Lifting The Markets In The New Year

Investing in your New Year’s Resolution

The New Year is around the corner and resolution season is about to hit.  Those of us that still carry quarantine weight may promise ourselves to watch less TikTok’s and lay off the junk food, and instead to read new books and eat more salads ─ you know the drill. We tell ourselves this is the year we finally improve, only to break that promise before Valentine’s Day (although it is true that a handful of admirably disciplined people will carry that promise to the end).

Exercise and diets are very popular resolutions for the New Year. Gym registrations increase between 75% and 100% in January compared to the average for other months. Albeit about half of these memberships will last less than 6 months, the New Year’s resolution market largely defines the financial year for the vast majority of over 40,000 gyms in the United States.

Notably, every segment of this “New Year’s Resolution” market is large. Health clubs are a $100b/yr. market globally (over $60b/yr. in the US), sports equipment add another $80b/yr., and sport’s apparel somewhere between $160b and $200b per year. The health food market is harder to quantify because categorizing foods as part of a “healthy diet” is tougher (is water a “healthy diet” product?), but market consultants size the segment at $350b/yr. market.

Fitness: Old School, New School, Apparel and Nutrition

As with most industries, we can split the broad exercise and healthy lifestyle market into three categories:

Conventional: A big portion of people’s fitness activities happen in gyms and health clubs that remain more or less unchanged – cardio equipment, weights, and studios for yoga and other group exercises.

Disruptors: Over the past few years, new trends and services have increased their reach, ranging from Peloton which sells equipment (bikes and treadmills) and follows with subscription services, to CrossFit-branded trainer-led programs.

Apparel and Nutrition: Sneakers and healthy snacks are as ubiquitous in gyms as treadmills and sweat.

The following is a sample list of companies in these three categories. All companies have their own drivers within the self improvement universe. This is not a merit based list or recommendation but rather a sample of companies in the noted categories to help your research in this sector.

What could go wrong?

Investors ought to note that event-specific, market-specific strategies like this are eminently “hit or miss.” If consumers, for whatever reason – fashion trends, the presence of a new market disruptor, a crunch in disposable income – fail to flood gyms and sneaker stores this January, the thesis of a “New Year’s Resolution” market would flop. And with it, the performance of stocks that depend on a resolution market have a greater chance of lagging the wider market.

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