Lessons in Fear and Wealth from the Coronavirus

As I write this, the biggest story in the entire world is a virus that is making its way around the planet, leaving a trail of sickness and death in its wake, while sending a much bigger shockwave of fear and uncertainty out front. Last week, the US stock market dropped 15% in just a few days, the most shocking correction since the 2008-2009 financial crisis (and the most interesting drop since the founding of this blog in 2011).

I am sure you’ve been hearing, reading or watching plenty about it already, but the real question is, what should we do about it?

The Scary Side

Is this a screenshot from the fear-mongering TV news? Nope, just a moment from a classic zombie movie, although sometimes it is hard to tell the difference.

The fear and doubt seems to be what the news stories have been emphasizing. The disease is highly contagious, and very sneaky. Each carrier seems to infect 2-3 additional people, which means exponential growth. And with an observed death rate of about 1% so far (on a limited data set of older people on a cruise ship) it may be several times times more deadly than the common flu.

On the news, we see rows of hastily installed hospital beds, people wearing paper face masks even here in our own country, empty supermarket shelves and shuttered factories and public venues.

And we are reminded that we ain’t seen nothing yet, because with mild symptoms that can hide for days, most cases are going unreported and the disease is pumping its toxic tentacles through the arteries of our economy, plotting its attack while we are left POWERLESS UNTIL THE RIOTS IN THE STREET START AND PEOPLE ARE SMASHING THROUGH OUR WINDOWS TO TAKE OUR LAST FEW CANS OF BEANS AFTER WE RUN OUT OF AMMO IN OUR SHOTGUNS.

Some people are just prone to this type of thinking, and I even have a few in my own life. They have warned me to gather “at least a few months worth” of nonperishable food in my pantry and make sure I have a generator and plenty of fuel, at the very least. And to reconsider my stance of not keeping any guns in the house.

The Not-So-Scary Side

I went out on the town early on in the scare. The reality was different from the news headlines, although restaurants did close a few weeks after this post was first published.

As I write this on March 2nd, there have been about 90,000 confirmed cases of COVID-19. And while the number is still growing rapidly, at the moment it is still a tiny number, about one thousandth of a percent of the world’s population. So even if it multiplies 100-fold, it would be a tenth of one percent. And out of these 90,000 people, about half are already recovered and have moved on with their lives. And the vast majority of the remaining ill, and all those who are so far undetected, and those who are yet to get infected, will also recover.

Past and current status of the outbreak.

But do we have any idea how bad it will get, before it gets better? As it turns out, we do. But first, some perspective.

Here are this year’s numbers for the tried-and-true traditional flu for the 2019 flu season in the US alone (and remember the USA is only four percent of the world population):

Wow, 32-45 million cases of the flu already, and tens of thousands of deaths. Even I had no idea it was that serious, and yet the flu is something I don’t even worry about – ever!

Even scarier: every year, about 2.8 million people die in the US alone, and a full 70% of these deaths (over two million people per year) are caused by “lifestyle factors”, which to put it plainly means ignoring Mr. Money Mustache’s advice about bikes, barbells and salads every day.

So if we start with the common flu, which is surprisingly scary, choosing car-based transportation and TV-based entertainment and consuming processed high-carbohydrate food and soft drinks should feel at least an additional hundred times scarier than that.

But do you feel the appropriate ratios of fear in these two situations? And a much smaller amount of fear about the Coronavirus? Probably not, because we humans generally suck at putting numbers, statistics and probabilities into perspective.

We Have Been Here Before

In my lifetime alone, we have seen the rise and decline of quite a list of worldwide health scares, each of which was covered in the news with similar intensity to what we see today. AIDS, Ebola, SARS, Bird Flu, and the 2009 Swine Flu pandemic, also known as H1N1. That one was particularly serious in retrospect, having infected between 11-21% of the world’s population and taking the lives of about 500,000.

Yet here we are, with that fearful event gone from the rearview mirror and a global economy that is far richer than it has ever been. Which is exactly what we will eventually be saying about the present moment in time, from our vantage point in the even more prosperous future.

And Math Can Help Create Perspective

Contagious diseases don’t just grow forever until everybody is dead. They follow an S-curve, like this recent prediction for Covid-19’s spread. It currently estimates that we may see things flatten out fairly soon, but more importantly it continually updates to new information and makes an educated guess – a great strategy for dealing with unknowns in life in general.

One mathematical model that a researcher is updating each day – image source.

On the other hand, some estimates are more pessimistic. Disease modelers at Northeastern University used different assumptions in mid-February to predict between 550,000 and 4 million cases in China*, before we reach the flat top of our “S”. That because of extreme quarantines, that turned out to be pessimistic as well and China flattened out well below 100k.

So let’s imagine that a 4-million outbreak happened in the rest of the world. That’s still only a twentieth of one percent of the world’s population who would even get the disease, and then a further 99% of those would recover. Again, it’s too early to guess the world numbers, and I’m not qualified to do so. But it’s always important to put things into context of the almost eight billion people on Earth – that’s a deceptively large number.

As a final source of information, when it comes to world health issues I always like to see what Bill Gates has to say. And sure enough, he written this great opinion piece in a medical journal and an even better Ask Me Anything on Reddit. His main point? The damage done by a virus really depends on how well our governments respond to it. Lots of caution and a quick response leads to much better results.

So there’s still a lot of uncertainty. But when faced with a lack of information, we can choose one of two options on where to learn more:

  • Good looking news anchors with fake tans and no scientific background, who make more money if they generate more viewership hours and advertising revenue, which is proven to multiply if they can cause their viewers to experience fear, or
  • Scientists and mathematicians who study this stuff for a living, and use incoming data to make a series of continually refined predictions.

As Mustachians, we get our information from scientists rather than news anchors and politicians, and then we choose a course of action based on what is in our circle of control. In the case of the Coronavirus, I would say that means taking the following steps:

  • Continue the usual program of living a healthy life. Just the incredibly simple steps of cutting cars, sugar and television out of your life as much as possible will virtually eliminate the 70% fatality risk factor of being inactive and unfit – and yet only a tiny percentage of people – even those lucky enough to still have fully able bodies – actually follow this advice. On top of that, this strategy will also greatly boost your immunity to Covid-19, and decrease your chance of serious illness or death if you do catch it.
  • Don’t try to out-guess the stock market. Just celebrate the fact that we have a temporary sale on stocks. While the endless stream of meaningless market commentary every day means absolutely nothing, one fact remains indisputable: stocks you buy today at a 15% discount from their peak, will be 15% more profitable for you over your lifetime.
  • And finally, still important but statistically less urgent is taking actual steps related to dodging this and other viral illnesses. Wash your hands a few times a day and avoid unnecessary large gatherings of people in close quarters, until the health organizations tell us we are in the clear.

Guns and ammo and a bunker full of canned beans not required.

* a really interesting quote from that same article about the size of the uncertainty around diseases:

” In the autumn of 2014, modelers at CDC projected that the Ebola outbreak in West Africa could reach 550,000 to 1.4 million cases in Liberia and Sierra Leone by late January if nothing changed. As it happened, heroic efforts to isolate patients, trace contacts, and stop unsafe burial practices kept the number of cases to 28,600 (and 11,325 deaths). “

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  • Adam March 3, 2020, 1:56 pm

    On the bright side people are being socially shamed into thoroughly washing hands, so maybe some good will come of this mess…?

    • DuckReconMajor March 3, 2020, 2:09 pm

      I’m more interested in improvements to health care access and better ability to take leave from work when you’re sick, in the US and other similarly-minded areas.

      • Robin March 3, 2020, 3:23 pm

        Not to be a downer, but don’t count on any long term changes from a health scare like this. The wheels of policy grind slowly. And for the same reason that the stock market will have recovered all losses from this scare in a matter of months, it is extremely unlikely that we’ll see a wholesale shift in healthcare access or worker rights.

        • DuckReconMajor March 3, 2020, 6:54 pm

          I figure, but I meant this as a pipe-dream to add to Adam’s “people actually washing their hands” fantasy.

      • scott March 5, 2020, 1:49 pm

        Yeah. Who cares about about simple things we can do on a daily basis to to improve our health like washing hands, eating vegetables, not drinking sodas, choosing muscle over motor. I just want to make sure I have a super cheap cadillac health plan with amazing drugs for my blood pressure and diabetes that my doctor can put on for the rest of my life.

    • Michelle M March 19, 2020, 8:36 am

      Haha yeah more people washing hands… I think doing away with handshaking as the standard greeting would be a good thing. A new culture of teleworking and tele-meetings would also be a good thing I think, for the environment, reduced accidents and traffic fatalities, improved overall communal sanity especially for larger cities. Some people bring up the social isolation factor, but when you step outside for breaks (what a concept!) you can get fresh air and wave to your neighbors :)

    • lurker March 28, 2020, 1:20 pm

      I live in NYC where someone is now dying every 10 minutes….just looking at the numbers in early march was misleading. Italy has now had 10ooo deaths…pandemics are serious business and NOT flu as usual.
      be safe everyone.

  • Tallgirl1204 March 3, 2020, 2:00 pm

    My grandma was a nurse during the Spanish Flu epidemic. She dealt with an overflowing hospital with a morgue stacked to the brim, and patients lined up on gurneys in every hallway. So I tend to be less sanguine about the process of this illness. May it be as you project— and if not, we will deal.

    That said— everything else you said is right on. Plus: wash your hands like you just peeled a pile of chilies and now you want to take your contacts out.

    • bcbiker March 3, 2020, 8:33 pm

      Not the same thing. Even if we were fighting a world war and we had not made 100 years of progress in medical science and patient care (anti-virals, respirators, etc.), this virus is not of similar caliber to Spanish Flu. Young healthy people are largely asymptomatic (so much so they are not tested) with COVID-19 and death rate approaches zero, whereas SF killed people of all ages and health status.


    • CSN March 3, 2020, 8:45 pm

      That was a very different disease in a very different time! Basic sanitation and the germ theory of disease had only started gaining mass acceptance in the most modern areas of the world a few decades earlier. It was during WWI and the Russian revolution! It also disproportionately hit the young and healthy due to autoimmune effects, the opposite of Covid-19 (and most flu-like viruses). Hardly comparable. If you don’t have specific vulnerable people in your life, you are only doing yourself harm by worrying about something you can’t control anyway. Keep calm, wash your hands, and read the news less.

      • Tallgirl1204 March 3, 2020, 9:17 pm

        Oh I’m not worrying. I just tend to have a busy brain, and one of these times the germ is going to be the big one. It would be good for us to have a well-funded public health program that is prepared to respond — not just brought on in a frantic moment.

        Likely we will be fine this time too. Probably.

        But in real life I’m washing my hands and not hugging sick people. Which is basically life as normal.

        • frank Hinde March 4, 2020, 1:58 pm

          It also helps that we are not stuffing people into the close confines of troop ships for several weeks. Also it was called the “Spanish Flu” because the sedition law at the time prevented anyone involved in WW1 from talking about this new strain of flu. As Spain had no such laws it did report the disease in the news. Thus it became the “spanish” flu. No wonder it spread so rapidly!

