Two Trends To Avoid, Two We Love

In the months (years, even) leading up to the COVID-19 crisis, I saw many investment opportunities that left me feeling skeptical. Their valuations were high. There was overly optimistic thinking surrounding their potential. It reminded me of Warren Buffett's adage of "be fearful when others are greedy, and greedy when others are fearful."

What I see today is much better: Many high-quality startups available at highly attractive valuations. In other words, it's an excellent time to be greedy, as others are fearful.

History supports the timing. During the last market downturn – the Great Recession – some of the greatest tech startups of the generation began: Uber Technologies Inc. (UBER), valued at $5.4 million in 2010, now with a $58 billion market cap. Instagram, acquired by Facebook (FB) for $1 billion in 2012 and now valued at $100+ billion. WhatsApp, valued at $1.5 billion by 2013 and then acquired by Facebook for $19 billion just one year later, and many others.

And those who invested as early as 2008 and 2009 had the benefit of investing at a much lower valuation than those who invested before and after the Great Recession.

Before we dive in, there's one more key step. In order to maximize our returns, it's important to examine the trends that defined Q2 2020 (April through June), the first full quarter during COVID-19. We need to determine what shifts in consumer (or business) preference will be short term vs. long term in nature – which trends will persist as we adjust to a new COVID-affected life, and which may reverse.

Here are two trends to avoid, and two which give us excellent startup profit potential today.

Trend No. 1: Commercial Office Space and Real Estate

Few asset classes have taken a harder hit this year than commercial office space. With quarantine in effect, companies large and small closed down their offices, and many were prohibited from visiting their office spaces by state or local governments.

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