Avian Flu Impact Preparation

[OnlinePokerCoach]

I have read reports of how an avian flu pandemic will hurt or slow the world economy. Other reports indicate that a pandemic this winter is a near certainty.

Has the market already factored in this pandemic's impact with the appropriate degree of probability? Is anyone withdrawing funds from equities for fear of economic collapse due to the avian flu pandemic that may come?

[Sniper]

The sky is falling???

[crazy canuck]

All you need

[squiffy]

Certain facts are very precise. NOK last year earned say $1 per share. Assuming there was no accounting fraud, that is a precise verifiable fact that persons trading the stock can incorporate into their decisionmaking.

But remember, not everyone who trades even considers that information. Do you read the annual and quarterly reports for all stocks you buy? Are you 100% aware of all current info about your stocks? Do you incorporate them into your purchase.

Don't assume that everyone in the market has perfect info. And don't assume everyone in the market cares about fundamental info. Many short term traders don't care about fundamentals or long-term considerations. So they are not necessarily even factoring in any long or medium term info.

Other possibilities are almost impossible to accurately predict or quantify. So if the financial impact of hurricane Katrina is difficult to predict a month beforehand or even a week afterward, how can you assume that the market will incorporate the info, when the info is uncertain and unclear, there is really little that the market can incorporate.

Many believe the strong form of the efficient market hypothesis is simply wrong.

And even the strong form of the efficient market hypothesis does not necessarily assume that the market can accurately predict the future.

Has the market fully incorporated all current information about the Avian Flu virus.

Even if you assume it has incorporated that info, what is that info?

A 5% chance that 50 million will die. A 1% chance that 100 million will die. A 90% chance that 1 million will die. And all of those estimates based on guesswork. Somethings are just very difficult to predict, so there is no hard fact to incorporate.

Now if NOK says today that it looks like it's earnings for the third quarter will be down by 20%, then that is a more precise fact which can quickly and easily be incorporated into NOK's valuation, assuming you are a trader that cares about valuation. THough not all traders will calculate the same valuation, even based on the same information.

The market quickly adjusts to new info. But the market can be wrong because individual traders might ignore that info, might make incorrect calculations based on that info, or might NOT be able to make any accurate predictions because the info is too uncertain.

My comments on this are OT, but worth making. I have taken no financial plans based on avian flu (and indeed, I dont think you'd want to), but I have taken numerous emergency precautions, including purchasing a large number of 3M N100 rated respiratory filters, and filling prescriptions for Tamiflu and Relenza, which are in worldwide shortage.

[imitation]

I'm living in china, so if I stop making posts in HUSH fear the worst. Seriously though I have big problems with the theory that "we must have a flu endemic", the reasoning seems to generally be because we've been 75yrs with out one and they generally strike every 75 years, but from a gamblers perspective doesn't this just mean we're more likely in a cycle now where the next flu endemic is probably not going to be in the regular 75year cycle but infact is now no more likely to occur in the next 75 years than it was meant to occur in the previous 75yrs. Is this logic correct?

[Sniper]

[ QUOTE ]
Don't assume that everyone in the market has perfect info. And don't assume everyone in the market cares about fundamental info. Many short term traders don't care about fundamentals or long-term considerations. So they are not necessarily even factoring in any long or medium term info.

[/ QUOTE ]

Some short term traders don't even care what the name of the company is! [img]/images/graemlins/smile.gif[/img]

I'm not a virologist, so don't take my thoughts on this as gospel, but no, I dont think you're technically correct. The cyclical nature of viruses is not the result of purely random, independent events (e.g., rolling a 27-sided die). Instead, viruses exist either in the human population as Influenza A/B/C, or in natural "reservoirs" in harmless form to their host animal (swine, monkey, bird, etc.) Over time, various genetic mutations occur randomly resulting in antigen drift, which in turn result in differences in lethality, transmissibility, inter-species transmissibility, etc. Antigen drift is not a random, independent event; it is a cumulative progression, and thus a dependent process. So the "cycle" of pandemic depends not on "pure luck" but rather a predictible sort of progression. This is why the 1957 Asian flu was followed by the 1968 Hong Kong flu. Efforts to predict flu pandemic is tricky. In 1972, there was a scare over swine flu that turned out to be the pandemic that never happened. More recently, virologists have gotten better at predicting drift, and in recent years, they have been able to look at all of the emerging flu strains worldwide, and predict with great accuracy which antigen combination should be used for vaccination. Recent evidence from the field suggests that avian flu (which as you know is the same sort of flu that caused the 1918 pandemic) has jumped from chickens to humans. Interspecies jump is a big step. The next big mutation that people are concerned about is human-to-human transmissibility via aerosol. When this happens, you get a pandemic. When the strain also has high lethality like the H5N1 variant appears to have, you get a superflu.