Counter-Cycilical Careers
In my opinion, one of the most effective ways to build wealth is to have a counter-cyclical career, such that during economic downturns, you are still getting paid and have enough money to buy assets at a discount. Obviously, you would also want to continue getting paid when times are good and markets are grinding up, but hopefully if your talented/experienced enough you should manage that.
What do you think are some good counter-cyclical careers in the finance space?
1. Tech. I remember the timing of the Facebook IPO in May 2012 and thinking that was a great time to buy Bay Area real estate still recovering from the Great Recession.
“Home values in areas with likely Facebook employees rose by approximately 20.9% between March 2012 and March 2013, compared to 16.8% for the rest of the Bay Area”
So, tech related finance work is more likely to be counter cyclical.
Good topic, because as someone in real estate, it is too cyclical. I still remember my wife asking me why I was the only one without a job amongst all our friends during the Great Recession (because they were in more stable roles or counter cyclical companies).
2. Volatility traders. My friends in hedge funds who work for funds that make money when volatility in the market is up. That seems counter cyclical. I don’t know about the impact of redemption requests (LPs withdrawing money seeking liquidity).
3. Small property management firms. Bad financial performance leads to owner unhappiness with current management, and leads them to seek changes. It’s a great time to grow if you have a good team, systems, and ability to focus on their assets.
On point 3, if you are aggressive with saving cash, you can buy one or two homes or apartments or something during a downturn when prices and competition is lower. Not as counter-cyclical as a whole career but having cash ready to buy in a downturn could work very well.
RX Con/IB? I am in an rx con team at a big shop and we pump out work when the economy is going down, then when the economy is booming we shift out focus onto bus reviews/m&a
My gf and I have discussed a similar idea - she moves into RX to hedge against lean periods in my PE career
Wal-Mart Corporate Executive
Private capital advisory groups that combine traditional restructuring with private credit / structured equity investments are doing very well right now. Very easy to pivot resources and transferable skills / relationships between the two as needed depending on where we're at in the business cycle.
I thought PCA is more for PE secondaries/Co-invest advisory? mind sharing a bit more your insights? more than thanks!
Yeah, PCA generally does refer to that, you’re right.
What I’m referring to I guess is more called like “Capital Solutions” or “Debt Advisory”
These groups basically advise non-investment grade companies on how best to tap the debt and equity markets. It’s basically a sell-side like process but instead of marketing a company for sale, you’re marketing certain tranches of its capital structure for investment.
I think it can be somewhat challenging work because generally the clients will be ShitCos, otherwise they wouldn’t hire you.
I honestly thought Healthcare IB is fairly counter-cyclical before 2020. Feels a lot different now, a lot of chaos and uncertainty in that industry. The only employees truly safe in that space IMO are providers that are able to stay small / independent. Margins get tighter each year but there are a lot of AI / tech solution out there that independent providers can use to improve their patient volume etc.
Large health systems are doing massive quarterly layoffs for the past 2-3 years now. I also know well over a dozen healthcare corporate folks in white collar jobs at public companies that got laid off in the past 2 years.
Anecdotally through some banking friends, MM-focused practices has dried up at some firms which has led to headcount cuts.
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