The fitness industry has changed dramatically in the last year. Fitness equipment more than doubled in revenue, fitness apps are more popular than ever, and people have changed the way they thought about health and working out. What does that mean for your portfolio? Josh and Austin bring you along as they discuss the changes in the fitness world, their own fitness routines and how to invest in this trend. Listen in now!
Main Talking Points
[1:26] – Fitness in 2020
[7:20] – Josh & Austin’s Fitness Routine
[12:04] – Dad Joke of the Week
[12:40] – How to Invest in Fitness
Links & Resources
The pandemic’s home-workout revolution may be here to stay – The Washington Post
Trends in Digital Fitness – Lincoln International
Invest With Us – The Invested Dads
Free Guide: 8 Timeless Principles of Investing
Social Media
Full Transcript
Intro:
Welcome to The Invested Dads Podcast, simplifying financial topics so that you can take action and make your financial situation better. Helping you to understand the current world of financial planning and investments, here are your hosts, Josh Robb and Austin Wilson.
Austin Wilson:
All right. Hey, hey, hey. Welcome back to The Invested Dads Podcast, the podcast where we take you on a journey to better your financial future. Today, we are going to be talking about home fitness and specifically as it has changed over the last year or so. And shout out to Steph because this was her topic idea. Great idea, Steph.
Josh Robb:
Yes. And we’ll get to why in a little bit. But home fitness, for me, I count every time I bring a doughnut to my mouth, that’s an arm curl, that’s home fitness.
Austin Wilson:
Yeah. And nothing wrong with that. I talk about fitness whole pizza in my mouth.
Josh Robb:
Yes, that’s right.
Austin Wilson:
After work tonight, we have some leftover pizza I’m going to go try to fit in there. So that is kind of not quite what we’re talking about, but actually we did see a lot of people make some pretty significant changes as COVID-19, which started in ’19 and extended through all 2020 and here we are in 2021, has changed the way people do a lot of things since specifically their workout routine has definitely changed. So we’re going to look at what happened this last year, we’re going to think about what’s going to happen going forward and how you can invest in this industry.
[1:26] – Fitness in 2020
Josh Robb:
Yeah. So let’s start by looking back at this last year through kind of March, April, when everything really got shut down, as people were told to stay home, and one of the big things is if people were going to a gym or going to a fitness center to work out, that was one restriction they weren’t allowed to do anymore. So what happened?
Austin Wilson:
Right.
Josh Robb:
Because they’re stuck home, they still wanted to stay in shape. And if they were like me, they started to eat a lot more too, because I mean, you’re just sitting around doing nothing and you start eating, they wanted to find things to do. So we’re going to look at that. There’s a couple of articles we’re going to reference kind of as we look back on that. The Washington Post had an article, which we will link in the show notes. And they said one of the side effects was national parks. So like Yellowstone National Park had the busiest September and October on record as people said, “Okay, if I can get out and be spaced in a big open outdoor area, do some walking, some hiking…”
Austin Wilson:
That’s a pretty big one.
Josh Robb:
Yeah. I think you could be social distanced there. Those are the big things. We saw bikes and kayaks throughout the summer. They’ve sold out. And then as the weather changed, we saw people’s themes shift to skis, snowshoes, snowmobiles, all the outdoor stuff. Those were in short demand as well.
Austin Wilson:
Yeah. It was kind of an interesting thing. So yes, obviously now we’re finally getting to the point where we kind of understand how those things kind of spread, but you crimp down on people’s ability to go work out with people, even though working out is something that makes people healthy and it really put people in a tough bind, even though a lot of people still wanted to continue to work out in some way, shape or form and they got dang creative.
Josh Robb:
Yes, they did.
Austin Wilson:
And being outside in general, always awesome. But it was a boom specifically last year and we’re already seeing it here in 2021. Health and fitness equipment revenue more than doubled to $2.3 billion from March to October last year, according to NPD retail data. So you can’t go do this at the gym now, you got to do work out at home, sales of treadmills for working out at your own house sold of 135%, while those of stationary bikes nearly tripled. And that put an increase in pricing because that depleted inventory levels.
Josh Robb:
Yeah. And we’ll talk about-
Austin Wilson:
That stuff was in demand.
Josh Robb:
And so what we saw was the shift from going somewhere, doing a class, doing some sort of group activity to either a solo activity, hiking, kayaking, those types of things or working out at home. And we’re going to talk about it in a minute. But part of that homework out is we saw more and more apps, right? And as people went looking for it from January through November of last year, approximately 2.5 billion of health and fitness apps were downloaded worldwide. Now that’s worldwide. So bigger, not just US, but that’s a lot. A 47% jump from the same time period the year before.
