Part of it has to do with where we live. South Central Texas is a thriving, job-creating area, and it draws millions of young workers, so children seem to be everywhere. If you’re looking for a place with adult-friendly restaurants and theaters, this isn’t it.
But part of it is my age – or more specifically, my stage of life, although the two go hand-in-hand.
Everywhere I look, I see babies and toddlers. I want one. But not to keep. I’ve got a bad case of grandparent fever.
I want the kid I can spoil and give back. I want one who will think I’m awesome, no matter what. I want one I don’t have to discipline, one I can see as it suits my schedule.
My own children are well aware of this, and so far, aren’t interested in my needs.
For years I’ve told them that the day they produce a grandchild, I’ll buy an Airstream. I want a 27-footer, big enough for a bedroom, enclosed shower in the bathroom, and a decent living area that can double as an office. I intend to drive it to wherever the grandkid lives, and then park it out front of their home.
I don’t want to be in the house with my kids, that seems intrusive for them and a pain for me. But I do want to be close enough to have grandkid access.
It’s sort of a joke. Sort of.
None of this is surprising. I’m in my early 50s and my kids are in their mid 20s. We’re progressing just like our demographic and consumer spending research suggests , which is what makes the information so powerful. Unfortunately, whatever I’m doing next is the wrong place to focus, because my particular generation isn’t big enough to make a difference. We’re Gen-X’ers. It’s the Boomers before us, and then eventually the Millennials, that drive things, and RV’s are a great example.
On the Road Again
From 2009 through 2017, RV sales exploded. Part of it was a rebound after the financial crisis, but in large part the Boomer drove the growth as they reached the peak age for RV demand, 59 years old. With peak Boomer births in 1961, we expected RV sales to increase as we moved closer to 2020, the year in which the largest number of Boomers would turn 59, with the biggest growth in the later years.
In our Boom & Bust portfolio, we held Thor Industries (NYSE: THO) during some of the high-growth years in the mid-2010s, and made good money on the stock. But in 2018, the industry started to roll over. After explosive growth, RV sales dropped 4.1%. This year, sales will tank by 20% or more, and have notched 13 consecutive months of annual declines.
Industry watches blame the Trump tariffs for increasing costs by 5%, and fearful consumers who expect a recession. But we know there’s something else going on. The large generation of the Boomers are moving past the peak age for buying RVs, so the industry is losing its best customers. The same thing happened to Harley Davidson in the mid-2000s when the Boomers past age 45, the peak point for purchasing motorcycles.
This information is incredibly useful on two fronts. When investing, we can focus on industries that are in the sweet spot of their demographic-driven demand, like owning Harley before 2006, and owning Thor Industries several years ago. We can potentially squeeze the most profit out of stock by holding it when the most people want to buy the company’s product.
In Boom & Bust, we’re no longer looking at RV companies. Last Spring we bought Weight Watchers Company (NYSE: WW) because the peak age for dieting is 60, which would put the peak demand for this company in 2021. We can’t know exactly when it will peak, but we want to own it when the demand should be highest. At last check, we were up 60%.
As consumers, we can use this information to time purchases. Knowing that RV demand should peak in the late 2010s, I could temper my enthusiasm a bit, comfortable in the knowledge that I’d probably get a much better deal by waiting until the end of the decade to buy one. If you look at RV classifieds, they’re full of people trying to unload the things, which is good for people like me.
This sort of research works for hundreds of products and services, from clothing to housing. All you have to know is where to look, which is why Harry published his Spending Waves book which includes the latest consumer demand research, and it’s part of what we’ll discuss at the Irrational Economic Summit next month in D.C.
Now, if only I could get my kids to comply by giving me a grandchild.
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