        • wolfgang March 14, 2020, 8:32 am

          The US gov’t did have a pandemic response team in place until . . .
          “In 2018, the Trump administration fired the government’s entire pandemic response chain of command, including the White House management infrastructure”

          Not sure why this bit of info is not covered in the press.

    • chc4444 March 8, 2020, 8:18 pm

      Love it. That saying is going on my bathroom mirror.

    • itisperspective March 15, 2020, 10:47 pm

      I don’t know why people are over-explaining the nuances or nit-picking on the differences between the diseases. The perspective you share on the magnitude and gravity of the scenarios is relevant. Great add! Let the extra diligent hand-washing commence!

    • lurker March 25, 2020, 4:37 pm

      my grandfather was sick in that epidemic and said they put coffins under all the cots to make it more efficient keeping them filled…NYC may look like that shortly but I hope your analysis is correct and mine is wrong…

  • Jaxson March 3, 2020, 2:18 pm

    I do wonder about some variables though. . At this point according to the map at John Hopkins ( cant seem to link it but it’s easily searched online ) as well as World Health Organization figures and statements ( today) the mortality rate of diagnosed cases is 3.4% , higher than expected. BUT…this is where I try to make sense of those numbers. How many of those deaths were of elderly people with pre-existing and serious conditions? Did the strict measures taken in China lower the death rates as compared to what will happen in less controlled circumstances? And how important is that word “diagnosed”; when it comes to making sense of the numbers. In Seattle, there’s evidence the disease was around for weeks, infecting people, and at least one death hat wasn’t initially attributed to this virus ( because no one knew to look) was actually a Coronavirus related death. So there are actually more deaths than at first noted. So…which will it be..we will have more deaths than the worst flu year or it will be another temporary and overblown scare? Those of us with elderly or immune compromised family members ( cancer) are very interested in the answers.

    • Christof March 3, 2020, 3:17 pm

      Let‘s review what we‘ve learned from SARS less than twenty years ago: “WHO officials observed that calculating the case-fatality ratio for a disease outbreak is difficult while the outbreak is still evolving. The true ratio cannot be determined until the outbreak is over, when the total numbers of deaths and recoveries are known.”


    • Robin March 3, 2020, 3:28 pm

      Remember that it works both ways. There are actually way, way more unreported *cases* than unreported deaths. There is a current The Atlantic article the deals with this topic (not sure on the rules about linking to outside topics here). While the current mortality rate is 2-4% (depending on the source you use) the actual mortality rates in likely to be far less because epidemiologists suspect that the number of known cases may be off by a factor of 10 or more. If true, that brings mortality rates for Coronavirus essentially in line with a normal flu.

      • JamsODonnell March 3, 2020, 8:47 pm

        Hey Robin,

        the number of known flu cases is also likely off by a factor 10 or more, only those who are really in a bad way get tested. In 2009, one family member had a positive lab-tested H1N1 diagnosis, we all got quite sick but nobody else was tested so we don’t count. (It’s flu shot every year for us since then)

        And by the way, the mortality rates of a normal flu are such that governments embark on massive vaccination campaigns. There’s no vaccine for coronavirus, and it doesn’t take much to have preexisting conditions – allergies and chronic asthma anyone?

        I’m not advocating panic, but I think the enacted measures are justified and minimizing by comparing with the flu is not. As silly as it sounds, I’m also grateful for people preparing to not leave the house for 2 weeks or so, which is what we all need to do if we catch this beast. If that means empty pasta shelves in the supermarkets for a while, so be it.

        • Robin March 4, 2020, 9:12 am

          But we have a lot more experience with the “normal” flu. Flu cases in a given year include estimates based on many years of data and lots of public health experience with influenza. Not just head counts of people who sought care. Yesterday WHO release a new mortality rate based on total actual counts: 3.4%. They then acknowledged, buried in the deep in their release that both the numerator and the denominator (but particularly the denominator) for the rate calculation have massive margins for error. That should have been the lead, but everyone wants to freak out about “hard” numbers.

          Keep calm and wash your hands.

          • Dan March 4, 2020, 4:52 pm

            I wash my hands a lot anyways. A good side effect from when the bird flu was the thing of the day.

      • Mike March 11, 2020, 11:16 pm

        According to the Lancet, the actual death rate from this disease is probably close to 1% due to the lack of testing / diagnosis. However, the threat is quite real to those with other conditions / risk factors such as smoking, cardiovascular disease, and diabetes where the death rate / hospitalization rate is going to be significantly higher. I would be most concerned with nursing homes and prisons along with other hospitalized patients as being the most at risk.

      • Andrea March 24, 2020, 9:05 am

        Coming into this discussion late, obviously with a lot that has happened since. But the things that haven’t changed in the past few weeks that are still true:

        1. We do not have herd immunity to this disease, it is new. Also we have no vaccine, which means much more people will get the disease. Even if 80% are mild cases, this transfers the disease much more readily.
        2. Unfortunately 20% of cases will likely need some form of hospitalization, even if that is just to get extra oxygen. The state of our healthcare system is already bad, this will stress our resources immensely. If we do not have those resources, people who would otherwise recover, have a higher risk of dying. This will increase the death rate further.
        3. Currently the numbers indicate this is somewhat similar to the Spanish Flu, but the target in this case is older people and those with pre-existing conditions. Obesity is a huge problem in the U.S., which brings on factors such as heart disease and diabetes. It is hard to say what the death rate will be for a certain population, since you have to look at what factors will cause more people to be at risk. For the average U.S. person, the risk might be high if you are both older and obese.
        4. This is more contagious than the flu, and so far has been stealthy in the way it infects some with little symptoms. This is why it is so dangerous.

        This isn’t comparable to the flu, but I realize there is a lot of hindsight now that we’re further into it.

        Social-distance, and invest. We’ll get through.

        • Mr. Money Mustache March 25, 2020, 4:09 pm

          I agree with your last sentence Andrea. But that 20% hospitalization figure is way off. Even in places like NYC with 15% reported, it’s a byproduct of the fact that we are only seeing and testing severe cases. At least 20% of people (some estimates are 50% and higher) show no symptoms, and another large percentage show only mild ones, so they stay at home and recover and we never hear about it.

          Then the most serious cases seek medical care (I can’t find any estimates of this percentage right now)

          And then out of THOSE cases, 15% are admitted to hospital.

          Germany has done moderate testing (several times the US level) and is finding a 0.5% death rate so far. If testing were expanded further so it were not biased towards people showing symptoms, it would probably be even lower.

          • Sander March 26, 2020, 1:48 pm

            One of the reasons that Germany has low death rate (the lowest from all countries as far as i know) is that they have exceptionally high number of critical care wards. The high death rate comes when these wards (and the respiratory devices) run out. We are headed om that direction in most countries.
            Germany also does not test the people who have died at home in isolation.
            All in all, these statistics (and most statistics really) are not so comparable between countries.

          • James March 26, 2020, 9:00 pm

            I’m a little surprised at this response from someone who’s usually good with numbers. Granted, the US has done a horrific job of measuring the spread and severity of this virus so far. As the saying goes “You can’t manage what you can’t measure.” We are all extrapolating off data with an inherent self-selection bias along and with no control group. If you aren’t showing symptoms, you aren’t tested and are set free to potentially infect others. Or not. Who knows?

            It seems when you say “At least 20% of people (some estimates are 50% and higher) show no symptoms, etc” that that should be a reassuring thing. It is far from it. That’s 50% of cases being able spread the virus unknowingly. As I write this there are ~85k confirmed cases in the US. Using your statement that means there are somewhere between ~22k and ~85k with ZERO symptoms. How many of them are quarantining? Where are they? Do they have the financial ability to quarantine? What would you say is the transmission rate?

            You go on to use Germany’s test rate and death rate as proxy for better testing and a possibly rosier picture. This doesn’t make the argument you think it makes. If the 0.5% death rate is the more accurate rate among those infected and the United States currently has a 1.5% death rate based on the current 1,295 deaths in ~85k confirmed cases, then by extrapolation we really have something like 3X the number of confirmed cases. Roughly 255,000 cases. Again, where are they? Who have they been in contact with? Have they traveled? What is the transmission rate? The biggest factor here is the healthcare system’s ceiling for care. It doesn’t matter if 50% of those with the virus are asymptomatic if the 3MM or 10MM people have the virus. And let’s say only 5% require hospitalization. On the low end of a hypothetical number, that’s 150k new people requiring hospitalization. On top of everybody who is already there because of the myriad health issues you often talk about on your blog. Nothing in your answer should reassure anyone who’s giving this even some rudimentary thought.

          • Andrea March 27, 2020, 8:49 am

            My bad! I definitely meant to say 20% of tested cases, which is definitely smaller than 20% of overall cases, like you said many of which go undetected with mild symptoms. From what I’ve read, roughly 15% of those recover and 5% die, in a good scenario where we have all of the proper medical equipment. But I should caveat all of this with I have just been reading multiple online sources for the past couple weeks, I am in no way an expert. I just wanted to point out this shouldn’t be compared readily to the flu, there are a lot of key differences even if the death rate does prove to be lower.

            The only thing I think we need to be careful with is comparing this to Germany, because like you said they did much more testing than we did, and early, being the key word. They were able to track those who had it more easily and isolate them, preventing spread and undetected cases. They’ve also reported the bulk of their cases seem to be in the age group between 30 – 60, which is not the high risk group. Also, they have a good intensive care medical setup, and with their early testing and isolation measures, they will likely put less stress on their medical system.

            I definitely agree the death rate is likely lower than expected, but it seems like it’s too early to say, and unfortunately the U.S. will likely be where we get a lot of our data on the outcome of this disease.

          • Boring Scientist March 30, 2020, 3:42 pm

            Your assertions about Germany are not supported by evidence and also not by the commentary in Germany. Several virologists are on record saying that the death rate in Germany is likely going to increase substantially. So while it’s true that testing is extensive compared to other countries, it is not likely a sufficient explanation for the low death rate (currently ~0.93 %).

            The CBC has some commentary in English about this:

            I agree with several points you make above but several of the quantitative assertions are not supported by the evidence I see.

          • Dave April 1, 2020, 4:09 am

            That’s the problem we don’t have proper data sets to determine just how bad this virus is. But my guess is the severity if this is way overblown. And of course the media is needlessly scaring the hell out of people because most people just see the headlines on news items and seldom read the details

            • Married to a Swabian April 1, 2020, 5:17 am

              Dave, with all due respect, unless you have a vaccine in your back pocket that you aren’t telling the rest of the world about, it’s not overblown at all. Even if the mortality rate is 1%, this thing is still highly contagious and deadly. If we took away all travel restrictions again, maybe a billion people would get the virus, leading to 10MM deaths. And that’s just round one or two … viruses mutate and adapt, so we could be fighting bouts with Covid19 for the next 18 months or more.
              We have built this huge global economy that is anti-Mustachian: it’s based on spending money people don’t have to buy fancy shit they don’t need. Now, we will have an extended period, where both the supply AND demand sides of the equation will be hammered!

              Markets hate uncertainty, and this is the biggest uncertainty we’ve had in a century.