Austin Wilson:
So that is literally about half as many more just within a one year period.
Josh Robb:
That’s crazy. And again, because we’re all social people, right? We want to have that interaction. So if I’m working out by myself, it’s a little harder to get motivated, right? And I’m using that kind of as a facetious question because I don’t work out.
Austin Wilson:
I was just about to say, oh yeah, it’s really worked out great for you.
Josh Robb:
But in general, if you’re going to work out in a group, you have a better chance of continuing that, right? If you’re being held accountable. So those fitness apps, those type of things were in high demand.
Austin Wilson:
Yeah, absolutely. Because I’m a numbers guy, I got some more numbers to bring to the table here. So I was reading this article from a consulting firm called Lincoln International. We’ll link that in the show notes. And the funny thing is this article was published in April of 2020. So this is not even really taking into-
Josh Robb:
The earlier.
Austin Wilson:
Yeah. This is early COVID article here.
Josh Robb:
And their research is probably pre-COVID.
Austin Wilson:
Correct.
Josh Robb:
Yeah.
Austin Wilson:
So this is already trends that were happening here. So as of April 2020, total health and wellness industry, the total industry in total, which I think includes like food and stuff as part of that, but that was worldwide a total of about $4 trillion, trillion with a T.
Josh Robb:
For trillion.
Austin Wilson:
So globally, we spend about 600 billion just on fitness and wellness services. So kind of digging into those numbers a little bit, if you look at the digital side of things from 2017 to what is estimated to be the size of that portion of the industry in 2022, the industry is expected to grow at a 32.6% compound annual growth rate over that five-year period?
Josh Robb:
Or what do you call that?
Austin Wilson:
I call that a CAGR.
Josh Robb:
CAGR. Compound annual growth rate.
Austin Wilson:
Not a K-E-G-G-E-R. Not like whoop whoop… But like CAGR, compound annual growth rate and that’s just smooth growth over time but anyway-
Josh Robb:
So compounding the annual growth rate, looking at it grow potentially. 32.6% of-
Austin Wilson:
Per year essentially is what that means.
Josh Robb:
Per year, but over from 2017 through 2022, we’re looking at an increase in growth rate per year.
Austin Wilson:
That’s from digital fitness and wellness products, okay? So digging down a little bit deeper, the fitness app market is expected to grow at a 21.1% CAGR from 2018 to what’s expected in 2026. So that’s not small growth. Those are big growth numbers and if you extrapolate that from the numbers that you had talked about earlier of 2.5 billion health and fitness apps, you’re getting some pretty big numbers.
Josh Robb:
Yeah. And the crazy thing about it to me is if you just go on to your Google Play or your Apple Store and you search, there’s a lot of fitness apps out there and there’s a lot of free fitness apps out there, right? And so there’s a lot of choices to choose from when it comes to how and what you do. So for the average local gym just said, “Well, what if we just offer online classes? There’s a lot of competition out there.”
Austin Wilson:
Absolutely.
[7:20] – Josh & Austin’s Fitness Routine
Josh Robb:
So what do you think going forward, where are you at now fitness wise, both home and out in the world?
Austin Wilson:
Well, I’m out of shape.
Josh Robb:
Where do you think things are going?
Austin Wilson:
I’m out of shape. So I guess I have not been a regular gym goer, like physical goer, since I would say I did it a little bit when I first graduated college. Because as an alumni, you could get a membership to the rec center for cheap. So I did that for a while and it was great. We even did that once we got married. Jenna was able to get a spouse membership. So we went there for a while. That was a long time ago. And since we moved or since we had a kid and all these things, we’ve not been gym going people. I don’t really anticipate that that’s going to change. Call me old fashioned-
Josh Robb:
Hi, old fashioned.
Austin Wilson:
But right now… Hi Josh.
Josh Robb:
I called you.
Austin Wilson:
So right now my workout routine is I get up 5:30 or 5:15 or whatever and go run one mile. That does not take any equipment. I go run a mile, come inside, do my pushups and sit ups, my squats, whatever I want to do involving no equipment whatsoever. And so I’m ahead of the game.
Josh Robb:
Yeah. You’re up for any equipment for you.
Austin Wilson:
I’ve been working out at home for a while and I don’t really see that changing. I just don’t have the motivation to go to the gym because that adds a lot of time.
Josh Robb:
It does. That’s the hard part.
