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Offline sleepy5136

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Re: Arizona Real Estate (Bubble)
« Reply #15 on: April 09, 2022, 10:39:44 AM »
We were already discussing Arizona on other housing threads.  It made sense to start a new thread because, indeed, Arizona doesn't have to do with Irvine.

Sharing information is not the same as a dig.  Arizona and Florida are the two bubbliest states right now, so R2D2 (and her husband C3P0) should go into their housing decisions with eyes wide open.  I would feel terrible if I knew housing was going to tank and didn't say something, even though I know my odds of persuading her with facts are not likely to succeed over the emotion of moving into the new build that they are dreaming about.

In 2008, when housing was already in freefall I tried warning various friends and family in the real world that it was much too soon to be jumping into the market.  There was more pain to be experienced before things bottomed out.  Nobody listened because they were caught up in the emotion/greed of homes being cheaper than they had been in a long time.  They couldn't possibly fathom that they would end up underwater after buying at such an opportune time, yet they all did end up underwater. 

My aunt & uncle probably fared the worst because they rushed into buying a new build on a golf course that, had they waited longer, they could have gotten a more premium lot, which is what they really would have preferred, for less money.  Later, when they were ready to sell some years down the road, it was a huge shocker that they were underwater because they now had to compete against re-sales that were priced much lower than new homes.

So lets see.

I sold my irvine house in 2016 for a net gain after fees, etc of around 1.1 million and took a 500K cap gain exclusion. I moved to legacy and that house will have about an 800K gain minus another $500K exclusion.

I have no mortgage or any other loan for that matter.

I'm not waiting around to see if prices drop and heading out of town to lower prices and taxes. Unfortunately rent has skyrocketed and I'm not a rent type of girl anyway so I'm buying a spec home to sit in while my "real" house is being built. So happens that the base is now higher than my purchase price with lots of upgrades in it. Win for me.

The little one is right under 2000 sq feet 4 bed house in a nice neighborhood within walking distance to a great park with pool etc. Nice to have in the az heat. Cost to live there, property taxes, HOA, insurance etc $5-6K for a YEAR........... sub $500 per month. Meanwhile my "real" house gets built.

The real house has gone up 20% just for the base price since they got my deposit. I have no idea how much upgrades have gone up. Chose those already.

Paying cash for both. What do I care? No uhauls behind a hearse. Kids are going to get all my cash, etc anyway and they would love to get those two properties free and clear.

The little temp house rents for over $2500 per month. Easy rental for that flooplan within walking distance to schools and they do walk there, moms with strollers in tow. Irvine used to be like that too but now it's too expensive to have a stay at home mom. Too bad. U don't get time with the kids back.

I plan on selling it but say rents drop to $2000 and the property tanks too along with the equity I've got. That is $24K per year. Costs are $5-6K. Accounting for vacancies, it's still not going to be a problem for me.

If it sells for a net loss of $30K I'm even on the rent I'd be paying, so most likely I'm good.

Now the main house is much lower than Legacy house. In fact I could buy another one of those plus these two houses for what I'm getting here for cash. Total outlay for that house is maybe $8K - $9K per year........ $750 per month.

ADD UP BOTH HOUSES! $1250 per month letting them sit. Rent the one and I'm um.............. making money. Yes I have cash just sitting but I don't need cash. I've got lots of cash plus the money I made selling Legacy house.

But maybe I should STAY HERE in my house I own now in Legacy because what is the other option? Sell and buy some ridiculously priced house here with higher taxes? I think not. What if prices drop as you say? Well..................... which is going to hurt me more? $1250 per month with rental income that completely pays for that or paying property taxes, HOA, insurance etc here which is more than that? And don't forget, I'm taking a $500K exclusion and CASH even after buying the two properties in AZ and I get to be near two of my kids.

AND to top it off income taxes are L O W E R in az. I make money from stock trading and it's going to save me 10% in income taxes.

HELLO! I think I got this covered!

