The world may never resume the same level of normalcy as prior to COVID-19. Therefore, we need to define what the “new normal” is and what that means for investors.
It may help to determine what is temporary and what is likely to last indefinitely. Perhaps social distancing and temperature taking is temporary, but no handshaking and increased online shopping are likely here to stay for a long time.
Consumer spending makes up 68% of the economy.¹ Therefore, our spending habits on travel, entertainment and shopping will have a big impact on what our recovery looks like.
Recent stock market activity appears to be anticipating a healthy recovery. However, if that is not sustainable due to longer-lasting impacts of the economic shutdown, volatility will most likely continue.
One good example is working from home. Forty percent or more of workers could remain working from home, even after social distancing bans are lifted.² This equates to eating out less, lower car costs and little need for new apparel. The domino effect of that could be consolidation in retail stores and restaurants and higher gasoline prices due to lower demand. The true ripple effect can’t yet be determined.
There are also many industries benefiting from more people staying at home. Internet entertainment, online shopping, gaming and streaming services are all increasing. Home office supplies, computers, cameras and in-home cooking items have all profited from us staying at home more.
Many of these are already obvious, but travel, sporting events, concerts and large gatherings remain unknown. According to Yale School of Medicine, as long as the virus exists, even at low levels, normal consumer behavior will be compromised. This leads to another perhaps silver lining in economic growth, through biotech, health care, testing, contact tracing and the race to create a vaccine.
Investors have a lot to process based on the level of uncertainty. What will stick forever? What will contact tracing and surveillance testing do to consumer behavior? What good changes will improve our world? We have already seen pollution virtually disappear and family dinners become the norm. McDonald’s CEO Chris Kempczinsi recently stated, “The world is going to look different coming out of this crisis, and we expect that many of those changes are going to be enduring.” I suspect that digital transformation across every industry is not going to stop. Education, entertainment, sports and religion will forever be available at your fingertips. Perhaps convention centers and arenas can be repurposed. There are a lot of things to sort out and it will take some time.
Investors need to be patient but proactive. Have a plan and be ready to take advantage of the next opportunity if it fits with your goals. The world is changing and hopefully, much of it will be for the better.
1. Federal Reserve Bank of St. Louis; 2. CNBC.com, May 4 2020
Source: Yale, May 18, 2020 “What’s Next with COVID-19”
Patricia Kummer has been a Certified Financial Planner and a fiduciary for over 30 years and is Managing Director for Mariner, LLC d/b/a Mariner Wealth Advisors, an SEC Registered Investment Adviser. Please visit www.marinerwealthadvisors.com for more information or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). Securities offered through MSEC, LLC, Member FINRA & SIPC, 5700 W. 112th Suite 500, Overland Park, KS 66211.
Other items that may interest you
We have noticed you are using an ad blocking plugin in your browser.
The revenue we receive from our advertisers helps make this site possible. We request you whitelist our site.