Austin Wilson:
So if I want to go… The closest gym to me is 10, 15 minutes away probably. That’s two. And you’ve got to drive there and drive back and that’s another half an hour on of your morning, which is already pretty crammed. So I don’t anticipate that changing for me, but where do I see the rest of the world going? Probably continuing with what we’re seeing now. I think people are seeing that you can do this stuff from your house just as well as you can do it from a gym. You can have some pretty basic equipment and have coaching through apps and whatever you want to do for a relatively affordable cost compared to going to a gym and having a membership and you just do as well. So I kind of see that continuing. I don’t plan on going back to a gym. What about you? What are your thoughts?
Josh Robb:
Yeah. So the last time I was a member of a gym was my brother owned a CrossFit gym in town. And I did that for a while. It was great. And since he moved, we haven’t done any of that. My wife does a lot of working out at home through apps and those types of things, classes. I do not. Most of my working out is half I sit up in the morning and then the other half is laying down at night.
Austin Wilson:
Classic.
Josh Robb:
That’s one whole sit up. So that’s pretty cool.
Austin Wilson:
Per day.
Josh Robb:
Per day. But honestly whether it’s running or we do have weights and a treadmill and just recently purchased a bike down for our basement. So we have some equipment at home for those as well. So I think like you working out from home will be the long-term. Now again, thoughts going outward, I do think… So going back to like the CrossFit gym, those specialized type of classes are hard to do on your own and to do so in a continual basis, you kind of need that group to motivate you, encourage you and kind of push you farther, right? So I think those types of things will come back and people will get back into those, right?
Austin Wilson:
Yeah.
Josh Robb:
Spin classes, you can ride a bike at home.
Austin Wilson:
I feel really dizzy.
Josh Robb:
But if you are in… oh I got you… the spin class. But if you are in a group, I think you probably ride a little harder because you’re there, right? So I think those types of things, you got your dance class, the things that are group oriented will come back but for just the average person who would just go into a gym doing their own thing and coming home, if they bought equipment, they’re probably going to just stay home and continue with that. So again, it comes back to what were they doing pre COVID-19? If it was a group class, they’ll probably go back to the end of this. Pilates or yoga, you could do yoga at home but part of the enjoyment I think is doing it in a class, doing it with other people. So that’s what I’m at.
Austin Wilson:
See, I spent many years of my life being coached and pushed and told how to lift and how to work out and all of these things and being motivated by… And now at this point in my life, I’m like… I’m just going to accept the dad bod and roll with it. A nice in-shape dad bod but normal.
Josh Robb:
A dad bod gets a bad rap. It’s just the exhibits of you’re just comfortable.
Austin Wilson:
I don’t worry, just don’t worry and I just love my body.
Josh Robb:
There you go.
Austin Wilson:
That will shape your body.
Josh Robb:
That’s key. I got to get on a whole other tangent.
[12:04] – Dad Joke of the Week
Austin Wilson:
Exactly. Josh, before we get into what is my favorite part of the episode, I have a dad joke of the week for you.
Josh Robb:
Let me hear it.
Austin Wilson:
And I think it’s going to crack you up.
Josh Robb:
I’m ready.
Austin Wilson:
Okay. So Josh, how does a salad begin a religious service?
Josh Robb:
A salad begin a religious service, I don’t know.
Austin Wilson:
Let us pray.
Josh Robb:
Let us pray. I like it. Let us pray. That’s good. I like it.
Austin Wilson:
That’s a classic joke. Reddit, I just get it.
Josh Robb:
You love the Reddit jokes? That’s quite sad.
Austin Wilson:
It gets me Reddit jokes/dad joke, they’re just wonderful. And they’re not all appropriate.
Josh Robb:
Yeah. You got to screen them.
Austin Wilson:
You have to screen them. You can’t just go random and go find a rogue one.
Josh Robb:
Nope.
[12:40] – How to Invest in Fitness
Austin Wilson:
Okay. My favorite part of the episode is ways to invest in this trend. And there’s a couple and one I think you’re really going to like, Josh.
Josh Robb:
My passion is well-named tickers.
Austin Wilson:
Of course.
Josh Robb:
It is.
Austin Wilson:
I got one for you.
Josh Robb:
Okay.
Austin Wilson:
So the first bucket I’m going to say is ETFs. And if you don’t know what an ETF is, we did an episode on comparing ETFs and mutual funds. So we’ll link that in the show notes, check it out. But an ETF, exchange traded fund, it’s kind of a way to get a diverse holding in segment or sector or a bucket.
Josh Robb:
Or a bucket of holdings at once.
