What Has Covid-19 Done To The Economy? - Morgan Housel - #151

**Chris Williamson** (0:00)
Hello, friends, welcome back. My guest today is Morgan housel, and that should be a name that you're familiar with, as I published an episode with him only a couple of weeks ago, one of our top ever played in Modern Wisdom history. So why is he back on? I brought him back because the current state of the financial markets and the global economy is really confusing. I have no idea why the market is 25% down and whether it's as bad as the Great Depression from 1928 or the financial crash of 2008 or whatever it is. I needed someone who knows what he's talking about and Morgan is the man who has taken that task on his shoulders. So today, expect to learn just what is going on with the financial markets, why prices have dropped, just how this does compare to previous financial crashes, what some of the signals would be that the market is at least starting to calm down in terms of volatility. Also, at the very end of this episode, I give my best advice for how to be anti-fragile during this situation. If you are under containment, if you are potentially in lockdown or there's some social distancing procedures that you have to follow where you can't leave the house as much, stay until the end to find out mine and Morgan's best suggestions on how to not only avoid boredom, but perhaps even flourish and develop yourself and your family slash home during the process. In other news, I know that this is the second in seven days of podcasts regarding the coronavirus. I promise you that this is not going to become the COVID-19 podcast, but I do think that as someone with a platform and an audience who is prepared to listen to long form in-depth discussions and also someone who has access to the kind of guests that I do, there is a little bit of a duty for me to try and provide the best quality of information that I can. The episode with Dr. Feigl-Ding from last week, which you should definitely go and check out if you haven't already, teaching us about the virus and what it actually does to the human body, et cetera, et cetera, it is the most played of all time. And I think that that is because people are desperately searching for information at the moment. And if I can in some way help to create some signal through the noise that's going on at the moment, then yeah, it feels like a pretty good use of my time. That being said, I also appreciate that giving you interesting and different topics, which actually help to distract you and remind you that there is a world out there. Aside from the virus, which is running rampant across the globe. I'm going to do that as well. So normal service will be continue to be resumed soon. But for now, please welcome the wise and wonderful Morgan housel. Oh yeah, PS. If you enjoyed this episode with Morgan, you will love his new book, The Psychology of Money, and it is available for pre-order now by following the link in the show notes below.
Ladies and gentlemen, welcome back. Morgan, we said we weren't going to have to speak until your new book comes out at the end of summer. And look at us now, two weeks later, and we're talking again.

**Morgan Housel** (3:23)
That's how fast the world changes. And I think that's, I mean, and we just jump right into it. I think that's been the interesting thing of what's happened in the last two weeks is how it's not what happened, it's how fast it happened. Like if you look at the long history of stock markets, markets falling 25% is not uncommon at all. It's something that happens every four years or so, going back to the last 100 years. For it to happen this fast is unprecedented. This is literally the fastest it's ever occurred. So that to me, if there's anything that's shocking that's happened in the last couple of weeks, from a financial perspective, the health perspective is a different topic altogether. But from an investing perspective, it's the speed in which this has occurred that's amazing.

**Chris Williamson** (4:05)
What are the headlines? What's the headlines in terms of financial activity over the last two weeks? What has happened?

**Morgan Housel** (4:12)
Well, let me start by saying this. In a normal recession, in a bad recession, you might have sales in certain industries down 5%, 10%. Maybe if it's really bad recession in a specific industry, 20%, that's bad. What we're dealing with here is a different magnitude. You have entire geographic regions where sales are down 80%.