BFIT in Barron's piece: BFIT high price and low earnings are mentioned within a visionary article claiming Americans will spend more money in services. Are we in for more trouble with this puppy?
interactive.wsj.com
Too, Too Much!
Glutted with goods, Americans increasingly want "feel-goods" -- cruises, makeovers, golf lessons and, the biggest luxury of all, free time
By Lauren R. Rublin
Brenda Foster, a 30-year-old Washington public-relations consultant, is the very essence of the new consumer. Leaving behind a hard-scrabble childhood for college, marriage and a well-paying job, she whittled down her student debts and began a spending odyssey familiar to many young and increasingly affluent Americans. Along with everyday essentials, and plenty of not-so-essentials, she and her husband, a telecommunications professional, bought a new computer, then a townhouse, and most recently, a sport-utility vehicle so fully loaded it resembles a house on wheels.
Now the spending spree is just about over, except for replacement goods. The couple has started to sock away money for kids, retirement and, if necessary, their parents' care. They're beginning to travel. First, a long weekend to Disney World; next, perhaps, a trip to Europe. And they're shelling out big bucks for a range of conveniences, from home repairmen to takeout meals. "If we order in, we don't have to spend time cooking, but can spend time talking instead," Foster says. "Where once we thought about acquiring things, we now look at how we can use our money to spend quality time together."
Foster and her husband may be more blessed than most with financial success, but they're far from alone in shifting their spending priorities. As Americans collectively grow older, more prosperous and more stressed, increasing numbers are reaching the same conclusion: As a nation, we have a surfeit of "stuff," but an alarming dearth of time for ourselves and each other. Take our morning coffee: It now comes in 25 -- or is it 50? -- flavors, but we haven't a minute to spare for a leisurely sip.
In survey after consumer survey, Americans harp more than ever before on the urgent need to regain control of their lives. Sixty percent of those queried last year by Kurt Salmon Associates, a New York retail consulting firm, said they had less time for leisure; an astounding 44% confessed that, given the choice, they'd rather have more free time than more money. Most of us can't make that choice today. Instead, we're using more of our money to buy more, and more rewarding, free time.
........[big chunk taken out]
Indeed, the shares of most service-sector providers aren't in the bargain bin; the long-running and increasingly heady bull market has seen to that. American Express, a potentially huge beneficiary of the public's quest for more travel and leisure, trades right around its all-time high of 93 1/2 . Vail Resorts, which operates a string of Colorado ski areas, now fetches 27, or 32 times expected 1998 earnings. Bally Total Fitness, a chain of health clubs spun off in '96 from Bally Entertainment, has nearly quintupled, to 27, since May. According to First Call, the company's likely to earn about 37 cents a share this year.
And, regardless of how great America's thirst for fun and convenience becomes, consumer-service providers will always remain susceptible to potholes. Recessions haven't been outlawed (we're not sure about bear markets), and cyclical swings will trim their sales and earnings from time to time. Greater competition to snare our attention and dollars likewise will lead to higher marketing costs, which is why Invesco's Greenberg thinks advertising agencies such as Omnicom, WPP Group and Interpublic just might be the best leisure-related investments.
But, the fact is, we have all the stuff we could possibly use. We're looking now for great escapes and great adventures, and are willing to spend big bucks on almost anything that educates, amuses and entertains, and relieves us of our daily cares. After all, no matter how many times we visit Canyon Ranch, we're not getting any younger.
Pancho
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