“Good to Bad to Ugly - What lies ahead” - A look back into the dark days of Covid

Written: 2022-12-01

While going through some old notes on my MacBook, I came across this note. It was something I had drafted (partially) back in the dark days of 2020, when Covid was invading our cities, our populations and the life we used to call normal. Over the next months (and years), life would change - some of those changes eventually would revert back how it used to be, some changes will remain with us forever. Similarly, some of the people impacted will recover, while others will carry the scars of the disease forever, while still other will be lost forever. But, it is interesting to look back through this window in time to see how future looked like while living in the days of darkness.

Here is the note I had drafted in 2020. I do not remember the date, but it looks like was from the early days of the pandemic - probably mid to end of February, 2020.

===== START: 2020-02 - Original Write-up date =========================

GOOD TO BAD TO UGLY

Markets were at the top around end of January

China started to show signs of stabilization

Then South Korea, Iran and finally Italy started to spiral out of control

Dominos started to fall all over Europe

Finally the monster laid its claws over North America... Washington State, California, New York City... almost like a movie.

Though we could see the enemy coming, we had no… <<sentence not completed>>

Now where we stand today the future is pretty gloomy.

It seems most countries have got it already. More and more people are testing positive every day. Our healthcare systems are crumbling under the pressure of the people who are getting sick at an alarming rate. It appears that the virus is here to stay.

THERE IS HOPE

Yes, there are some positive signs - a number of companies are testing drugs that could potentially cure the sick, many are in various stages of developing and testing vaccines that could potentially help to protect people from getting the virus in the first place. However, the process could be long, and there are no 100% guarantees. As this is a health crisis, the only solution to this crisis will be a solution in healthcare - at least one of these two options need to work. And we humans have thrown everything we have got to get these done - lots of money, and the best people we have got. And in most-likelihood we will find a solution here... a matter of when, not if. There is hope... hope is still alive!

WORST CASE-SCENARIO

While there is hope, there are a few other scenarios that are worse than what we have today, and I need to list those here as well.

A) The drugs do not work and the vaccines either don't work or has severe side-effects - In this case the drugs or vaccines developed so far may not be usable and we may need to go back to the drawing board and keep at trying to find a solution. Based on our past performance this is a very low probability scenario, but what is a bit more likely is that it takes us a long time to find something that works with relatively low side-effects.

B) The virus mutates and developed drugs/vaccines/immunity become useless - This is again a low probability scenario (especially for the case that the new mutation is also as severe and transmittable), but can happen. If this happens we’ll see reinfections and we'll see our pharmaceutical efforts thrown out of the windows.

C) The social quarantine initially works and then we get back to start loosening restrictions and see infections coming back up again. This would be a devastating scenario as this would result in the social quarantine to continue to be extended for a long long time.

The scenarios above are scary. And let's hope that none of that happens.

===== END: 2020-02 - Original Write-up date ============================

POST-ANALYSIS

Looking back at the writeup now (close to 3 years later), it is definitely an interesting read. In 2020 it was relatively early days for me of looking at the world from the lens of the market. I didn’t have a lot of background knowledge into virology, communicable diseases or vaccine production. My window into the that world was business news media, and some study of history. While all of that did let me structure my portfolio in a way that positioned me for gains in the next few months, my predictions of the future state of the world had mixed results.

The hope scenario is the one that primarily played out and brought us out of the pandemic. And considering where China is today, there is still room for this scenario to play out further. However, this scenario was already fast becoming a reality at that point in time. So, from an analysis point-of-view, there is not much value in analyzing it much further.

The worst case scenarios are more interesting for analysis - because there was less probability of these happening and had higher severity of impact. In many ways all of these scenarios played out, at different points in time, in an iterative manner, and somewhat differently in different geographies.

A) Vaccines and drugs that came out had different efficacy levels and different levels of side-effects. However, so many of them came out that we were eventually able to find a sampling of at least one that could get life back to normal.

B) The virus did mutate, but so did human ingenuity - changing our vaccines to catch up (relatively fast) to the mutating virus.

C) Social quarantine did work and resulted in reopening, which eventually resulted in newer waves of infections, but with each wave we got better at fighting it, less lives were lost and our healthcare systems managed to remain standing.

All scenarios played out, to different extremes, and with a mixed bag of outcomes.

What is missing from here is also interesting - the activation of the stimulus packages across many countries around the world and their impact is definitely missing - both the short-term and the long-term impact. And then the weight that was pulled in by the Pharma companies, the pace at which the vaccines were developed, approved and got distributed definitely was missed from the outlook. Neither was the sheer human tool the pandemic was going to take. And on top of that the back and forth all countries would do in balancing the need of the economy vs. public health.

So, how do I reflect back on this view of the future, as seen back in the dark days? I’d answer that in two parts - Part 1: the world is non-binary, and its state at any point is not going to be binary - its not a choice between whether the vaccines will work or not, whether the virus mutates or not, whether the lockdowns will work or not. Question is - by what extent would each of these work? And what would we do in response to those outcomes. It was not a single round game, but a game that got played in multiple iterations running in parallel. Of course, some situations do result in binary outcomes (yes, Lehman did end up failing during the GFC), but the outcome for as complex a system as the world typically is some shade of grey.

Part 2 - The world is a very complex system, even though hindsight and a logical understanding of the system does allow us to have relatively more accurate view of the future, ongoing monitoring of the situation on the ground needs to be taken into account to adjust that view in order to keep it close to the actual reality in question. And that is how we got out of the dark days of the pandemic.