When All News Is Bad News

By Charlie Bilello

16 Mar 2020

The Volatility Index (VIX), also known as the “fear index,” ended today at 82.69. Since its inception in 1990 it has never had a higher close.

When was the previous record?

November 20, 2008.

In the midst of the Global Financial Crisis, after the Lehman Bankruptcy, and 11 months into the worst recession since the Great Depression. Things were really bad and seemed like they would only get worse.

And then, for no particular reason, volatility gradually started moving lower. It was hardly noticeable at the time because things were still really bad.

But a month later, the S&P was 16% higher. 6 months later, the S&P was 23% higher. A year later, the S&P was 49% higher. Five years later, the S&P was 164% higher and the VIX had moved all the way down to 13. It was by no means a straight line higher, but things gradually got better.

I know what you’re thinking. That won’t happen this time around.

In the midst of an extreme panic, it’s hard to believe that it will ever end.

I could tell you that this virus isn’t going to come close to killing the number of people that some extremists are projecting, but that likely wouldn’t allay your fears.

I could tell you that this virus isn’t going to lead to another Great Depression unless we let it, but that probably wouldn’t provide much comfort today.

I could tell you that hoarding toilet paper, paper towels, food and medical supplies is doing much more harm than good, but there will still be those who say that if they don’t hoard and everyone else does, they’ll be left with nothing.

In midst of a bad situation, there are people who simply want to panic and assume the worst, which is why we find ourselves in a panic in the first place.

The media has figured this out and is happy to deliver the worst possible news available at any given moment.

They won’t tell you that this virus thankfully isn’t killing children, and in adults under the age of 50 the current estimated death rate is extremely low (and likely to go lower as we test more).

They won’t tell you that during past pandemics (see swine flu/H1N1) the fatality rate came down as the denominator (# positive cases) grew and more people were tested (the sickest are always tested first, leading to a much higher death rate initially – this is a high likelihood with COVID-19 given the high % of cases that are mild/asymptomatic. If you’re not showing any symptoms, you’re not likely to go out and get tested, especially now that you are instructed to stay home).

They won’t tell you that the number of active cases in China is moving lower and that active cases in South Korea may be starting to level off.


They won’t tell you that the extreme containment measures we are all taking is going to slow this thing much faster than any model could ever predict.

They won’t tell you such things because giving you a silver lining doesn’t generate clicks or keep eyeballs on the screen. Instead, fear sells and in the social media age it’s never been easier to create panic and mass hysteria.

When all news is bad news it can seem as if it will be that way forever. But it won’t. Betting against human grit and ingenuity in the long-run has always been a bad bet in the past and this time is no different.

That’s true in life and in investing.

It will get worse before it gets better but this, too, shall pass. We’re going to beat this thing and come out stronger than before. Better days are ahead.

Disclaimer: All information provided is for educational purposes only and does not constitute investment, legal or tax advice, or an offer to buy or sell any security. For our full disclosures, click here.

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