What caught my eye this week.
Being nothing if not a business nerd, I spent Friday evening enjoying a new report from Waitrose on consumer trends in 2021.
Don’t judge me! It’s not like the pubs were open. Or maybe they were? But I live alone. So I can’t go to them. Or maybe I can go? And sit on my own with a hearty meal? I’ve lost track.
Anyway, there was lots of food for thought in the Waitrose report, served up alongside all that ready-baked pun potential.
A few morsels:
- Waitrose dubs preparing dinner ‘the new commute’, with three-quarters of home workers using cooking to mark a divide between work and play.
- Some 69% of Waitrose shoppers think they’ll continue with online grocery shopping when normality returns.
- There’s been a 222% rise in interest in pickling.
- Rosé sales were up 57% year-over-year in Autumn, as the seasons went by in a blur.
- With coffee shops closed, sales of bean-to-cup machines rose 64%. (Here’s one I prepared earlier.)
- Cash transactions at Waitrose have fallen from 22% pre-pandemic to just 10% now.
- 58% of customers say they’ve secretly enjoyed the lack of pressure to go out.
As an active investor and stock picker, I’ve spent this year trying to divine what has changed and what has not in the wake of the virus.
I’m instinctively a skeptic of overnight societal shifts:
Nah. People love cities. Society is roughly never changed by one-off events. Americans I think particularly struggle with this. Europe saw major cities reduced to 2-foot of rubble in a WW2 and life return to normal. If (/when) technology changes things, it won’t be due to Covid.
— Monevator (@Monevator) November 23, 2020
I certainly don’t believe all those people who bought bean-to-cup coffee machines won’t soon be back in the cafes as much as before.
And I have to believe that the 58% of us who’ve enjoyed the freedom to lounge at home reading business reports on a Friday night will eventually feel the pressure to get back into the fray.
Cost conscious
What was most striking to me from the report though was what was not in it.
2020 was a year of economic turmoil, but you’d never have known it.
I’ve had a very good 2020, financially speaking, which is kind of depressing given what a rotten year it’s been. I kept my head in March and picked up bargains. This year to forget looks like being one to remember, seen through the heartless lens of returns.
It could have all gone differently, of course.
When The Accumulator wrote his seminal Do Not Sell post during the crash, he wasn’t thinking the market would bounce back within months. I guess it’s conceivable too that the vaccines wouldn’t have proven effective in trials, though that always seemed unlikely to me. There remains a risk we can’t vaccinate ahead of mutations, I suppose.
But one thing I would never have expected in March was that a supermarket could review this year without talk of shoppers cost-cutting, downshifting in brands, and buying in bulk to save money.
We now know it’s been a K-shaped recovery – the richer who shop at Waitrose have been far less affected by the economic tumult than those down the road at Tesco. But I’d still have expected financial hardship to at least feature, given the scale of the economic drawdown.
In many ways this is a clear positive. I posted in March that readers should prepare for a recession. We saw one, but for Waitrose shoppers – and I suspect most Monevator – readers it hardly felt like it.
However for me this gives a hint at the hard-to-fathom borrowings the country has taken on to soften the impact of Covid and its related disruptions.
The UK economy saw a record slump earlier this year. But unemployment didn’t soar and while there have been some bankruptcies, it seems small beans for anyone who was around in the 1980s, or even the early ’90s.
We rightly decided to offset the pain of this one-off and unforeseen external shock from the coronavirus. We can debate whether this or that anti-viral mandate was heavy-handed and made it worse, but it’s very hard to argue we shouldn’t have borrowed hard to keep the economy afloat.
The chancellor kicked tax rises down the road in his Spending Review. With the economy still shaky and bonkers Brexit imminent, that made sense.
But we will have to pay for all this one day. Something to think about when you’re next clicking for pickles at Waitrose.
Note: I expect we’ll discuss the economy in this week’s comments. Please keep it civil and on-topic. Virus-specific comment should go on our dedicated Covid thread. I get there’s a huge crossover but let’s try to keep this discussion finance and investment-related please, for wider reader enjoyment.