  • Connor March 3, 2020, 2:22 pm

    Fed rate isn’t tied to Mortgage rates unless they are variable. In which case, you would already gain the benefit if your house is financed with a variable rate mortgage without needing to “consider refinancing”.

    • Mr. Money Mustache March 3, 2020, 2:28 pm

      Well, it’s not formally “tied” but they are awfully correlated, wouldn’t you agree? Mortgages are usually based on the long-term Treasury rate, which has dropped just about as precipitously as everything else in the last month.

      Update on March 5th – sure enough, this was in my news feed today:

      “The average rate was 3.29%, down from 3.45% last week and the lowest in 49 years of data-keeping, Freddie Mac said in a statement Thursday. The previous low, in November 2012, was 3.31%.”

      • Erin Coyle March 3, 2020, 4:32 pm

        Once again I am so grateful to be part of this amazing group. I just retired (RN) and have a super simple life and no debt at all. I don’t have a lot of money but I’m not having to spend it. My small needs are met by modest rental income from mortgage free properties that I love. Even so I have to admit my heart was lurching a little bit over this entire situation. Reading MMM always makes me grateful, reminds me to respond rather than react based on science. Thank you MMM for waking me up years ago, for giving me courage to trust what I know, and for everything you share with so many! Wash your hands guys… be kind… remember what’s important.

        • Matt March 6, 2020, 10:58 pm

          You are a rare breed. I’m an RN as well and I find almost all the nurses I work with are terrible with money. I don’t why that is. But I’m 29 and I can retire tomorrow if I wanted because I followed MMM advise years ago. Almost all the nurses I work with complain about the stress and work life balance etc but with some simple tweaks at home they can reduce their budget so they can go down to part time or casual status literally tomorrow.

          • chc4444 March 8, 2020, 8:27 pm

            Bravo Matt.

          • Katie Camel March 12, 2020, 11:53 am

            I find the same among the nurses I work with, Matt, which surprised me, given the amount of money we can earn through extra shifts (overtime or per diem) if we put forth the effort. I’ve written about it several times because it never ceases to amaze me how little nurses know about personal finance, but they’re also reflective of the population at large. One of the most common things I hear, though, is, “Oh, my husband takes care of that.” But more and more of the younger ones seem attuned to personal finance, which gives me hope. Good for you, though! Well done!

            Oh, and I agree with MMM’s points about the overall likelihood of death and how to reduce one’s chances of this virus from becoming deadly.

        • NurseFILife March 9, 2020, 7:33 pm

          I second your gratitude. I also second washing hands. It’s pretty much the first thing we learn in nursing school, and the answer to every NCLEX question :)

          I would love to hear your story, feel free to send me an email.

      • Perry Eubank March 5, 2020, 12:40 pm

        Thanks for mentioning the interest rates in the article MMM, I don’t follow them and had no idea! You just saved me $170G’s. Hard to believe. I used your link, so hopefully you get a little cheese from that too. Take care.

        • Mr. Money Mustache March 5, 2020, 9:10 pm

          WHAT! $170,000?! Tell me more – I assume you are calculating your interest savings over the life of the mortgage, but even so this sounds like a lot.

          Either way, mega congratulations and I’m happy this article was worth reading, even just for that alone :-)

          • Blake Maloney March 10, 2020, 5:53 am

            I didn’t save $170k, but I did save nearly $5k and 5 years refinancing my last student loans using your link. Good stuff.

      • Lex March 10, 2020, 12:40 am

        They are indeed correlated, but keep in mind Fed Funds is an overnight lending rate and mortgages are much longer-term. Additionally, the correlations may not be as tight as people believe. Many point to the 10-year Treasury as an important proxy. That yield touched 50 bps today, which is astounding in its own right. Despite that precipitous drop, most banks have barely budged on their mortgage rates in 10 days (as you pointed out–3.45 vs. 3.29), be it a 7/1 ARM, 15 year fixed, or 30 year fixed. Two reasons for that. First, the whole world is rushing to refinance and there is little incentive to drop rates dramatically with this sort of demand. Second, treasuries have no pre-payment risk, while mortgage-backed securities (MBS) are full of pre-payment risk, thus investors who buy MBS demand a higher rate. Everyone should certainly be checking out the viability of a refi given the drop in rates and whether it makes sense…just don’t expect things to trend down as dramatically as Fed Funds or even the 10-year Treasury.

  • Dave March 3, 2020, 2:24 pm

    The Spanish flu killed almost 700,000 Americans at a time when the population of the country was way way less. I used to ask my Grandmom about it as she was 16 when it happened. She said they just dealt. She knew people who died, but just thought that was how life went.

    With this on top of an election year, buckle up folks. The market is surely going to give us a wild ride!

  • Tawcan March 3, 2020, 2:24 pm

    Like you said the vast majority of people that contract the coronavirus end up recover. Some even don’t show any symptoms. The virus is more concerning for those people with pre existing medical conditions.

    And let’s not forget the stock market goes up and down. Ignore the noises and continue investing for the long term!

  • william wallace March 3, 2020, 2:28 pm

    You started out talking about markets and then went into science. It has nothing to do with science, at least in regards to the markets dropping. Yes a cure will be made and just like SARS/H1N1/etc the market will recover. But in the mean time, China is at a standstill. The world markets need China to play and right now they are out of the game. Just for a little while, but the recent China PMI numbers would have been more relevant.

    Totally agree once we hit bottom the discount on stocks will be a terrific buying opportunity. Fed rate cut is a great opportunity to refinance for some. But we’re honestly only a week into a sell-off so I’m still short the market.

    • Mr. Money Mustache March 3, 2020, 3:53 pm

      Ahh, but that is exactly my point! I always recommend investing based on science (Is humanity likely to continue to prosper and trade over the next 20 years), rather than temporary fluctuations in the casino (what is the Fed going to say next week or what will happen to Amazon’s Q2 numbers if the supply chains are hit)

      I’m ALWAYS “long the market”, and have been continuously accruing ever-appreciating stocks and reinvesting dividends since 1996, and I think it’s both the simplest and highest-yielding method over the long term.

      I even wrote the foreword to the book on this philosophy!


      • mary stone March 4, 2020, 1:52 pm

        Assuming MMM’s in his 40’s now, going long in the stock market makes sense – maybe not so much in 20-30 years from now, or if you encounter other circumstances that shorten your timeframe. I’ve seen a lot of increased spending and credit card debt for anyone affected by chronic / terminal health conditions.

    • Married to a Swabian March 5, 2020, 6:05 am

      The old Wall Street adage about it being hard to catch a falling knife applies here.

      We allow Vanguard to manage most of our IRA and are glad at times like this. Makes it hard to get off the rollercoaster at the wrong time.

      I do think that comparing this virus to the normal flu is an over simplification. It appears to have a significantly higher mortality rate while being equally contagious.

      One factor that complicates things in this country, with our shitty healthcare coverage and large number of non-mustachians, is the number of people who cannot afford to take even a few days off work. They need to show up at work, sick or not, to be able to pay the bills.

      • William March 5, 2020, 10:45 am

        Wash your hands, stay home if sick, refinance debt, hope the government provides Tax credits for time off. Doctor approved 🥑

      • FinallyFI March 5, 2020, 9:29 pm

        One more reason to cook my own food and eat leftovers at work. Think about it . . . those who prepare food at restaurants are often the ones that can’t afford to take time off from work, especially when they are sick -right on @Married to a Swabian!

  • Aeowulf March 3, 2020, 2:31 pm

    So glad to have you say something on this subject. The hysteria, even among fellow Mustachians, is getting out of hand.

    Also, it shouldn’t take a “outbreak” for people to start recommending washing their hands again. Even still, people at work refuse to take their occasional bathroom break as an opportunity to clean up just a little… people are gross. No wonder diseases spread like crazy.

  • Drue A Berry March 3, 2020, 2:32 pm

    I agree. I am a registered nurse in the US, and believe me, this is exactly what we in medicine have been saying. Lack of exercise and the yearly flu are far more dangerous than COVID-19. So Pete has this exactly right:

    Wash your hands, stay home if your sick, get your flu shot, get some exercise, and as the wise philosopher once said: “Dont worry, about a thing!”

  • Tara March 3, 2020, 2:33 pm

    According to one video I watched, approximately 157,000 people die every day, of all causes. Life is impermanent and we will all die some day, there is no guarantee that we will all live to old age. The most important thing you can do is live your life every day in such a way that when you die, you go out feeling satisfied. And wash your hands. :-)

  • SC March 3, 2020, 2:36 pm

    Overblown? Likely-especially because both parties are trying to make political hay from it. Still there are some real consequences to deal with. We have friends in Hong Kong where schools are closed until April 20th so they have the real issue of kids being home all day and keeping up with school work. If the school closures happened in the US I bet some parents would prefer the zombies.

    Another friend works for a company whose manufacturing supply line from China has ground to a halt. Their factories here in the US will stop soon because they do not have the components they need from China. These aren’t world ending events of course but they have an impact.

    • Jason Middleweek March 4, 2020, 10:03 pm

      Although closing schools etc is very disruptive and not everyone can afford time off to look after the kids, maybe we will find time for some home education and family bonding through all of this.

      I feel for the tourism and hospitality industries, especially the indebted and those in insecure jobs with no savings that will struggle to pay their mortgages and rents. However it may be a time to slow down and reconnect as humans.

      Poor countries are the ones the WHO (and Bill Gates) really worries about. It is going to make life even tougher and more deadly for them.

      And maybe it will reignite some respect for nature and science. With the climate crisis there seems to be a lack of belief that we are beholden to nature and and a lack of respect for the science behind the diagnosis and possible solutions.

  • Ted March 3, 2020, 2:37 pm

    Cutting ‘carbs’ or cutting cars?

    Finding typos is a sickness!

    • Mr. Money Mustache March 3, 2020, 3:48 pm

      In this case I really did mean “cars”, although the sentence works either way, I guess :)

      • Jamie March 4, 2020, 11:43 am

        I vote for cars…Except please leave in EVs :)
        We invested in PV panels and have 2 lower cost EVs (volt and Leaf), and I can’t go on enough about how much we have saved since 2014 on gas and electricity. I looked at the purchases as a long-term investment, as both PV and EV technology lasts a long long time.

        New to your website, but you are right on with this Covid-19 post. Thanks!

        • Dave March 5, 2020, 11:27 am

          You would have saved even more and got exercise with a bike

  • Anonymous March 3, 2020, 2:38 pm

    I’m super guilty of getting swept up in the fear. Thanks for the level headed reminder that everything is going to be ok! Also I pumped 15k in the market this week (just lucky timing that we happened to get a windfall of cash at this moment in time)!

    • Another anonymous April 13, 2020, 2:53 pm

      I did similarly, plowing $68,000, all at once, mind you, into my Betterment portfolio at the beginning of March. Isn’t it interesting that only a month later what felt like a “big win – discount stocks” had quickly turned into, “ohhh, I over paid! How foolish.” And yet only a few years from now we’ll say, “good thing we put that money to work! It’s really come a long way.”

  • Norm March 3, 2020, 2:40 pm

    Can always count on MMM for the level-headed assessment. I got a little panicky when it spread beyond China and I heard about a 15% fatality rate for the elderly. So I’m not worried for myself, but I do worry I could be an unwitting disease vector. I do think the US is better prepared to handle this than most countries, though. So, we’ll see. A two-week home quarantine might not be such a bad thing.

