Are Investors Overthinking When it Comes to Potential Changed Behavior Due to the Pandemic?
May 18, 2021
You’ve heard the terms “pandemic stocks” and “recovery stocks.” Those terms are thrown around to explain what’s happening in the market. The reality is that both ideas may be overplayed and to as real as many investors believe there are.
Will the be long-term changes in American society because of the pandemic? It’s hard to know and while we may see some smaller changes, it’s possible we won’t have any major lasting repercussions.
Maxx Chatsko and Steve Symington joined Dan Kline to share their thoughts on this big investing question on the May 17 edition of “7investing Now.”
A full transcript follows the video.
Dan Kline: Question number three, “are investors overthinking when it comes to potential change behavior due to the pandemic?” I fully think they’re overthinking this, like, it’s Yeah, there’s gonna be a little surge in travel. It’s not like we’re all of a sudden gonna be like, Alright, let’s spend the next six months in Vegas. Maxx Chatsko. Your thoughts here?
Maxx Chatsko: Yeah, I almost think this like is like a narrative in the media, and they write articles about it. Is there any data that that’s actually happening, like are investors, like, I’m selling all my tech stocks to buy restaurants and travel? Like, is that actually, is there data around that, Dan?
Dan Kline: Yeah, so we’ve seen a little bit of shift in what stocks people are buying, but I would call that, you know, a retail level, not so much an institutional level. And we are seeing some travel trends, if you look at like Disney bookings, they’re way up for the holiday season, obviously, compared to last year where they were, you know, more or less closed, if not closed in that time period.
But I would expect this to be the busiest Walt Disney World Christmas, you know, Thanksgiving through Christmas ever if they’re open at full capacity with all the hotels, I expect, it’s going to take a while on say, like the cruise lines to ramp up, you know, or for, you know, all inclusives are going to continue to do really well. I think, yeah, is Chili’s is going to do better because we can eat out a little more freely now. Sure. But I don’t think any of those are going to be massive trends. Like, yeah, I’m gonna have my whole family over for a party in June. And that’s, that’s not typical. Am I going to do that every month? So might that be good for the grocery store near me, but for the most part, I actually think, you know, this is being wildly overplayed, Steve your thoughts there.
Maxx Chatsko: Well, one, one quick comment there just again. So I agree with that. And, you know, I think it’s important if we, if we zoom out and take a step back, you know, remember that the pandemic pulled ahead by several years, the digital transformation of most industries. So that growth is real and sustaining. Just because we’re going to go out to bars this summer, we couldn’t do that last year doesn’t mean, you know, tech companies or growth stocks or are no longer viable businesses or anything that growth’s gonna vaporize. So, you know, think about digital transformations. And these trends have been accelerated by several years now.
Dan Kline: Yeah. And that that is also a negative too. So if you look at movie theaters, and I just wrote a piece about this, this accelerated, I don’t want to call it the death of movie theaters. But the change of movie theaters, the need for less movie theaters is probably the way to put it. So you’re gonna see this all over. But again, do I think everyone’s gonna like stop and smell the roses and appreciate life for the long term? No, that’s not particularly American, in how we do things. Steve, your thoughts on this one?
Steve Symington: Yeah. Maxx, the whippersnappers took the words right out of my mouth. Actually, that was that was really my thoughts there. I agree with you on the retail side, the consumer side. But there is undeniable progress. And there’s been an undeniable acceleration in enterprise digital transformation. And we’ve seen that with a lot of businesses that basically they got right in the middle of the pandemic. And they said, well, we’re gonna do this eventually, anyway.
Now’s the time. And so they accelerated their digital transformation efforts. So your company’s kind of shifting to a cloud, shifting to recurring product models. And really kind of capitalizing on consumers’ behavior, however temporary, it might be in order to kind of push for those that spending. So I don’t know how much of that is pulled forward, that will not happen.
Going forward. I think a lot of it’s going to prove sustainable because this is once we’ve moved to a cloud-based kind of digitized enterprise model, then it’s just continuing spending on that model to basically sustain it. So yeah, that’s the big thing is, is where change to behavior do the pandemic is really reflected the most I think, is in the enterprise, not necessarily with consumers.
Dan Kline: Yeah, we’re also going to see some other change behavior. I’d be surprised if the suit came back strong. I would think that travel patterns are going to change I’ve talked to you know, I’ve talked a lot about how like the lines at your coffee shop are different because commute patterns are different. I think we’re gonna see some changes to airfare routes, because maybe like a lot of people who work in Silicon Valley moved to Nevada or Arizona, but they’re still gonna have to regularly go to the office. So we might see routes that weren’t traditionally commuter routes, like you know, you could always find New York to Boston 10 times a day or, or West Palm Beach to Baltimore fifteen times a day, like whatever it is, I think you’re gonna see more of that.
But those are going to be sort of like micro trends that happened, because, you know, maybe companies realize like, all right, like it’s good to be in person, but we don’t have to be in person. 7investing audience, you have been awfully quiet. We would love to hear some more questions and comments. We, of course, know you’re sitting back and basking in Maxx and Steve’s wisdom here, but you are welcome to participate as well.