The first market trading day in September ended quickly in a bloody fashion. The DOW was down -1.08%. The S&P 500 was down -0.69%. The Nasdaq was down -1.11%. Safe haven assets – gold and silver – were up 1.82% and 5.58% respectively.
Stocks fell due to trade tensions with the U.S. and China. Global uncertainty is at all time highs. Markets are teetering at the edge of catastrophe. The only thing that could possibly stall the next recession is further rate cuts and peace on the trade war.
I shouldn’t have even woken up todayâ€¦I should have stayed asleep the rest of the year. It would be much easier to wake up in the middle of a recession than to endure everyday waiting for the economic downturn of the century to happen.
Despite the impeding economic downturn, Canadian E&P service companies look attractive at this level. I can name a number of them trading below liquidation value. Most trade for around 3-4x EV/EBITDA. If takeaway capacity ever increases in Canada (from new pipelines such as the Trans Mountain Pipeline Expansion), there is likely to be an increase in asset valuations. However, buying Canadian E&P service companies will be a lumpy ride. I would suggest buying the unlevered ones that can endure volatility.
On a personal note, it is time to start building up a cash stockpile. An economic downturn makes me nervous. I would like to have at least 1 years’ worth of cash to sustain a downturn. If you are reading this it might make sense for your to start converting assets to cash or saving the majority of your paycheck. Not only will a cash stockpile help you sustain an economic downturn, but you will also be able to take advantage of a massive asset selloff.
Tweet of the day:
Source: Ramp Capital
Song of the Day:
Source: GG Allin Bite it you Scum