Pent up demand #FinanceFriday

Most economists agree there is a lot of pent-up demand in the economy now. People are spending less but many people still have their usual income so bank balances are growing. Many are asking what they will spend that surplus cash on when things return to normal. When the lockdown ends, many will rush out for a haircut and the ladies will be looking to improve their appearance in all sorts of ways. Can barbers and hairstylists offer a little more and take extra into their tills when the lockdown ends? Many other businesses might have an opportunity to increase sales too.

housing

There was a rush of house buying following the last lockdown so estate agents and mortgage providers could benefit from the end of this lockdown. We could see the share prices of brewers benefit from the end of the lockdown and they will certainly benefit from the end of the pandemic. Long-term investors need to consider which companies will suffer permanent damage from the pandemic and which will come out of it and see their share price surge. Some companies are incurring a lot of debt now but where the share price is substantially lower they could bounce back.

Banks and Oil

Banks such as Lloyds still look cheap. Lloyd’s shares are trading at 36.49p today. That’s down from around 65p before the pandemic. Even Barclay’s still looks relatively cheap. I’m still quite bullish about oil companies too. RDSB and BP are giving me good returns and both will pay a quarterly dividend in March or April. I think they go ex-dividend in March.

A changing world

We are living in a changing world. Now people have got into the habit of not going to the pub and cooking at home instead of eating out will these trends continue after lockdown has ended? Premier Foods is doing well because people are now in the habit of having afternoon tea. I must admit I’m using more Hartley’s jam!

Bank Balance

A healthy bank balance gives people security in an insecure world and people who now have a healthier bank balance might decide to keep it that way while others will be shopping for a new car. Maybe some are using the money they have saved to pay off debts and they could decide to stay out of debt in the future. It seems certain that some people will have their habits changed by the pandemic. Many people will be assessing their lives and be grateful for good health and might change their lifestyle as a result. It might be worth monitoring the switch to healthier lifestyles when making investment decisions.

Phew, glad that’s over

There will be a sense of relief when the pandemic is over and many people will take it as an opportunity or excuse to celebrate. That sense of relief will bring changes in behaviour too. I’m sure a few champagne corks will pop in time. That pent up demand will have a significant effect on the economy both when the lockdown ends and when the pandemic ends.