    We’re also in the market for a new house, and I did notice a serious drop in interest rates at our credit union. Holy cow.

    • Middle class March 8, 2020, 12:31 am

      Just curious why you think the U.S. is “better equipped” to handle coronavirus? In general, people don’t get many sick days and will go to work when sick. Plus our healthcare system will not guarantee that people get tested due to cost and if a vaccine is invented, it may be very expensive. Citizens of many other countries dont have to think about cost of testing or price of vaccine.

      • Mr. Money Mustache March 8, 2020, 8:49 am

        I think Norm was talking about US as one of the lucky rich/developed countries versus the more difficult conditions that most humans live in, in Africa and India for example. It’s true that if you are comparing only developed countries, places with universal cheap health care might be more fully covered.

        It remains to be seen and this will be an interesting experiment, because the US and Canada share one chunk of land but use two very different medical systems. We can watch the progress in getting through the virus in both countries over the next few months.

        • Sophie March 10, 2020, 6:39 am

          In a developed country you have more people over 65 with existing health problems, which is why the death rate is higher in Italy. The correlation is that the death rate will be higher in the USA since health care is worse and the public health system is dire.

      • Jason Middleweek March 9, 2020, 2:58 pm

        Hi Mustacheans

        From over this side of the Pacific in Australia and judging from the news and tweets, the US does seem pretty ill prepared for the coronavirus. I hope I don’t get swamped with trolls but it is pretty obvious in this crisis that your president lacks leadership qualities. This might be his Katrina moment. Also, your health system looks to be fragmented and better at heart transplants than primary care. It is times like this that a universal health care system really shines. Also, I can’t believe that many full times workers in the US live in their cars now – division and inequity in the US seems out of control. The US may reinvent itself this election but wondering if you guys over in the US are feeling confident with the coronavirus response?

        Over here I feel pretty confident (despite my net wealth plunging). There seems to be unified and clear headed leadership, bipartisan responses and evidence that the government has had a plan for all this (huge secret stockpiles of medical supplies all over the country). The government accepts the economic punishment and is instead focusing on containing the spread and minimising deaths and trying to mitigate the economic fallout from the process.

        The trouble financially is many Australians have a fair bit of life savings in the US stock market because our stock market is so small so we are hoping you guys can sort it out. I guess the US has proven to be full of pretty clever people and has a habit of reinventing itself…

  • rjpope42 March 3, 2020, 2:44 pm

    Many months of food is obviously absurd, but 3-4 days of non-perishibles tucked away in case of supply chain disruption is still a good idea.

    That’s like $5 worth of beans and rice, you’d be silly NOT to stock that.

    • Mr. Money Mustache March 3, 2020, 4:01 pm

      Yeah! Just for fun I did a rough inventory of my own pantry and fridge situation, with no special precautions. It’s enough for about 100 “meals”, or 33 days of food for me. Plus about 20 days worth of the foods my son eats.

      Of course, our diets would get a little weird towards the end of that period because we would be doing stuff like “rice yet again with olive oil and some thawed-out raspberries from the freezer”.. but we would still be healthy and supplied with calories.

      And it’s important to remember that a 30-day food drought has NEVER come close to happening in the US. We would definitely end up in a zombie apocalypse situation with armed troops on the streets to quell the social unrest, long before I ran out of Basmati rice.

      • Lisa March 3, 2020, 5:05 pm

        There was a guy in China in one of the quarantined cities posting on Reddit a few weeks ago. It was interesting to get an inside perspective. They lived in a high rise, so would walk their dog on the roof. The doorman tested everyone entering for fever. They had to place their order for groceries online within 30 minutes of the store’s resupply. He said corner stores and groceries stayed open, they just had less stuff available. He was getting tired of broccoli and carrots, but they had fresh vegetables. But he mostly used it as an opportunity to try cooking new things or making fusion food (like “Mexican” using Chinese bun instead of tortillas).

      • SisterX March 3, 2020, 10:44 pm

        I’ve always seen a few weeks of food being recommended not because we’ll have food shortages (although, if enough people get sick at the same time there could be some shortages–truckers aren’t exactly in the best of health in general,and most farmers in the US are over 55) but to prepare for possible quarantines/lockdowns, in case you and/or your family gets sick (so no one needs to run to the store for soup and medicine), and for social distancing purposes (so as to avoid getting sick, potentially overwhelming the healthcare system with many sick people all at once). All of those are perfectly reasonable, and in fact make it a great idea to have a few weeks’ worth of food on hand. The guns ‘n ammo ‘n zombies crowd is gonna do their thing, but they do that even when there’s NOT a global pandemic. Best to ignore their noise and focus on why reasonable people are saying to stock up on some essentials.
        Also, there’s good reason beyond those already stated to stock up on a few things. Many medications are manufactured in China, and the FDA has already announced the first shortage due to factories being closed. (https://www.businessinsider.com/fda-announces-first-coronavirus-drug-shortage-2020-2) Stocking up on essential, life-saving medications is a valid concern for those who need them, especially in the face of an illness that is deadly for the already ill.
        Pet food also relies on vitamins manufactured in China. For those with pets, having a bit of extra food for the next few months is probably a good idea, and at worst they don’t have to buy pet food for a bit longer than usual.
        If people prep in a sensible fashion it’s actually beneficial in the long run. Please don’t dismiss it all as being merely panic. That can make people more complaisant than they maybe should be, and ignore good advice.

        • greg March 4, 2020, 7:24 am

          In our current system of just in time deliveries, you will definitely cause a shortage of medicine or anything else by advising people to “stock up”. A self fulfilling prophecy for sure.

          • SisterX March 4, 2020, 12:21 pm

            A) I said only for life-saving medications and B) having an extra month’s worth on hand should not break the system. If it would, then we REALLY need to re-think our system because it’s clearly not good enough.
            The point is not to have a year’s worth of stuff, just a little bit extra to see you through whatever. Stop trying to blow everything out of proportion when someone says you should be a tiny bit prepared for bad things happening.

            • greg weatherford March 4, 2020, 4:26 pm

              Sorry for “blowing everything out of proportion”…not my intent, although you could make a case that by saying that you just did the exact same thing with my response ;)

              As a pharmacist in a grocery store I do see these shortages in both the pharmacy AND grocery side anytime some well meaning t.v. personality recommends stocking up on ANYTHING. Currently its face masks and hand sanitizers but believe me the if everybody who takes blood pressure or diabetes medicines monthly were to all of a sudden take 2 or 3 months additional medicine some who need it would go without due to our current “just in time” supply chain. You may not like it but that is the situation we find ourselves in.

      • Daniel March 4, 2020, 2:57 pm

        Kathrina should have made it clear that having 30 days on hand is the smart move

        • Cody March 6, 2020, 9:03 am

          Wouldn’t it have just been inaccessible/washed away for the majority of people? If you lose your home, having a stash in the basement ain’t gonna help.

      • Jason March 5, 2020, 12:48 pm

        Rather than “prepping,” I like to call keeping a reasonable freezer and pantry stocked with all the ingredients for a good number of healthy meals just “adult-ing.”

        Anyone without rice or similar in their pantry probably isn’t cooking much. I agree with sisterX below that the whole “2-weeks” thing is just so that you can just stay home if you get sick. A great idea with the regular Flu too. I appreciate anyone that *doesn’t* go to the grocery store with the Flu; they might save a life.

        • Don March 8, 2020, 1:52 pm

          We DID prep over ten years ago with two years worth of long term storable food down
          in the barn from LDS oriented companies who do that sort of thing. We buy our propane a year at a time when it is cheapest in July, and keep a thirty gallon water barrel with a pitcher pump to draw it if our well became tainted. The well has a hand pump with a dedicated hose to refill the barrel should the electricity go down rather than lugging five gallon buckets. We have a propane distribution post with a lamp at the top complete with lamp shade (Amish style) for emergency lighting. Our home came with a 5kw generator so we can have hot showers on power down days. Understand that we live in rural Washington where we have winter hurricanes that blow the pine trees down on the power lines. This happened at least once a month when we first moved here. Less so nowadays.

          Has it been worth it? I lost my job in 2014 and we lived on the food for three months until I found a new one. The longest we have been without power is a week after an ice storm, but 2-3 days without power were not unusual. I was able to show up at work fresh after a hot shower, hot coffee, and toast (cooked on the camp toaster over the propane stove) We light our way to the barn with kerosene lamps, and use three day lamps to keep the pump house pipes from freezing. Perhaps it was overkill, but we could close the gate and not come out for six months or longer if necessary. Prepping is no different from keeping a savings account, just in more available forms. You might not need it where you live in the city. Or maybe you do. It is nice to sit tight and watch the rest of them run amok at the bigbox store or get into fist fights at the gas pump.

          Yes it has been worth it

          • Dillon March 13, 2020, 4:51 pm

            Yes! I live in Rural Michigan and we keep a regular larder of about 6M worth of supplies just as a part of life and buying economically in bulk – not as a hoarder or end of days prepper – it came in handy when my husband was suddenly diagnosed with a rare cancer and spent 6 months recovering from surgery and radiation. And it’s come in handy now as the area stores are stripped of basics and I don’t have to face massive groups of people to know we’ll be fine. Our generator has helped immensely during ice storms (5-7 days without power – keeps the house from freezing and pipes breaking) and again when our neighbor’s house burned down and the electric company cut power intentionally. I get my milk down the road and my eggs from my front yard. I really see it similarly to financial independence – having that preparation in place means I don’t have to act out of need. It provides a lot of flexibility.

      • Tracy March 9, 2020, 10:28 am

        I tend to buy big bags of lentils and beans through a co-op club every year or two, so I always have lots of them on hand. Cause I’m frugal and like a good deal. Plus I put up canning every year, and fill the freezers with fresh fish and berries. I don’t stress about our food situation at all. Ever. It’s nice to know that whatever gets thrown our way we could feed ourselves. We are also heading into the gardening season so we can grow fresh vegetables to supplement the beans and rice.
        The only thing I did do was refill a required prescription early and get an extra bag of dog food. I am more worried about the supply chain than anything, not being able to get something when I do need it. We actually needed toilet paper last week and couldn’t find any. It was crazy.We are in a chill community on Vancouver Island, I couldn’t believe that toilet paper hoarding had reached us.
        I am VERY thankful to live in Canada and have the health care system we have. It isn’t perfect, but in this type of situation where we will potentially have a large # of people getting tested or requiring health care, to not have to worry about how you personally will have to pay for it, means one less thing to stress about.
        If this virus does spread throughout the world, it won’t be the viral apocalypse media is suggesting it will be, but we may all very well be touched by it. We just need to do our best to keep from spreading it, so we don’t bring it into the homes of the people who are most at risk, which is people with compromised immune systems and the elderly.

