Low Impact: Extremely High
This one is very bad, but not so hard to mitigate. Human beings need .75 gallons of water per day to function. My family of 4 needs about 20 gallons of water to make it for a week. Lowe's sells 5 gallon water bottles for about $7 each, so $28 buys me a week of water. If you drink soda in 2 liter bottles, those can be refilled for almost no cost. So yes, I have extra water at my house. If nothing happens, that we'll drink that water anyway. This one is cost neutral. Easy peasy.
What happens if you can't flush a toilet? The answer is that people get sick very quickly without sanitary conditions. How to mitigate? Easy, but not inexpensive. For about $100, you can get a 60 gallon rain barrel. Pour some water in the toilet, and FLUSH. That works as long as the sewer is working. Likelihood is low on this one. I'm pondering a rain barrel.
Total Anarchy Risk: Ridiculously Low Impact: Extremely High
The odds of total anarchy is almost zero, but the impact is extremely high. What do you do?
First, cash (and gold) is king. What is the impact of withdrawing a couple thousand dollars from your savings account? If cash is needed and credit cards are worthless, you'll be the happiest person in the world. If nothing happens, just put the cash back in the bank. Cost is neutral.
What else? One of my favorite stock analysts says that the important items to have in a 4th turning are shotgun shells, pit bulls, and a bunch of dog food. Oddly enough, Sportsman's Warehouse has an ad today. You can buy a Mossberg 12 gauge for $369.99 and 10 shells for $3.99. Total waste of money until it's not.
Conclusion
For a few hundred dollars, many of the issues related to Coronavirus can be mitigated. If nothing happens, most of that money will come back to you. The safest course is to act before the crowd. When the stadium is 1/4 full, it's too late. Maybe nothing happens. Who knows?
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