When I look at the current economy, there are two things that concern me.
– The possibility of an AI/data center bubble. I am worried that a lot of the investment into AI not rational, and does not reflect the current state of the technology. If reality fails to meet the market’s expectations, I can’t see how the result is anything but a disaster.
– The downstream effects of oil price shock, such as increased transportation costs and food prices with reduced discretionary spending. A lot of the commentary I’m seeing regarding this second point is that the price shocks will be so bad, it will incentivize everyone involved in the closing of Hormuz to the table, and therefore it won’t be too terrible in the mid to long term. I am highly skeptical of this, again because I don’t think the geopolitical decision makers are aligned with the rational interest of the market. Historically, food is considered a reliable investment during recessions. if oil shock negatively impacts food production, I assume that will not be the case.
I want to invest in a way that will be best equipped to capitalize on a combined storm of both disasters occurring in an overlapping way. Logically, the two types of stock that will probably do best in a continued conflict between Iran and the US are American oil companies and weapons manufacturers. Unfortunately I have moral objections to both of these industries which preclude me from investing in either.
With that in mind, here are the options I’m considering:
– ARK Genomic Revolution ETF: Genomics is a cutting-edge field that I consider much more likely to deliver tangible results in the near future compared to AI.
– Tema Heart and Health ETF: same as above, GLP-1s are only getting cheaper and more common.
– Invesco Solar ETF: energy stock, but without the ethical baggage of financing the proliferation of oil drilling in response to price shock.
– Costco: Rising food prices will benefit wholesalers as people look for better deals
– Apartments and cheaper homes: United Rentals, LGI Homes, and UDR Inc. in anticipation of reduced demand for large houses and increased demand for smaller homes, secondary dwelling units, and apartments.
– Games Workshop: bit of a weird one at the end here, but with brand recognition only growing and no cap in sight I think It stands to increase the percentage of profits from licensing, offsetting my concerns vis a vie more expensive transport and materials for their physical products. Additionally, the demographic GW serves is primarily higher income, and therefore less likely to cut off their spending altogether when compared to, say, a lower-income family canceling their streaming services. It weathered tariffs well enough, and unless things are even WORSE than I fear I think it will punch above its weight class.
What I want to know is, could this selection of investments outperform safer options in the proposed scenario? Are there any stocks I’m missing that would be worth including? Would it be better to short stocks I think are particularly vulnerable? My initial thought is that picking stocks that are already doing fine is a safer investment than betting on a crash I’d really prefer not happen in the first place.
EDIT: If the cost of commutes continue to rise, I imagine Zoom would also be a safe investment.
I am extremely pessimistic regarding the intermediate future. Are these investments resilient enough to handle what I’m afraid will happen?
byu/2timescharm ininvesting
Posted by 2timescharm
23 Comments
You lost me at ARK lol.
[removed]
ARK?! lol.
If you are legitimately bearish in the short term, then just buy puts on the SPY or QQQ and call it a day. Every idea you listed would also probably go down in the event or a recession/bear market.
I hate to be that guy, but………..”VOO and chill.”
If you’re investing for the long term, zoom out, DCA into a low cost broad market portfolio and trust that capitalism continues to generate profits. The stock market on the whole reliably beats inflation on a long time horizon.
No one can predict what Trump is going to do or any geopolitical events. And you can’t time it or know for sure how the market reacts to any given event.
No one knows exactly where this AI thing is headed. But it’s a safe bet big tech continues to profit for a long time – and it’s going to remain an anchor of a broad market ETF or mutual fund. It might pop in two years – and crash back to today’s prices. It’s not going to evaporate entirely. Unlike crypto, there is proven utility and investment that is more than speculation- in things like R&D that will generate useful things for society.
Betting on these sectors or individual companies might work, or it might not. But I do think the S&P goes up at 10% for decades to come. It’s as reliable as any bet I can think of.
If you’re scared of inflation, buy tangible, non perishable goods, you’ll beat that 3.8% inflation that way and you’ll have real, tangible things to use or eat, Investing means a lot of things.
Use broad based index funds.
LMAO so you’re adverse to traditional safe haven investments, but you want to bet on risky pharma plays? and not just bet on them but do it the laziest way possible with a high fee fund with questionable performance?
