Coronavirus - Macro Investment Aspects Only

[dealtn]

This is where the suburbs, towns and smaller cities are benefiting. People who used to work in the big cities will be spending more time (and money) close where they live and much less time (and money) in the cities. Demand for goods, services and properties in these locations outside the cities will rise thanks to those people who live locally and are no longer tied to the big cities by their work.

Yes this is my kind of "macro" thinking but its hard to identify the "winners" here, being those companies relatively un-exposed to large City and commuting areas, and those over-exposed to towns and "local" areas where many (possibly ex) commuters live.

Leisure isn't a sector I am overly familiar with, but I would think Budget Gyms so GYM or maybe Ten Pin Bowling, which leads to TEG.

Struggling to turn a macro play into something investable.

Perhaps it is easier to spot opportunities for divestment at the moment.

John

I'm not sure that is easy either! Depends on what you are holding I suppose. Then again, it's never been easy.

[odysseus2000]

Councils are milking this pandemic for as much as they can.

https://www.bbc.co.uk/news/uk-politics-53934725

Not sure how that claim that Government is the least affected by the pandemic is looking, or the subsequent one that Councils are milking the pandemic.

If this article is even close to being right that's a lot of change for local government.

This is all part of the game of government.

Councils have been bleating about what extra money they need and how services are otherwise going to be lost.

Central government doesn't want a bottomless pit of supporting local government and so is telling all the local governments to shut and make do or face being replaced.

There is room for lots of local government reform and now is a great opportunity, so central government is getting its message across to local councils that they either improve themselves or they will be reformed.

Of course the headlines are that huge financial savings could be made etc, but if people don't like their local councils they are apt to turn on the London politicians who will be blamed by the councils, so there is some natural limit to the amount of cash that can be saved and the amount of council workers who can be fired without services getting bad enough to vex voters.

Regards,

[dealtn]

Central government doesn't want a bottomless pit of supporting local government and so is telling all the local governments to shut and make do or face being replaced.

There is room for lots of local government reform and now is a great opportunity, so central government is getting its message across to local councils that they either improve themselves or they will be reformed.

So you now agree they won't be the least affected!

[TUK020]

Anecdotally I would back the thinking that we may be seeing a reversal of the move to big cities like London and New York. My son who works in the city for a major bank has not been into his office in the city since lockdown. He used to commute from Clapham every day, drink at least three or four coffees from various coffee shops on his commute and at lunch. East lunch in one of the many places around the city and work out in a local gym.

During lockdown he moved in with us, 75 miles from London and worked every day remotely, interacting with colleagues all over the world via telephone and computer, just as he had done while sitting in his office. We had set up a gym at home with all the weights and equipment he and his brother needed to continue their strength and conditioning programmes (he is a semi pro rugby player and his brother has just taken up his sports scholarship in the US). We have a professional standard coffee machine at home that he used many times everyday. He saved a lot of money during the lockdown and is now planning to quit his rented flat in Clapham at the end of his lease in October and move permanently to his home town, as have several of his friends who also work in London.

Our daughter worked in hospitality in London, she is about to be made redundant along with about 50% of her coworkers, the hotel she works at is looking at well below 50% occupancy for the rest of the year and well into 2021. She now has three jobs locally that pay her more than she used to earn in London and she is also saving over £1000 per month in travel and housing costs by living with us.

I was listening to a small business owner in the City of London talking about how we needed to get the workers back to their offices so that he can return to making money from them. I felt he was guilty of putting the cart before the horse and forgetting that his business is only there to serve the office workers not vice versa and he should perhaps start thinking about moving his business to where his customers are.

Things have changed permanently.

John

I haven't been in my office since early March. I am amazed at how well our work from home regime ahs worked out.
Last weekend, we reading commentary from Bernard Looney of BP, about how they will not go back to the way they were previously, and as a result BP's office space requirements were being rethought.
I have just bailed out of Land Securities as a result. I don't think commercial office real estate is not going to recover any time soon.
SEGRO, which is much more focused on delivery warehousing, is going great guns.

[odysseus2000]

Central government doesn't want a bottomless pit of supporting local government and so is telling all the local governments to shut and make do or face being replaced.

There is room for lots of local government reform and now is a great opportunity, so central government is getting its message across to local councils that they either improve themselves or they will be reformed.

So you now agree they won't be the least affected!

Its all politics.

If the move to home working really happens, then its likely that local Councils will expand to deal with the extra numbers of people living at home.

You will see lots of sparing between local and central government, almost all of it will be marketing.

Regards,

[funduffer]

I agree there will be a large shift to home working.

However, for an experienced employee, who knows the job and the contacts he/she needs, a home set up has advantages to both the employee and the employer.

However, for a new, young employee, who is starting their career, it will be very difficult. They will not have the network of contacts, nor the experience to be able to perform well working from home. On the job training will be extremely difficult.

