Everyday households are feeling the pinch of higher prices are revisiting their travel plans for the summer season. Let's explore how consumers are handling this elevated disruption and how they should think about it.

Joining me now, John Shrewsbury, co-founder and managing principal at Gen Wealth Financial Advisors for this week's FA Corner brought to you by Capital Growth. John, it's good to see you.

This is something everybody's we're all talking about these higher gasoline prices, but obviously airlines are also coping with higher jet fuel prices. We're seeing them pass on um some of those costs. So, we're sort of shaping up for a tricky a tricky summer travel season because like you get pinched if you fly, but obviously you get pinched if you drive, too. Are you are you getting questions from clients about how to manage through this?

Yeah, I think what we're seeing is that clients are are not canceling vacations. They are simply just adjusting their trips and they're adjusting based on their budgets and what have you. You're seeing some shorter trips, you're seeing some staycations and and doing things in the vicinity of their homes. And also uh the budget conscious decisions that are uh happening here are really affecting extracurricular activities.

Now, there is an exception to this. Clients with plenty of discretionary cash flow, those folks are going for the experience type getaways and don't really seem to be too concerned about what it costs. So, from a consumer standpoint, they're making some adjustments but they're definitely going on vacation.

Well, and that's interesting. I'm curious like where where you see in that income strata, the price sensitivity start to bite more, right? I mean, I don't know how specific you can be, but just in sort of general terms.

Well, I think I think that anybody north of about $120, 130,000 a year in income has a little bit more discretionary income than the average working person. And so they're going to have a little bit more flexibility. And then if you are uh particularly we work with a lot of retired people and so they they stay on vacation uh often times, but they're not really curtailing their plans because they have that extra money, that extra cash flow in IRAs and 401K plans and things of that nature.

And they they see this as their opportunity to go and do because they clearly know that their time is relatively short and they want those experiences. Particularly with kids and grandkids, that really is the motivator for them.

Yes, Carpe a situation there, John. Um, on the flip side, how do um are how are you counseling people to sort sort of offset maybe the higher spending they're doing by maybe investing in things in the market that might do better when these fuel prices are higher?

Yeah, we have seen uh very definitive things happening in the market, both good and bad with uh the the higher oil prices. First of all, oil exploration companies and refiners, they've been doing pretty well. They they've benefited from the higher prices and their stocks are going up. Gasoline distributors, convenience store operators, if you think about the Murphy USA's of the world and and things of that nature, Murphy USA is an Arkansas company. We we followed that company.

They're seeing significantly higher cash flow and they're their stocks have benefited really the most of all the Petro sector. Airlines have obviously taken it on the chin. We saw Spirit Airlines go down. Uh all the major airlines are are in a slump over the last three months as far as their stock prices concerned with the exception of JetBlue.

Now Jet Blue's been on a run and I think they're their pricing has caused them to benefit from uh the disruption that's going on and they're actually getting more business at Jet Blue even though they're dealing with higher jet fuel prices. One other thing, I think hotels are really kind of holding their own. Uh we've seen that uh hotels have have kind of been fair fairly flat during this time.

One of the easiest things for consumers to flex in their decision about travel is to stay at maybe a little bit less expensive hotel to help to offset some of the expenses that they have as far as gas prices are concerned.

And then John, the other thing I would ask is, I mean, I know diversification is a good strategy at any time, but perhaps even more at a time, um, you know, when A, maybe your travel budget's a little stretched and B, you're seeing stocks at new high. It's a good time to sort of look at look at your portfolio. So, what are you telling your clients about diversification at at this moment?

We have always been a big fan of diversification. One of the things that I'm concerned about as a financial advisor is that if you look at the S&P 500, you think it's diversified. 500 of the largest company stocks in America, right? Well, 40% of the S&P 500 is enveloped in 10 stocks. and nine of those 10 stocks are actually technology stocks. And Walmart is the 10th one and Walmart is looking a lot like a technology company these days because they are so tech driven in their online shopping and things of that nature.

And so, we are really big fans of diversification. If you look across all of the sectors, you can see that small caps, foreign stocks, even emerging markets outperform the S&P 500. And so if you're an investor, you're kind of missing out on some of those outsize returns by just going in the traditional 500 index fund.

John, great to see you. Thanks a lot for joining us.

Thank you.

And that was FA Corner brought to you by Capital Growth.