Living in the shadow of COVID-19

There are times to worry about money. There are times to worry about survival. This time the focus needs to be on the latter. Let's talk realistically about COVID-19 and how you should address this challenge.

Reality check:  If you are dying, sick of disease, you don’t care about money.  As I write this, the world is facing a challenge it rarely sees.  A pandemic virus that appears to be similar to past medical events such as the Spanish flu or the plague.   There are precedents with this, yet we seem to be less interested in embracing those at the individual level - waiting for our government to tell us what to do.  It isn’t going to happen, people.  Your government is not going to save you.  If there was ever a need to take on personal responsibility and detach ourselves from central authority, this is it.

In 1918, an influenza pandemic hit Mexico, specifically in Mexico City.  This was commonly called the “Spanish Flu”.  This is only 100 years ago.  That pandemic was called the “mother of all pandemics” and statistics show it causing upwards of 20-50 million deaths worldwide.  This is at a time when there wasn’t international cheap flights, frequent flyer miles, business class seats, etc. between Mexico City & other parts of the world.  Today the Mexico City airport looks more like a traffic jam than a transport hub due to the travel patterns of millions to go to and come from it.  It is a “mega city” with over 23 million people living in it.  Yet the influenza pandemic at that time was unusual in that it targeted 25-44 year old people more than other demographics. More people died with the Spanish flu in 1918 than all those killed in World War 1.

 But death from disease is not unusual to Mexico.  In the 16th century, when Hernando Cortes and his army conquered Mexico, there were about 25 million people living in that country.  One hundred years later, following a series of epidemics, the population dropped to approx. 1.2 million.  History and records show that the biggest reason for this drop in population was a smallpox epidemic.  This was brought by travelers from foreign lands and exposed to a nation of humans that had no immunity to it.  One Franciscan friar at the time wrote in 1577, “Nobody had the health or strength to help the diseased or bury the dead”.

I watched the one hour “Four Corners” episode on the Coronavirus this week.  For those that do not know, Four Corners is a TV show put out by the non-partisan ABC television network in Australia.  ABC is (or at least was) government funded.  They are similar to the PBS network in the USA, and therefore the closest analogy I can make with that show is that Four Corners is Australian’s Frontline show.  Hard journalism, no partisan editorial control, well produced and well funded.

Their coverage of the Wuhan Province and the Coronavirus should win a Purlitzer prize.  It showed (from the inside) many Australians who had been stranded there, and all the cell phone footage that people were taking that eventually leaked past the great Firewall of China, through various VPNs and the Tor network, allowing truth to emerge.  It is shocking and something that you can only watch if you are prepared to see dead bodies literally lying on the side of the road, some in full dress - men in suits, women in business attire, that just literally dropped dead there.  Maybe they died in apartments and someone just had to drag the body out of the building for fear of ongoing infection, or just that they didn’t want a dead body in their apartment.  Vans with teams of people in Hazmat suits come by, pick up the dead and drive off.  It reminds me of a scene in Monty Python’s Holy Grail - the “Bring out your dead” scene, but without the comedy.

As I write this, the rest of the world is starting to see the spread of COVID-19 and it is scary.  But like all stages of grief, it begins with denial.  Imagine how those in Mexico City handled the Spanish flu in 1918?  Or the smallpox epidemic of the 16th century?  How do you become one of the 1.2 million survivors there?  Do you think that the survivors were those in denial?

Unconstrained responsibility

If you follow my teachings, you will know that a key part of the philosophical approach of being unconstrained is to take full responsibility for yourself and your family.  That means you don’t carry unnecessary debt, and you find a way to be 100% sustainable.  That’s really easy when it comes to money as long as you can fight off the constant social battles and marketing to try and make you fall back into that debt.  That takes strong will, but the strong will financially survive.

Now we have to take that same approach and apply it to health.  

Funny thing is that those of us that live in the USA have been conditioned for this, for decades.  We live in a medical system that is 10x more expensive than any other in the world so we don’t tend to run to a doctor for any small thing.  It is just too expensive for that.  Maybe you have really good health insurance so you can burden the system when you stub your toe and think your leg is broken.  But most people don’t.  That’s a good thing.

