We’re witnessing a second wave of COVID-19 shut downs. This is something expected over six months ago. Instead of worrying about what is happening now, it’s better to take a look at the positive side of this development. The positive? Everyone learned they were wasting incredible amounts of time. Commuting to work is a waste of time if your job requires a computer and telephone number. Ordering perishable basic items online is significantly faster and isn’t worth a trip to a store. Sleeping during the day as a “lunch break” is more efficient and more effective. And. All your friends consolidate into a smaller pool.
New Time Saving Purchases: As we’ve stated many times here, health and time are worth significantly more than money. Without health, your time on this planet is shorter, more painful and prevents you from making any forward progress. Also. Time is the only finite item in the world. Even a billion dollars cannot buy you more time.
This is a good time to take a look at the items we can throw out the window starting in 2021 (if the economy opens on January 1). 1) all consumable items with no shelf life should be ordered online. This saves time and money. There is no reason to go to a retail store in the future for items that are the same off the shelf vs. in person (things like fresh produce may require a trip to the store); 2) electronics. There is no reason to buy these items at a retail store. The new smartphone or computer is going to be better, simply measure out the screen size and click buy and ship to your home; 3) Basic clothing. Socks, shirts and even shoes are easy to order online. The one exception is custom clothing. This should reduce all of your shopping time to mere seconds from 30-45 minutes; 4) all cleaning and healthcare supplies. Another easy one, this includes everything from soap to medication and 5) digitized information. The days of saying “I prefer physical books” is dead at this point. Physical books are now physical maps, inefficient if you’ve spent a full year operating off of remote documents.
For fun, while unrelated to saving time, you can see that commercial real estate is going to be in a world of hurt for the next several years. There is no reason to bet on that industry for now. Retail is simply being shifted online at an incredible rate and it’s smarter to avoid catching a falling knife for now. With businesses closing during the most profitable month of the year, online sales are going to balloon for the month of December.
New Time Saving Equipment/Adjustments: Hopefully, you do not work for a firm that is stuck in the past. If you’re in a knowledge based industry or work in technology you should be entirely set. There is no reason to return to long commutes ever again. Perhaps you need to live relatively close to an airport for important in person meetings, however, that should be about it. Also. You should go ahead and cancel that gym membership. The industry is going to be forced to raise prices or shut down entirely. While there are some exceptions for certain people/groups, generally if you can afford to buy a bench and have the space for weights… Go for it at this point. Painful to write but shutting down an industry like that for 12 months is not going to result in a “v-shape” recovery any time soon. Support your local gym if possible… it’s just unlikely that most of them survive
While we’ve covered this topic a few times, we’d go ahead and expand everything. Your usual outsourced services should be done at home going forward. Adapt or die. The majority of service businesses (massage, facials, spas etc.) are going to be out of business quickly. No. We are not happy about this and have stated many times that the decisions made have crushed the middle/lower-middle class for a long period of time. Appalling. That said, you have to adapt to the situation. Look into the following: 1) at home skin care routine – spend more for quality, 2) at home massage items like electric pulse massages, massage chairs and bands to help you stretch at home and 3) brand new cooking equipment. These three items should improve your quality of life the most. If you’re forced to “rely on yourself” you may as well have the best items to do so. Most younger people will end up eating a bunch of junk food (while simultaneously smoking a bunch of weed). Naturally, you should do the opposite and become efficient at cooking and maintaining your health.
Similar to the prior section, pausing to talk about investing, we’re positive on the future of drug use/marijuana. Not because we recommend it but because that is what people will do (weed and other recreational drugs won’t help you get ahead if used frequently). Think about it in two ways. What will people actually do? They will eat unhealthy foods like burgers and pizza while smoking a lot of weed. What should you do? You should *invest* in the companies selling burgers/weed/pizza and spend your *time* living a healthier, cleaner and more independent life.
New Habits and Social Circles: To make sure this is phrased correctly, we’re not thrilled about the results of the government intervention (shutting down business etc.), this is a statement related to the results of the actions. The result? Your social circle likely shrunk and depending on how your business was running your quality of life went up 2-3x or went down 3-4x. This movement of 2-3x increase or 3-4x decrease has caused a fast and severe bifurcation in your social circle. You’re able to distinguish the beneficiaries from the pain takers based on their reaction to the COVID-19 situation. (Notice we don’t use the word winner vs. loser here since this wasn’t their fault, they were forced to shut down).
For those that are interested in keeping their social circle unchanged, the most you can do is avoid talking about money. We’ll go ahead and bet that this won’t work. But. It is your best shot. Once you eliminate discussions on income/expenses you can minimize the friction. In the end… There will be a split. This will lead to a smaller social circle (for better or worse).
Assuming you have an online income of some sort, you’ve had a great year. While work hours were longer, you were able to sleep during the day and you were able to increase your profit margins by at least 30-40% (IE. a dollar earned no longer led to 30c in profit but closer to 40c). Also. You learned that variable work hours reduced stress and led to similar productivity levels. These changes are structural at this point, meaning you’ll never go back to the past even if your business slows down a bit in 2021. One thing is for sure, you’ve learned that sudden surges in demand need to be accounted for instantly. If you miss the boat on a sudden surge your potential annual income drops significantly.
In similar fashion to the prior sections, the final sentence also alludes to our belief in Q4 results (investing/generating revenue). Since the US is shutting down retail outlets during one of the busiest months of the year, the impact to them will be even more severe. Q4 results are usually significantly higher than any other quarter in the year (just look at the P&L of a Company like Apple and compare Dec-qtr revenue to Jun-qtr revenue). If you run an online business we *strongly* recommend sending out a promo/sales offering right now. This should last through Christmas as you can capture more sales than usual (all of your competitors are not allowed to compete). Before anyone jumps in and says the “prior sentence is too cut-throat”… Just look at your inbox over the next week. You’ll be bombarded with new offerings from e-tail companies as they recognize this as well. Don’t miss the boat.
Separate Note – December: Outside of the positive changes that COVID-19 is bringing *for a select group[* (ability to save tons of time and increase margins), we can look at the implications of the December shut down which are as follows: 1) more restaurants/retail will be shut down for good, 2) this will cause online sales to see a significant boost in December, 3) companies that were on the fence about remote working, will likely make it a permanent option, 4) major cities will continue to see outflows for example SF -> Nevada/Texas, Boston/NYC -> Miami/Carolinas, and preference for lower cost cities such as Nashville, 5) executives will be paid a *lot* since they know their workers won’t be able to move easily and 6) additional loss of trust with the government will make a vaccine deployment harder as citizens will not trust the initial solution.
Putting feelings aside, that appears to be the impact of the decision to shut down businesses in major cities. It is quite depressing to see companies that were alive for 20 years go out of business. That said, you (yes you the reader) has to adapt or die. Keep your costs at near zero (especially if you own anything related to brick and mortar) and continue to build an online business/presence. The big will get bigger, but at least e-tail/online sales is a growing market.