      • rjpope42 March 16, 2020, 9:29 am

        Basmati! You are living that luxury millionaire lifestyle indeed! :)

        I did the same inventory, our RV usually only stocks about a weeks worth of food, so we spent $50 to supplement 30 days worth of beans, rice, and coconut milk.

        they’d be wierd/boring meals as well, and I was feeling like a bit of a silly prepper, but looking back 3 weeks later I’m pretty pleased and feel like it was just the adult thing to do

        plus I discovered I could live on $50/month for my grocery budget, which I wasn’t actively aware of!

      • sophie March 28, 2020, 8:40 am

        I found this a pretty selfish article. There are many people who have poor health in our society though no fault of their own- e.g. born with cystic fibrosis- as well as older people, who cannot in the foreseeable future ever leave their house again without very serious risk. It is clear that droplet transmission of this virus is much more serious that first realised and this means that vulnerable people in urban areas cannot even safely sit in their gardens, if they are lucky enough to have one. I have a friend in Milan whose family has not been allowed to leave their flat in a month apart from one person shopping every 4 days. Her entire family had the virus in January and her 13 year old daughter spent five days in hospital with pneumonia. Had her daughter become ill now in Milan, she would probably die, given Italian hospitals now. And this is a healthy family, not vulnerable older people or those with chronic or acute health issues. I felt quite ashamed to even read this article and the comments afterwards.

        • Rachael Macgregor April 1, 2020, 3:35 am

          I came on here to say the same thing. I have a genetic condition and several co-morbid conditions. Ironically, they were made worse by trying to exercise and eat healthily for years before diagnosis. Wrong exercise and wrong foods, further worsening my condition. It has always bothered me that MMM, who I otherwise hold in high regard, refers to health problems as mostly something that has been brought on by poor life choices, disregarding the millions of people that have conditions through absolutely no fault of their own. I didn’t comment before for fear of being labelled a complainy-pants, and assumed that MMM surely had compassion for those with health conditions out of their control, just didn’t mention it specifically.

          Reading through this and the comments below where people dismiss this virus with phrases like “the death rate is only that high in those with pre-existing conditions though” is sickening. You are talking about ME, a person, and millions of others like me that *have* conditions that were already having an impact on our lives. Me, in my early 30s, with a husband and young children that would be utterly devastated to lose me. And to add, it’s not only those with *serious* health issues, it’s a lot of people with seemingly minor conditions that are badly affected, those who the flu barely affects, because this is not “just a bad flu”.

          To minimise this from a bubble of “well, it’s not going to harm me because I’m not out of shape or old” is highly selfish and simplistic. It’s also unrealistic as many, many countries are reporting death cases where people had no underlying conditions.

          I am getting on with things, just like many others, but with the added stress of cancelled medical appointments and limited, if any, access to my usual healthcare. And I’m in a country with an excellent healthcare system, for everyone. I can only imagine how awful this must be for someone who was already struggling to get adequate healthcare for a chronic illness in the USA.

          Please stop minimising this. Instead, remain calm, but take it seriously and remember that the “only”s you reassure yourselves with are real people, who are currently facing many months of isolation until a vaccine is available, with a lack of medical care, equipment and drugs that we normally need.

          What we need right now is a focus on community and helping each other out.

        • Dave April 1, 2020, 4:22 am

          I had a sister who died of CF. They are at extreme risk of dying from the seasonal flu so covid would be a similar risk for them. For those at risk of dying from covid they would be at the extreme end.

    • Chris March 3, 2020, 10:53 pm

      We live in the Pacific Northwest, which will get hit by a 9.0+ earthquake at some point, so we always have at least 30 days of food and water for the whole family. Buying dry goods in bulk, and maintaining a reasonable amount of freeze-dried food isn’t too difficult. We also have three 50-gallon barrels of sanitized water in the backyard.

      • Ms Blaise March 4, 2020, 9:39 pm

        ….same here in Wellington NZ. I thought about the virus last week ( 3 cases here now) after a very measured, science based response from the gov. And I bought some extra plunger coffee.

        • lurker March 8, 2020, 11:31 am

          I love New Zealand!!!! Wish I was there for the next few months.

    • Marcia March 4, 2020, 3:13 pm

      I’ve been stocking up a little bit more the last week…my kids were out of school a couple of years ago for the wildfires. If they shut down school again for 2 weeks, I want to be able to feed them. But I CANNOT find lentils! I prefer to use canned beans, but dried lentils. I only want 1-2 lbs, because I’m almost out (not really trying to stock up). The three stores I’ve checked are out of lentils! Maybe there’s a worldwide lentil shortage? My coworker says that Trader Joe’s has been out of red lentils for over a month though.

  • Mr Fundamental March 3, 2020, 2:44 pm

    Today the Fed decided to do an “emergency” drop on interest rates by 50 basis points. How is this going to solve the problem of people not going to work due to the Coronavirus? Does cheap money get these people back to the factories? :)

    I’ve seen a TON of tweets and news stories recently about how the market is on sale and we should take this buying opportunity. The market isn’t actually down THAT much — if you zoom out to a 5 or 10 year view, it is hardly a blip. If you buy when you have the money, and only sell when you need it, this little downturn actually should have zero effect on your investing behavior. What do you guys think?


    • About to grow my Mustache March 4, 2020, 12:20 pm

      Well. I’m one of those poor married college students who’s about to get a giant tax return and we’re super pumped to finally open up our own Vanguard account. : D So it’s nice timing for us, at least, as long as the market stays down until our tax return comes!

    • Vince March 4, 2020, 1:26 pm

      Cheap money doesn’t get them back to work. It gives them “cheap” interest rates on their credit cards so they can go shopping while they have tha time off from work.

      • Married to a Swabian March 5, 2020, 6:11 am

        In America, it’s Never the wrong time to CONSUME!
        ….it’s what we do best.

    • Cameron March 4, 2020, 6:49 pm

      The S&P500 is currently at the level it was on 23 October 2019… about 15 weeks ago. If it’s on sale now, it was on sale then. I’ve bought plenty of stock cheaper than that. Wake me up when it’s back at Christmas 2018 levels, then I’ll get the popcorn and ‘dry powder’ out.

      • Kacy March 16, 2020, 8:53 am

        Bzz Bzz wake up alarm

  • Tony W March 3, 2020, 2:50 pm

    Looks like the media and news talking heads are working their puppeteer magic. The same magic that commands the masses to buy and eat more than they need or can afford.
    The same puppeteer magic that commands the masses to play out scenes for “The Hunger Games” every Black Friday Sale.
    Just like every skilled predator Covid-19, media and news talking heads target the frail and weak. Be deliberate, stays as strong physically and mentally as you can. If you stay ready you will not have to get ready ;-)

    • Arrgo March 6, 2020, 7:12 am

      Well said Tony. The media, news, and corporations do their best to coral and control the sheep. They’ll tell you what to do, what to believe, and what to spend your money on. People need to learn to think for themselves and fight back.

  • Brandon March 3, 2020, 2:58 pm

    FWIW, especially for those of us in Seattle, here’s an excellent article on the virus: https://bedford.io/blog/ncov-cryptic-transmission/

    But yes, keep calm and carry on.

    • Mr. Money Mustache March 3, 2020, 4:14 pm

      WOW! Thanks so much Brandon – I had no idea that disease research was so advanced these days. That is really well written and reads more like a detective novel than anything medical.

      It sounds like the harsh measures in China were REALLY effective – more than I could have guessed. With Wuhan being a densely populated region of 8+ million people, and yet only seeing a few tens of thousand cases before it all died out.

      • scott March 4, 2020, 12:18 pm

        I think what you are describing here is exactly why you see those S curves. At some point people start to change their behavior in response to the disease. Whether you call it panic or taking precautions our collective response to the virus can change the rate at which it spreads. I think it makes sense to consider some “harsh measures” in order to minimize the impact of the virus on our super expensive medical care system here in the US. Is it going to kill us all? No. But that doesn’t mean we shouldn’t take serious precautions to limit the impact of the virus.

        I’d highly recommend adding a healthy dose of Nassim Taleb for anyone interested in developing well rounded perspective on the coronavirus. I really like his saying” “…do not mistake absence of evidence for evidence of absence.” This exposes a serious flaw in the analysis of many “scientific” experts.

        • Dillon March 13, 2020, 4:54 pm

          Exactly! Thank you.

  • Ben March 3, 2020, 2:59 pm

    You should use a stock market graph that starts at zero. Perhaps not as useful, but it does provide some perspective…

    • Mr. Money Mustache March 3, 2020, 4:03 pm

      I totally agree Ben! I used that ridiculous graph because it was in the “fear” section of my article.

      But any article that is truly talking about investing should use at least a 20-year graph with a Y axis that starts at zero. And never contain words like “plummets”, “craters”, or “freefall”.

      In my view, this latest stock market action is a “minor wobble”, and even the 2008-9 crash where the market lost 52% of its value should be described as a “significant but temporary decline”

  • Kyle March 3, 2020, 3:02 pm

    Meh. Our upcoming trip to Zion will proceed as normal. I just dumped a bunch of money into our Roth in order to maximize our tax refund for 2019. Business as usual here.

    • Kyle March 5, 2020, 4:01 pm

      Oh, and we are refinancing to shave a hundred bucks per month off our mortgage.

      • Tim Kukler March 7, 2020, 4:21 am

        As you’re doing this, consider a TWENTY year term instead of a 30, I just did and at 3.00% it was a total win. Monthly mortgage exactly same as I pay now, so I won’t notice it, yet only 20-year remaining instead of 28-year remaining payments it’s a total win long term. Conversely the 15-year monthly payment was too high for my taste.

        Thought of another way, a 20-year refinance awards you 1/2 of benefits vs 15-year mortgage at just 1/3 the price, or some such back-of-napkin math.

        Just ensure to ask for a long “lock” time – banks’ pipelines for refi are swamped right now with everyone jumping on this, my bank gave 80 days instead of the typical 45 days.

  • TightWad March 3, 2020, 3:03 pm

    How about listening to a MD and infectious disease epidemiologist that graduated from CDC’s Epidemic Intelligence Service with over 17 years of experience in the field? And I quote, “Expect people you know to die.”

    • Mr. Money Mustache March 3, 2020, 3:45 pm

      Thanks for sharing that article TW. I just read it and it is well written, but that sentence you quoted is not an accurate summary. She said “it could be like an average flu season, or it could be like the Spanish Flu”.

      Then she goes on to say only in the second situation would you expect someone you know to die (and I agree with that sentence – assuming you know 50-100 people and there is a 1% death rate)

  • Barbara March 3, 2020, 3:13 pm

    The first thing I thought as I saw the stock market plummeting, was not virus, but SALE. Where can I get some more cash to invest? I was so excited that payday came right after it dived so that my 401k money would capture the savings. I’ve been hanging around here too long. :)

    • Dillon March 13, 2020, 4:57 pm

      I bumped up the percentage that’s taken from my husband’s pay check for is 403b for the same reason – lol.

  • Jason March 3, 2020, 3:15 pm

    One of the leading researchers and physicians on these types of virus and pandemics in the world is Dr. Anthony Fauci. He has written 4 days ago in the New England Journal of Medicine that the data they are seeing currently is likely very skewed because of unreported less severe infections. He sees this being a situation of only a pandemic attune to a severe flu season! With possibly only a 0.1% mortality rate. https://www.nejm.org/doi/full/10.1056/NEJMe2002387

    • SisterX March 3, 2020, 10:48 pm

      The WHO confirmed an overall mortality rate of 3.4%.

