Big Returns From Hitting the 'Pause Button' on Your Daily Grind

Being trapped at home for 10 months has been difficult...

So, in the final part of our five-day series on the Mayo Clinic medical center's suggestions for fighting cabin fever, let's cover the last powerful concept: taking a break. 

Stepping away from a daily routine allows you to perform better at that routine. Think of it as a "pattern interrupt" that gives you a chance to distance yourself from tasks in order to reflect and reset with a fresh mind.

This is similar to the Mayo Clinic's second suggestion that we covered on Tuesday: a reminder to get outside, if for nothing more than a walk.

When discussing the idea of taking a break, the Clinic also suggested a phenomenal activity that has done wonders for tens of millions of people across the globe...

I'm talking about meditation, which has seen a spike in adoption over the past few years. I've even written about it here at Altimetry Daily Authority.

New insights about meditation just keep popping up – including from my personal experience...

One form of taking a break for me has been playing Scrabble or Words With Friends with my younger sister.

I thought I had a decent mastery of words, but my sister is no slouch. She and I had been in a dead heat in our competition for years. If someone added up all our games, they would likely be close to 50/50. 

Then I thought I'd try something based on all the research I had been seeing about high performance. You guessed it... I started meditating immediately prior to playing Scrabble with her.

The result? I started crushing her. Game after game, I was edging her out by a few points with some choice words in ways that she couldn't compete with. I must have been averaging eight out of 10 games against her! 

Then, without even finding out I was doing it, my sister also started meditating before playing Scrabble. If we planned on playing, we both ended up asking to delay by 20 minutes. 

Well, she caught up... and we're now back to a dead heat.

Taking a mental break is an important concept for fighting the dullness of pandemic-related restrictions... or for stepping up your performance in general. And a great way to do that is through meditation.

A break is a way of hitting the 'pause button'...

While the Mayo Clinic extols the value of short breaks, a vacation can also be beneficial for longer periods of self-reflection.

And yet, we can still get stressed even while on vacation. In a new place, there always seems to be more things to see and do than we have time for. Getting from point A to point B, placating family, and planning adventures can all be stressful. 

But one company specializes in helping people take a break even from a vacation. Whether it's treating yourself to meditation or other activities to encourage wellness, OneSpaWorld (OSW) has it covered.

The company operates health and wellness centers, including spas at resort hotels or on cruise ships.

Investors might expect that pampering travelers would lead to high upside...

However, by looking at the as-reported metrics for OneSpaWorld, the opposite seems to be the case. After jumping to 11% in 2018, the company's as-reported return on assets ("ROA") cratered back down to just 2% in 2019. It's no wonder investors have concluded OneSpaWorld has no competitive advantage... and this drop was before the coronavirus pandemic.

But in reality, this decline in as-reported ROA is just "noise" from bad accounting. Once adjustments are made around goodwill, stock option expense, and other items, we can see a big profitability distortion...

Folks will pay a premium for wellness. And rather than poor, inconsistent returns, Uniform Accounting shows that OneSpaWorld has high, consistent profitability levels. As you can see in the chart below, the company's Uniform ROA rose from 45% in 2017 to 68% in 2019...

Self-reflection not only helps people center themselves... but it can also lead companies to make big profits.

Based on misleading GAAP metrics, investors would write off this company as it comes out of the pandemic. But by using Uniform Accounting, investors can see the value creation of selling relaxation for OneSpaWorld's business... and how this could potentially lead to big returns as the world returns to normal.

Regards,

Joel Litman
January 29, 2021