Exponential Growth and the Coronavirus

As a high school math teacher, I have absolutely no training in thinking about the spread of infectious diseases like the coronavirus. However, looking at numbers is what I do on an everyday basis, both professionally as a math teacher as well as with money in my personal life.

Unfortunately, the numbers are telling me that the coronavirus is going to get pretty bad.

Like many of you, I didn’t pay too much attention to the coronavirus when I first heard about it. Even as more people started to get sick in China, the virus was still too far away for me to really worry about.

However, on January 19th of this year, the first person in the United States was diagnosed with the coronavirus. People in the United States started to take notice. Then, one month later, community spread began to take place, the stock market dropped precariously, and people began to really take notice of the virus.

Michigan

Here in Michigan, the first two cases of the coronavirus were announced on Tuesday, March 10th. Up until this time, stores were almost completely stocked, schools were in session, bars and restaurants were open, and people generally were going about their daily lives. I even traveled to Grand Rapids on the west side of the state to attend a conference  and saw packed bars and restaurants, thousands of people attending a concert, and a thriving downtown.

Of course, things changed rapidly.

At 5:00 pm on Thursday, March 12th, my conference was cancelled. On my way back home, I stopped at the grocery store to pick up a bit of extra food. Even though it was 10:00 pm, I saw that the grocery store was packed. Workers were furiously stocking the shelves as hundreds of us loaded up our carts with essentials like pasta, beans, and rice. At 11:00 pm, we watched as the governor announced that all k-12 schools would be shut down for 3 weeks.

In the span of two days, Michigan went from a state that was completely open for business to a state that was getting shut down.

Coronavirus numbers

In the midst of all of this craziness, many people are still in denial over how bad this may get. People like Dave Ramsey are saying that they’ll still be giving out hugs and handshakes to whoever they meet. State governors and federal representatives are still going out to crowded restaurants and spreading the message that it’s going to be OK.

Looking only at the current numbers, it kind of makes sense to say that everything will be OK. As of this writing on March 16th, only 11.5 out of every one million people in the United States have been diagnosed with the coronavirus.

So everything is going to be OK, right?

Unfortunately, the numbers don’t point in a positive direction.

Current numbers and trends

In the United States, just under 4,000 people have been diagnosed with the coronavirus. While this number is still extremely small, it is growing rapidly, as the following table shows.

• March 10th: 994
• March 11th: 1,301
• March 12th: 1,697
• March 13th: 2,247
• March 14th: 2,943
• March 15th: 3,680

Exponential Growth

As anyone who teaches Algebra 1 or Algebra II knows, this is an almost perfect case of exponential growth. Exponential growth is great for your money when it is invested in the stock market, but really bad when we are talking about a virus.

Based strictly on this set of data, an exponential growth model shows that there could be close to 200,000 people in the United States diagnosed with this virus at the end of March.

Of course, let me be really clear and state that there won’t be this many at the end of March! Doing simple things like practicing social distancing, closing schools and restaurants, and washing our hands will go a long way in preventing the virus. But this is where the numbers are right now.

Logarithmic Growth

Even more scary than exponential growth is something called logarithmic growth. Logarithmic growth shows how long it takes for a number to get from one factor of 10 to the next.

For instance, if it takes one month for the number to grow from 10 to 100, then logarithmic growth says that it will also take one month to grow from 100 to 1,000 and another month to grow from 1,000 to 10,000.

Here’s the current graph for logarithmic growth in the United States. As you can see, the graph looks fairly linear from the start of March until now, which shows that logarithmic growth is currently happening for the coronavirus in the United States.

Again, please keep in mind that this type of growth will not continue because of efforts that are being made to stop this virus. However, it does show that it took 10-12 days to grow from 100 to 1,000 people.

This indicates that it will take another 10-12 days to grow from 1,000 to 10,000 people and 10-12 days to grow from 10,000 to 100,000 diagnosed cases. Again, this is based strictly on the current path of growth and will not actually happen because of measures that are being put into place to prevent it from happening.

Behavior of people

As millions of us follow the advice to limit contact with others, there are still millions of people in the United States who think this is going to pass quickly or think that they are immune to the effects of the coronavirus. While driving around yesterday, I noticed that bars and restaurants are still packed and stores are open. Even schools are still open in many different states.

Of course, we don’t want to shut anything down. We want to keep going about our normal lives and pretend this is another one of the long list of things that the media tries to alarm us with every single day.

However, this time it is actually different.

If we don’t put into place some safe practices, this virus will continue its spread throughout the United States and the world.

The stock market

I have never sold any stocks or mutual funds during my life. I have always strongly resisted market timing because I know that my intuitions are not correct when it comes to the stock market. I also have a 9 year time window before my wife and I are planning on retiring at the age of 50.

However, I sold some of my mutual funds last week.

I have been thinking about selling over the past two weeks, but I always have been too greedy. When the Dow was at 26,000, I would want to wait until it reached 27,000. Then when it was at 25,000, I would want to wait until it was 26,000.

As I look at a 5-year chart of the Dow today (3/15/20), I notice that it currently sits right around 21,000. I also notice that the Dow was at 21,000 at the start of 2017, only three years ago.

At the end of this coronavirus crisis, will companies be as strong as they were back in 2017? To me, the obvious answer is no. This is why I decided to sell a lot of my mutual funds.

Again, I have never recommended market timing and I understand that this is exactly what I am doing now. Almost every financial blogger that I follow and respect has been talking about “buying stocks on sale” throughout this crisis and has been arguing against trying to sell and time the market.

While I agree with them 99% of the time, I think this time is different.

Hopefully, I’m wrong

As I keep telling my wife, I’m just a random math teacher who is looking at some numbers. I don’t have any training looking at viruses and I’m probably wrong. I even have spoken with a lot of very smart people who feel that this won’t get very bad.

Whether I’m right or wrong, it still probably makes sense to limit our exposure to others during this time period. Taking a few simple steps will help to limit our chances of getting this virus.

*All of the data related to the coronavirus was taken from the Worldometers website.

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Be safe! Let us know in the comments what you are doing to stop the spread of the virus and how you are spending time if you are hanging out at home with your family.

And thanks for reading!

~Nathan

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Let’s keep living a great life . . . with the help of money. So what’s next?

• You can travel for free by using rewards credit cards (but don´t travel now).
• You can get motivated and get out of debt.
• You can check out the next post or the previous post and continue to learn.

But no matter what you decide to do, let’s leave the ordinary behind and take action today!