With major league baseball’s spring training just around the corner, you may already be daydreaming about the smell of cut grass and roasted peanuts, hearing the crack of the bat and the roar of the crowd — just to feel normal again. 

If so, you are not alone — not among fellow Americans weary of the COVID pandemic nor within the context of history. This would not be the first time Americans have lived through a period of austerity brought on by a pandemic that resulted in burgeoning pent-up demand and economic recovery. In 1918, the Spanish Flu and World War I largely curtailed social gatherings and other activities across the country. 

To be sure, the U.S. was a very different place in the early 20th century, but consider that attendance at baseball stadiums in 1918 was half that of the previous year.

By 1919, however, the pandemic had largely subsided, the war was over and attendance at games soared from 2.8 million in 1918 to 6.5 million in 1919. The decade that followed — the Roaring ‘20s a time of exploding economic recovery— coincided with the first golden age of the automobile. Americans eager to see the countryside bought nearly 26 million cars and 3 million trucks in the 1920s, according to Automotive News.

Could pent-up demand for travel and leisure drive a Roaring ‘20s economic recovery today? 

Ready, willing — and able — to spend

Indeed, cabin fever appears to have taken hold of consumers everywhere. There are signs that Americans are prepared to act: Savings rates have soared since the start of the pandemic, and though they have slowed a bit in recent months they remain relatively high.

Many consumers have boosted their savings during the pandemic

Once the current situation subsides, the desire to travel plus the ability for consumers to spend means we could potentially see a powerful economic recovery.

The economic environment is much different than the global financial crisis of 2008.  Today, looser fiscal policy, looser monetary policy, strong banking infrastructure and a higher personal savings rate could drive a sharp pickup in demand.

These conditions not only can benefit the travel and leisure industries but also the broader economy. To be sure, there will probably be hiccups along the way, and some areas will likely recover more quickly than others.

Passenger loyalty: A tailwind for cruise lines toward economic recovery

Cruise ships became the epicenter of the COVID crisis in February 2020, when 3,700 people were quarantined aboard the Diamond Princess after a shipboard outbreak. At the time, the ship accounted for half of all known cases outside mainland China.

Over the past year, this industry has gotten so much negative media, yet people are still booking cruises for 2021 and 2022. 

In fact, more than 70% of respondents to an industry survey said they will cruise again.

Loyal customers can keep cruise industry afloat

While cruising has resumed in Europe, the U.S. Centers for Disease Control imposed a “no sail” order that has not yet been lifted in North America.

There is still uncertainty as to when ships will set sail again, but there is a possibility that they will be cruising near full capacity quicker than many people expect.

What’s more, with intense focus on healthy sailing practices, there’s a case to be made that they could one day be considered among the cleanest places on earth to vacation.

Vacation plans up in the air

As was the case in the cruise industry, global air travel was down an estimated 66% in 2020, about 20 times worse than the previous record. Within the U.S., which is more dependent on business travel, the devastation was worse: Air travel declined as much as 95% in the early months of the crisis.

The rollout of the vaccines and, prior historical events, leads to increased confidence that demand will bounce back. For example, we also saw this after the September 11 attacks. A lot of people thought consumers would never fly again, and traffic recovered quickly.

Indeed, in China, where the virus is largely under control and the economy has rebounded, domestic air travel has nearly returned to pre-COVID levels.

Air travel in China has soared back. Will the U.S. soon follow with it’s own economic recovery?

The ripple effect for economic recovery waves

A revival in travel demand can also have a powerful ripple effect, creating the need for a range of goods and services and helping drive job growth across a variety of industries. Among these are aircraft manufacturers, jet engine makers, hotels, casinos and restaurants — all of which were devastated by the pandemic.

Consider aircraft engine makers, which operate a recurring revenue business model. Companies like Safran and General Electric build the engines and sell them at a modest profit, but the engines must be serviced regularly, and the engine makers can generate a great deal of revenue from the service contracts.

Unlike other sectors of the economy during COVID, aircraft engine makers are not going to see digital disruption upend their business. After all, there are no digital aircraft engines. 

Markets tend to anticipate recoveries

Markets often anticipate recoveries in the underlying economy, so it’s important to recognize underlying trends early. Consider the global financial crisis, a period when the housing and automobile industries were severely beaten down. By 2012 it became clear that demand was building, thanks to changing demographics and an aging auto fleet. In both industries, a full recovery took several more years, but a rebound in auto- and housing-related stocks anticipated the recovery in demand and earnings. From February 2009 through December 2010, auto sales fell 6% while auto stock returns advanced 496%.

Auto stocks rebounded ahead of sales after the global financial crisis

More recently, since the introduction of the vaccines, shares of companies across a number of travel-related industries have registered strong gains.

The market often reflects a recovery in earnings before they materialize.  In a year from now, we could be in a very different environment where demand and earnings for some of these companies begin to recover in a more meaningful and sustained way.

Maintaining a balance

Students of history can look to many examples of past crises and declines that were followed by powerful economic recoveries thanks in part to pent-up consumer demand. Examples include the travel sector after 9/11 and the housing and auto industries following the end of the great financial crisis in 2008–2009. 

For investors and their advisors, it is important to make sure portfolios are balanced with exposure not only to growth strategies but also to strategies focused on more value-oriented companies, like many of the travel-related stocks.

A review of more than 4,000 portfolios by Capital Group found that investors significantly reduced allocations to value equities over the last three years. It may be time to rebalance. 

Returns for leading growth companies have continued to be strong, for good reason. But it may be shortsighted for investors to become seduced by the runaway growth stories, considering that many of the beaten down stocks in travel and other sectors have attractive valuations. And recently there have been some early signs that the market rally may be broadening as many of these stocks have posted meaningful gains.

