Health Warnings in Perspective
04 Jun 2009
by: By Francisco Suárez, Head of Equity Research Actinver • Photos by Jesús de Avila • June 2009
Just
as having access to and the ability to process valuable financial
market information are key factors in making correct personal finance
decisions, the same principles can be applied to almost everything
else. In this period of the AH1N1 influenza outbreak, you should follow
important indications from very highly respected authorities. Here are
two of them:
Usually,
when we deal with something new, with unknown and potentially material
consequences, it is perfectly acceptable to err on the side of caution,
taking the most conservative actions, even if in retrospect these were
perhaps overboard. We act this way to protect our client’s capital, we
do the same to protect our families, and authorities will do the same
for the welfare of their citizens. The US authorities and of course the
World Health Organization (WHO)
acted responsibly, issuing several warnings when the threat began, and
with good reason: this was a new virus, we didn’t knew how severe it
was, nor how easily the virus could spread over the world, and, more
importantly, whether the virus could mutate into new strains, making it
virtually impossible to stop its spread. For the same reasons, the
Mexican authorities acted accordingly and decided to carry out radical
actions for the benefit of the whole world: an overall reduction in
economic activity, school closures, even closure of restaurants in
Mexico City and, of course, providing key information to stem the
growth rate of infection. Everything worked, and we have seen other
jurisdictions abroad taking identical actions.
A
few weeks ago we mentioned how markets overreact to both positive and
negative events. It is human nature. We focus on the number of people
infected (less than 10,000 according to the WHO) but we don’t pay
attention to the trillions not infected. The following are examples
that lead us to believe that we may have over reacted somewhat, but, as
I mentioned, it is ok to do that for the greater good:
Factors behind the CDC’s decision to downgrade the Health Warning were: “There
is evidence that the Mexican outbreak is slowing down in many cities
though not all. In addition, the United States and other countries are
now seeing increasing numbers of cases not associated with travel to
Mexico. Finally, the risk of severe disease from novel H1N1 virus
infection now appears to be less than originally thought.”
What to do now? Well, it is perfectly ok to enjoy the many resorts Mexico has, such as Puerto Vallarta and Riviera Nayarit.
Take advantage of the exchange rate, and, of course of good prices, as
it is expected that businesses will try to attract customers. Of
course, please follow the basic principles for this disease: wash your
hands frequently, use sanitizing gels and the like, follow instructions
from the authorities and everything that the CDC says it is ok to do,
and avoid bringing very young, senior, or other travelers who are at
“high risk for complications from any form of influenza” (see the CDC
website). Make it safe, and at the same time, make it a bargain.
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