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Value Investor’s World in Perspective May 1, 63
Dr. Niwet Hemwachirawarakorn
Kovit 19: Humanity’s Great Fit
A few days ago, there was a little news that I didn’t know if it would be “Fake News” or “Fake News”. A pilot flying an airplane in the sky found a “UFO” in the sky. And the recorded image NASA or related organizations confirm that it is an object that cannot say what a UFO really is or is. I’m not really excited and I think people are not interested. Because this kind of thing has been around for at least decades. But while I was “stuck” at home, not going anywhere for months due to the Covid 19 outbreak, this made me “imagine” that
If there were aliens who had driven a spaceship in the air looking at the world for decades or hundreds of years, During this period, you will be very surprised that suddenly all the streets of the world full of cars are almost deserted. Almost all the people who walked on the way to work or the trip disappear. Popular entertainment venues like Disneyland are closed. Like a tavern or bar at night it is quiet. Mostly closed Sports competitions or concerts where many people come together come to a complete stop, actually, not just aliens or aliens who are confused about what happened. Many of the animals that have been driven by humans into the forest for hundreds of years are probably astonished. In some places, they even got to see what happened in the city. Large marine animals like dolphins swim along the coast without fear of being attacked. Because there are no people
I think in the history of human society. We should never have experienced a situation like this before: The activities of humans. It should constantly increase since the birth of humans in the world. We have grown in terms of numbers and activities to survive and spread the species. Sometimes we also experience problems, such as the appearance of world wars and pandemics such as the Spanish flu. But all this does not happen in the whole world like this. And people did not reduce much of their activities. But the coronary virus outbreak has caused people around the world to reduce activity dramatically and immediately. If you look at it from the sky around the world, I think this is similar to the state of the world that dates back at least 50 years or so. What happened to humans? When will humans move and travel the same?
If we really look at the “big picture” of the crisis, Covid 19 is similar to Ali’s observation from the sky. I want to briefly explain it like this: Almost all human beings in the world today Live in a modern world where every day they leave home and travel to work in both private and public vehicles. With approximately 80% of the activities or activities carried out “Surviving” or increasing the chances of survival in the future, such as the production of food, medicines to save the world, construction of houses, Building a factory or office And services such as barter, which is one of the most important things for humans that other animals don’t, and another 20% is for entertainment and tourism. That entertainment event also includes a concert Watch sporting events Go socialize with friends. As for tourism Currently, in addition to traveling by car, it also includes trips abroad that mainly use airplanes.
Kovit 19 requires humans to “social distance” or to not allow people to get closer to each other within 2-3 meters, not to get too close together, to prevent foreigners from finding each other. Because it makes the disease easily contagious and unable to control the outbreak. What is being done now is trying to stop the journey and stop the rally. Since most countries in the world “lock” or “close cities” to reduce the outbreak, this reduces people to travel far from home. Everything that is not necessary does not work. Tourism and entertainment activities that humans have to abandon 20% are gone, which humans partially compensate by receiving home entertainment through media such as Netflix and social media increased.
Leaving the house to go to work for another 80% is actually 40% or half is working to produce and provide services that are not necessary to survive directly and without urgency. What humans are slowing down and don’t until the situation improves That they left only 40% of the activities necessary to get out of the house, but 40% is still too much You can’t prevent the outbreak of the world well enough. So what humans do is Bringing work that originally had to be done at work to do at home through digital technology. And increase the efficiency of product distribution through the electronic commerce system. This method can Reduce travel outside the home by 10%, leaving only 30% of what must be done outside the home, therefore, in general, humanity can reduce travel outside the home by approximately 70% to reduce and stop the outbreak of the Koro virus. Probably until you find a medicine or vaccine to prevent it, which is expected to be in 1 or 2 years.
The economic damage of the mentioned processes is very severe. If humans reduce out-of-home travel by 70% to work only 30% and work at home, plus a 20% increase in work efficiency, it means that GDP decreases by 50% during 2 months of lockout . This means that by 2020, GDP will disappear in a full month, or GDP will decrease by 8.3%, it will be one of the most decreasing years in the world. We will have to keep watching. The point is, when will countries slacken the economy and how much? When the situation improves, how fast will the economy recover? Another important thing is which economy will be affected and which will benefit or recover quickly?
Industries related to tourism, travel and entertainment outside the home. It is clear that it will be the most affected because it is almost completely closed during the closure of the city. Direct travel-related industries, such as the oil business, have been hit hardest, even when negative oil prices have never occurred in history. Not to mention the aviation, airport and hotel businesses that are almost closed and recovery takes longer than other businesses. Companies with weak financial positions may need government help to survive. The luxury goods business is not very necessary or can be postponed because durable goods are affected in the sense that people have to save and keep cash when their income is reduced or reduced considerably. It will be affected for a second, but it is still a very difficult year. For products that are necessary to use or consume on a daily basis, especially those foods Probably not very affected The reason is because Almost all governments, including Thailand, have to help pay this part of their living expenses while the city is closed and people has no income.
In every great economic crisis of the past, there are hardly any companies that benefit. But this is a special case for digital technology companies and high-tech companies. Especially the service that makes it easier for people to work at home People who provide business services over the Internet AND people who sell home entertainment through all media Instead, it benefits because people have to use more of its products and services during the lockout period. This has caused the fall of many large companies in the stock market. Many companies are doing “all the high times” incredibly.
The last question is when will the economy recover to the same level as before the Covid 19 crisis? This is something that no one can clearly answer, depending on the development of the outbreak. Many people say that the day the world discovered the vaccine and produced enough to be the day that everything should return as before. However, I would like to add that the economy may be growing again, but the products and services that people use can change. Because some products that people have used during the crisis, can continue to use them in significant amounts after the crisis . Which makes the same products that people used to use less. For example, online shopping is getting more, but buying in the store may be less after the crisis. Or like working at home where several people will continue to work at home, which affects many original products, including the use of oil and office space, etc.
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