Just move on over to WSB, you don’t belong here.
EDIT: Oh god and solar and Games Workshop? Are you still living in your parents basement? srs question.
I would urge you not to be a macro bear. But if you’re truly convinced, please remember that forced selling is indiscriminate. I think a combination of SPY, gold, and short term treasuries makes more sense in that case than selecting individual stocks. And maybe add a smaller sleeve with your own stock picks.
Will this outperform other stuff?
No one knows.
You are overthinking everything.
What you are trying to do is throwing darts at a board. You have no idea what you are doing.
I’m a bit tired and grouchy right now, I was just going to say this post is stupid. But I won’t, that would be rude.
Discretionary spending ETFs are so underwhelming… Do any of your ETFs beat VOO?
We are definitely going to be dumping soon!! But it will be a fast recovery
HYSA brother
Schd
Just buy CTA and let it ride whatever direction market goes lol
Put it in a money market fund if youre so scared
Ark wowzers
>> Genomics is a cutting-edge field that I consider much more likely to deliver tangible results in the near future compared to AI.
If you’re right and AI is a bubble, that bubble will take other high growth tech with it. Also willing to bet a lot of that field is using AI as well
>> Tema Heart and Health ETF: same as above, GLP-1s are only getting cheaper and more common.
Cheap substitutable drugs aren’t gonna make money. Price will be driven down by competition.
>> Invesco Solar ETF: energy stock, but without the ethical baggage of financing the proliferation of oil drilling in response to price shock.
If the demand for energy used by AI vanishes, that’ll drive profitability down for energy related stocks.
>> Costco: Rising food prices will benefit wholesalers as people look for better deals
Agreed
>> Apartments and cheaper homes: United Rentals, LGI Homes, and UDR Inc. in anticipation of reduced demand for large houses and increased demand for smaller homes, secondary dwelling units, and apartments.
Don’t see an impact either way here.
>> Games Workshop:
Don’t know enough about the industry either way to make a call here.
How much are you investing? If it’s a couple hundred or thousand dollars just do whatever you want.
VOO or VTI is actually the most diversified AI play because of the percentage the perceived AI winners are in these indices. VOO/VTI and chill works for the AI boom too.
Beyond that, I have done well betting on companies the market thought were roadkill in the AI race. GOOG was left for dead, look at them now. AAPL is going to have the last laugh. QCOM already popped. Software as a whole has been dumped as worthless. There are opportunities there.
Big picture thinking is almost impossible to do well. Even if you’re right about the trend, specific investments may not work out like you think.
You are overthinking this. S&P 500 forward earnings estimates from LSEG are running around 20%. Earnings and backlog of the AI superstars are superior. Preparing for a potential bubble 3-5 years out is not a good investment strategy.
I do not like your picks. Based on your premise there is an AI bubble coming, here are some great stocks to research in different industries.
Costco – I like it and owned it for a long time, but sold last August to buy a rental property. TJX is another good retailer.
Heath care has been beaten down 17-20%. I’ve been buying Medtronic on the slide down, it’s up today. If I had to buy and hold for the next five years and not look, medical devices is a good bet. Medtronic is a Dividend Aristocrat. Johnson & Johnson is another good choice, which has a good drug pipeline and medical devices, also a Dividend Aristocrat.
Real Estate: My two favorite REITs, both Dividend Aristocrats with yields around 5%, Realty Income (O) and Federal Realty Investment Trust (FRT).
Oil & Gas Pipelines: Enterprise Products (EPD) and Energy Transfer (ET). EPD is a Dividend Aristocrat.
Financials: Goldman Sachs and East West Bancorp are in my top 10 holdings.
If you think there is an AI bubble, these are some great companies in different industries that could also benefit from deploying AI to improve productivity and profitability. Good luck.
> Costco
53 TTM PE
45 Forward PE
50 x Free cash flow
Growing at 10%
4.1 PEG
2.99% profit margin
0.6% Dividend Yield
Share count unchanged since at least 2017
Why would anyone want to own it? It’s a low margin business with mediocre growth, a high valuation, no income worth mentioning, and no share buyback program.
If you want to tell yourself a story about how Costco shares will become more valuable because investors will see shoppers flocking to it in a recession… maybe you’ll be right. I just don’t see the appeal.