Flash Report /

Three lessons that the 1918 Spanish Flu can teach us in 2020

  • The longest bull market in history has now suffered the fastest correction since the Great Depression.

  • But this crisis is not unprecedented. The Spanish Flu Pandemic of 1918 killed more people than WW1.

  • US suffered heavy casualties from Spanish Flu, but the stock market return in 1918 was higher than average.

Nirgunan Tiruchelvam
Nirgunan Tiruchelvam

Head of Consumers Equity Research

Tellimer Research
17 March 2020
Published byTellimer Research

Covid-19’s impact has been nasty and brutish. The longest bull market in history has now suffered the fastest correction since the Great Depression.

However, investors may take some comfort in an event that took place over a hundred years ago. The Spanish Flu Pandemic of 1918 killed more people than the Great War (1914-8). Fifty million people died, according to some accounts, which was c3% of the world’s population at the time. It spread rapidly infecting one in four humans – 500 million people.

The death rate in other parts of the world was much worse. It was more than 4% in some parts of India, where the flu killed 7 million people.

1918 Spanish Flu Pandemic2020 Covid-19 Pandemic
People Infected500 million 182,000
Number of Fatalities50 million7,100
Mortality Rate11%


Dow Performance 12% in 1918
-31% in 2020 ytd

Amid the panic today it is worth considering the following:

(1) Health standards are infinitely better today

Advanced countries and many emerging markets today have access to antibiotics, high-tech hospitals, and intensive care units. In 1918, the hospitals were unable to cope. Infected patients had to sleep in the corridors.

Medical staff themselves were infected, as this was long before health warnings. Thousands were infected by gathering in public places. On 11 November 1918, massive crowds gathered to celebrate the end of the war – Armistice Day. The warnings to avoid large gatherings seemed to be ineffective.

Today, retailers and bar operators from New York to Singapore are concerned about the poor footfall due to Covid-19. This is trivial compared to the devastation that the Spanish Flu brought. From September 1918 to the end of the year up to 20,000 people were dying every day in the world. This is more than three times the total number of casualties from Covid-19 so far. 

(2) Business continued unabated

There was a brief recession in Q4 of 1918 in the US, but that was due to demilitarisation. The US had only entered the War in 1917, but had become the world’s principal supplier. The end of the war and the return of troops to civilian life caused an economic slowdown. The flu’s impact on commerce was comparatively muted. Europe entered an economic boom in late 1918, which was a prelude to the roaring twenties.

(3) The Dow rose in spite of the pandemic

The Dow Jones Industrial Average (Dow) returned 11% in 1918, including reinvested dividends. The US suffered heavy casualties due to the flu, but the stock market return was higher than the long-term average.

The Dow components back then included some counters that are still thriving. General Electric, US Steel and Western Union. Other companies such as Utah Copper and Westinghouse have merged into Chevron and Rio Tinto. 

The world is different in 2020

Disease can spread much quicker in the jet age. Population density is maybe fourfold higher today, according to the United Nations. We are also much more vulnerable to the rapid spread of fear and panic due to instant digital communication, whether television, social media or online news outlets.

But, the savage correction that we have suffered in the past week may be overdone. Stock markets and commerce rose in the face of death in 1918. The pall of gloom may lift sooner than the doomsayers expect.