If we were to take the same approach to self-sufficiency with our health in the case of a massive medical adverse event, then we can get through this.  But you need to be prepared, and that should have been happening over the past few weeks or months.

My friend, Joshua Sheats, who hosts the awesome “Radical Personal Finance” podcast, has been preaching that message for years.  And he is 100% right.  You need to be self-sufficient for adverse events.  This is your only way to freedom.  Preparedness is key to getting through life’s adverse events - not denial or ignorance.

Yes, people.   The buck stops on your desk.  So picture this situation and ask yourself if you are prepared for it.

Hospitals are at 200% capacity.  There are no beds.  People have overrun the ER and admissions.  Medical staff are at their wit’s end and can’t handle the onslaught of patients.  There is no cure to Coronavirus yet, but thousands flock to a central place that is already a guarantee of you getting infected by it because that is where all the infected have gone.  But people are desperate - isolation and protection from this is the least thing on their minds because they think they are already infected.  Those that are not - well they are now.

With the lack of a cure to this virus, and the high rate of infection, the best thing the CDC have offered this week is to tell people to not sneeze in public, not cough without putting your hand over your mouth and wash your hands repetitively.  Really?  That’s the medical cure for this?

What am I doing?

First, take off your “I’m not a prepper” cap.  It doesn’t look good in a world in collapse.  You look like an idiot.  Yes, that’s what you said about the so-called “preppers” out there.  Those that devote a large amount of their life to being prepared for cataclysmic events.  Yes, they happen infrequently.  But when they happen, they get the last laugh.  Maybe there is something we can take from their crazy teachings?

It would seem to be that isolation is going to be a factor here, so you need to be able to sustain yourself for extended periods of isolation.  That means while the media is more interested in the DJIA crashing and tumbling to low levels (and I’ve written about how fickle that is for ages, and is just a matter of time anyway), now you have to move your focus to more lower level, physiological areas.  Back to my teachings about where to invest your money to avoid the devastation of market cycles - Food, Shelter, Water, Energy, Clothing, etc.  These are the things we should be focusing on now.

There are some really basic reasons why our society in the 21st century is more likely unable to handle itself through something like this.  We are not trained or conditioned to exist in hostile environments.  Sure, if you have military training you can do it.  You could live in a foxhole for weeks - our grandparents were far more prepared for that because they faced the continual “war to end all wars” approach.  But we spoiled brats never had to deal with that.  Well reality check - now is the time to think like your grandparents or great grandparents.

The low hanging fruit here is to stockpile food & water.  if the water table gets infected, then you can’t rely on tap water, etc.  And the human body needs water at least once every 3 days to survive.  So to me, that’s job #1.  Get a supply of water that you can rely on.  If you can find them, go and get 5 gallon bottles from Walmart, and fill them up at water purification and filling stations.  In Arizona, we have these at most gas stations.  Locate them in your area and pre-fill those bottles.   I keep 30 gallons on hand at any time and rotate through it so that I can be sure to have water.   Living in the desert in 120 degrees for 5 months of the year (if we don’t get out of here to escape it by traveling) shines a more important light on water than anything else.

Second, food.  The human body needs 2,000 calories of food intake per day.  You need food that can withstand the second law of thermodynamics - entropy.  You need food that is canned, or sealed that can last long periods of time.  Think rice, pasta, canned meat, canned fish, canned vegetables, flour, etc.  There are some excellent preparedness shows on YouTube for this.  Here’s one I would highly recommend and for those with a Costco nearby, the products he shows are routinely available there (as long as you get to them before there is a run-on for food).

Now the important thing here is that we don’t grow our own food anymore.  So that means you are reliant on a food supplier.  About 30 years ago, we started to transform supply chains around the world with this concept called “Just in time” inventory control.  It meant that by using computers to track sales, each sale would trigger a purchase order to restock the warehouse.  The idea was that the warehouses didn’t need to keep massive inventory of products.  They could draw upon the distribution network (ie. trucks, trains, planes, shipping, etc.) to order as needed directly from the manufacturers.  So there isn’t any magical warehouse out there full of food.  Those warehouses are more likely in your neighborhoods - most noteworthy Costco or Sam’s Clubs.  They have the bulk supply of food and therefore you should seek them out and get 30 days supply of food in your pantry.  If you can store more, do that.  But if you are thinking this will blow over and not be a big issue, no problem - just get food that you will likely consume anyway.  Then there is no downside risk to this.

