Some perspective on Coronavirus

Photo by The New York Public Library on Unsplash

The Coronavirus crisis has caught most of us by surprise. We say most, because there are some incredible geniuses out there who predicted this would happen at some point in the not too distant future. Still, it’s tricky to make money out of global pandemics and market meltdowns unless you’re able to say precisely when they will occur. And we are yet to find a fund manager who called this crisis. 

Us mere mortals must comfort ourselves with the knowledge that right and wrong are not absolutes when it comes to investing, more gradations that enable us to maximise gains and minimise losses by edging closer to the truth of what is going to happen and expressing ourselves accordingly. 

Closer to the truth.

We’re not going to comment on whether we believe these incredible moves across all asset classes are overdone. We’ll leave that to those who trade in Twitter followers and public predictions. Instead, we simply want to point out that nobody, no matter how smart, how clued up on virology and epidemiology, and how well versed in the market impact of monetary and fiscal stimulus of epic proportions, can say what will happen next.

The Danish existential philosopher Soren Kierkegaard once observed that “Life can only be understood backwards, but it must be lived forwards”. 

Understanding what has occured is an important part of investing, but so too is imagining what might happen. Living and looking forward is painful and at times, downright scary, but to survive and thrive in markets we must confront uncertainty. We cannot afford to rely on hindsight, past performance, and other retrospective ways of understanding our world. This leads to groupthink and fosters a false sense of security. We must use our imaginations to envizage different outcomes and seek to move closer to the truth.

The importance of humanity. 

It helps if you think and act like a human being, rather than a weighing machine. In recent days there have been so many opinions, predictions, arguments and boasts doing the rounds in the fund management community that it’s easy to forget we are dealing with more than a market meltdown – we are dealing with a human crisis, one that is tearing apart families, communities and businesses all over the world. Of course, as fund managers we seek to profit from market dislocations – it’s in our job description. But we must never forget the real lives that play out behind our screens.

We’re not drawing a dichotomy between the humanity that is so sorely lacking in our industry and the expertise that enables investors to generate huge gains from grisly events. Love and money don’t have to be mutually exclusive. In fact, they can reinforce each other. By seeking to understand the human cost of this tragedy, we can gain a better understanding of how individuals, communities, societies and entire nations will behave and adapt, and how these responses might impact asset prices. In other words, by considering others and trying to be better humans, we can become better investors. 

Distasteful and wrong. 

Please don’t mistake this for virtue signalling. We are not perfect – far from it. But we certainly don’t brag about winning trades on social media whilst elderly people are being rushed to intensive care units. We think it’s distasteful and wrong. 

Throughout our society and culture, the response to the Coronavirus has varied. It’s revealed the best elements of human nature, with compassion and kindness overflowing from our phones and TV screens in the form of people offering to go to the shops for those who are self-isolating, anonymous strangers literally offering to pay the bills of those who are out of work due to the economic disruption caused by the virus, and countless other acts of beauty and kindness. The locked-down balcony musicians of Italy spring to mind.

The worst bits of humanity have also been on show. Criminals are targeting the elderly and vulnerable with scams that exploit their fears about the virus. Respectable middle class people are stockpiling to the point of selfishness. And sadly, lots of young people seem to be putting their grandparents’ generation at risk by refusing to modify their behaviour in the face of a disease that seems to fall particularly hard on the elderly.

We’ve always subscribed to the view that adversity doesn't build character, it reveals it. It’s been lovely to see some of the most successful and wealthy people in the world show leadership at a time when we need heroes more than ever – whether it’s Tom Hanks and Idris Elba “coming out” as having contracted Coronavirus and inspiring millions of people to engage with the challenge facing us, or Jurgen Klopp emphasising the need to focus on what really matters:

“All of us have to do whatever we can to protect one another. I’ve said before that football always seems the most important of the least important things. Today, football isn’t really important at all.”

Okay, two of the team at Three Body Capital are obsessive Liverpool fans, but you can’t fail to admire the sentiment expressed in those words! “The most important of the least important things” is a beautiful way to describe something that is so precious to so many people, but perhaps less precious than everybody thought.

A new kind of hero.

These heroes have something that celebrity fund managers don’t have – humility. They are able to minimise their egos and see things from others’ perspectives. They can channel compassion, kindness and most importantly, wisdom, through their formidable marketing channels to inspire millions of people to positive action.

This crisis is bringing profound change to the world – and how we perceive the world. Of all the second impacts, perhaps it will change the way that we think about our heroes? Rather than following vacuous and often talentless celebrities bragging about their holidays and expensive lifestyles, perhaps we’ll exalt the scientists that work day and night to keep us safe from microorganisms that would seek to destroy us? And maybe we’ll elevate those who provide something useful to society – delivery drivers, cleaners, childminders and others who make invaluable practical contributions to our lives. 

So, this weekend we’re not thinking about markets, fintech platforms or raising money for our fund – we’re thinking about the people working day and night to keep us safe. We doubt that many “key workers” will be reading this newsletter, but if you are one, thank you. And please, for all of our sakes, keep doing what you’re doing.