The most useful investment advice — other than to buy low, sell high — is to simply follow the money.
Tracking consumer spending was essentially how legendary investor, Peter Lynch, was able to grow the Fidelity Magellan Fund from $18 million to $14 billion in 13 years.
In fact, in his day, Lynch was known to scour malls to collect consumer data. Of course, that was back when shoppers actually went to malls.
While money trails lead to investment returns, every now and again they surprise us and steer us towards forks, leaving us to start anew on an uncharted road.
This is precisely what occurred in late February 2020 when COVID-19 made its way onto American shores and completely dislocated the world’s largest consumer market.
In a mere instant, everyone’s purchasing plans and spending habits profoundly changed. Consequently, so should our investment strategies.
Judging from my facebook feed, there are a lot folks out there with very long multicolored hair and too much time on their dried-out unmanicured hands looking to recoup losses and discover new investment ideas in what feels like an alternative universe.
Hey, ungroomed people, you do not need to look that hard. Just follow the money down this deviated trail. Below is a glimpse into what you may find.
Technology is not going away. If anything, COVID-19 has demonstrated just how integral technology has become to our lives. Technology made it convenient to shop, meet with colleagues, facilitate doctor appointments, hang out with family and friends as well as fulfill our banking needs — all without ever exiting our front door.
While they were totally gnarly in the 80s, money no longer hangs out in malls. Malls have been gradually dying since the 1990s — much to the chagrin of Merry Go Round and Forever 21. The coronavirus will be remembered as the final nail in their coffin. It’s going to take a very long time before shoppers brave department store dressing rooms and try on clothing that recently touched multiple unhygienic and possibly contagious bodies. I’m seriously getting queasy just thinking about it.
It’s time for virtual dressing rooms to seize their moment and shine. Although product fit has been an ongoing concern for online clothing shoppers, AI (Artificial Intelligence) as well as advancements in VR (Virtual Reality) technology are rapidly removing this barrier.
According to a recent (pre-quarantine) report by Market Research Future (MRFR), the global virtual dressing room market is expected to cross $6.81 billion by 2025 at a CAGR of 15.21%. However, now that coronavirus has turned online shopping from a novelty into a necessity, these estimates may be conservative.
The Big Five tech giants, or “FAAMG” (Facebook, Amazon, Apple, Microsoft, and Google (Alphabet)) are not the only companies that stand to benefit from the growth in the virtual dressing room market. Designers of all ilk — from household names to Etsy crafters — will profit through direct to consumer sales.
Novelty Products, Cannabis and Alcohol
If advertisements are a leading indicator of personal consumption expenditures, then look for 2020 to be the year that gimmicky and needless consumer products replaced vacations and dining. My social media feed is loaded with ads of inflatable hot tubs, couches that look like transformers, ass cushions, and personalized coffee mugs and t-shirts that remind my husband of how lucky he is to be quarantined with me.
Between the boredom buying, carb overload and toilet paper hoarding, analysts are going to assume that cannabis inspired 2020 consumption.
Indeed, cannabis sales are already soaring. According to CNBC, legal sales of marijuana are booming as the nation battles COVID-19. It cites one cannabis company as having seen its average store revenue increase 52% to 130% just since January. Shares of Canopy Growth and Tilray are up 33% and 64% respectively since mid-March when most of the “shelter at home” orders when into effect.
Alcohol sales are rising too. According to market research firm Nielsen, online alcohol sales has already spiked 243% during coronavirus pandemic.
Restaurants, although this will be a terrible year, you will rise again! We miss you so much. When you reopen, we are going to relish every inch of you. Well, except McDonalds and other unhealthy fast food chains. No one needs your diabetes burgers. Coronavirus made us realize just how dangerous you are and how “not that bad” mom’s cooking really is.
Coronavirus, with a little help from platforms like Zoom Meeting, will leave an indelible mark on television journalism. Anyone with a webcam and a twitter handle can become a journalist without the need for fancy camera crews and Nielsen viewers.
I can easily envision blogging aggregators like Medium and Substack making a big leap to video and ultimately diverting TV advertising dollars away from mainstream news media. It’s been abundantly clear for quite some time that reporters report spin — not news. But now, as coronavirus put hairstylist and makeup artists temporarily out of commission, we are realizing that most television personalities aren’t even better looking than us regular folks! If I wanted to watch average-looking biased people discuss current events, I would just tune into an old rerun of “All in the Family”.
Buh bye banks. Your reign has officially ended. Millennials have already abandoned you, preferring to have a root canal than to visit your tellers. But now, thanks to COVID-19, Millennials’ parents and grandparents will be bidding farewell too.
Coronavirus underscores just how obsolete physical banks have become. Not only is there no foot traffic, banks don’t even store our money there! And depending upon how they end up handling small business lending under the CARES Act, banks may end up perpetuating their own demise.
Instead, look to fintech to displace traditional finance for good. Robo advisors, saving and investing apps and even retailers themselves will become the brokers and bankers of tomorrow. This will mean cheaper fees and better returns for small investors.
Robo advisors saw significant accounts openings amid the corona market upheaval. According to a Bloomberg article dated March 31, 2020, “Since the market downturn began, TD Ameritrade has seen new-account openings for its automated investing platform jump 150% from the same period a year ago, Wealthfront investment said account signups are about 68% higher since stocks declined, and Betterment’s first-quarter increase is 25% from a year ago.”
According to mobile market data provider App Annie, fintech app Robinhood has seen a 50% growth in iOS and Google Play downloads during the first half of March compared to the two weeks prior.
And finally, there is bitcoin. Sweet, sweet bitcoin. Despite what Warren Buffet thinks, you are going to emerge as the biggest winner of all. We don’t need to follow the retail dollars to see that. Instead, all we need to do is follow China’s Renminbi. By now China has realized that its handling of the coronavirus has foiled its plan for its digitized Renminbi to be the dominant global currency. Instead, backlash from the international community will cause China to seek the next best thing — bitcoin. I’d be surprised if China hasn’t already started stockpiling bitcoin along with gold and oil.
Even if China isn’t hoarding bitcoin, all of the corona stimulus plans, quantitative easing and lowering of interest rates will help make bitcoin an attractive global investment opportunity — if not a new safe haven.
Apologies, Disclaimers & Well Wishes
My sincere apologies to anyone who I may have inadvertently offended in this article such as ugly journalists, the unsanitary, pot heads and fast food chains (if you can even call it food).
Please don’t construe any of this as investment advice. Navigate your own money trails. Stay healthy. And, most of all, please keep washing your hands even after a vaccine arrives.
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