From Monevator
Is it rational to invest in alternatively weighted index tracker funds? – Monevator
10 ways to lose money trying to beat the market – Monevator
From the archive-ator: Earn more money by tackling your mental beliefs – Monevator
News
Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!1
David Blunkett says Labour never envisaged 200,000 disabled children struggling to access their Child Trust Fund money – ThisIsMoney
Spending Review: five things that were in the small print – Which?
Only 1-in-4 got these three money questions right [Revealing] – ThisIsMoney
Bank of England told to find out where ‘missing’ £50bn in cash is ‘stashed’ – Sky
Pensions’ problems put a toxic cloud over stock recovery [Sorry, paywall] – Bloomberg
The real virus to fear – Ryan Holiday
Products and services
Lloyds is re-introducing 10% mortgages for first-time buyers – Guardian
Unbiased will match you with an FCA-regulated financial advisor who’ll review your investments for free, with £50 off future advice – Unbiased
British expats left with few options as more UK banks confirm Brexit account closures – Which?
What’s firing up the [nascent, mostly US] direct indexing boom? – Think Advisor
AJ Bell customers see charges rise but exit fees scrapped – ThisIsMoney
Sign-up to Freetrade via my link and we can both get a free share worth between £3 and £200 – Freetrade
AmEx’s latest £5 cashback for £10 spent ‘Shop Small’ scheme starts 5 December – American Express
Rightmove’s five most-viewed properties of 2020 – House Beautiful
Homes for sale in market towns, in pictures – Guardian
Comment and opinion
Never forget that to most employers you’re just a number – via Twitter
How much should you invest in annuities and equities in retirement? – Klement on Investing
How good personal finance habits made possible the Dazed and Confused movie – AWOCS
Game theory: Lessons from the Monopoly board game – Humble Dollar
Digital dollars – AVC blog
Shopping is not the same as buying – Seth Godin
Rich as I say, not as I do – Of Dollars and Data
Our recent FIRE fears article discussed on Animal Spirits [Podcast] – The Irrelevant Investor
Naughty corner: Active antics
Robert Shiller: Making sense of sky-high stock prices – Project Syndicate
A reminder that a market that has been going up tends to keep going up – Crossing Wall Street
Active fund investors earn higher returns for tolerating underperformance [Search result] – FT
The case for investing in non-market assets – Institutional Investor
The top 30 [US] stocks over the last 30 years – Charlie Bilello
Options traders are incredibly bullish – Sentiment Trader
A deep dive into Caledonia Investments – IT Investor
Why most Robinhood investors earn lousy returns [Research] – The Evidence-based Investor
Covid and politics
Note: Any comments on Covid should only go on our special thread, please.
Britain approves Pfizer-BioNTech COVID-19 vaccine in world first – Reuters
UK got vaccine first because it’s ‘a better country’, says Gavin Williamson, an actual government minister – BBC
Dr Fauci walks back comment that UK rushed vaccine approval – BBC
Latest REACT study finds UK’s R number is now below 1 – Imperial College
Germany’s second wave has been worst than its first… – CNBC
…country is a victim of its early Covid success, says minister – Reuters
Sweden now recommends children of Covid sufferers should stay at home [Search result] – FT
Boris Johnson and EU chief seek to break trade deal deadlock – BBC
“This has to stop” says US election official sick of staff intimidation [Video, and if you still support Trump even after his post-election behaviour, please get off my blog] – via Twitter
Kindle book bargains
Don’t have a Kindle? Buy one – no need for a house big enough for books!
