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Ask HN: How to best take advantage of the coming recession?

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Re: Ask HN: How to best take advantage of the coming recession?

#61

Post by zugi »

incomingpain wrote: post #25
granshaw wrote: post #4

The most talked-about coming recession ever... don't go overboard, in case it doesn't happen...

In 2018 several high ranking economists as well as Powell said they know how to prevent recessions. https://tradingeconomics.com/united-states/gdp-growth Had 1 in 2020, and 1 in 2022. On average they are 7-10 years between. Split US government control likely going to result in balanced budgets. High cost to debt means less spending. Reality speaks, the next recession is always coming.

> Split US government control likely going to result in balanced budgets.

I don't see the U.S. getting anywhere close to balanced budgets in the next few years. Deficits are running a trillion dollars a year. Divided government blocks bold new expensive programs, but existing programs and spending just keep growing.

For just one example: last year Congress spent an extra $100 billion on defense alone over and above what was originally budgeted. Anyone who pointed that out was accused of being a Russian shrill or of hating Ukraine, because $26 billion of that went to support Ukraine. But no one discusses the other $74 billion...

Re: Ask HN: How to best take advantage of the coming recession?

#62

Post by roland35 »

opportune wrote: post #59
poulsbohemian wrote: post #49

Having lived through like 5+ of these downturns now, here's what I tell my kids: -- These cycles are part of the sickness of our system. Prepare for it. -- When times are good, hoard money. IE: save it, don't spend it. Put it in the market, in assets, in something for when you need it. -- Always have a side hustle. It doesn't have to be much, but some little side thing where you are making a little money can make a d…

Regarding living below your means. For a lot of people their default mode if they don’t stop themselves is to spend almost as quickly as the money comes in. For people raised in a culture (be it family or larger) of saving and living below your means, who then get good jobs, I think the problem can easily become reversed where you are so attuned to the time-value of money and frugality that you become a bit miserly.…

Exactly this. Saving is very important, but also spend money on things that are meaningful to you now.

Re: Ask HN: How to best take advantage of the coming recession?

#64

Post by sobkas »

Best thing you can do to prepare for coming fake recession is to start hiking prices and force salaries down, so you will continue to have record breaking profits. And when real recession will finally hit, you can tell "Didn't I said so?" and use your past profits to carve even bigger part of economy for yourself.

Re: Ask HN: How to best take advantage of the coming recession?

#65

Post by adam_arthur »

zeusk wrote: post #56
adam_arthur wrote: post #36

Earlier quoted context omitted.

There are plenty of high yield investments that pay 10%+ right now. PDO paid out ~20% last year, including special dividends. And likely will perform similarly this year, though somewhat lower due to cost of leverage increasing. AFCG has senior, real estate secured loans and pays 14.5% with no debt (though recently opened a line of credit). Even in event of default, they get to assume ownership of valuable properties…

I'm sorry, none of them have a track record of paying 15%+ yield. The yield looks high right now because they're in distress and the asset prices have gone down, with earnings heading lower and higher borrow cost I doubt those yields will even make a dent to capital losses in owning those assets. PDO and AFCG were not even listed 5 years ago. PBR is very much a distressed asset in a state pursuing nationalization of…

You’re simply wrong, these positions are not distressed.

PDO is a bond fund, not a company. They earn interest on bonds they hold. All bonds have lost value as risk free rate has risen. The interest payments on those bonds has remained the same, and they don’t hold non-performing loans. There is no distress in the portfolio.

If rates drop again in the future, the capital losses revert back to capital gains. If you think the Fed will hike substantially more from here, then these arent the place to be. I for one think they dont have much further to go

These are managed by PIMCO which is a famous fixed income firm, not some nobody. You can look at PTY for a longer track record public fund. Which performed very well through the GFC by the way

AFCG has 0 debt and real estate secured loans. Not distressed, even if they experience defaults in a severe recession. Lenders go bust when they are overindebted and cant service debt due to defaults. Lenders without debt don’t

PBR has a PE of less than 2 and is not distressed at all. Its price is down due to political fears that the new government will mismanage the company. Fears which are likely to be overblown.

ARCC and CSWC are two other high yield lenders that are doing better than ever. CSWC sports close to a 15% yield including specials, and they’ve raised the dividend consistently every year.

ABR pays 13% and raises the dividend double digits every year. Multifamily secured loans. Has performed better than most hype growth tech stocks while paying double digits

There are plenty of deep value and high yield plays out there. Too bad that most don’t care to look for them

Re: Ask HN: How to best take advantage of the coming recession?

#66

Post by drbeast »

roflyear wrote: post #10
zeusk wrote: post #7

Earlier quoted context omitted.

I'm sorry but can you list a single stock with 15% dividend with track record for paying that out consistently? 15%+ growth (considering they pay taxes and have expenses other than dividend) consistently will reach astronomical numbers pretty quick.

They do not exist, absolutely. 4% is a good number for dividend paying stocks. Also inflation isn't over 15% hahaha.

[flagged]

Re: Ask HN: How to best take advantage of the coming recession?

#68

Post by roflyear »

adam_arthur wrote: post #65
zeusk wrote: post #56

Earlier quoted context omitted.

I'm sorry, none of them have a track record of paying 15%+ yield. The yield looks high right now because they're in distress and the asset prices have gone down, with earnings heading lower and higher borrow cost I doubt those yields will even make a dent to capital losses in owning those assets. PDO and AFCG were not even listed 5 years ago. PBR is very much a distressed asset in a state pursuing nationalization of…

You’re simply wrong, these positions are not distressed. PDO is a bond fund, not a company. They earn interest on bonds they hold. All bonds have lost value as risk free rate has risen. The interest payments on those bonds has remained the same, and they don’t hold non-performing loans. There is no distress in the portfolio. If rates drop again in the future, the capital losses revert back to capital gains. If you th…

Are you taking into account stock price, as well?

For example, if you buy a stock at $5, and it pays out $3 of dividends, ok that may be great, but if the value of the stock is now $2...

Re: Ask HN: How to best take advantage of the coming recession?

#69

Post by zeusk »

adam_arthur wrote: post #65
zeusk wrote: post #56

Earlier quoted context omitted.

I'm sorry, none of them have a track record of paying 15%+ yield. The yield looks high right now because they're in distress and the asset prices have gone down, with earnings heading lower and higher borrow cost I doubt those yields will even make a dent to capital losses in owning those assets. PDO and AFCG were not even listed 5 years ago. PBR is very much a distressed asset in a state pursuing nationalization of…

You’re simply wrong, these positions are not distressed. PDO is a bond fund, not a company. They earn interest on bonds they hold. All bonds have lost value as risk free rate has risen. The interest payments on those bonds has remained the same, and they don’t hold non-performing loans. There is no distress in the portfolio. If rates drop again in the future, the capital losses revert back to capital gains. If you th…

> PBR has a PE of less than 2 and is not distressed at all. Its price is down due to political fears that the new government will mismanage the company. Fears which are likely to be overblown.

You really don’t know what you’re talking about and are underplaying material risks like the govt. withholding most or all profits of the nationalized oil firm.

And like I said, the other stocks you had mentioned didn’t exist 3 years ago - that’s not a track record to judge by - issuing leveraged loans in free money environment which is no more.

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