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Ask HN: What tech companies/industries will do well in a recession?

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Re: Ask HN: What tech companies/industries will do well in a recession?

#111

Post by Bjorkbat »

tubalcain wrote: post #80

I suppose we could also frame the question as which tech companies and industries will NOT do well during the recession. I think that streaming services will not do well. People will return to torrenting and piracy. Same with crypto trading platforms. Basically any place where Joe Average can't afford to spend more than he has on hand. Tesla will see a big drop too, as people will cash out to buy their groceries. As…

AI/ML is a bit of a wildcard for me.

On the one hand, I’m certain many companies will be eager cut costs through automation. On the other, investors will likely grow cold if the results just can’t live up to the hype fast enough.

Re: Ask HN: What tech companies/industries will do well in a recession?

#112

Post by blululu »

egberts1 wrote: post #88
princevegeta89 wrote: post #78

Earlier quoted context omitted.

Except there is no house during a recession. People don't travel nor look for vacation rentals to stay in.

or people look to airBnB as a cheaper alternative to hotels.

Except that an AirBnB now typically costs more than a hotel for basic travel (a private bedroom & bathroom with wifi and maybe some basic kitchen supplies for coffee).

AirBnB also uses a bunch of dark patterns (service fees and taxes are not listed in the default nightly rate...) and you don't always get what you thought you were getting. I've been burned enough times with deceptive AirBnB listings to not trust the sticker price (hotels are typically less hassle).

Re: Ask HN: What tech companies/industries will do well in a recession?

#113

Post by screye »

Speaking of a recession, I hope the recession isn't another massive redistribution of wealth into the hands of an older generation.

Housing has continued shooting up, as those in the 30s find themselves with fewer assets to buy it with. The low interest rates amortize the costs allowing affordability, but the older generation still gets a massive payout. Then when the economy start recovering back up, the older generations find themselves with all of this liquidity to exploit, while the younger generation is stuck paying off mortgages.

Housing is controlled politically, and holds safety, convenience and schooling hostage. It doesn't play the supply-n-demand game. Thus, it gets to stay unaffected by recession as long as default rate stay low. I am not sure what the mechanism for it is, but I do selfishly wish that housing prices and interest rates will back down to normal sometime soon.

Re: Ask HN: What tech companies/industries will do well in a recession?

#115

Post by lamontcg »

Don't invest for the winners in the recession.

Invest near the depths of the recession for the winners of the recovery where everything looks like its on a firesale.

The problem is of course timing the bottom. And resisting the emotional urge to think nothing could ever recover.

The 2020 extraordinarily V-shaped recovery surprised me a lot.

Given that nothing financial is really popping that hard and a lot of the headwinds we're facing now are just high commodities prices, bullwhip effects from the pandemic, and China is shutting down again, all of those factors are likely to be temporary so any near-term recession is likely to be V-shaped as well.

I suspect this is just a correction and we're close to maximum pessimism and investors should start looking for what to buy in the near term. And if you didn't already sell then you're probably too late and would be looking at locking in any losses that you had and missing the rebound.

But this is a description of conditions as they are today, not a crystal ball of the future. If something detonates tomorrow everything could change (and literally if Russia launches some nukes at Kiev tomorrow everything may change in an instant -- but I'm more considering a financial detonation).

Re: Ask HN: What tech companies/industries will do well in a recession?

#116

Post by screye »

samfisher83 wrote: post #103

Faang companies are printing cash. Instead of making 50bil maybe they will only make 45.

FAANG companies have P/E ratios orders of magnitude higher than 'traditional' industries. They are expected to make a 'lot of money'. Making 'good money' will lead to stock crashes as we saw with Meta and Netflix.

Re: Ask HN: What tech companies/industries will do well in a recession?

#117

Post by DelaneyM »

dharmatech wrote: post #66
DelaneyM wrote: post #33

"Recession" is a bit ambiguous. To identify winners and losers in any economic climate you need to consider the specific factors at play, and the winners of previous "recessions" may or may not be winners in the next. In this case _my_ assessment is that we're facing a prolonged period of high inflation partially fueled by factors which can't be mitigated by Fed actions (COVID lockdowns in China, global transportatio…

> In that economic environment, consumer staples which do their own production and have the ability to quickly respond to inflation are favoured. I'm in a sector ETF for this. What are some example ETFs in that space? Commodities oriented ETFs? ---------- UPDATE ---------- OK, nevermind. :-) Googled "consumer staples etf" and a bunch of examples came up. https://www.investopedia.com/top-performing-consumer-staples...…

> Consumer staples -> consumer poisons.

When you're sampling the top-10 you get a biased set - "sin" stocks usually face increased consolidation pressure (certainly true for PM, MO, KO). If you expand your view to a full breakdown, a consumer staples ETF broadly represents "stuff people buy at supermarkets".

ETFs based on indices do not have opinions or intelligent design, they attempt to accurately represent a well-defined sector or thesis. A lot of people buy a lot of unhealthy stuff, so that shows up here.

If this is important to you, could I suggest screened indices (https://www.ishares.com/us/products/investment-goals#/funds?...) or a social impact fund (https://www.ishares.com/us/products/286007/)?

Re: Ask HN: What tech companies/industries will do well in a recession?

#119

Post by Melatonic »

laverix wrote: post #99
Melatonic wrote: post #97

Earlier quoted context omitted.

I would disagree - when average Joe loses his job due to a recession they are going to need some form of entertainment to fill their now wide-open schedule. People here might find torrenting and piracy pretty trivial but the average Joe is going to find it a much bigger hurdle than simply logging into Netflix and pressing go.

But how does average Joe pay for the account, if the prices for groceries, electricity, heating and transportation explode? If things go really south, average joe will be happy if he can afford food and heat his rented flat at least a little bit in winter.

He probably will keep paying for a single service he really likes and share it with a bunch of people/family and split the costs. But yeah of course if it is between beans and rice and Netflix the person is gonna choose food. But that would be extreme poverty

Re: Ask HN: What tech companies/industries will do well in a recession?

#120

Post by giantg2 »

bush-bby wrote: post #109

Any company who’s customer is the government. There’s only one entity that spends money in a recession, and that’s the government. Safest job you could have is one working for the federal government. Everything else is speculative and subjective to whatever is influencing the economy at any given point.

I would add that industries that contract with or supply tools for the government work would be good. Things related to infrastructure would likely be good. However, they already had an infrastructure bill and companies like CAT might be over bought.
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