Market, Schmarket

During the Spanish flu pandemic of 1918-19, the US stock market barely noticed. This pandemic was global in extent, had a case fatality ratio of 2 to 3% (the same numbers bandied about for COVID-19), and killed anywhere between 10 and 100 million people globally at a time the Earth’s population was about one quarter of today’s. In the US, 28% of the population was infected, about half a million of whom died. Scaling to today’s population, that would be 1.5 million deaths.

The graph plots the monthly average value of the S&P Composite from the beginning of 1917 through the beginning of 1920. Note the suppressed zero, which exaggerates changes in the S&P. The gray bars represent the mortality in the UK, the only country for which I could find quantitative data. The height of each bar is proportional to the number of deaths in each interval; the width is roughly the period over which the deaths occurred.

The first case of Spanish flu was observed in the US in January of 1918, the year when most people died from the flu. That was a pretty good year for the market: a roughly 10% rise. There was a small decline around the time the most deaths occurred but this could easily be attributable to something else. The first half of 1919 was a robust bull market. The following couple of years (not plotted) had their ups and downs, followed by the Roaring Twenties.

Today, the US market rebounded about 5%. The volatility!

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Author: drlorentz

photon whisperer & quantum mechanic

33 thoughts on “Market, Schmarket”

  1. Thanks for this—I was wondering about the 1918 flu’s effect on the market.
    And yet, we hear that the Spanish flu killed off the adult, working-age population, spared the very old and young.  I wonder if there was an effect on wages, (which were practically invented after the labor shortage caused by the. Black Death)?

    I just ordered a book about this period, so hope to know more soon.  But we DO know it went on for about 2 years, abating in summer and then returning.  And that it was followed by the Roaring Twenties.
    The world was already dealing with mass death from  WW I, though not so much in our country.  Maybe people were just kinda inured to it by 1918…?

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  2. Could it be that markets have remained fragile (some might say the greatest CON-fidence game of all time) all this time since by, most measures, the problems which led to the 2008 crash are all worse, not better? The overwhelming debt at all levels is the elephant in the sick room. Is this merely the much overdue end of extend and pretend, with coronavirus as the mere catalyst?

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  3. civil westman:

    Could it be that markets have remained fragile (some might say the greatest CON-fidence game of all time) all this time since by, most measures, the problems which led to the 2008 crash are all worse, not better? The overwhelming debt at all levels is the elephant in the sick room. Is this merely the much overdue end of extend and pretend, with coronavirus as the mere catalyst?

    There’s been nothing fragile about the market in the last five years! The financials of my companies have been positively stellar. What is frightening is that profitability/volume no longer matter and the media has decided to take control of the narrative.

    This so-called “virus” is one such example because the Trump economy was booming and it just had to be stopped one way or another.

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  4. EThompson:
    Made 35% on my investments today

    “investments”, heh….  Nobody makes 35% percent on genuine investments in a single day, or year.  You can make that on wild speculations, but then you’re hoping the black swan doesn’t land on your pond.

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  5. EThompson:
    Who are you to tell me “Nobody…”

    Let’s see your brokerage statements.  Show me the year where you have made 35% year-on-year from your investments.

    Statements before and after, please.   Ain’t it cool?  Reality bites.

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  6. civil westman:
    Could it be that markets have remained fragile (some might say the greatest CON-fidence game of all time) all this time since by, most measures, the problems which led to the 2008 crash are all worse, not better? The overwhelming debt at all levels is the elephant in the sick room. Is this merely the much overdue end of extend and pretend, with coronavirus as the mere catalyst?

    That’s been my feeling as well. In 2019, it already seemed quite frothy.

    The point remains that the Spanish flu had little effect on the economy, in spite of having produced much sickness and death. The country was coming off a wartime economy but it’s not my impression that WW I had much effect in the US, given the late entry and relatively minor commitment to the effort.

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  7. drlorentz:

    civil westman:
    Could it be that markets have remained fragile (some might say the greatest CON-fidence game of all time) all this time since by, most measures, the problems which led to the 2008 crash are all worse, not better? The overwhelming debt at all levels is the elephant in the sick room. Is this merely the much overdue end of extend and pretend, with coronavirus as the mere catalyst?

    That’s been my feeling as well. In 2019, it already seemed quite frothy.

