coffeecaninvestor Posted May 3, 2024 Posted May 3, 2024 I go through this thought exercise and try to keep a list of what companies I would buy if we get another major recession or flash crash type scenario. Most of mine are chronically too expensive so I’ve never owned them. Figured it would be interesting to see what others would buy in that scenario? My list would be CPRT, MA, BRO, HEI, ROL, CSU, BR, MCO.
coffeecaninvestor Posted May 4, 2024 Author Posted May 4, 2024 5 minutes ago, ValueArb said: Patron Silver. If you said Johnny blue I’d have been right with you.
bizaro86 Posted May 4, 2024 Posted May 4, 2024 (edited) IMO, in a big crash you don't want quality businesses now trading at reasonable prices, you want junky businesses trading like they're going bankrupt in 5 minutes that will survive. Eg. In March 2020 I bought ROST, IBKR, and GOOG. All are great businesses and were trading cheaply. But I did way better buying TZOO (low quality travel business trading like it was going broke) and CVE 30 year debt trading at $0.50, taking a quick double, and then rolling the profits into COST to get quality. Anyway, next time that happens I'm more likely to try to find super-cheap stuff than buy quality on sale. I think screens like "P/S down more than 50% from 5 year average" would be the way to go. Edited May 4, 2024 by bizaro86
Paarslaars Posted May 4, 2024 Posted May 4, 2024 (edited) Probably LEAPs on whatever at the time looks cheapest but has the balance sheet to survive. Edited May 4, 2024 by Paarslaars
coffeecaninvestor Posted May 4, 2024 Author Posted May 4, 2024 5 hours ago, bizaro86 said: IMO, in a big crash you don't want quality businesses now trading at reasonable prices, you want junky businesses trading like they're going bankrupt in 5 minutes that will survive. Eg. In March 2020 I bought ROST, IBKR, and GOOG. All are great businesses and were trading cheaply. But I did way better buying TZOO (low quality travel business trading like it was going broke) and CVE 30 year debt trading at $0.50, taking a quick double, and then rolling the profits into COST to get quality. Anyway, next time that happens I'm more likely to try to find super-cheap stuff than buy quality on sale. I think screens like "P/S down more than 50% from 5 year average" would be the way to go. That has been on my mind. Over time I have come around to maybe adding in more cyclical businesses that have good balance sheets. I was thinking of adding things like homebuilders to the list and maybe DOOO to the list. The quality less cyclical names didn’t get quiet cheap enough, and I wasn’t prepared to buy the less quality stuff in 2020. A screen would probably have helped for the really junky stuff.
coffeecaninvestor Posted May 4, 2024 Author Posted May 4, 2024 6 hours ago, Saluki said: MELI, CPRT, FFH, JOE, GOOG, SPGI, BRK, FICO. FICO almost made my list, and probably would if it was a melt down like 07/08 it really got cheap and performed crazy well coming out due to the crazy multiple expansion.
tede02 Posted May 4, 2024 Posted May 4, 2024 Although panic periods can make great companies attractively priced, one of my observations is it's the low quality, more cyclical stuff that gets fire-saled during these situations. Financials, some retail, small-cap generally, lower volume generally, etc. will have these massive draw-downs which provides some huge upside potential. But it's obviously never easy when the future looks really dark.
coffeecaninvestor Posted May 4, 2024 Author Posted May 4, 2024 I agree but sizing it right probably helps. I’m always looking for that elusive cheap compounder but clearly it’s probably not the ideal strategy come a market panic since people flock to those. I’ll have to do some back tests to see but I wonder if it makes sense especially in a 401k where most hold ETFs to rebalance to a small cap and small cap value during a big draw down to goose returns with a little less company specific risk. I wonder what the optimal holding time would be.
Jaygo Posted May 4, 2024 Posted May 4, 2024 Teck resources This thing gets murdered then 10x’s every crisis. Seems like a terrible long term holding but swings like crazy so great for a trade.
coffeecaninvestor Posted May 4, 2024 Author Posted May 4, 2024 I’ll check teck out. For the most part small cap outperformance Usually lasts 2 years of less in GFC & 2020, but it rips off the bottom. Small cap value didn’t do well at all. Homebuilders look attractive especially NVR it performed better off the bottom and did well long term.
bizaro86 Posted May 4, 2024 Posted May 4, 2024 2 hours ago, coffeecaninvestor said: I’ll check teck out. For the most part small cap outperformance Usually lasts 2 years of less in GFC & 2020, but it rips off the bottom. Small cap value didn’t do well at all. Homebuilders look attractive especially NVR it performed better off the bottom and did well long term. Homebuilders did so well out of 2020 because everyone was replaying 2008 in their minds and thought RE would get killed. When it didn't, they soared. I think it's unlikely the market will make the same mistake twice in a row. You need to be prepared to look for the next mistake, not get tee'd up to take advantage of the last mistake.
CanadianMunger Posted May 4, 2024 Posted May 4, 2024 21 hours ago, coffeecaninvestor said: If you said Johnny blue I’d have been right with you. Come on man this is a value investors forum, way better options available for about a third of the price haha
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