• The Bureau of Labor Statistics has never had to cope with 20% of the workforce filing for unemployment within a month. That surely wasn’t in any of the calcualtions.
• Value investing, the model championed by Benjamin Graham and Warren Buffett, is in trouble because it didn't anticipate low inflation, low interest rates and enormous Fed market interventions.
• The model for speculating and hedging in oil has come undone. With two of the world's biggest producers in a price war, a collapse in demand amid the pandemic and a lack of crude oil storage space, futures prices briefly traded at a negative $40 a barrel last month -- meaning those holding oil had to pay to have it taken off their hands.
Keep in mind that in terms of the pandemic, we're not really talking about a black swan event, a term popularized by Nassim Taleb -- who by the way doesn't believe Covid-19 qualifies as an “unpredictable, rare, catastrophic event.”
Bill Gates saw it coming back in 2015. So did every pandemic team, including some that the Trump administration disbanded or downgraded. The decision was made to save a few dollars in preparedness, betting that the risk would never materialize.
So in that sense, the models weren't even needed to help us see the coronavirus catastrophe coming; all that was necessary was some simple, common sense.
Barry Ritholtz is a Bloomberg Opinion columnist. He founded Ritholtz Wealth Management and was chief executive and director of equity research at FusionIQ, a quantitative research firm. He is the author of “Bailout Nation.”