9/27/2007

09-27-07 - 1

I still think the US economy is headed for a recession. I've been thinking about how to play it; I don't really know finance very well and have had zero success trying to get help on message boards. The best I've come up with is to just try to pick some companies that I think are really bad business or overvalued and short them. Ideally if I make good picks the shorts are +EV even if the economy doesn't crap out, but if there is a big dive then the shorts like automatically become a huge win. The key is to find a company that's reliant on the current over-inflated consumer boom in the US which will soon collapse. Maybe an auto-maker that focuses on luxury gas-guzzlers. I really think Amazon and Apple are both way over-valued right now, but people are so high on those mistakes I dunno if they'll ever have stock prices that are based in reality.

I'm trying to imagine the middle class guy who's way over-reached in his home purchase. He's been subsidizing all kinds of companies, what is he going to cut back on? Hmm.. I think "Whole Foods" is a horrible company, but the stock is already plummeting so dunno if I want to chase that down, but that is the type of company that will burn bad in a recession as people switch the cheaper alternatives. Harley Davidson would've been another good one, but they've already announced cuts and the stock is falling. I need to find the one that hasn't announced bad news yet, cuz the market is so retarded it doesn't anticipate at all, it's so obvious that this kind of company is going to bite it.

The other way I could try to play it is to pull all my money out into cash and then try to snap up a house in a foreclosure auction. I don't really know much about that and I hear you have to be able to buy places sight-unseen with cash and no refunds. Obviously you can make a lot of profit at those auctions but it's a huge risk and it's one of those things in capitalism that works far better when you have a huge bankroll and can buy lots of those houses and resell them, it's not a great way to buy a residence.

No comments:

old rants