Amazon FBA Step-By-Step: A Beginners Guide To Selling On Amazon – £0.99 on Kindle
Make Your Bed: 10 Life Lessons from a Navy SEAL by William McRaven – £1.99 on Kindle
Influence: The Psychology of Persuasion by Robert Cialdini – £1.99 on Kindle
Bean Counters: The Triumph of the Accountants and How They Broke Capitalism by Richard Brooks – £1.19 on Kindle
Off our beat
A look behind the curtain of the global virtual assistant boom – The New Yorker
How to handle The Beast – Raptitude
‘There’s a gaping hole in our knowledge’: the scientists studying why gamers invert their controls – Guardian
‘It will change everything’: DeepMind’s AI makes gigantic leap in solving protein structures – Nature
The empty Spanish resorts of Covid summer – Bloomberg
Blogging is dead. Long live blogging! – Abnormal Returns
And finally…
“He who has learned to disagree without being disagreeable has discovered the most valuable secret of negotiation.”
– Chris Voss, Never Split The Difference
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For cul-de-sac read: curtain twitch, stripe lawn fetish, picket fence, toilet roll doily, fantasy wife swap and cat ownership. (Not necessarily in the that order.) Cities will be just fine.
I have to agree most of us will be back to normal within a year or two. The only exceptions will be existing trends that have been accelerated. Working from home doubled over the previous decade, I expect at least some of that to continue. Equally shopping on line, high street stores have been suffering for years, a return to normal won’t solve all their problems.
In other news this week Vanguard sent an email saying they now support in-specie transfers.
RE: “Only 1-in-4 got these ….”
Yikes!
Oh, the ‘DO NOT SELL’ post. Truly one of the great Monevator moments.
I agree with you that cities will return to normal – and increasingly I think WFH will become unusual (maybe 1 day a week) as for big firms it’ll be too tricky for HR departments etc to co-ordinate things if everyone’s in the office at different times. I am still trying to work out what REIT bargains are still available (obviously not what they were in April, but still cheap relative to history, and unprofitable, hypergrowth tech…).
Re: ‘Only 1-in-4 got these…’
It feels a bit clickbait advertorial… I think the third question is a bit silly. Arguably it depends. If it was the company that you work for, and you know well, then that’s probably less risky than a mutual fund you don’t know much about.
Thanks for the links. Of interest to those of us over 55 perhaps – I had an email this week from Vanguard saying that their SIPP pension now supports drawdown and there are no additional charges for drawdown. https://www.vanguardinvestor.co.uk/articles/latest-thoughts/retirement/how-pension-goes-even-further-with-vanguard
“But I live alone.” You’ve not gone and broken-up with ANOTHER girlfriend have you?
I was really hoping this latest one was “the one”; it all seemed to be going so well :'(
Monevator,
While I appreciate that as a British citizen you likely have a different persepective on politics, you ought to appreciate the views of approximately half of the American electorate as well (I say this as a registered Democrat). Your hostility to Trump supporters is unjustifiable and beneath the dignity of this otherwise excellent blog, and you ought to apologize & remove the “please get off my blog” commentary above.
@tom_grlla
Re “If it was the company that you work for, and you know well, then that’s probably less risky than a mutual fund you don’t know much about.”
I beg to differ. The full extent of the risk in these circumstances is possibility of not only losing some savings/investment but also your income, pension, etc too. This is not just theoretical, it really can and does happen.
> Only 1-in-4 got these three money questions right [Revealing] – ThisIsMoney
I did that test last week! I think I got it because I use moneydashboard.com. I am glad that my answers were the same as those in the article. Though I suspect most monevator readers are also in the 24%
@Omaha Dad — I will not be removing the comment, thanks. It was one thing to vote for Trump. It’s another thing to continue to support him while he takes a wrecking ball to the social conventions of American democracy for his own future gains.
I say this as a longtime admirer of your country, for what it’s worth. That man has proven he wasn’t fit to visit the White House, let alone govern from it.
My employer is going to reopen next year in a new, larger office and is planning the build-out, seats, space allocation etc for something like 3 days in office 2 days WFH for most employees. Taking a risk but feedback from staff (and candidates being interviewed) has been very positive. I think on the whole this will be beneficial, and help attract talent.
The Nature article is one of the biggest to hit the streets this week, and a true step up for the usefulness of A.I.