See that's the thing, LL provides general recommendations which don't cover different individual situations that buyers and sellers have.  It's not black and white in real estate, there's many shades of grey, and like you mentioned all local markets are different.  As IHO said, if you can comfortably afford the cost to own and you plan on owning for 5+ years then I just don't see any material downside in buying in good locations like Irvine and other parts of Orange County.

Irvine will always be a great location within the OC.......... always. The Irvine company has lots of rentals and when there is no more land will still be here and a force in keeping up the city. The city itself has one of the best balance sheets in the entire country and if there are issues with school funding there are outside sources which will pour money in. Most of the city has HOAs and they will most likely keep up their own areas.

And then there is the location........ smack dab in the center of the county near freeways and jobs.

UCI will fuel tech here. Plenty of medical facilities.

If/when a housing downturn comes, Irvine probably will go down too but when people want to buy they will buy in the better areas. Why buy crappy when everything is down? Irvine and view homes is what you want if prices significantly drop. Avoid value when things go down. It's like value trap stocks. They lag on the upswing.
comparing a primary residence to stocks is like comparing apples to oranges.

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Offline Ready2Downsize

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Re: Arizona Real Estate (Bubble)
« Reply #16 on: April 09, 2022, 11:04:16 AM »
We were already discussing Arizona on other housing threads.  It made sense to start a new thread because, indeed, Arizona doesn't have to do with Irvine.

Sharing information is not the same as a dig.  Arizona and Florida are the two bubbliest states right now, so R2D2 (and her husband C3P0) should go into their housing decisions with eyes wide open.  I would feel terrible if I knew housing was going to tank and didn't say something, even though I know my odds of persuading her with facts are not likely to succeed over the emotion of moving into the new build that they are dreaming about.

In 2008, when housing was already in freefall I tried warning various friends and family in the real world that it was much too soon to be jumping into the market.  There was more pain to be experienced before things bottomed out.  Nobody listened because they were caught up in the emotion/greed of homes being cheaper than they had been in a long time.  They couldn't possibly fathom that they would end up underwater after buying at such an opportune time, yet they all did end up underwater. 

My aunt & uncle probably fared the worst because they rushed into buying a new build on a golf course that, had they waited longer, they could have gotten a more premium lot, which is what they really would have preferred, for less money.  Later, when they were ready to sell some years down the road, it was a huge shocker that they were underwater because they now had to compete against re-sales that were priced much lower than new homes.

So lets see.

I sold my irvine house in 2016 for a net gain after fees, etc of around 1.1 million and took a 500K cap gain exclusion. I moved to legacy and that house will have about an 800K gain minus another $500K exclusion.

I have no mortgage or any other loan for that matter.

I'm not waiting around to see if prices drop and heading out of town to lower prices and taxes. Unfortunately rent has skyrocketed and I'm not a rent type of girl anyway so I'm buying a spec home to sit in while my "real" house is being built. So happens that the base is now higher than my purchase price with lots of upgrades in it. Win for me.

The little one is right under 2000 sq feet 4 bed house in a nice neighborhood within walking distance to a great park with pool etc. Nice to have in the az heat. Cost to live there, property taxes, HOA, insurance etc $5-6K for a YEAR........... sub $500 per month. Meanwhile my "real" house gets built.

The real house has gone up 20% just for the base price since they got my deposit. I have no idea how much upgrades have gone up. Chose those already.

Paying cash for both. What do I care? No uhauls behind a hearse. Kids are going to get all my cash, etc anyway and they would love to get those two properties free and clear.

The little temp house rents for over $2500 per month. Easy rental for that flooplan within walking distance to schools and they do walk there, moms with strollers in tow. Irvine used to be like that too but now it's too expensive to have a stay at home mom. Too bad. U don't get time with the kids back.

I plan on selling it but say rents drop to $2000 and the property tanks too along with the equity I've got. That is $24K per year. Costs are $5-6K. Accounting for vacancies, it's still not going to be a problem for me.