If the protection here is isolation from other humans, you will rely more on the Internet and communications to meet your natural human need to socialize.  So maybe now is the time to make sure you have the fastest and most reliable Internet.  If you are not a “techie”, at least learn how to restart your router or your Wifi access point in your house if something happens.  Know the procedure if you lose power or data connection, so that you are self-sufficient to restart what is needed.  Most of us know these things, but for those that have parents or grandparents who call you when their Internet goes down or their computer doesn’t work, etc. - well now you better be there for them because they will rely more on it in isolation than they will when they can go to the social community center and see their friends.

If you have dogs or cats or other pets, you better have a plan for them too.  That means keeping 30 days supply of dry pet food for them.  They will need it just as you need it.

If you believe you will need to travel, you will need fuel.  If a city goes into isolation, there won’t be people manning gas stations, so you better have a supply of fuel.  That said, if the goal is isolation, you won’t be wanting to go out so maybe that isn’t as much of a priority.

I personally like the idea of having a CB or Ham radio, which I do have, in my house.  This is a communications backup plan, but you probably need that.

Finally, and this is more for my US friends, weapons & ammunition isn’t a bad idea.  It is your second amendment right, and those that embrace it can best defend themselves against theft from others.  My hope is that this never is needed simply because we are all prepared.  But imagine that those who lived in denial and couldn’t get to food stores in time (and keep in mind the food stores, due to Just in Time inventory only keep 3 days of food available), then you have millions of desperate people out there and if you have food and they don’t.....  well you know the drill.

An apocalyptic picture

If you are still reading this, either you are thinking like a prepper or you think I’m a nut job.  But consider that I come from a country of 25 million people, a lot of hostile land, harsh weather and it is on the other side of the planet.  I grew up learning that we have to be self-sufficient because we were so far away from everyone else.  Community and pooling resources matter.  But you are ultimately responsible for you and your family.  Even today, Australians face the subconscious risk of having more deadly spiders, snakes & bugs out there than any other country on the planet, yet humans live with this natural part of the ecosystem in balance.  

I realize that my preparedness strategy probably looks more like an episode of “The Walking Dead” than normal life.  But I see the deferment of responsibility to third parties as being worse than personal responsibility.  I’ve been preaching that message for ages - but more about financial deferment of responsibility to fund managers, Wall Street, bankers, etc.  Now it is about how you take that same approach and use it for survival.

Yes, this might look like an apocalyptic picture.  But only 100 years ago, this was how Mexico City looked.  And Mexico at the time had just gone through over a decade of revolution and civil war.  That was a place that, at the time, was better prepared for individual survival and yet managed to get through it.  We need to think like they did and learn from what they learned.

You spend most of the first quarter of your life being trained in schools for a life in “the real world” and yet those very schools never trained you for survival.  It was more important that you learn trigonometry than how to find water in the desert.  It was more important you learned genetic engineering than how to heal a wound on the frontline.  Because you were told you would never have to deal with these things.  History teaches us otherwise.

The institutionalized will be the first victims here.  Those that look to their elected leaders for guidance will realize they have been swindled.  Those famous celebrities that how hold the levers of power in the world are no better than you or I.  They don’t know the answers, yet they have armies of humans surrounding them - that will take a bullet for them first, so that they will likely survive.  But if you think that your President or VP has the answers here, then you will be sorely mistaken.

A more likely scenario is that they want to quash unrest and civil disorder, so they will lie and hide the truth from people.  They won’t speak about root causes of these things, whether these viruses were engineered as weapons by humans or some bizarre bat infestation.  Yet they won’t talk about why that same thing doesn’t happen ever 10 years, yet the bats have been living with other animals since the dawn of time.  That said, I don’t know the answers to why these viruses exist, but I do know that they are not telling the truth as to the actual impact and risks to individuals.  They fear the stock markets crashing, the economy destroyed because that would not favor their re-election prospects.  Yet that is exactly what is happening as I write this.

