Picture this: You’re driving on the highway at about 80 miles per hour. It’s faster than the speed limit, but you’re keeping up with the flow of traffic, so you don’t think twice about it.
Then, your speedometer breaks. Nervous that you can no longer track your mph, you slow down a bit. You’re passing vehicles frequently, so you slow down some more. And when you see a police car on the side of the road, you slow down even more.
Much to your dismay, sirens and lights appear in the rearview mirror. You’re being pulled over – you assume for speeding – but the officer says, “Why are you going only 45 mph in a 60?” Turns out, you didn’t need to go that slow.
This analogy is how I describe the current voyage through the COVID-19 pandemic for our economy and many public companies. We don’t actually know how fast (or slow) we’re going because our speedometer is busted. And it’s all relative anyway. Some industries are unexpectedly thriving due to the coronavirus – such as alcohol sales being up 55% because we’re drinking more (likely to cope with anxiety but to the detriment of our immune systems). According to Nielson, spirits were up 75%, beer up 66%, and wine up 42% from March 15-22, 2020. Other industries like airlines and hotels will be hit harder.
When earnings start coming out this week, we’ll have a better point of reference for each sector. And we can make more informed decisions about whether to step on the gas or the brake. Stay tuned.