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What’s Different This Time

John Templeton famously said, “The four most dangerous words in investing are: ‘It’s different this time.”

Michael Batnick says, “The 12 most dangerous words in investing are, ‘The four most dangerous words in investing are: it’s different this time.’”

Both are right.

Some things never change. Greed, ego, FOMO, and gullibility were with us 1,000 years ago and they’ll be with us 1,000 years from now.

Other things have short shelf lives. You cannot believe in capitalism while assuming the world is static. Technology changes, laws change, social expectations change. History is only interesting because people marvel at how different things used to be.

The trick – and you might as well call it that because it’s so hard – is separating indelible behaviors from things that have changed that make it difficult to compare today’s ordeal to the past.

We’ve been through pandemics before. But that was then. To make sense of how covid-19 is affecting people we should acknowledge what’s different this time.

One big change is the expectation among western nations that pandemics were a thing of the past makes suddenly dealing with one feel more impactful than ever before.

Historian Dan Carlin writes in his book The End is Always Near:

Pretty much nothing separates us from human beings in earlier eras than how much less disease affects us … If we moderns lived for one year with the sort of death rates our pre–industrial age ancestors perpetually lived with, we’d be in societal shock.

Will we ever again have the type of pandemics that rapidly kill large percentages of the population? This was a feature of normal human existence until relatively recently, but seems almost like science fiction to imagine today.

In 1900 roughly 800 per 100,000 Americans died each year from infectious disease. By 2014 that was 45.6 per 100,000 – a 94% decline. Life in general is about as safe as it’s ever been. And effectively all of the improvement over the last century has come from a decline in infectious disease:

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This decline is probably the best thing to ever happen to humanity.

To follow that sentence with “but” is a step too far. It’s a wholly good thing.

However, it creates an anomaly. We are medically more prepared to fight disease than ever before. But, psychologically, the mere thought of a pandemic has never felt so foreign, so unprecedented. What was a tragic but expected part of life 100 years ago is now a tragic and inconceivable part of life in 2020.

Compared with other pandemics even as recent as the 1960s, it’s different this time because so few people today had the slightest expectation that an infectious disease would ever impact their lives. Even if covid-19 ends up medically less impactful than what happened in 1957 or 1968, the shock and surprise effect may be greater.

Clark Whelton, a former speechwriter for New York mayor Ed Koch, recently wrote:

My mother once showed me a list of the contagious diseases she survived before the age of 20. On the list were the usual childhood illnesses, along with deadly afflictions like typhoid fever, pneumonia, diphtheria (it killed her older brother), scarlet fever, and the lethal 1918–19 Spanish flu, which took more than 50 million lives around the world.

For those who grew up in the 1930s and 1940s, there was nothing unusual about finding yourself threatened by contagious disease. Mumps, measles, chicken pox, and German measles swept through entire schools and towns; I had all four. Polio took a heavy annual toll, leaving thousands of people (mostly children) paralyzed or dead. There were no vaccines. Growing up meant running an unavoidable gauntlet of infectious disease. For college students in 1957, the Asian flu was a familiar hurdle on the road to adulthood. For everyone older, the flu was a familiar foe. There was no possibility of working at home. You had to go out and face the danger.

Compare this to my generation – who enjoy a dozen vaccines within weeks of birth – and it’s like we live in separate worlds. I can’t fathom what was normal two generations ago.

My guess is if covid-19 struck the world in 1920, it would be a single page in the history books about yet another deadly pandemic wedged in between a long list of common tragedies. But since it happened in 2020, it will be a generation-defining event that fundamentally reshapes how we think about risk.

The biggest risk is always what you don’t see coming. A big hit you expected can leave less scar tissue than a smaller hit you never imagined. Covid-19 would be a big deal in any era, but the fact that it struck people who assumed it’d never happen to them makes me think it will leave a mark in ways other pandemics didn’t.


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