      • Chuck Albacore March 4, 2020, 7:21 am

        The WHO isn’t allowed to make “reasonable assumptions”. Just pure stats.
        So, 2.4% of DIAGNOSED cases have died. How many people are just feeling like they have the flu but really have Covid? You and I can see that it’s probably a MUCH lower mortality rate, since every death is reported, but not every infection is. No need to fan the flames even if the CDC/WHO did say that.
        I’m going out for a walk – fresh air, sunshine (which kills viruses VERY quickly) and solitude will cure this fear!

        • Robin March 4, 2020, 10:52 am

          Which the WHO also confirmed. I not sure how putting sensationalist information out that they *know* is false, while burying the lead (intentionally or not) about the level of uncertainty in those numbers helps. I mean WHO is a great org, and their website contains lots of measured and valuable information about the coronavirus – but they sometimes seem to miss that today’s media will grab a headline and run with it.

        • SisterX March 4, 2020, 10:17 pm

          I forgot, we should ignore the people whose job it is to work on stuff like this and instead listen to the armchair epidemiologists in the crowd.

          I never said I was afraid, merely gave out the most accurate statistic we have so far from a reputable source. But sure, if you’ve got secret details on how many untested cases there are (which doesn’t actually seem to be true, given how extensively China’s been testing people, as well as Italy and S. Korea) then I’m all ears.

          • Robin March 5, 2020, 12:38 pm

            The details aren’t “secret,” they are just unknown. Acknowledge the data that WHO stats do (and do not) contain – as per their policies – (publicly available) is important context for the baseline stats.

            • Robin March 5, 2020, 12:40 pm

              *Acknowledging that the data…

  • Tom March 3, 2020, 3:20 pm

    Do yourselves all a favor and read the book Factfulness by Hans Rosling if you haven’t yet… This is more relevant today than ever, it also cover’s the Ebola outbreak in 2014 mentioned in this article

    • Andreas March 4, 2020, 2:30 am

      Yes this one! Just read it a few weeks ago, right on time! I was not aware of that head, on multiple occassions acutally worked on site with different “plagues”. His fact based information is important for us all.

      Rip Hans!

  • Dre March 3, 2020, 3:41 pm

    MMM, have you heard of a book called “Why we sleep” by researcher Matthew Walker?

    One of the best recommendations you can give to your readers aside from eating well & exercising is to ensure they get 7-9 hours of GOOD QUALITY sleep. Sleep is a phenomenal immune system booster; better than exercise and nutrition.

    In the book the author outlines a few studies regarding the flu and sleep’s outstanding protective effect against it.

    Let me know if you end up checking it out!

    • Chris March 3, 2020, 10:56 pm

      That sounds great. Will you take my small children so I can get 8 hours of uninterrupted sleep?

      • Becki March 16, 2020, 8:55 am

        OMG, yes! Or like my small child who still sleeps with me and likes to kick me in the face *yawn*

  • Mike March 3, 2020, 4:12 pm

    The Coronoavirus is not 400 times more deadly than the common flu. This is easy to find on the CDC site so please stop spreading misinformation.

    “So far, the new coronavirus has led to more than 89,000 illnesses and 3,000 deaths worldwide. But that’s nothing compared with the flu, also called influenza. In the U.S. alone, the flu has caused an estimated 32 million illnesses, 310,000 hospitalizations and 18,000 deaths this season, according to the Centers for Disease Control and Prevention (CDC)”

    • Mr. Money Mustache March 3, 2020, 5:14 pm

      Thanks Mike, you are right and I misused the calculator here.
      CDC data on the flu: about 1 in 2000
      Covid-19 based on current recoveries: 4% which would be 80 in 2000.

      I will fix the article right now. Also, even the 4% is likely to drop as many mild cases go unreported and people just silently recover.

      Correction appreciated!

  • JeffD March 3, 2020, 4:15 pm

    There are two kinds of FIRE “retirees”, those that continue to have an income stream outside of stock market investments, and those that only have an income stream from market investments. The later group has to be much more careful with their decision making at this juncture. They can not necessarily handle a repeat of 2008, with a follow-on that could look a lot more like Japan.

    • JeffD March 5, 2020, 10:36 pm

      Just heard Jeff Gundlach make this same point on his March 5 CNBC interview.

  • Liam March 3, 2020, 4:38 pm

    Hmm, this article makes some great points, but I think it’s arguing against a strawman.

    I haven’t really seen anyone freaking out about COVID-19. Everyone I’ve seen online, and those around me, seem to be treating it pretty irrationally, whereas other crises have made people much more irrational. I’d actually say news and the online spread of information has been pretty truthful and rational in the case of COVID-19.

    By the way, you write “I went out on the town at the peak of the scare”. I don’t think we’ve seen the peak of the scare yet.

    • Mr. Frugal Toque March 4, 2020, 6:48 am

      It depends what you mean by “freaking out”.

      Costco and Walmart are out of toilet paper and Home Depot is out of masks.

    • Married to a Swabian March 9, 2020, 5:36 am

      Prepare for a spike in the “Freak Out Index” today, with number of cases still on the rise, no semblance of coordinated response from our government and markets going into free fall.

      Time to buckle up Mustachians!

    • Anne March 9, 2020, 1:58 pm

      I haven’t seen any “panic” or “freaking out” except in the stock market. A few hundred people buying extra TP at any given store hardly rises to the level of panic.

  • Chad March 3, 2020, 5:20 pm

    Fear is confusing to some.

    People will go into a casino and lay down bet after bet thinking they are in control, that’s the same danger day traders face.

    People for some reason are more afraid of leaving their money in the stock market even if it’s in an index, absolutely zero logic their as you don’t loose till you sell. I think of it this way index market stock is like being the house in a casino, you may have hits but overall you always make money.

    It’s fundamentally human nature, trust in the market is basic to me, in order for the stock market to loose everything you are betting that nobody in all of those companies wants to make money.

    Keep calm and buy whenever and whatever amount you can👍

    • MayneStreet March 5, 2020, 5:32 pm

      I don’t understand this logic. If I lose 50% of my money, at that moment, I have to make a 100% return to get it all back. Such was the case in 2008-2010.

      Smart money went cash in 2008 and started buying back into the markets in 2009/2010. A 1% money market/bond is better than losing 50%. Preserving capital is always #1.

      • Mr. Money Mustache March 7, 2020, 9:05 am

        That’s true in theory, but in practice it only works in retrospect or if you have magical powers to predict future fluctuations. Since 2010 we have seen constant emails and comments from market-timing experts telling us the markets were overvalued, and they were all wrong.

        There is a brief period when these predictions are correct and look amazing (like this current market drop), but then they look wrong again for the majority of the time.

        Meanwhile, remaining invested forever is on average the most profitable strategy. https://www.investopedia.com/articles/investing/030916/buffetts-bet-hedge-funds-year-eight-brka-brkb.asp

  • Keith March 3, 2020, 5:25 pm

    Even the CDC doesn’t know how many people die from the flu every year. First, influenza is impossible to distinguish from influenza-like illnesses without doing lab tests (http://bmj.com/cgi/content/full/333/7574/912), but of those specimens tested, on average only 16% contain an influenza virus (http://www.bmj.com/content/346/bmj.f3037).

    Second, flu stats are not based strictly on lab tests but computer models and are usually exaggerated (http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1309667/ ); additionally, pneumonia and influenza (P&I) deaths are lumped together, with the numbers ranging from 3,000 to 49,000 annually for 1976-2007 (https://www.cdc.gov/flu/about/burden/faq.htm). However, the CDC admits that only about 8.5% of these deaths are actually caused by the influenza virus, and the overall percentage of deaths compared to total cases is even lower. According to CDC Ambulatory Health Care Surveys, there are about 500,000 cases of influenza like illness per year (http://www.cdc.gov/nchs/ahcd/about_ahcd.htm); even a worst-case fatality rate is less than 1%.

  • Tehrina Terry March 3, 2020, 5:57 pm

    Thanks Pete! My husband & I have been keeping our eyes out for your article about this, and you didn’t let us down! I stopped watching the news months ago but I do watch our net worth regularly. When I saw our “stache” decrease rapidly last week I asked him what was going on in the news that was freaking everyone out and he told me the Coronavirus. Luckily we have been following you for the past 3 years (meaning we are 2 years from FI), so we happily made our regularly scheduled deposit into our Vanguard index funds last week and bought on sale! Thanks for your level-headed perspective.

    And as far as any concern of contracting the virus itself, we have also looked to all that is within our circle of control and changed those things 3 years ago too: bike commuting, home gym with just some essentials – squat rack and lots of iron where we fight gravity 6 days a week, and lots of veggies!

    P.S. I’m not necessarily writing this as a post worthy comment, I’ve just been wanting to contact you for awhile to thank you for this blog and the huge difference you’ve made in our lives. Thank you!

    -Tehrina & Joel

    • Tehrina March 17, 2020, 9:43 am

      I posted this comment 2 wks ago, so I wanted to take a moment to check back in and update it. As of 2 wks ago we felt that the Coronavirus was the latest H1N1 – nasty flu but based on all the lifestyle preventative measures we take it would be okay. Now we know that this particular virus is something much different than anything we have experienced in our lifetimes. With that being said, we are still so grateful to Pete, as following his ideas for the past 3 yrs has put us in a state of readiness so that we are prepared. However, we are doing things differently. We are engaging in social distancing in order to help keep vulnerable populations safe. I’m a psychotherapist and I have moved my practice to only offering Telehealth at this time. Whereas 2 wks ago I said I stopped watching the news months ago but check our net worth daily, that’s actually flipped. We agreed last week to not even look and to keep investing as always, but I am following news on the Coronavirus so I can be informed to make safe and responsible choices with things that are still within my circle of control, such as social distancing/self-quarantine. The MMM community is a great community of people who are used to making smart life choices, so I’m hopeful that we will all stay safe and do our parts to keep our communities safe by staying in if we can so that those who do not have the choice, I.e. doctors and nurses, can safely go out and do their jobs.

      I’ll sign off with my new favorite handshake: Live Long & Prosper!

  • Susan March 3, 2020, 6:56 pm

    “The damage done by a virus really depends on how well our governments respond to it. ”

    Geez, MMM, have you seen our current government? We’re all gonna die!!!

    • lurker March 8, 2020, 11:37 am

      laughing and crying on that one!!!

  • Dean March 3, 2020, 7:06 pm

    I’m actually considering booking a vacation soon. With everyone scared to travel, there’ll be some incredible deals on flights or accommodation, and most areas will remain a relatively low risk.

    Be greedy when everyone is fearful :)

    • Renee March 31, 2020, 10:36 am

      Please be careful. Restrictions on travel are trying to prevent you catching the virus and spreading it around without you knowing it.

  • Liz March 3, 2020, 8:49 pm

    Thanks for this article, MMM! Like other RN’s who replied in the comments, I really appreciate your perspective. Also, I am trying to convince my husband to follow your advice and refinance his student loans– we should have done this sooner but hadn’t prioritized it. He says we should wait because he thinks the rate will drop again soon. But I want to jump on this now! Any advice to resolve this marital impasse?

