They’re Not Dropping Like Flies

I used to renovate houses. Not in a commercial way, but the few houses I bought to live in. I got pretty good at it for a hobby too. I’m a quite decent plasterer, plumber, etc. So if I ever become Irish (it was a Galway man that taught me to plaster), or wake up in the 1980s again, then I’ll be good to go. Most of the places I bought were probate sales. It’s a sort of perverse thing, because after a time it starts to make you susceptible to inclement weather. Cold winter, you say? Up goes the eye-brow. Similarly, 35°c on Wednesday…

Don’t get too excited though. Not only does probate take an age to administrate, but life expectancy is going up by the day. One in three babies born today is expected to live to 100. You can see from the graphic that people, as time goes by, are living longer and also dying more often at a good age, and less so in mid-life. That means, barring population increases, that organisers of funerals, like Dignity plc (DTY), can expect a more predictable but slightly slower business. Actually, population is growing. Starting with the 2011 census figure of around 63m and with expectations in the region of 70m by 2030, we’re expecting a 10% increase over 20 years. I doubt people come here by and large to die though, and the rest are babies, so I suggest that won’t take up the slack.

I’m not sure that funeral directors around the land are surreptitiously trying to discourage people from giving to cancer research charities, but these demographics must weigh on their minds. The good news for them is that in this second age of enlightenment people are still as superstitious as ever about ditching stiffs, especially when they related to them.

Looking at the Dignity chart there are a number of interesting features. Firstly, and I’ve marked this on the chart, it could easily be argued that we have just seen a 650 point measured move over the last 9 months. What is interesting here is the fake-out at the top. That looks suspiciously like an over-heated market to me! There are also a couple of interesting gaps that both arrest a rally. The MACD is looking weak too. I don’t like putting analysis on a chart after the event so much. It’s all too easy to let confirmation bias say what you want to say, but there are ample signs here to consider a lacklustre to bearish period for this stock.

If I were advising funeral directors on how to future-proof their business I’d say forget the funeral plans until interest rates return to normality, and get into the business of Living Funerals, where people advanced in years spend their dough on a knees up while they can still stand up, instead of leaving their nearest and dearest to gather all their friends together for a missed-the-boat wake after they’ve snuffed it. I even have the tag line: “Put the FUN back in Funeral!”