Austin Wilson:
You’re not picking companies, you’re picking a… This is a thematic ETF so you’re picking a theme. The thematic ETF is the Global X Health and Wellness ETF.
Josh Robb:
That doesn’t sound like a good start. Global X, I don’t even know what that means. So what do we got?
Austin Wilson:
So what could the ticker be? The ticker is BFIT.
Josh Robb:
BFIT.
Austin Wilson:
BFIT.
Josh Robb:
I like it.
Austin Wilson:
I mean, just the ticker alone is going to sell some shares. Alternatively, if you wanted to do the research on your own, you could buy individual stocks. And the well-known ones in the space are Peloton. So obviously Peloton went public a couple of years ago. They have the bikes, but they also have weights and recalled treadmills. Let’s not talk about that. But I heard a lot of people don’t want to get rid of the treadmills.
Josh Robb:
You like them, huh?
Austin Wilson:
Yeah. And Peloton will come to your house and take it away.
Josh Robb:
Oh, they will. They’ll knock on your door until you answer it and stick in the window glass.
Austin Wilson:
But a lot of people don’t want to get rid of them even though they’re dangerous. So anyway, Peloton, our ticker, PTON, I believe Lululemon, L-U-L-U obviously makes athletic apparel, but they also make this product called Mirror. And I keep seeing commercials for it. Literally, it looks like a mirror on the wall, but it’s a screen and it has a coach doing workout and statistics and you can see yourself in the coach and I don’t know, kind of workout doodle.
Josh Robb:
Those commercials give me anxiety because I’m watching that and it’s resistance spins. So do you see some sort of resistance?
Austin Wilson:
Well, that’s a different one, but I see-
Josh Robb:
You weren’t talking about it. On the wall-
Austin Wilson:
It comes away from the wall.
Josh Robb:
… by pulling the things and-
Austin Wilson:
What if you only put it in the drywall?
Josh Robb:
Well, that’s my question is like how strong are those bolts that are holding it there? Because if you’re a resistance and you’re pulling a 100 pounds or something, if that comes off the wall, it’s coming quick at you and that’s a solid piece of equipment.
Austin Wilson:
It sounds like a lawsuit waiting to happen.
Josh Robb:
So Lululemon might have a lemon, I don’t know. But yes, either way, good.
Austin Wilson:
To think more on the apparel and shoes side of things, Nike, Under Armour, those are names that you can invest and Peloton trader.
Josh Robb:
And like Nike has fitness app, right?
Austin Wilson:
Oh yeah, through Apple. Specifically, it kind of comes pre-installed or could come pre-installed depending on they have a partnership with Apple on Apple watches.
Josh Robb:
But if I understand it, they have like chips in their shoes and stuff that sinks in this. And it’s like, you run a flat foot and stopped doing that or whatever.
Austin Wilson:
I’ve never had it. I don’t want it to judge me.
Josh Robb:
I’m not the trailer, you’re running slow. I don’t know what it tells you, but whatever it is.
Austin Wilson:
That’s hilarious. So speaking of Apple, this is the lot that I’m going to say you probably already own it. If you’re invested broadly in the stock market, you probably are in an index fund of some sort or a well-diversified fund that holds some of the bigger companies in America. While the bigger companies in America are, you guessed it, Apple being one. They have the fitness plus subscription you can subscribe to and essentially a coach get on your… You have to have an Apple watch for that, but it connects your Apple watch and your phone. You can even put it on your Apple TV and it’s essentially a fitness program. You can subscribe to that. I’ve never done it. I have a free trial. I could try because I just got a new Apple watch.
Josh Robb:
Just try and tell me how it is.
Austin Wilson:
I’ll have to let you know. Also Google, they just acquired Fitbit and everyone, those were the thing prior to Apple watches.
Josh Robb:
Yeah. They have Fitbit. They’re still very cool.
Austin Wilson:
Apple watch took the Fitbit thing and said, “We’re going to actually make this.”
Josh Robb:
And Samsung says, “Hey, we’ve got an EKG now in ours.”
Austin Wilson:
So do I.
Josh Robb:
Yeah, nice.
Austin Wilson:
That’s pretty cool. What’s a resting heart rate?
Josh Robb:
Resting heart rate.
Austin Wilson:
There’s a blood oxygen monitor now.
Josh Robb:
Well, I can take my blood pressure now, that’s the new thing from Samsung.
Austin Wilson:
Man, we’re going to have a one-up challenge. The coolest thing that is not real yet, but it could be here.
