Change, and What’s Next, in a COVID-19 World

 

By Judy Loy, Registered Investment Advisor, ChFC® and CEO of Nestlerode & Loy, Inc.

In the last four months, things have changed drastically around the world. 

The COVID-19 pandemic took the United States from full unemployment to a 14.7% unemployment rate in 30 days. The markets dropped precipitously in March, hitting a low on March 23. However, the second quarter saw stocks post the best gains since 1988. 

U.S. citizens are barred from traveling to Europe due to the resurgence of the coronavirus in the states. The latest 14-day change in the U.S. for the virus according to the New York Times is an 80% increase in new cases but a 23% decrease in new deaths. While many restaurants, bars and salons faced closures, technology advanced due to the lockdown. In November, we have the presidential election as Biden and Trump face off for leadership of our country.

Much is still unknown about how the pandemic will affect us over the long-term and how long masks will be in vogue. As of April 2020, 20% of workers were able to work remotely and were doing so due to the pandemic, according to Statista. Facebook (FB), Shopify (SHOP), Zillow (Z) and Twitter (TWTR) are looking at employees permanently working remotely. This could alter many landscapes. Commercial real estate, gas and dry cleaning could face a steep lack of demand.

The ability to work from home was only possible for Nestlerode due to advances in technology: cloud computing, a VoIP phone system and video conferencing. At this point, much of our information is available via cloud storage, which permits automatic updates and access to data wherever we are. Our VoIP phone system enabled us to unplug our phones at work and plug them in at home with the same telephone capabilities. Our clients could call our office number; any of us could answer the phone and even transfer calls to each other seamlessly in our living rooms. Under the circumstances, clients were agreeable to virtual meetings via Join.Me or Zoom to discuss the markets or update their retirement plan. Will new home constructions require three bedrooms, 2 ½ baths and a home office?

Over the years, commercial space went from individual offices to cubicles to open workspaces.  Will the fear of COVID move us to more private workspaces or merely sneeze guards to separate us.

Travel and vacations may face permanent changes. As people look to social distance, vacations seem to be taking a new form. For instance, used and new boat sales surged in May along with demand for RVs. According to the national Marine Manufacturers Association, boat sales increased 75% compared to 2019. The RV Industry Association claims RV dealers are seeing 200% increases in sales compared to last year. The pandemic is also increasing demand for backyard swimming pools and many dealers are already sold out for the year because of demand and supply issues. 

On the flipside, not many industries have been hit as hard as airlines during the pandemic. According to the Transportation Security Administration, May and June saw sharp decreases in people going through security checkpoints down 92% and 95% respectively from the previous year. When will people feel safe flying again? Some pundits say it may be a generational change, with more people vacationing closer to home (note the pool and RV sales).

Restaurants and bars continue to struggle with limited capacity, extra cleanliness requirements and additional delivery and takeout costs. Disposable paper menus and masks for employees round out the difficulties the food and drink industry faces. Bars face closures as coronavirus cases are linked to their locations. Alcohol is restricted at many bars, which pretty much can mean the same thing. McDonald’s even faced falling sales due to lower breakfast sales and is pausing reopening plans due to the virus’ resurgence. The largest fast-food franchisee in America, NPC International, filed for Chapter 11 bankruptcy protection.  NPC owns Pizza Hut and Wendy’s franchises and has been struggling for a while due to Pizza Hut’s performance.

COVID-19 changed our lives temporarily and may change long-term habits that affect our economy, commerce and lifestyles. This can lead to changes in profits and investment hot spots. When reviewing your investments, consider the outlook for industries post-pandemic. The only certainty is change.