By May 1, as the whole world donned surgical masks, a relatively new strain of swine flu virus, H1N1, had become the focus of the 24/7 global media machine. The official alert level had been raised by the World Health Organization to a Phase 5 outbreak, just one bracket shy of the peak, which signifies the most deadly sort of global pandemic. Condign warnings of mass death and economic disaster dominated the airwaves and the Internet. That next week, swine flu was, to all intents and purposes, the only story.
Yet on May 6, Mexico City—in which this new black plague had staged its breakout—lifted a weeklong ban on restaurants seating customers. The next day, the national government allowed universities, high schools, churches and museums to re-open; grammar schools opened five days later. Face masks disappeared. And around the world over the following week, this new disease—which has quickly proved little more contagious than ordinary influenza, and quite effectively treatable with antiviral drugs—faded away, but for wildly overpublicized reports of the occasional—and isolated—death.
Through May 18, the World Health Organization reported a grand total of 8,829 confirmed cases in 40 countries, resulting in 74 deaths, six of them in the United States. For perspective, in the United States alone, each and every year the garden-variety seasonal flu infects between 15 and 60 million people, hospitalizing 200,000 and killing 36,000, according to the Centers for Disease Control & Prevention.
What had happened, as reported by The Economist among other rational observers of the story, was that the first known case was a little boy in the Mexican state of Veracruz, who was diagnosed on April 2. The first confirmed death—of a 39-year-old woman in Oaxaca—occurred on April 13. But the Mexican health authorities hadn’t the technology to perform genomic analysis, the process by which new viruses may be quite quickly identified, and they did not send samples abroad until April 22. By the time the strain was isolated—as the not terribly aggressive and eminently treatable bug that it is—the whole world was in full-on panic mode.
In effect, the pandemic was over before it began. This did not forestall any number of global outbreaks of idiocy, among them the slaughter of 400,000 pigs in Egypt (never mind that the disease is mainly transmitted human to human), and a characteristically odd statement from the Vice President of the United States, who averred that he wouldn’t let his family take Amtrak.
Yet every single news story, during the brief shelf life of this incipient pandemic, referred in gruesome detail to the Spanish Flu of 1918–19, which killed 675,000 Americans and some 22 million people worldwide. Never mind that this was long before antibiotics, let alone genomic analysis, and that the recommended precautions included mustard baths, gargling salt water, and Bovril. This pandemic is always ritually cited by the media as they do their best to whip up a firestorm of alarmism over the latest health-related tempest in a teapot.
The great swine flu outbreak of 2009 thus joins a long, ignominious line of equally overhyped nonevents.
A 1976 swine flu outbreak at Fort Dix, NJ set off a similar hysteria, during which America’s top health official estimated it would kill one million Americans. One person died.
In the 1990s, a “mad cow” panic enveloped the earth. In a 1997 book, the normally rational Richard Rhodes warned that the human variant of mad cow (called vCJD) might kill half a million people per year in Britain alone. To date, confirmed cases worldwide, according to the Wall Street Journal’s Bret Stephens, total about 150.
In the post-September 11 panic of 2001, an isolated instance of someone mailing small doses of anthrax to a handful of political and media personalities was spun into a nationwide terrorist germ-warfare threat. Six people died, including a 93-year-old Connecticut woman.
Then there was the SARS panic of 2002-2003 (worldwide deaths to date per the WHO: 774), followed in 2005 by the massive global avian flu panic (257 deaths at last report).
With each and every outbreak, the media have erupted in full hysterical frenzy, fearmongering in inverse proportion to the actual threat.
It is always extremely difficult for investors and their advisors alike to gauge the full effect of the media’s bias for catastrophism during relatively real events like the global financial meltdown of 2008. In exactly this regard, it will be importantly useful to remember the extent to which they blow out of all proportion—when they don’t totally invent—some or another putative health crisis.
The single greatest deterrent to rational investor behavior is the 24-hour cable news cycle, now trumpeting to the skies some “new era” technology (e.g. the Internet in 1999), then decrying the end of economic life on the planet as we have known it (e.g. the global economy falling off a cliff in 2008). Journalism’s constant refrain that recent economic events were comparable to the Great Depression—which they were manifestly not—should remind us of nothing so much as the last half-dozen global pandemics that never were.
It is not so much that the media are unhelpful to investors seeking to maintain their perspective. Rather—in every thought, word and deed—the media seem single-mindedly determined to stamp perspective out.
At such times, an experienced advisor with an adult memory, a sense of the economic/market cycle and the conviction that this time isn’t different may be the investor’s only practical refuge. Consider the possibility that the highest and best function of an investment advisor isn’t economic commentary or market prognostication, but simply in saving his clients from the media…and from themselves.
© 2009 Nick Murray. All rights reserved. Reprinted by permission.
