Joining the dots …. The 1918 ( non- ) Spanish flu pandemic killed tens of millions and then fizzled out. There was no vaccine to fight it for another 20+ years ( up to the early 1940s ) and yet there was no pandemic recurrence in between. The 2009 swine flu pandemic infected more than 500 million people and killed an estimated 280,000 people. Just emerging from the GFC, the world did not stop to try to fix the pandemic and now, just eleven years later it is largely forgotten. The 2020 Covid-19 pandemic has infected 3 million and so far killed around 220,000 people. The world has panicked and shot itself in the head. The long term economic fallout of the global economic lockdown and self inflicted massive unemployment not seen since the great depression will continue to be felt long after Covid-19 is forgotten. Each year, seasonal flu kills an estimated 500,000 people world wide and the world has learnt to live with it. Time to think realistically.

Marcus Padley

Great article Patrick - David knows his stuff. Lots of valuable ideas I can steal in there. David the one thing that puts me off Long Short funds is the experience of a Long Short fund manager that I used to sit next to. He constantly underperformed and in frustration closed his fund. His comment was that the idea that you can go short as well as long works great in the marketing (the idea that you can take advantage of the good AND the bad - of course its better) but the reality (for him at least) was that being habitually short effectively negates some of the benefits of the long term always being short somewhere. He could not keep up with a bull market trend and a bull market was the dominant long term backdrop. If I was marketing a Long Short fund I'd like to see the comment that "At times we will be all long, and leverage the fund to being long" and "we only use shorting for specific (possibly rare) opportunities, not out of habit". When the market falls over Long Short funds come into their own over a long only fund, but in a bull market the habitual use of shorting, just because you can, leaves a you dragging an anchor. Having said that I wish I could short as well! But I'd only use it occasionally. Thanks for the article.

Patrick Poke

Great point Marcus. I'd just add to that though some some investors may appreciate the lower average beta that would be achieved by a strategy like you described - equities with the risk dialled down a touch.


Hi Geolato FYI Wikipeadia states that the 2009 swine flu H1N1 epidemic had 1.6 million confirmed cases but the estimated number was between 700 million to 1.4 billion. There were 18,499 lab confirmed deaths by WHO. In relation to the swine influenza virus it was isolated in 1931 and first identified 5 years later. It was found to be a close relative of human influenza virus and shown to be a surviving strain of the 1918 H1N1 Spanish flu virus. In 1933 the influenza A strain was discovered and in 1940 the influenza B strain was discovered. These are the 2 strains responsible for seasonal flu. In 1936, 2 separate vaccines for influenza A were developed. A vaccine for the Spanish flu H1N1 was not developed, it was for influenza type A.

John Creighton

How can markets rise when there is no visibility on the length of the impending viral plateau? Markets are forward looking yes but they are flying blind currently.