CrowdStrike Holdings, Inc. Class A Common Stock

Okta, Inc. Class A Common Stock

Zscaler, Inc. Common Stock

If a recession takes place (which I think will). Then earnings of businesses will go down. Cost of capital will rise. Bad for business.
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This will come forward in earnings revisions and lower guidances.
![image](https://cdn.commonstock.com/3937e221e62f2074c921411035ee17aa3df25ab4f1b13127a6f03201063a8137-1125x1059.png)
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Trailing ratios will be hard to use for investors, because those do not show the true picture.
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I think cybersecurity(**$CRWD** **$ZS** **$OKTA**) and other sectors with a  high net revenue retention won’t be hit as hard compared to other sectors (Advertising for example. YouTubers ad revenues have been declining for quite some time now!)
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Cyclicality is a strong force.
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“There are two concepts we can hold to with confidence: - Rule No. 1: Most things will prove to be cyclical. – Rule No. 2: Some of the greatest opportunities for gain and loss come when other people forget Rule No. 1.”
* Howard Marks
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Do you think stocks are cheap now?

Depending on how your define a recession, you could argue we are already in one. Costs of capital have been rising, but that doesn't mean that if things start to get truly ugly that fed can't soften or reverse policy.

Most things are cyclical to an extent, but cyclicality isn't inherently bad. As much as people love to see numbers that smoothly go up and to the right, it's not a practical expectation for most operations, and attempting to achieve that will likely destroy value long term.

Anyone with large floating debt will obv feel pressure, but higher COC leads those with superior COC to further excel. Additional, those with ample cash on the balance sheet will inevitably be presented with all kinds of interesting opportunities.

This leads me to gravitate towards companies that can comfortably maintain self funding continued operations and aren't overly reliant on SBC. If persistent inflation is a concern, true pricing power matters more than ever. Higher rates also reduce available funding to would-be competitors and favors anyone with an existing large, capital intensive footprint.

I think it's key to remember that when environments become unfavorable, those conditions become long term tailwinds for operators that best navigate. No different than ships in a storm. Plenty of competition will batter their sails, crash on rocks, or sink to the ocean floors.

Plenty of ugly out there. Things can certainly become cheaper. If you have a longer timeframe I'm not sure that's too much of a concern. And if you have a short term timeframe choppy waters will present the best opportunities anyways.