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by JimboOmega 4107 days ago
There's a bunch of options.

One of the most obvious, as an investor, is to hoard cash now. When the bubble bursts, your dollar will go further; you'll get better valuations, companies will be more desperate, etc.

As an entrepreneur, time to make hay while the sun is shining; raise cash now.

Looking for hedge? Consider SF real estate. A big part of what's keeping it sky high is the proliferation of startups in SoMa, making living in the city an attractive option. If those jobs all disappear, I doubt there will be more than enough Tech shuttles to bring all those people back down to the valley - and the depressed labor market should lead to lower wages.

I do think there's tremendous opportunity in the hiring space for a good startup, but I have no idea what that is. The "Bad Hire" risk is magnified for small companies... so if anything, that's something that does better in this phase of the business cycle, when hiring is high.

1 comments

How would SF real estate be a hedge if the regional tech labor market becomes depressed? Lower wages in SF and the surrounding area should depress real estate prices in SF, not increase real estate prices.
It won't be a good hedge. You'll take a bath on that real estate if the venture capital market seizes up (eg with higher interest rates and were a bubble to pop). Rents will fall, vacancies will soar, and a lot of construction will halt.

I can't see what the parent meant, such that it makes sense as a hedge. The hedge (if one were really worried about a bubble popping) on SF real estate would be to sell right now - if you can get a high price - and rent.

I'd never enter the SF renter market as a landlord, given that it can basically only go down.

I meant to suggest it as something you could short - it's an asset class that is tied to the health of the sector. Since it's hard to short the companies in the sector, you could short the RE as a proxy.

I meant to suggest SHORTING real estate as a hedge. Not buying it.

You can accomplish this through companies that own property in the area.