Jon Quast

There's a great Morgan Housel quote about this.

Every five to seven years, investors forget that recessions happen every five to seven years.

I'm not saying that we're in a recession right now, but it seems like investors have amnesia that this is completely normal.

And historically speaking, it could get a lot worse than it is right now before we hit anything near what we usually see.

It's an interesting question.

I think that you do have to take it on a business-by-business basis, try to avoid the broad sweeping sector analysis.

If there's a company that you're losing faith in the long-term prospects of the business, obviously, that's a good choice for raising some cash.

But I would say that generally speaking, if you are looking for general takeaways,

Energy, there's definitely some risks in energy right now, depending on the company.

The outlook for energy is extremely bright, but some of those businesses, I think the valuation has run away.

I would say that cyclical businesses as well, when it comes to AI infrastructure, there's a lot of businesses that...

typically have lower margins, let's just say, in a normal cycle.

Right now we're experiencing extremely high margins just because there's so much demand.

The question is, how long will that demand be high?

Because at some point it would be,

reasonable to assume that the demand is going to go back down to more normal levels.

The profit margins will go back down to normal levels, in which case you need to value the business based on that more normalized earnings, not peak earnings.

I would say that's the most reasonable thing to expect is that, yeah, you're going to go back to what is normal at some point.

The question is, when will that be?

Yeah, that's so true.