Thread by @dunkhippo33

I read this great blog post on @Oaktree about @howardmarks latest memo on the macro conditions of the economy & thought I would share my own thoughts as well on investing in this landscape. Disclaimer: this is NOT investment advice.

oaktreecapital.com/insights/howar…

1) 46M Americans have been laid off or sig reduced in comp. Unemployment remains at 10%+.

tradingeconomics.com/united-states/…

2) 10%+ unemployment is already but even more staggering is what is not counted in this:

A) Some ppl have just given up searching for a job

B) Some who have reduced hrs & comp

C) Some parents are moving to a 1-job household, as schools are in limbo for the coming yr

3) In short: Main street is dead for now. Americans have no $$ & are out of work.

In 2009, Americans had too much real estate debt. The correction happened when investors bought real estate for cheap & had patience to re-build. This time, it's hard to know *what* to invest in.

4) The stock market is booming like crazy.

tl;dr: It's bolstered by tech stocks. Tech cos are doing well. In many cases, they have more customers now because everyone is moving more and more online since main street is dead.

5) In addition: ppl also believe the gov will bail out big companies - like airlines. Whether this is true or not, I don't know, but investors seem to have faith that the gov will not let the big companies die.

6) Last driver: the fed decreased interest rates to near 0%. In lay terms, this means that putting $$ in your checking acct yields basically no interest. And ppl are looking for alternatives to place their money that can yield a return.

7) So why the stock market? Ppl don't know where to put their money.

At this time, commercial real estate seems dicey to many - who knows when companies will start moving back in again?

Residential rental properties seem dicey because does anyone have a job to pay rent?

8) Most of my real estate investor friends are in "hold" mode as they figure this out.

There are gems here and there as always, but unlike 2009, it's tough to say as that as an asset class there are many big opportunities here right now. (that may change in a couple months)

9) Bitcoin and other cryptocurrencies.

The drivers for crypto doing well on a macro level is more adoption and usage. If lots of ppl start losing faith in the USD or there are more intl transactions, we may see interesting movement over the long haul.

10) And that could happen - the US is accumulating trillions in debt to help us get out of this. Will China call our debt? Will our credit rating as a nation go down? Will we see massive inflation? Will ppl still want to be in USD? Not sure...

11) Same for precious metals. E.g. Silver tends to be quite cyclical & counter to how our economy is doing.

macrotrends.net/1470/historica…

Basically ppl buy silver when they don't know where to put their $$ & don't trust institutional places. Silver has been zooming up in price.

12) Late stage private tech stocks that have an IPO on the horizon (esp SaaS) are also very frothy. Basically, these companies have strong revenues / repeat business and in investors' minds are both a "safe" and high growth place to put money.

13) Public and late stage SaaS companies may be "overvalued" from a revenue-multiples perspective. But in general, if a co has strong retention / upsells, they are great long term opportunities IMO. Even if a mkt crash happens in between.

14) And then there's early stage private tech stocks. As I've mentioned before, these tend to be bifurcated. Am seeing really high valuations and really low valuations.

This still holds:

https://twitter.com/dunkhippo33/status/1277631903470776320

15) Basically, there is a lot of investor competition for investing in networked founders. The old adage "You never get fired for picking McKinsey" applies here.

But, smaller investors are still very active! 🙋‍♀️ Navigating the investor landscape is still inefficient tho

16) Btw, there are now many great sources to go to if you don't have a network:

-Apply on our site hustlefund.vc
-Apply for @lolitataub 's matching tool
-Apply for @firstdollardeal

Ppl are still active; $$ are just smaller & the investor landscape is confusing.

17a) Wrapping this all up: I'm biased here, but I think the best value right now is in investing in early stage tech startups that can make money right away. I.e. don't require much investor $$ AND is not selling to budgets that are dead or dying.

17b) It's hard to predict market sentiment (e.g. silver or bitcoin), but if you are investing in something that is tied to building something truly valuable that customers want, it will go up in value.