To rephrase your question, what are the structural alpha opportunities within economic slowdowns/recessions? Check out SSRN for those.
what is SSRN ?
Ask HN: How to best take advantage of the coming recession?
31–40 of 83 posts
Re: Ask HN: How to best take advantage of the coming recession?
#32If I read your post correctly and you still live in Eastern Europe - I'd use these funds to invest in security of you and your family and move out. Even being a few hundred kms further to the west (Romania / Slovakia / Poland) would put you in a much better situation.
Re: Ask HN: How to best take advantage of the coming recession?
#33I will post again my answer to what someone else asked similarly the other day [0]: One thing we must make clear is, is there actually a recession? Many companies are firing, but they've fired much fewer than they've hired in the past few years. Many companies are still hiring now. I don't think there is a recession, much as people might be scared that there is. [0] https://news.ycombinator.com/item?id=34296393
I really dk why you're being downvoted. Seems the only correct option when hysteria starts is to join it.
As they say, the market can stay irrational longer than you can stay solvent
Re: Ask HN: How to best take advantage of the coming recession?
#34There will always be another recession, but no one knows when. Therefore, the way you position yourself now should really be how you would position yourself at any time.
Re: Ask HN: How to best take advantage of the coming recession?
#35I will post again my answer to what someone else asked similarly the other day [0]: One thing we must make clear is, is there actually a recession? Many companies are firing, but they've fired much fewer than they've hired in the past few years. Many companies are still hiring now. I don't think there is a recession, much as people might be scared that there is. [0] https://news.ycombinator.com/item?id=34296393
Last time I was on the interstate, there were a god awful number of trucks moving junk. Restaurants nearby are busy. Unemployment is pretty low (U-6). We may have receded from the helicopter-money fueled mania of last year, but there doesn't appear to be widespread pain one usually associates with "recession"...
Re: Ask HN: How to best take advantage of the coming recession?
#36When everyone is expecting a recession, one does not come. Expecting higher inflation and flat to slightly reduced growth (aka stagflation). Find dividend paying stocks that actually keep up with inflation (10-20%). They exist and have track records of maintaining this pay out, you just need to find them.
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.
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.
PBR yields 50%+ on TTM basis. Though will be lower going forward and has a fair amount of political risk
High yielding stocks tend to be lenders, and the risk profile of the loans is up to you to assess. But you can find many apparent great deals right now, assuming we don't enter a new depression with mass defaults.
Even in the GFC, high yield debt only reached a 15% default rate. Which still leaves you sitting pretty with a lot of these lenders, after factoring in yields and discounts to NAV. You can expect price to become depressed for a period of time in an event like this, though. e.g. See ARCC performance during 2008
Re: Ask HN: How to best take advantage of the coming recession?
#37Plan all big improvements to your house, when the construction sector would have a hard time finding a job. Any expensive improvement like roof, road, fence should be much cheaper. I consider the Eastern Europe having unique opportunity these days, as the Ukrainian market has extremely good potential to grow in many areas. If it goes EU+NATO direction after the war, it may boost the whole region and follow the direct…
Potential is great, but so is the risk. For example consider this: apartments in Kiev are now priced at about 50% of their usual price, you may buy one. Now hypothetical scenario: in the Spring there is an Russian offensive on Kiev and your investment is destroyed, you have $0 in that case.
I think investing and war are very very bad companions. If you want to _invest_ your cash you should avoid too risky moves.
On the other hand if you want to _speculate_ then go ahead, but be prepared to lose 100% of money for maybe 200% gain (for my example with real estate).
Re: Ask HN: How to best take advantage of the coming recession?
#38Realistically, if it’s as bad as they say, it could be wise to become a little bit liquid right now to reinforce your buying power during the apparently inevitable massive dip that’s coming. Personally, I don’t see it getting nearly as bad as 2008, but I could be wrong. I think some big corps will eat shit, there will be some layoffs, yada yada same old shit. There’s not going to be thousands of people suddenly homel…
>it could be wise to become a little bit liquid right now That seems about a year too late on the nose, though I get your point. One staggering stat for me is that ~40% of owner-occupied homes have no mortgage. Sure property tax and insurance (not required on a fully owned house) but that seems minimal especially if you were able to pay off the home, outside of very high areas or appreciation.
I'm sorry, can you verify that stat? Upon a search, I see references to that number but in relation to older homeowners.
Re: Ask HN: How to best take advantage of the coming recession?
#39The 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.
> Had 1 in 2020, and 1 in 2022.
What people colloquially refer to as a recession vs the textbook definition is important to understand.
> Reality speaks, the next recession is always coming.
Just like the sun rises and falls. But this is meaningless information. Recessions have varying severity and you can't say when it comes.
Re: Ask HN: How to best take advantage of the coming recession?
#40No one here has asked you about your risk tolerance. If you need to avoid losses (maybe due to supporting the family), you move to cash or partially to cash. I wouldn't have a fear of missing out if there is no recession because your income is how you make money, not betting on the market.
If you're sure a recession is coming, you move to cash or partially to cash. That allows you to buy in when things are lower (eg. Warren Buffet always carries lots of cash and everyone came begging to him in 2008 and he promptly told everyone to bend-over and he did some amazing deals).
In summary, if your risk adverse => cash. If you want to be opportunistic => cash.