    • JeffD March 3, 2020, 11:05 pm

      You will refinance at a lower rate whether now or with the next cut, so you are in a win-win situation. There is no way to make the wrong choice!

    • Amy March 4, 2020, 2:40 pm

      Easy, do it now. You will receive the lower payments immediately, rather than continue to pay a higher amount indefinitely. So you will save more money. And if it drops a lot more you can look into doing it again. Sounds like procrastination to me. I was once married to one of those… 😁

  • Mitch March 3, 2020, 9:24 pm

    Check out the prices of hand sanitizer, Clorox wipes and N95 masks on Amazon and eBay! I was at Home Depot back in January to get a mask for a little dry wall sanding and the gentlemen said a few people had come in recently and bought everything except for a secret stash back by lumber.

    I will sell my unused masks to the highest bidder ;).

    This source below is estimating only 30% of cases have been reported and makes a case for a grossly overstated death rate.


  • Nordland March 3, 2020, 11:12 pm

    MMM makes the bold prediction that the market will rebound this time. What if it will, but…in 10 years. And everyone who listens and goes in now will end up with losses in their portfolio for observable future?

    I understand the optimism may pay off in a long run, but I would be cautious this time around. To me, it feels like the market may go down a bit and then rebound closer to election, falling much further after that. We’ve had 10+ years of bull market and valuations have become completely insane. They cannot grow anymore, plus regular stocks didn’t grow last year, it was all crazy tech stocks valuation (FAANG plus Tesla, which never made any profits yet) that were driving the index higher. Rest weren’t so excited.

    I personally would wait until SP gets somewhere around 2,300 until I start considering buying it again. There was a time of growth, now its time to correct and purge, for however long it will – maybe a year, but more likely next 3-5 years.

    • Mr. Money Mustache March 4, 2020, 12:03 pm

      Aside from your detailed and specific predictions of stock market movements (something I actively discourage), I would take exception with the claim that valuations are completely insane.

      Over the past ten years, stock prices have grown significantly, but so have the earnings. So the index hasn’t really become any more expensive for at least the last four years, and arguably it has been a similar range for he last 20 years or more: https://www.multpl.com/s-p-500-pe-ratio/table/by-year

      Even more important, stock values are an estimation of the discounted value of all future earnings of the companies. And the last ten years have been a time of spectacularly low interest rates, which means stocks are worth more.

      If you believe that interest rates will remain lower on average in the next 20 years than they were in the last 100, then future earnings need to be discounted less, which means stocks are worth more today.

      This is definitely an “inspired by Warren Buffett” perspective, but I do think he has a great point when it comes to how stocks, profits, and interest rates all go together.

      • Nordland March 4, 2020, 4:37 pm

        I definitely aware that P/E ratio is been somewhat constant over past years. However, P/E is more like a crystal ball and may not reflect true imbalances in the system at the time near financial extremes.

        The more fundamental question I always ask myself – how the heck did we get ~20% (or even more) growth in earnings per year when the GDP grew 3-4% the most? Stocks (in balanced conditions) should be representative of a real economy. And seeing the market cap being 150% of the GDP to me is the indication that the market is as overvalued as prior to the dot com bust time
        And this time around is seems like IT and financial sectors shares are going to suffer the most too.

        Btw, this is another one of “Buffet indicators”, which I think gives a better overall valuation feeling.

        P.S> Also, it is worth remembering that corporate buybacks were huge over last 5 years and they drove the shares prices of respective companies even higher.

        I don’t do a “technical trading”, but I’m trying to set a certain “market watermarks” for myself based on the above and similar analyses to determine what would be a reasonable entry point again.

      • JeffD March 5, 2020, 10:03 am

        On the other hand, Warren has had a giant warchest of over $100 billion cash for the last several years because he is finding it difficult to find anything that he believes is fairly valued.

        • Dave March 5, 2020, 12:03 pm

          He has been buying Delta airlines in the last few days

          • JeffD March 12, 2020, 2:23 pm

            I think he bought way to early. When even companies are liking paycheck to paycheck, if you cut off their expected cash flow, they can’t service their debt, their credit rating is downgraeed, and their cost of loans is at a much higher interest rate that they can’t afford, because they are already living paycheck to paycheck. A pervasive 10x leveraged economy can’t handle a shock, and this is the downside unwind for companies that were already broke.

            In summary, if these companies were living a FIRE lifestyle rather than the non-FIRE lifestyle, they would have been just fine.

      • Peter V April 1, 2020, 5:51 am

        Keep in mind however, that the earnings per share has been leveraged up with share buybacks. Earnings per share has been unnaturally lofted by companies buying back stock in exchange for taking on more and more debt as incentivized by the low rates that have been in place for over a decade.
        Stocks were overpriced relative to the risk of their debt burdened balance sheets.

    • MayneStreet March 5, 2020, 3:28 pm

      I agree with this post. The rate cut was due more to to liquidity issues in the Repo markets than consumers. 50bps was needed to keep those going. Starting Sept 19 2019 the FED expanded their role in the repo market to solve liquidity/pricing issues for banks.

      On March 3rd and 4th the fed did over 200 billion dollars in repo bids (which were still/are oversubscribed). Significantly higher than usual. The real rally in the market came exactly around the time the FED expanded their role.

      The REPO money is essentially a form of QE that has inflated the market. COVID19 was just a catalyst to bring down an already fragile market. Over time, the market will go up, no doubt. But I think we have more downside here. We will not see another V-shaped recovery without significant FED intervention which is another topic. Basically, cost average. Don’t go all in here.

  • Eva March 4, 2020, 12:48 am

    This seems like an useful article – explaining why we need to Stock few weeks of food (which we, mustacians do anyway since we bulk-purchase shelf food when it is discounted) :

  • Ryan Schlomer March 4, 2020, 5:16 am

    I’d say the news is freaking out more than anyone else. I haven’t seen anyone wearing masks in the US, and the stores seem to be normal. Nobody watches the news when everything is calm.

    • Keith March 4, 2020, 6:31 am

      I’m in San Antonio where we have 120 COVID-19 evacuees quarantined, with 11 of them testing positive for the virus and being treated. One of them was released after testing negative twice, but then tested positive. Before returning to isolation, she went to a local mall. Before that, the lines at Costco weren’t too bad, but now people are freaking out. Even in Austin 90 miles up the road, where there are no confirmed cases, some poll workers refused to show up yesterday. It’s human nature to fear novel threats that aren’t well understood. Getting the facts from reliable sources is the best antidote.

  • Bob Fitzgerald March 4, 2020, 6:57 am

    I’ve been looking into a refi of my mortgage. Rates are pretty low already. When the .5% Fed rate reduction was announced I wondered if that might further reduce mortgage rates. When I searched for an answer, one was no or not soon because Fed decrease mostly effects short term financing rates not long term. Do you believe this is incorrect?
    If the rate drop will further lower mortgage rates how quickly will we see the effect? Days, weeks, months?

    • Marc March 9, 2020, 9:11 am

      One option is to refi at a rate where the mortgage co pays you closing costs. That way you lock in a great rate now, and if they drop, you can do it again without sunk costs. The difference in rate for lender paid closing is so small, it would take many years to recoup, and who knows if you would have moved or refi’d by then anyway, so it seems worth the risk

  • Mr. Frugal Toque March 4, 2020, 7:08 am

    One of the defects of our current Mathematics curriculum is the emphasis on Calculus.
    At the moment, I believe you can get all the way through even an Engineering degree and take just one or two stats courses.
    It’s giving everyone a really poor attitude toward risk assessment: we’re buying too many lottery tickets and “extended warranties” while, as you point out, failing to concern ourselves with exercise and a healthy diet and instead worrying too much about a coronavirus.
    After they put me in charge of the universe, we’ll have skilled Mathematicians educating our children from a very young age about using numbers to balance fear against reality.

    • Chuck Albacore March 4, 2020, 7:26 am

      Or just have leaders who understand statistics and forbid the news from interpreting anything. How cool would it be if some of the biggest personalities on the boob toob were savvy with stats?
      Personally, I hated math in school but I’m still bright enough to know that at least 40% of statistics are wrong.

    • Fergus March 4, 2020, 12:56 pm

      Math is hard. Statistics is hard. Both are necessary–you cannot do finance beyond a basic level without a good understanding of both of these disciplines.

      MMM states above: “…one fact remains indisputable: stocks you buy today at a 15% discount from their peak, will be 15% more profitable for you over your lifetime.”
      Possibly. Or a discounted stock could continue to lose value resulting in losses…


    • Jason March 5, 2020, 7:48 am

      I’ll concur with this assertion, Mr. Toque.

      I have two degrees in Engineering and didn’t take any Math-department Statistics courses for either. I had one engineering lab class that was heavy on the statistics, but it was not the everyday statistics that you need to decide whether to risk A to obtain B based on the likelihood of each. It was the statistics you need to report confidence intervals in test results. Meanwhile, a whole year of calculus, plus ordinary and partial differential equations (for grad school).

      I find in practice as a Mechanical Engineer, you almost never reach for the calculus for two simple reasons. A) Its a language that isn’t spoken widely, especially in the decision maker-caste. B) algebra coupled with the powerful tool of “citing trusted references” tends to be far more persuasive and I rarely need the fancy stuff.

      Disclaimer: if you are contemplating or actively attending school for Engineering, don’t take this as reason to ignore calculus. You won’t make it to degree without it. Furthermore, there are engineering roles that make powerful use of the more sophisticated side of an Engineering Education like modelers, simulators, vibration experts, orbit planners, and on and on. I didn’t have the foggiest notion while I was an undergrad of the wide diversity of specialties that engineers can develop into, so don’t cut any of the branches before you’re even planted in the economy.

      • Renee March 31, 2020, 10:41 am

        Engineer here who couldn’t agree more. Why not have also important statistics courses along with the calculus? Statistics goes much farther (in both academia and industry) when you have something to convince others of (because people’s eyes don’t glaze over when they see it!)

  • Fire2020 March 4, 2020, 8:27 am

    Thanks for the article on this issue that has taken over the news recently. I was hoping that the next MMM article was about this issue. I feel better about it now and know that this is the time to get in the market at a discounted rate.
    We reached FI a couple months ago and have a large sum of money to add to our existing low fee investments. We were cautious until now to make the move but now have a better understanding!
    Thanks again for all you do!

  • Sean March 4, 2020, 8:57 am

    Don’t forget about Mad Cow Disease… that’s what I first thought of (in terms of society panic)

  • IndianSage March 4, 2020, 8:59 am

    Hey MMM,
    Great article. I have been telling people the same thing, I will probably refer them to your article for data points. The market is falling, the fact remains the same – you’re buying index funds at cheaper rate than all time high. Do you recommend any index fund apart from SPY and VOO?

  • Elbow Wilham March 4, 2020, 9:20 am

    I hope you are right and this is a nothing burger, but so far what people are doing does not match what they say. Our government says its just like the flu, but is preparing to quarantine. S. Korea, Italy, Iran area all being over run. You don’t shut down the second largest GDP nation over the flu. I hate to see what happens when the health care systems start to get over run in the next few weeks. Humans don’t do good with exponential numbers.