It will be interesting to see how companies adapt to developing younger staff with increased home working.

FD

[tjh290633]

I agree there will be a large shift to home working.

However, for an experienced employee, who knows the job and the contacts he/she needs, a home set up has advantages to both the employee and the employer.

However, for a new, young employee, who is starting their career, it will be very difficult. They will not have the network of contacts, nor the experience to be able to perform well working from home. On the job training will be extremely difficult.

It will be interesting to see how companies adapt to developing younger staff with increased home working.

FD

I am sure that the answer to that is attending the office, or other place of work, for 2 or more days each week. That allows for staff training, sitting by Nelly, working under supervision, reviewing work that has been done at home, and so on. You could liken it to Night School.

They would have specific tasks to carry out while at home, and their mentors would comment and criticise while in the office. That can also be done by phone or electronic communication.

The sort of work that cannot be done at home is laboratory or machine shop work. Likewise building and construction.

It will call for ingenuity.

TJH

[scrumpyjack]

I do recall many decades ago, one of my partners had been visiting a client in the far east. It was quite a small office, but he knew the company had loads of staff. The partner asked where they all were. Ah ha, said the director. They are all in an office hundreds of miles away. He then flicked a switch and they had video surveillance of every employee so they could see exactly what they were doing and manage them from a distance!
Maybe each person working from home will have video cameras so big brother can watch them and manage them!!!

[odysseus2000]

Potential increased tax on self employed to pay for C-19:

https://www.thesun.co.uk/news/12556554/ ... rce=pushly

Regards,

[gryffron]

I worked for several years for a company where all the staff worked from home. I see a lot of problems. It's harder for managers to manage. Whilst working from home is ok for senior staff with large houses, it is much harder for juniors. They don't have room to work at home. They may share a home with family or others. How can they receive training, or induction into the company procedures?

Working from home is fine for experienced staff who know their jobs, and know their colleagues. They may even be more productive precisely because they are not spending their time helping new staff or juniors. But how does that support the company in the long run? Or build new staff relationships.

I see a big move to homeworking in the short term, but longer term a return to the office as new staff move to the company and have to be inducted, trained and managed.

Gryff

[odysseus2000]

I worked for several years for a company where all the staff worked from home. I see a lot of problems. It's harder for managers to manage. Whilst working from home is ok for senior staff with large houses, it is much harder for juniors. They don't have room to work at home. They may share a home with family or others. How can they receive training, or induction into the company procedures?

Working from home is fine for experienced staff who know their jobs, and know their colleagues. They may even be more productive precisely because they are not spending their time helping new staff or juniors. But how does that support the company in the long run? Or build new staff relationships.

I see a big move to homeworking in the short term, but longer term a return to the office as new staff move to the company and have to be inducted, trained and managed.

Gryff

All good points, but all addressable in various ways as far as I can tell.

E.g. if a junior doesn't have home space he/she can either rent a room from someone nearby, or in some facility of 'cubes' set up to provide what ever is needed.

For training, much of this can be done via videos with meet ups at hotels or what ever for things that are difficult to do over the net, such as meeting contemporaries etc.

It will come down to what folk prefer and the overheads of creating it with some firms doing it well, others badly and losing staff to the ones who execute better.

No doubt some folk will never adapt to remote working and will have to find jobs that don't need it, but in the by and by I expect the techniques of remote operations will be developed to the point where office work slips into history books for a lot of the current office work people.

I commuted for a several years but can't imagine ever doing it again although some industries like manufacturing with big machinery will not be able to avoid the need to bring folk to the machines, many others will imho.

Regards,

[redsturgeon]

I worked from home for all but two of my years of working for others across several international large companies.

The problems mentioned are real but not insurmountable. It was normal to run training and induction courses, sometimes up to 12 weeks in duration, these succeeded in instilling knowledge, processes and cultural norms for the companies to their new recruits.

Regular meetings, either face to face or via the phone/computer were normal either 1:1 or in small teams.

Metrics were put in place to be able to monitor worker effectiveness from a distance, not much more difficult than actually eyeballing a worker on a daily/hourly basis.

No doubt some of these measures come at a cost but set against the cost to the company of large serviced workspaces often in premium locations plus the cost to employees in time and money of the daily commute then they probable net out on the side of remote working.

Also there is probably a balance that has been shifted rather than an all or nothing situation. Bosses who have been insisting on the necessity of 100% office attendance may now have been persuaded that perhaps 3 or 4 days home working per week is perfectly viable.