Investors have scaled back their exposure to value funds

We just experienced a market downturn and recovery where the growth-oriented companies led during the decline and on the way back up.  Historically, that is an unusual pattern.  As the vaccines roll out and the recovery broadens we may begin to see companies in the travel industry, or perhaps energy or financials, all of which had been very hard hit during the downturn, participate in the recovery.

Platt Wealth Management offers financial plans to answer your important financial questions. Where are you? Where do you want to be? How can you get there? Our four-step financial planning process is designed to be a road map to get you where you want to go while providing flexibility to adapt to changes along the route. We offer stand alone plans or full wealth management plans that include our investment management services. Give us a call today to set up a complimentary review. 619-255-9554.

It’s easy to get lost in the rabbit hole of social media. Especially when we’re still practicing social distancing and businesses aren’t all open yet.

You think you’re going to get caught up with some friends from high school. Next thing you know, you’re arguing about what kind of potato you are two hours later. Or you run your own business and you’re trying to keep up with all the latest channels that people say you “have” to be on!

Here are some tips for avoiding the overwhelm.

Give yourself a break

It’s not entirely your fault that you find social media addicting. If you’ve been beating yourself up about the time you spend on the platforms, stop. They have been specifically designed to be addicting.

You may be under the false impression that social media platforms exist to connect people with other people. They don’t.

Their business model is to keep people on the platform so they can get as many ads in front of as many eyeballs as possible. The fact that you can catch up with your high-school friends or see your niece’s wedding dress is entirely incidental to what the channels are all designed for, which is to make money for advertisers.

That’s why you find it so easy to get sucked in and waste hours in front of the screen. The designers created it to be that way.

Turn off notifications on your phone

In the course of designing platforms that will keep us glued to them for hours, the developers also know quite a bit about neuroscience and use that to their advantage.  Definitely to most users’ disadvantage!

You probably know that humans are social animals, and we have a need to fit in somewhere or belong somewhere and have some friends. Introverts included. They just need fewer friends than extroverts do to feel they belong.

Our brains also like novelty. That’s why the app designers have all those beeps and buzzes to let you know when you have a notification. Your brain releases a little hit of dopamine, a happy neurochemical,  when this novelty hits you. That’s your brain saying Yeah! More of this!

The notification leads you to open up the app so you can see where someone liked or commented on your post. More feel-good neurochemicals, because you’re getting social validation with the likes and comments, you social animal you.

Still think you need to leave them on? Studies have been done on how long it takes you to start concentrating again once you’ve been interrupted. The answer may surprise you – it’s 23 minutes.

If you’re trying to focus on your work and you pause to see that someone liked your Facebook post, you’ve just wasted more than 20 minutes. Just on the few seconds that it took you to check the notification.

Even if your business is on social media, you don’t necessarily need to keep your notifications on. Unless you’re selling through the channel, in which case you might. Most of the social media platforms allow you to set up a FAQ where you can answer the questions that you often get.

Turn off your notifications and notice how peaceful life is all of a sudden.

If you use social media for business, curate and use technology

There are a lot of people out there, who may or may not refer to themselves as social media coaches or gurus or superstars, who will insist that anyone worth their salt must be on platform A or B. And some will advise you to be on all of them. But unless you have full-time social media staff, that is just not possible.

Do you need to have your business on social media? Some people argue that you don’t, but those are the people who made their names early on. They don’t need social media to amplify their bylines.

For most of the rest of us, though, we do need to be out there. After all, the platforms are free. You just need to pick the one or two that match your demographic and that you personally can bear to deal with.

The demographic information for all the social medic channels is widely available (here, for example) if you don’t already have a general idea which channel you should focus on.

One rule of thumb that you probably should abide by is to have a LinkedIn profile if you sell business-to-business or B2B. If you’re B2C, selling direct to the retail customer, it may not be necessary. Instagram and Pinterest both skew female and are visually oriented.  Twitter posts do better when paired with pictures but is mainly a text-based platform.

In order to automate your social media as much as possible, you can find a scheduler where you input all your posts and they’re sent out to your platforms at the time that you choose. That way you don’t have to spend so much time on the channels themselves. Although they do reward organic or non-scheduled content.

You can create video from a blog post using technology now as well. See where you can use systems to your advantage.

Give yourself a break, part 2

And sometimes, you may just need to avoid social media for a little while. During this time, there’s a lot of misinformation and partisan positioning that can rapidly become overwhelming. If you have a business on social media, look only at your business page and nothing else.

On your personal platforms, you can let everyone know that you’re taking a break. You might even find while you’re off that you don’t want to get back on! If you want to stay in touch with friends and family, you can do that via phone calls and web chats. They’re more effective than social media anyway for maintaining social ties.

Focus on offline

Before you sit down in front of the screen, it might be worth asking yourself if you’ve done everything else first. Did your kids, pets, and/or spouse spend time with you today? Did you exercise in some fashion, even if it was just a dance party for one? Is there a craft or a hobby that you keep wishing you have more time for?

Spending too much time online makes people more lonely and depressed. It’s healthy for you to spend time offline. Especially when you’re spending it thoughtfully by working on a craft or something else that you really love.

Or talking to friends you haven’t spoken to in a while, or catching up with family. Or taking the whole family for a walk after dinner (staying 6 feet away from other people exercising in the great outdoors). Or whatever behavior is healthy, fun, and lights you up… because social media won’t, in the long run.

Are you concerned about your financial health while we deal with COVID-19? We’re working remotely (technology for the win!) so please feel free to give us a call at 619.255.9554 or email us.