What Investors Need to Know About the 4th Wave of the Pandemic: Part 2

What Investors Need to Know About the 4th Wave of the Pandemic: Part 2

Posted On March 26, 2021 1:08 pm

In part 1 of this series, we explored why another big wave of the virus was likely, possibly even hammering the US one final time before the American epidemic finally ends.

Of course, just because the US suffering will likely be over by July, doesn’t mean that the virus won’t keep delivering drama for another year or two.

In part one we saw why it’s likely to be until 2023 before the pandemic is over globally. But in this conclusion, I wanted to cover the two most important facts of all about the potential 4th wave of the corona virus.

That includes the effects on the stock market and your portfolio.

Fact 3: The Human Toll Won’t Be As Bad In A 4th Wave Of The Virus

IHME’s latest estimate is that by July 1st almost 4 million people will have died from COVID-19.


(Source: IHME)

  • base-case nearly 4 million dead by July 1st
  • the global pandemic is far from over
  • likely this will be the deadliest pandemic in over 100 years
  • surpassing the Honk Kong Flu’s 5.5 million dead
  • on a per capita basis, it won’t be as bad but the human toll will be larger

However, the good news is that as horrible as the deaths have been so far, and we’ll get more in the coming year or two, even a sharp spike in cases isn’t likely to cause a tsunami of deaths as it once threatened to.

Let’s consider the IHME’s model for the US.

(Source: IHME)

  • IHME estimates the worst-case scenario is 1,800 daily deaths by May 21st if B-117 really takes off in the US
  • base-case deaths continue to drift lower
  • no mega-spike in deaths is likely because the most at risk of death are already mostly protected

Thanks to 66% of seniors now being vaccinated, even if daily cases were to spike to over 200K per day, more than tripling from here, the rise in deaths wouldn’t be anywhere close to the 5K we saw in late January.

The vaccines aren’t 100% effective, but they are almost 100% effective at preventing serious disease and mortality.

Every day we vaccine another 2.5 million people and thus reduce the risks of a major spike in mortality from a 4th wave.

Globally it’s going to be tougher. The reality of vaccine development and distribution is that more people are going to die than was necessary.

  • theoretically, we’d vaccinate the highest risk around the world before moving onto lower risk people
  • which means the pandemic would end at the same time in 2023 in all countries
  • obviously rich countries aren’t willing to wait 3 more years, understandably so

In the bigger context, as bad as this pandemic has been, and could still become, it’s remarkable how few people are actually likely to die.

  • the 1918 Spanish flu killed 5% of humanity
  • which would be about 400 million people today
  • MIT estimates that 3.3 million Americans could have died
  • 600K is a tragic number, but less than 20% of the worst-case scenario

So does this mean that stocks are poised for the best year ever thanks to robust economic boom times?

Not necessarily.

Continue Reading Here

About author

Dividend Sensei
Dividend Sensei

I'm an Army veteran and former energy dividend writer for The Motley Fool. I'm a proud co-founder of Wide Moat Research, Dividend Kings, and the Intelligent Dividend Investor. My work can be found on Seeking Alpha, Dividend Kings, iREIT, and the Intelligent Dividend Investor. My goal is to help all people learn how to harness the awesome power of dividend growth investing to achieve their financial dreams and enrich their lives. With 24 years of investing experience, I've learned what works and more importantly, what doesn't, when it comes to building long-term wealth and income streams and achieving long-term financial goals.

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