Arguably this will change the game of understanding disease and change how microbiology is conducted. It could lead to protein design, one academic postulated in a radio four interview, potentially giving new and specific tools to block the progress of disease… The rise of machine learning continues apace. I would not bet against it being the most powerful tool in scientific development from this point in time onward. How society deals with the use of A.I. may well be another thing. They already know so much about your behavior from your interactions on line.
JimJim
Paying for all this Covid support?
If the UK was alone in the level of financial support provided we would indeed be in trouble, but from what I understand most other countries have done much the same. Therefore many other nations will come through similarly indebted. Will we see taxes rising globally?
@Tom_grlla Part of me wants to think that I know the firm I work for better than the many ingredients that make up a mutual, but then I think of Lehman Brothers.
Big firm, well respected, staff got to invest in the firm’s stock at a discount and were strongly encouraged to do so. Many did very well, right up to the point when they didn’t.
I do a mixture of in office and remote working, which I did post pandemic and will do after. My pandemic experience does not bode well for Waitrose though – having to queue up outside the shop made me look at other options – being in to receive an internet delivery means I can shop the much more imaginative and higher quality M&S food whilst getting branded groceries and non-food from Morrison’s – my shopping bill has decreased despite an upgrade from Waitrose to Marks ! I thoroughly recommend.
Regarding the city/suburb/rural split, I think covid will just reinforce things. If you like cities and everything that goes with them, I doubt Covid will stop you. On the other hand, if you can’t stand the idea of urban living, Covid is just another reason to stay away. A *second* pandemic might change things though…
To Omaha Dad, and I say this as a registered Democrat too, The Investor is entitled to his hostility to Trump supporters; I would not respect His opinion if he could not discern that Trump is not a decent man, and that anyone who gave him a vote is not a decent person. Way more of my compatriots than I am comfortable with voted for an unfit, deeply compromised person. But Biden won. Anyone still living in Trump’s alternative reality is not welcome in the real world.
Regarding remote working, I work in IT (large UK company) and we’ve now got pretty solid evidence that our development teams are 10-20% more productive in the current environment. There was a wobble in March/April, but we have tracked development velocity for years now (story points per sprint, for the Scrum folks) and there’s a clear uptick once things settled down from May onwards. It’s not people working longer either, as we track billable hours too and they’ve not moved.
Working hypothesis is that it’s an increase in focused “deep work” time driven by a decrease in office distractions. Most of our staff report preferring home working too, we’re almost 90% against going back to the office for a five day week, preference now seems to be home based with office only if essential, so we’re looking at reconfiguring for drop-in space only. And “can I work remote?” is the top question we’re being asked when interviewing now.
I know anecdotes aren’t data, but certainly looks like some sectors may not go back to “normal” after this. My company almost certainly won’t.
> Only 1-in-4 got these three money questions right [Revealing] – ThisIsMoney
I think the main issue here is the third question. It’s revealing that 53% said they don’t know. (which wasn’t a choice when the questions were presented at the start of the article). I think the term “mutual fund” is more of an American term, and a lot of people wouldn’t have understood it. If the question had said “a fund investing in a range of different stocks” instead, this would have been more understandable to a layperson.
In fact, when the question was translated to German, the language might have been more familiar to Germans, which could account for the difference in ability to answer the question.
@Christian
Designing “good” questionnaire’s is notoriously difficult. However, these questions were posed by an advisor firm – so a degree of ambiguity may be viewed as good by them. After all, the point they are trying to make is that you need to pay somebody (i.e. them) to advise you!
Having said that, the third question is not tricky it is just a variant of whether a person understands the risk of holding all their eggs in one basket. That apparently 53% are unsure about this and 11% think it is a good idea may be quite revealing!
@Al Cam
The question isn’t tricky, but mutual fund is more an American than British English term, so I suspect a significant fraction of those don’t knows are really saying IDK what a mutual fund is.
Yes, I agree ‘Mutual Fund’ is potentially confusing to Brits.
I frequent several UK finance sites and it’s not a term one sees that often
As I was saying.