The K-Shaped Economic Recovery from the Coronavirus RecessionSubmitted by Reby Advisors | Certified Financial Planners | Danbury, CT on October 15th, 2020
By Bob Reby, CFP®, October 15, 2020
This article originally appeared in the Fall 2020 Edition of the Reby Advisors Newsletter.
Survival of the Fittest – adaptability has distinguished the winners from the losers during the K-shaped economic recovery from the Coronavirus Recession.
Throughout history, companies with the resources, knowledge, and competencies required to adjust appropriately to major disruptions often emerge from these challenges stronger than ever. Businesses that cannot adapt fail, and get replaced by startups or existing companies that meet shifting consumer demand more efficiently.
This “creative destruction” has accelerated over the past seven months. Charted graphically, the divergence between thriving and declining businesses gives the “K-shaped recovery” its name.
The upside of the “K” includes brands with the technological capability to digitally connect with customers at home, like Amazon, Zoom, Peloton, and Uber Eats. It’s no surprise that the technology sector has led the way in 2020, keeping overall market performance at or above breakeven, despite the worst economic quarter on record in Q2.
Many “non-essential” brick-and-mortar retailers find themselves on the downside of the K. Yelp reports that more than 163,000 businesses on its crowd-sourced reviews website closed between March 1st and August 31st – and 60% will never reopen. Household names such as JCPenney, Lord and Taylor, and Sears have closed hundreds of locations; these former retail powerhouses simply could not compete online with Amazon.
What can we do to avoid being left behind? As investors, we diversify our portfolios with the aim of capturing the gains from future technological advances made by all companies and industries. In our businesses and careers, our skills and knowledge must keep pace.
With this goal in mind, Reby Advisors will host a virtual “Fireside Chat” titled The Future of Money on October 22nd featuring a special guest speaker who will discuss new technological breakthroughs that may transform our financial lives. You can register to attend at RebyAdvisors.com/FutureOfMoney.
If you have any questions about your financial plan, investment strategy, or how Reby Advisors may help you prepare for the future, please do not hesitate to reach out.
To read the Fall 2020 Edition of the Reby Advisors Newsletter, simply click below: