Only time will tell if they'll go the way of buggy-whip manufacturers after the invention of the automobile.
Event planners and owners of conference halls and theatres are still hurting. With so many free Zoom webinars now available, can organizers really charge as much for a virtual experience? All the businesses that supported large events are now scrambling for customers, and the smart ones are reinventing themselves. Could we see the return of drive-in movies?
My husband works in the airline industry, which has been hit particularly hard. In February, employees received record-breaking profit-sharing checks. In March, the airline cut its schedule by 90% and was burning through $50 million a day. Thousands of employees were encouraged—or forced—to take voluntary leaves or exit packages. Government assistance was the only reason the airline didn't immediately furlough most of its workforce and demand pay cuts from those who remained. We all know that's coming once the assistance runs out.
We used to take a lot of cruise vacations; in 2019, we took four. This year, none. We'd scheduled a cruise for April, but then the cruise line suspended its voyages ahead of the no-sail order. I still receive weekly emails from travel agencies touting enticing sailings—first for fall and winter of 2020, now for spring and summer of 2021—but I'm not biting. It took us over 60 days to get our refund from our April cruise that got canceled, and the no-sail order keeps being extended. I feel sorry for owners of travel agencies and people who work in the tour industry. I believe demand will return one day, but how long can they hang on until that happens?
Stocks in these industries have suffered accordingly. Investors have made money through short-term speculation, but if you purchased these stocks before March, you're still in the red.
No one can predict the future, determine tomorrow's winners and losers, so how do you prepare?
If you're an investor, diversify. Tech stocks are hot now but don't put all your money there. Remember the tech bubble at the turn of the century? If your nest egg is spread out among different baskets, you're unlikely to lose it all if one sector tanks. As I mentioned, the Dow is soaring again, but a different mix is driving the averages.
If
you're an employee or a business owner, build expertise that will transfer
across industries. Take advantage of downtime to learn new skills or update
proficiency. Never stop networking and don't burn bridges.
Having emergency cash is essential. I've done several posts about the value of accumulating and maintaining an emergency fund—at least three to six months' living expenses in a liquid, low-risk account. The only reason most of the airlines are still in business was that they had billions of dollars in cash on hand, accumulated when business was booming. Even so, only government assistance saved them from burning through all that cash before revenues could return. Such a reversal of fortune!
Look for ways to shrink your financial footprint. Cut unnecessary spending, reduce debt. The less money it takes to sustain your lifestyle, the longer your emergency funds will last, and the less likely you are to suffer a reversal of fortune.
What
are your thoughts about preparing for the unexpected? I'd love to hear your
comments.
Good post, Sharon. In May my older daughter graduated with a four-year degree in hotel administration. She's working in a hotel now, but we live in an area where most places close for the winter in the beginning of October. After that, she's hoping to find a job in the hotel industry somewhere not too far away, but the hotels that remain open in New Jersey are often the ones catering to business travelers...and we know what's happened to business travel.
ReplyDeleteLuckily, my daughter is living at home right now, but for people who don't have that luxury, this is a tough time. I always encourage people to remember to continue donating to food pantries and community charities if they're able, because the money has to be stretched even farther now.
Good reminder to always try to help others when you can. It will mean much more to them than what it costs you.
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