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In other news, while the number of new cases of COVID-19 is decreasing in China, if their statistics are to be believed, there are some major new clusters in Italy, South Korea and Iran. These countries are reacting aggressively, closing down entire towns à la Wuhan, but they may have trouble imposing the same discipline that the CCP is famous for. Lethality rates are somewhere between 2% (the percentage of all know cases which have already lead to death) and 10% (percentage of all resolved cases that have been resolved by death). The former number is probably too low, because the death typically only occurs about 2 weeks or more after diagnosis, and the latter number is probably too high because full recovery takes even longer.

If the virus establishes a foothold outside China, the only thing between us and a major-league worldwide pandemic (like influenza, but with 200-1000 times as many deaths) is the summer, and that might only be a reprieve. It seems to me that there is not much of this potential disruption baked into stock prices that are about 2% off highs.

At 14% of Berkshire’s market cap (before taxes on gains), Apple looks like a particular Achilles’ heel. Berkshire’s major operating businesses (railroads and energy) would be hurt, but perhaps less than the market average. Insurance businesses should be ok. Any other notable vulnerabilities, if a more serious coronavirus scenario ends up playing out? It is still by no means a sure thing, but it is looking a little more threatening over the last few days.

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