    The point remains that the Spanish flu had little effect on the economy, in spite of having produced much sickness and death. The country was coming off a wartime economy but it’s not my impression that WW I had much effect in the US, given the late entry and relatively minor commitment to the effort.

    At that time were ordinary people invested in the market? I know in the Roaring 20s people were but I don’t know when the got in.

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  8. EThompson:

    civil westman:

    Could it be that markets have remained fragile (some might say the greatest CON-fidence game of all time) all this time since by, most measures, the problems which led to the 2008 crash are all worse, not better? The overwhelming debt at all levels is the elephant in the sick room. Is this merely the much overdue end of extend and pretend, with coronavirus as the mere catalyst?

    There’s been nothing fragile about the market in the last five years! The financials of my companies have been positively stellar. What is frightening is that profitability/volume no longer matter and the media has decided to take control of the narrative.

    This so-called “virus” is one such example because the Trump economy was booming and it just had to be stopped one way or another.

    I agree. And: ET, are you taking new clients?  I wish I had gotten out of the market when you did.  I’ll go with your advice any day, and I’m not aware of any other Rattys who have shared such success with us.
    (So….where’d ya put your money?)

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  9. Hypatia:

    EThompson:

    civil westman:

    Could it be that markets have remained fragile (some might say the greatest CON-fidence game of all time) all this time since by, most measures, the problems which led to the 2008 crash are all worse, not better? The overwhelming debt at all levels is the elephant in the sick room. Is this merely the much overdue end of extend and pretend, with coronavirus as the mere catalyst?

    There’s been nothing fragile about the market in the last five years! The financials of my companies have been positively stellar. What is frightening is that profitability/volume no longer matter and the media has decided to take control of the narrative.

    This so-called “virus” is one such example because the Trump economy was booming and it just had to be stopped one way or another.

    I agree. And: ET, are you taking new clients?  I wish I had gotten out of the market when you did.  I’ll go with your advice any day, and I’m not aware of any other Rattys who have shared such success with us.
    (So….where’d ya put your money?)

    It’s just sitting in an IRA.

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  10. It would be a shame if these insightful, dare I say near-genius, comments were lost to posterity. Somehow they managed to disappear from this thread. I’m not trying to advance any conspiracy theories but there’s someone around here who goes by the name of a small unit of US currency, a coin. Just remember, Mr. Small Coin, once online, forever online.

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  11. Please don’t delete comments and don’t resurrect deleted comments by members who made them. These are not the best methods to handle discussions.

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  12. 10 Cents:
    Please don’t delete comments and don’t resurrect deleted comments by members who made them. These are not the best methods to handle discussions.

    I want my deleted comments to remain so. Nobody has the right to resurrect them; again, pls fix this. drlorentz is an asshole and you know it.

    I have never resurrected other people’s deleted comments on this site, mostly because I don’t have the tech smarts to even do that!

    Again, pls fix this.

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  13. I trust people on this site to deal with things. Please deal more with the topics than with personal attacks. I understand that in normal discussions people disagree and are not too nice at times. As long as it does not get too out of hand, I don’t get involved. It helps me if you don’t add “gasoline to a fire”.

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  14. 10 Cents:
    Please don’t delete comments and don’t resurrect deleted comments by members who made them. These are not the best methods to handle discussions.

    I don’t think people should be at liberty to insult someone and then pretend it didn’t happen. That’s what apologies are for.

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  15. EThompson:

    10 Cents:
    Please don’t delete comments and don’t resurrect deleted comments by members who made them. These are not the best methods to handle discussions.

    I want my deleted comments to remain so. Nobody has the right to resurrect them.

    Who are you to tell me “nobody”?

     

     

     

     

    Just thought I’d help…

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  16. drlorentz:

    10 Cents:
    Please don’t delete comments and don’t resurrect deleted comments by members who made them. These are not the best methods to handle discussions.

    I don’t think people should be at liberty to insult someone and then pretend it didn’t happen. That’s what apologies are for.

    1’m 50rry you’re such an a55h0l3.

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  17. 10 Cents:
    Please don’t delete comments and don’t resurrect deleted comments by members who made them. These are not the best methods to handle discussions.

    True.   Science has revelated that

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  18. drlorentz:

    EThompson:
    I want my deleted comments to remain so. Nobody has the right to resurrect them; again, pls fix this. drlorentz is an asshole and you know it.

    Stay angry.

    Edit: The Interwebs has all your comments. All your comment are belong to us.

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