{"id":478,"date":"2022-09-30T23:49:00","date_gmt":"2022-10-01T03:49:00","guid":{"rendered":"https:\/\/gmays.local\/?p=478"},"modified":"2024-01-26T22:37:59","modified_gmt":"2024-01-27T03:37:59","slug":"recession-opportunities","status":"publish","type":"post","link":"https:\/\/gmays.local\/recession-opportunities\/","title":{"rendered":"Recession opportunities"},"content":{"rendered":"\n<p class=\"has-drop-cap\">There&#8217;s a <a href=\"https:\/\/news.ycombinator.com\/item?id=33040211\">question<\/a> on Hacker News about what people were doing to profit from the current\/upcoming recession in 2022.<\/p>\n\n\n\n<p>I responded about the investments I made earlier in the year. Below is the response in full, plus answers to a couple of follow-up questions I received.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity is-style-dots\" style=\"margin-top:var(--wp--preset--spacing--20);margin-bottom:var(--wp--preset--spacing--20)\"\/>\n\n\n\n<p>During the last recession (GFC), I did well with real estate. Every $100k invested has grown 3-4X, but more importantly continues to return ~1.5% to 2% monthly in rent, plus offers significant depreciation expense at tax time. I doubt those conditions will happen again in my lifetime \u2014 I was lucky with timing.<\/p>\n\n\n\n<p>This recession I bought a significant portion of select \u2018pandemic stocks\u2019 I thought have good fundamentals (or at least better than their price suggested) after they dropped 70-90% earlier this year (I was already all in cash anticipating a recession). My hope is in ~3 years that investment will 3X when the market recovers.<\/p>\n\n\n\n<p>I wish I had better ideas on the next opportunity this recession, but by definition they will always be contrarian. My next big bet will likely be on myself with a startup, which I haven\u2019t done in a decade.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote\">\n<p>Which recession stocks did you pick?<\/p>\n<\/blockquote>\n\n\n\n<ul>\n<li>Affirm<\/li>\n\n\n\n<li>Coinbase<\/li>\n\n\n\n<li>Cloudflare<\/li>\n\n\n\n<li>Netflix<\/li>\n\n\n\n<li>Peloton<\/li>\n\n\n\n<li>Roblox<\/li>\n\n\n\n<li>Shopify<\/li>\n\n\n\n<li>Snapchat<\/li>\n\n\n\n<li>Snowflake<\/li>\n\n\n\n<li>Unity<\/li>\n<\/ul>\n\n\n\n<p>Peloton is the only one I regret so far \u2014 seems to be a falling knife I tried to catch, but I still have some hope they can offload the inventory, grow distribution through Amazon\/retail and drive up subscription revenue. But seems increasingly unlikely.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote\">\n<p>These are all closely correlated as tech stocks. Isn&#8217;t it similar to a Nasdaq index fund?<\/p>\n<\/blockquote>\n\n\n\n<p>Not exactly. They are all tech stocks, but NASDAQ has large cap tech stocks, which &#8216;only&#8217; saw a ~30% drop YTD in the index.<\/p>\n\n\n\n<p>The ones I invested in were growth stocks that saw particularly steep corrections of around 70-90% when I invested.<\/p>\n\n\n\n<p>My bet was that though they were overvalued, it was an overreaction that would on average get me a ~3X return in 3 years.<\/p>\n\n\n\n<p>So yes, they are similar, but IMO the similarity was an overreaction that was not based on fundamentals. As mentioned earlier, I&#8217;d make the same bet again now for all but Peloton.<\/p>\n\n\n\n<p>Keep in mind these are longer-term (3+ year) investments. If you watch the market, the wild swings (especially in these stocks) still tell us the market doesn&#8217;t know how to value them.<\/p>\n\n\n\n<p>Back to the OP&#8217;s question, to get any significant outsized return you often have to be contrarian AND right. I felt I knew enough about the fundamentals of these companies and the market that I had enough confidence to make the bet. Only time will tell.<\/p>\n\n\n\n<p><strong>UPDATE:<\/strong> See follow-ups to this post:<\/p>\n\n\n\n<ul>\n<li><a href=\"https:\/\/gmays.local\/1-year-follow-up-on-buying-the-dip-on-pandemic-stocks\/\" data-type=\"post\" data-id=\"326\">1 year follow-up on buying the dip on pandemic stocks<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/gmays.local\/1-5-year-follow-up-on-buying-the-dip-on-pandemic-stocks\/\" data-type=\"post\" data-id=\"342\">1.5 year follow-up on buying the dip on pandemic stocks<\/a><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>There&#8217;s a question on Hacker News about what people were doing to profit from the current\/upcoming recession in 2022. I responded about the investments I made earlier in the year. Below is the response in full, plus answers to a couple of follow-up questions I received. During the last recession (GFC), I did well with [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"_links":{"self":[{"href":"https:\/\/gmays.local\/wp-json\/wp\/v2\/posts\/478"}],"collection":[{"href":"https:\/\/gmays.local\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gmays.local\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gmays.local\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/gmays.local\/wp-json\/wp\/v2\/comments?post=478"}],"version-history":[{"count":9,"href":"https:\/\/gmays.local\/wp-json\/wp\/v2\/posts\/478\/revisions"}],"predecessor-version":[{"id":656,"href":"https:\/\/gmays.local\/wp-json\/wp\/v2\/posts\/478\/revisions\/656"}],"wp:attachment":[{"href":"https:\/\/gmays.local\/wp-json\/wp\/v2\/media?parent=478"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gmays.local\/wp-json\/wp\/v2\/categories?post=478"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gmays.local\/wp-json\/wp\/v2\/tags?post=478"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}