If you are looking for a quick guide for preparedness, I’d recommend this one:

https://theprepared.com/wuhan-coronavirus/

Or if you want to watch a short Video, this is excellent:

Your money or your life

Which brings me back to the reason I wrote this.  You have to choose how you react to this situation - what you believe.  I personally believe that caution and self-responsibility should be a core tenet of human behavior so it isn’t a long distance from normal day to day life for me and my family than being prepared for this sort of thing.  But for many of my friends, they don’t share that approach.  It would be better to laugh this off and get back to watching the football.  

With that, what really affects them is money.  They see markets in turmoil and worry more about their 401K values than anything else.  They worry if they can now retire or not.  Meanwhile for years I’ve been telling them to stop thinking of “retirement” at all and think about sustainability.  Do I have to further say that again?  The time to be prepared for being detached from financial deferment and to be 100% independent and self-sufficient was years back, but then they were more interested in getting the new iPhone X than buying income producing assets.

Now we come to a time where focus has to be shifted from financial markets and the made up realities of the world, to the actual realities.  We are humans.  We are a species on this planet and we need to live in harmony with it.  That means being prepared for hostility - whether that is with other animals or humans, or whether it means to be in hostile climates or hostile medical situations.  To rely on medical insurance to get you through these things is a fools errand.  Better to have your own medical supplies and some knowledge of basic medical procedures and be self-sufficient.  When the hospitals are over capacity, and are the source of infection, you won’t want to go to them.  Think about how you handle the challenges of day to day existence in that world.

It is in times like these that it reminds me of the natural cycles and how overgrown forests get destroyed by bushfires.  That’s the natural way of the world.  In order for new growth to emerge, sometimes mother nature has to destroy the old growth.  Recently Australia went through that at levels never seen in hundreds of years.  This is the way of nature - old growth and dominance is challenged to restore order.  We humans have been the dominant species, destroying everything in our path, for centuries.  You think that maybe mother nature wants to restore some natural order here?

I think that all have to look to our personal belief systems when we come to these larger challenges.  We don’t all know the answers, but in those times it would seem to me that it is prudent to have a risk mitigation plan in place.  I do this with money, and that’s how I’ve become wealthy.  I also do this with day to day life, in order to survive.  By not relying on third parties for everything, and being careful to never sell your future out to others, you are best prepared to get through challenges like this.

If you turn on the TV for answers, you won’t find them.  What you might find are some hidden early warning systems if you look to other countries and how they are handling this.  I have been monitoring European media outlets, Australia and Canada to get a sense for how they are dealing with it, and whether the spread is more rapid for them than here in the USA.  I’ve held back on travel plans until there is some clear view ahead right now.  This isn’t a time you want to be stranded outside of your “zone of control” so to speak.  But if the dust settles and there is some safe road forward, I’ll jump on travel quickly.

As for money, the answer here was what I’ve been saying in past podcast episodes & articles and I look back at those and see how well that advice has weathered in these times.  The past 6 days of business straight, the DJIA has plummeted.  As I write this, it is down about 3,500 points from highs and no end in sight for heading further south.  Again, like in the patterns of nature, the old growth is being shed to make way for new growth and like a bushfire, it will probably decimate the old growth allowing new investors to jump in, buy up bargains and thrive.  But timing is everything here.

Those that heeded my advice to buy Gold will be happy with the outcome.  Gold has risen to 1,650 an ounce and likely to continue going up.  Crypto assets haven’t fared as well, and as I’ve written and spoken about before, they are untested in times of crisis.  So anything is possible there.  The one thing I think will be a factor in the future is that we need a way to do commerce outside of physical person to person interaction, and crypto is a great answer to that challenge.  But whether the banking system will allow it to thrive is yet to be determined.  They will state that they have ACH and credit cards for this, and they would want to because they make enormous profits on credit card interest payments.  Anything that could threaten the entrenched business model will be challenged and they will do what they need to, to stop it.  But time will tell if they are successful in that or not.

From a financial point of view, this is the time to go to the bench, wait for the dust to settle and form a strategy of what to do then.  Safety is more important, but more important than that is survival and health.  

Think of this moment like the dying man and his last thoughts.  It isn’t going to be about how much money he has in his wallet, if he is looking at his own mortality.  I’m not saying that the future is dire, but I am saying that it will be rewarded to those that are prepared to get through the bushfire that is COVID-19.