Josh Robb:
I could defibrillate myself if I am having a heart attack. It’s pretty cool.
Austin Wilson:
Apple’s working reportedly on technology that will allow diabetics to test their glucose levels from their watch without ever pricking anything.
Josh Robb:
Wow.
Austin Wilson:
Like that’s a game-changer.
Josh Robb:
Yeah. That’s huge.
Austin Wilson:
So I think that that’s pretty cool, but I mean, that’s health and science and medicine aside from it’s all in there. Google-
Josh Robb:
But why you can integrate into one is more like people will use you for all those different things.
Austin Wilson:
Yeah. Another thing that Google has is YouTube and there are probably millions. I’m going to say more than thousands. I’m going to say probably millions of-
Josh Robb:
That’s a good number.
Austin Wilson:
… fitness videos for free. You have to watch an ad, which could be kind of funny. So like you’re doing a work out in your living room and then it’s like, “Hold on. Here’s an ad.”
Josh Robb:
Is there an ad in the middle of the fitness workout, oh man.
Austin Wilson:
I don’t know, maybe there is and you have to find your remote real quick and push skip after five seconds and your heart rate goes down and you got to start over.
Josh Robb:
You got to start middle of like a crunch, hold this and then it goes into the 30 seconds and you’re just sitting there shaking and they’ll be there, “Hold this plank.”
Austin Wilson:
Yeah, those are some ways that you can get exposure to these themes. But Josh, what is our disclaimer when it comes to investing?
Josh Robb:
Always talk to your advisor to make sure that whatever investments you’re looking at make sense for your long term goal.
Austin Wilson:
Because these are names that a lot of people hold and we would say most people probably hold.
Josh Robb:
Yeah. But you go back to Peloton, right? They have a recall on their newest product could affect the price.
Austin Wilson:
And their stock. It did, it tanked.
Josh Robb:
Yes.
Austin Wilson:
So it’s not been great.
Josh Robb:
Always talk to your advisor to make sure it fits with your long-term goals or whatever your investment goals are for your account.
Austin Wilson:
Unless it has a great ticker.
Josh Robb:
Unless it has a great ticket, then no, you still talk to your advisor. But do you think it’s easy to say, “Hey, by the way, it’s really a good ticker,” just make sure he knows how good it is or she.
Austin Wilson:
And as always, check out our free gift to you. It is a brief list of eight principles of timeless investing. These are overarching investment themes meant to keep you on track to meet your long-term goals. Check it out. It’s free on our website. No, we don’t mention Lululemon in it at all, but it’s probably worth a read anyway. Josh, how can people help us grow this Podcast?
Josh Robb:
Yeah. Make sure you subscribe. That way, every Thursday you get an alert letting you know that there’s a new podcast available.
Austin Wilson:
Every Thursday.
Josh Robb:
Every Thursday. Also leave a review on Apple Podcast. Kind of like we talked about the integration, the more people that see it there, the more people will be able to find it because we’ll rank higher. If you have any ideas about a topic like Steph who suggested this to us, send us an email, hello, at theinvesteddads.com or if you want to talk about your fitness experience through COVID, we’d love to hear because it’s been interesting to hear people talk about that, right? I know someone who was a spin class teacher. And so obviously that didn’t happen. So there’s changes all over. And then also if you know someone who was talking about the changes, share this episode with him or someone who you’d like to say, “Hey, you know what? Listen to this fitness app,” as a suggestion to hey, maybe start working out. So if my wife suggests to me, even though I recorded it, I will know, but share with them.
Austin Wilson:
And please don’t hit me when I’m running in the dark early in the morning. It will be darker more during the summer. I know we’re getting there. So thank you for being here. We’re so happy that you are listening to our podcast. We’ll see you next Thursday.
Josh Robb:
Talk to you later.
Austin Wilson:
Bye.
Outro:
Thank you for listening to The Invested Dads Podcast. This episode has ended, but your journey towards a better financial future doesn’t have to. Head over to theinvesteddads.com to access all the links and resources mentioned in today’s show. If you enjoyed this episode and we had a positive impact on your life, leave us a review, click subscribe, and don’t miss the next episode. Josh Robb and Austin Wilson work for Hixon Zuercher Capital Management. All opinions expressed by Josh, Austin or any podcast guests are solely their own opinions and do not reflect the opinions of Hixon Zuercher Capital Management.
This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Hixon Zuercher Capital Management may maintain positions in the securities discussed in this podcast. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses, which would reduce returns. Securities investing involves risk, including the potential for loss of principle. There is no assurance that any investment plan or strategy will be successful.