I have a friend who normally commuted between 3 and 4 hours daily, by bike, train and tube to an office in Kensington. She is a senior lawyer and over the past year had managed, after quite a fight to persuade her boss that one day a week she could work from home without it affecting the quality of her output. Since lockdown she has not been to the office once, she is actually going in for the first time today. I asked her if she felt her output had suffered, she said that there were less than half a dozen times in the last few months where being in the office for a meeting would have been better.
She saves £500 and 50 hours per month in travel costs, she won't be going back to the office more than one day per week. Her mental health and stress levels have improved greatly too.

I can see the downside for the David Brents of this world who need the presence of minions to support their own desire for power and status but for the majority of workers and for the company balance sheet I can see many positives.

John

[gryffron]

I can see that the creation of local office "pods" in small towns and villages is a great idea. A dedicated workspace for those with smaller or disruptive home environments. Also providing social interaction, cafes, sandwich bars etc. And potentially business benefits as the different businesses working out of them can support each other.

Maybe that's the positive business opportunity several here were looking for. Clearly companies using them won't own them. So space for the REITS to use their property portfolios?

Gryff

[tjh290633]

I can see that the creation of local office "pods" in small towns and villages is a great idea.

There is one in our small village, which is obviously meeting a need.

TJH

[odysseus2000]

Is there opportunity in emerging markets?

Twitter was showing how well Rees Moog's emerging market fund was doing by looking at Sales amount.

https://twitter.com/RealBristolNews/sta ... 70530?s=20

The data for the fund itself is not as impressive:

https://www.trustnet.com/factsheets/o/d ... -b-acc-gbp

It gets a bronze from Morningstar.

Looking at other funds in this sector:

https://www.trustnet.com/fund/price-per ... ageSize=50

shows that the funds have done the best over 5 years.

As of now, investments in the Nasdaq leaders have done far better with the Nasdaq now well above the early 2020 high, whereas Moog's emerging market fund is not.

The large sales amounts growth, that I take to be punters buying into the fund, would have done better in the Nasdaq although the flood of new investments have been a blessing to the fund owners.

I have noticed this kind of under-performance from emerging markets before and personally don't feel they are worth the effort, although looking to see what stocks the funds own can uncover some opportunities. Moog's fund e.g. is 36% in China, 15% in India with near 5% holdings in Tencent and the Korean Samsung.

Regards,

[odysseus2000]

Lord Sugar writing in the Sun why folk should go back to work:

https://www.thesun.co.uk/news/12568515/ ... k-economy/

He makes many of the points made on this thread.

It will be interesting to see what happens as the forces of non-commuting home work and lower over heads for employers meet up with the forces of the traditional way of doing things.

Usually in these kinds of battles it is the new ways that win and indeed it was folk like Sugar who obliterated the type-writer industry and associated working practices with personal computers.

If work at home continues there will be huge opportunities in finding ways to service the non-commuting folk and that probably means more distance selling, more local services and that may help the smaller retailers who have struggled in many towns.

Regards,

[Watis]

Lord Sugar writing in the Sun why folk should go back to work:

https://www.thesun.co.uk/news/12568515/ ... k-economy/

He makes many of the points made on this thread.

It will be interesting to see what happens as the forces of non-commuting home work and lower over heads for employers meet up with the forces of the traditional way of doing things.

Usually in these kinds of battles it is the new ways that win and indeed it was folk like Sugar who obliterated the type-writer industry and associated working practices with personal computers.

If work at home continues there will be huge opportunities in finding ways to service the non-commuting folk and that probably means more distance selling, more local services and that may help the smaller retailers who have struggled in many towns.

Regards,

I don't think you can blame/congratulate* Sugar for killing the typewriter industry. It was going to happen anyway.

Watis

* delete as appropriate

[PeterGray]

I get very annoyed by those, like Sugar, who fail to distinguish between those not working, on furlough etc, and those working from home. Those calling for people to "get back to work" mostly mean they want people to change the place they are working, from home to the centre of towns, mainly to support sandwhich bars, pubs, ciity restaurants etc. Most employers with staff at home are finding that productivity is good, and they and their staff are quite capableof deciding when it is neccessary/sensible/safe to bring staff back to the office, part or full time.

Bleating "get back to work to get the economy working" is very misleading. Much of the economy is working without people travelling to offices. There are fairly specific parts of the service sector which are really suffering, and they may have to change the way, and places, they work in the future. Responsible employers are unlikely to risk the health of their office staff, and possibly their own work, in order to bolster sandwich and beer sales in town centres.

[johnhemming]

I get very annoyed by those, like Sugar, who fail to distinguish between those not working, on furlough etc, and those working from home.

My guess is that the newspaper asked him to write this and may have assisted in the process.

[odysseus2000]

Interesting AGM statement from Royal Mail:

Strong parcel growth, strong letter decline:

https://www.investegate.co.uk/royal-mai ... 00093248Y/

Much of the rest is management moaning about unions and working practices.

Should management gets its way there looks to be good opportunities and the updated forecast are interesting.

Regards,