    I think the world will look a lot different in a few months.

  • Roger March 4, 2020, 10:36 am

    I checked out the two sources you cited, since they conflicted with my own research, and I was curious.

    The first one doesn’t separate out China from the rest of the world. This is misleading. If you broke those two out, you’d see a curve for China that is indeed flattening out: I think they probably do have it under control. The rest of the world, however, is just taking off. See for example the graph in this article:

    The 2nd one seems pretty good! Unfortunately, that range in outcomes is not for the world, but for the city of Wuhan. Quoting from that article:

    When people’s chances of becoming infected vary, an outbreak is more likely to be eventually contained (by tracing contacts and isolating cases); it might reach a cumulative 550,000 cases in Wuhan, Allard and his colleagues concluded. If everyone has the same chance, as with flu (absent vaccination), the probability of containment is significantly lower and could reach 4.4 million there. Or as the researchers warn, “the outbreak almost certainly cannot be contained and we must prepare for a pandemic ….”

    Wuhan is a city of 11 million. Indeed, if you read the article they linked to, there’s a plot near the end showing projected infection rates as a function of R0 and k (“dispersion parameter”, I won’t claim to know what that is). It includes values ranging from 5% to 40%.

    • Pat Kilroy March 6, 2020, 9:10 pm

      Good catch Roger! I hope MrMM corrects this mistake and reconsiders that part of his analysis. The difference between the world population & Wuhan is about a factor of 770 times.

      • Mr. Money Mustache March 7, 2020, 8:25 am

        Done.. thanks Roger and and Pat. I was shocked to see that the outbreak in China proved to be only 1/44th of their worst-case scenario. Your point that the overall spread out here in the less-controlled world is yet to be known is well taken. But I do see some pretty hard work on slowing the spread, so I would expect far from the worst-case scenario elsewhere too.

        Does anyone have math-based worldwide models yet, or is it too early? (I’ll update this comment if I find any)

        • Boring Scientist March 11, 2020, 1:22 pm

          World ex china is included in the link you provided: https://elm.nsupdate.info/virus/#world

          The trend is still exponential and uncertainty on parameter estimates (such as Nmax) high.

          I believe the main concern in much of this is that the number of cases over a short period of time causes stress on the health system on top of the flu etc. The stories from Italy are concerning since respirators and other medical devices may become short in supply. Would suck to need one but being denied access because of uncontrolled, rapid spread.

          Such spread could also change the death rate dramatically (uncertainty in all inferences to date is high).

          Panic? No. But I think significant attention to our behaviour is justified to slow down the spread.

        • Julie March 16, 2020, 11:16 pm

          Yes, does anyone have the R0 on this yet? I really need the R0 to dispel fact from fiction.
          I’ve heard 3ish, but I don’t know how scientific that number is.
          Another number range I hear is anywhere between 1.41 to 5.47: https://www.businessinsider.com/wuhan-coronavirus-scientists-seek-r0-estimate-spread-2020-2
          For now at least, understanding the six feet of distance is helpful.

          I developed a calculator with an R0 of 2 but the real multiplication is affected by how many people in total are in contact. For a concert with a R0 of 2 if 1,600 people in total are infected from one asymptomatic person than within 50 days a total of 409,600 people are infected. For a student/teacher who is infected and asymptomatic who exposes 200 others to the virus, 51,200 are exposed within 50 days. I think hundreds of thousands in my area have been exposed (PNW).

          I’m in ground zero and I just bought some more free weights yesterday but mostly will enjoy daily hikes in nature. So, not much of an interruption of routine.

        • Wowser March 20, 2020, 12:11 pm


          Definitely looks like a different curve a week later, excluding china. Error bars are still huge (+/- 140%, obv. -140% is nonsensical), but the naive model is saying 500m+ infected.

  • Michael B March 4, 2020, 10:43 am

    Let’s take a rationalist approach.

    Even if you think this virus is unlikely to affect your life this year, it costs so little to prepare for it that the expected value is positive.

    It’s not like trying to prepare for a nuclear war, where you need to build a concrete bunker that’s completely off-grid and protected from radiation. Which is a wasted investment if a nuclear war never happens. That’s millions spent on something that you’ll likely never need.

    But prepping for being isolated or quarantined? You buy enough food (and household supplies) to last you a few extra weeks. You’re out basically zero, since you’ll use it all eventually either way.

    Seems like a wise investment to me.

    I’m not in favor of cashing your entire portfolio of stocks in for cash due to general unpredictability of such things, but perhaps buying some put options against the total market might be a good way to help sleep at night while the world panics around you.

    • Fergus March 4, 2020, 3:21 pm

      Michael, this is a good point on the market. (Although “rationalist” is not a great term…)

      Many people hedge against the market and do very well for themselves. Stocks don’t always go “up”.


      • Michael B March 6, 2020, 9:54 am

        I’m only suggesting it as an option to help sleep at night. If you have your ‘fuck you money’ wrapped up in indexes it can be nerve-wracking to watch them head towards zero. If you think the fear of a complete market collapse is going to drive you to panic sell, you may wish to instead by buy options. It’s relatively cheap insurance.

        My larger point was that MMM seems to be downplaying the risks (the no canned beans required part). Even with a good response life has become difficult for some people. South Korea has an almost model, proactive response but people are starting to lose it from isolation and their health care system is also becoming overwhelmed.

        The US government, on the other hand, has stupendously bungled the response to the virus here in ways that defied previously pessimistic expectations. People everywhere in the US would be wise to prepare to isolate for a few weeks. **ESPECIALLY GIVEN HOW LITTLE IT COSTS TO DO SO***. The expectancy is high, even if unlikely. This is what I meant by rationalist approach. It’s not likely to be necessary, but you’re going to be really miserable if you end up needing it and didn’t take a few hours to prepare for it.

  • Angela March 4, 2020, 12:23 pm

    I don’t think the flu comparison is very useful, as it is misleading. Saying “more have died from the flu” is only because the current influenza season started well before 2019-nCoV made its way to the USA. So yes, the flu has killed many more people, but it is orders of magnitude less-deadly than COVID (even if the more conservative estimates of 1-2% mortality are more accurate). I think the potential of more deaths is where the fear comes from. And the fact that we don’t have a vaccine or targeted treatment, the way we do for influenza.

    Anyway, that being said, I agree with the rest of what you wrote. People need to move on, keep themselves healthy, read some Stoic philosophy, and take the precautions recommended by the CDC.

  • Dr. Medimentary March 4, 2020, 12:33 pm


    Very timely post and I agree its better to understand numbers rather than soundbites and fear. I also agree that we should all use common sense to preserve our health- eat well, move and wash our hands. Oh, and keep dollar cost averaging.

    I added my own two cents on understanding risk: https://medimentary.com/understanding-and-communicating-risk/

  • Andy March 4, 2020, 12:34 pm

    If flu has killed ~300,000 worldwide this year, and coronavirus has killed 3,000, then flu is …. 100 x worse.

    I’ve been reading lots of stuff about this thing – none of it clearly definitive or trust worthy. Hype aside, it seems there are about equal cases to be made for the extremal “it’s nothing” and “the world is ending” views. I’d opt for what I hope is true: that this isn’t a big deal, except that there are some weird things going on. Two examples: 1 – china’s apparent over reaction. Their view of human life is rather different from ours and I can’t see them shutting down whole cities over a few hundred, or even a few thousand, deaths; and,
    2 – the apparent death rate among senior government people affected in Iran.

    Of course, China is almost certainly lying about nearly everything and Iran is probably not reporting (or even tracking) deaths among the kulaks. The effect on us appears to be almost entirely political and economic, rather than medical.

    • Amy March 4, 2020, 2:54 pm

      Interesting.. yet the CDC in USA says that their numbers are no longer representative as they are not tracking potential cases. They are letting the states compile their own numbers from their own testing (yet some states had not yet received testing kits).. so when you say that China and Iran are lying/underreporting, it looks like the USA could be too.

    • Daniel March 4, 2020, 3:19 pm

      Wrong comparison

      The Flu IS pandemic. COVID 19 is not (yet), hence the numbers are different

      China did in fact a little miracle in containing the virus, and that’s only possible in an authoritarian country

      Did they lie about the numbers? Maybe, but if anything, they made them surely better looking, not intentionally worse.

      Based on genome mutation analysis published, there must be about double the number of infected people… So that is off by a factor of 2 roughly.

      Still a lot of dead people in addition to the flu, it’s not like you get only one or the other…. It all depends if it goes pandemic or quite again…

      And see below, the real target are the elderly anyway.

    • Fergus March 4, 2020, 3:32 pm

      Hey Andy, here is a good website for tracking this. I’m not sure that China is lying about the impact (why would they?). They are probably underreporting this. Japan is also surely underreporting this to keep people coming to the summer 2020 Tokoyo Olympics.


      cheers, Fergus

      • Kim March 7, 2020, 3:43 pm

        Having been a New Yorker for 9/11 and later a resident in an area where 14k acres and 500 homes were destroyed in a matter of days due to a wildfire.. I feel like all things are possible and there is a lot in danger in thinking that we will always be just fine and that bad things can’t happen. Yes, the mortality rate of the virus is low–but statistics mean nothing to the victims who are 100% dead. I do believe COVID 19 is a big deal and will have a major impact on the economy as well. Maybe I am an alarmist–but I have been directly impacted by several disasters, lived in Asia for H1N1, and don’t take these things lightly.Preparation is important but also the foresight to see that pandemics (and possibly biological warfare) are all probable realities for the future and being merely reactive to epidemics is not going to cut it anymore. Hopefully COVID will spark some changes in people and make them think about these things and how susceptible we are as a population … even in the year 2020 we are not as advanced as we think we are.

        • Jason Middleweek March 8, 2020, 5:42 pm

          Hi Kim

          Thanks for your post and sorry to hear about the tragedies you have been exposed to and experienced. I think trauma leads to risk aversity for sure. Look, I first learnt about global warming in geography class in 1986. I have been angry for the last 34 years about the way we have neglected our atmosphere since then for the sake of big cars and good times. The cumulative damage will come home to roost in the next few decades for sure. But what road do you take if you are risk averse?

          a) live frugally, not take on debt and accumulate cash and gold?
          b) find a job you like and spend all your money on distractions and fun with no savings plan in place?
          c) find an isolated piece of land next to a river and build a well stocked fortress?
          d) live a healthy optimist, build a supportive and loving family and community. Try and spend on what really makes you happy and invest any surplus cash (with a level of risk that you are comfortable with) in the long term to try and help a bit in the uncertain future.

          Your post suggests that you will take road a). However despite the Spanish flu, two world wars, the Vietnam war, the Cuban missile crisis and accumulation of nuclear weapons, over the long term option d) seems like the way to go. The trouble with saving in cash over the next 10 to 20 years is that the opportunity cost is huge and you don’t sound like the type of person who will tip it all in when the market reaches the “bottom”.

          I’m sure MMM can write the retort to your post more eloquently than me.

  • Suchot March 4, 2020, 1:13 pm

    Praise the lord and sweet baby jesus that there are still rational folks out there. ;)


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