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EggplantWizard (99.84)

H1N1 and its impact on global equity values.

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April 25, 2009 – Comments (5) | RELATED TICKERS: SWI , N , E

The recent outbreak of H1N1 in Mexico is eerily reminicscent of the 1918 Spanish flu, which was also an H1N1 variant.

 Provided that we see a global pandemic develop, it seems that the risk premiums for insurers, financials, and consumer discretionary businesses should increase dramatically (dropping overall equity levels), while the risk premium for pharmaceuticals (especially GSK and Roche), healthcare providers, and possibly logistics oriented businesses should decline substantially.

Also, in the event we were to see even 1% mortality in developed countries, real estate values would be likely to plummet below any previously imagined lows.

The recent WHO Pandemic alert is a very serious matter for market participants to stay abreast of, consider your holdings appropriately.

5 Comments – Post Your Own

#1) On April 25, 2009 at 10:25 PM, angusthermopylae (36.38) wrote:

Wow...

I just hit "post" on my blog, and I look up and see your article...

I completely agree; even a relatively minor mortality rate will have an exaggerated impact.  It would be so in normal times, but it will be even worse with the current situation.

Here's my article, in case you're interested...

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#2) On April 25, 2009 at 10:27 PM, angusthermopylae (36.38) wrote:

...sorry...wrong link:  Article is here.

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#3) On April 25, 2009 at 10:33 PM, EggplantWizard (99.84) wrote:

To be more specific -- a dead mortgagee is a non-performing mortgagee (hence the risk to financials). Insurers are obvious

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#4) On April 26, 2009 at 5:45 PM, walt373 (34.38) wrote:

I recall reading somewhere that the stock market did pretty well during the Spanish Flu

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#5) On April 26, 2009 at 5:59 PM, EggplantWizard (99.84) wrote:

walt373 (85.97):

Interesting... I guess I wouldn't be surprised overall -- but *sectors* would be very important.

Fundamentally, I suspet the difference is the Post WWI effect was larger than the flu effect on equity values. 

IIRC, there was a property bubble in the 20s. In part, this was probably likely caused by a glut of supply due to a lot of dead people from WWI and the Spanish flu.

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