If it sells for a net loss of $30K I'm even on the rent I'd be paying, so most likely I'm good.

Now the main house is much lower than Legacy house. In fact I could buy another one of those plus these two houses for what I'm getting here for cash. Total outlay for that house is maybe $8K - $9K per year........ $750 per month.

ADD UP BOTH HOUSES! $1250 per month letting them sit. Rent the one and I'm um.............. making money. Yes I have cash just sitting but I don't need cash. I've got lots of cash plus the money I made selling Legacy house.

But maybe I should STAY HERE in my house I own now in Legacy because what is the other option? Sell and buy some ridiculously priced house here with higher taxes? I think not. What if prices drop as you say? Well..................... which is going to hurt me more? $1250 per month with rental income that completely pays for that or paying property taxes, HOA, insurance etc here which is more than that? And don't forget, I'm taking a $500K exclusion and CASH even after buying the two properties in AZ and I get to be near two of my kids.

AND to top it off income taxes are L O W E R in az. I make money from stock trading and it's going to save me 10% in income taxes.

HELLO! I think I got this covered!

See that's the thing, LL provides general recommendations which don't cover different individual situations that buyers and sellers have.  It's not black and white in real estate, there's many shades of grey, and like you mentioned all local markets are different.  As IHO said, if you can comfortably afford the cost to own and you plan on owning for 5+ years then I just don't see any material downside in buying in good locations like Irvine and other parts of Orange County.

Irvine will always be a great location within the OC.......... always. The Irvine company has lots of rentals and when there is no more land will still be here and a force in keeping up the city. The city itself has one of the best balance sheets in the entire country and if there are issues with school funding there are outside sources which will pour money in. Most of the city has HOAs and they will most likely keep up their own areas.

And then there is the location........ smack dab in the center of the county near freeways and jobs.

UCI will fuel tech here. Plenty of medical facilities.

If/when a housing downturn comes, Irvine probably will go down too but when people want to buy they will buy in the better areas. Why buy crappy when everything is down? Irvine and view homes is what you want if prices significantly drop. Avoid value when things go down. It's like value trap stocks. They lag on the upswing.
comparing a primary residence to stocks is like comparing apples to oranges.

The best always rises to the top. But if you think buying some crappy value in Stanton will outperform Newport with a view, try it and see what happens.

The ONLY reason crappy is selling now is reduced inventory but when a slowdown comes those that had trouble selling when times were good are the ones who will once again find no buyers.

Now is the time to sell into strength anything that has "issues" including location, floorplan, condition. Same as stocks....... sell into strength because crap is only being pulled up because of FOMO.

Offline sleepy5136

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Re: Arizona Real Estate (Bubble)
« Reply #17 on: April 09, 2022, 11:26:57 AM »
We were already discussing Arizona on other housing threads.  It made sense to start a new thread because, indeed, Arizona doesn't have to do with Irvine.

Sharing information is not the same as a dig.  Arizona and Florida are the two bubbliest states right now, so R2D2 (and her husband C3P0) should go into their housing decisions with eyes wide open.  I would feel terrible if I knew housing was going to tank and didn't say something, even though I know my odds of persuading her with facts are not likely to succeed over the emotion of moving into the new build that they are dreaming about.

In 2008, when housing was already in freefall I tried warning various friends and family in the real world that it was much too soon to be jumping into the market.  There was more pain to be experienced before things bottomed out.  Nobody listened because they were caught up in the emotion/greed of homes being cheaper than they had been in a long time.  They couldn't possibly fathom that they would end up underwater after buying at such an opportune time, yet they all did end up underwater. 

My aunt & uncle probably fared the worst because they rushed into buying a new build on a golf course that, had they waited longer, they could have gotten a more premium lot, which is what they really would have preferred, for less money.  Later, when they were ready to sell some years down the road, it was a huge shocker that they were underwater because they now had to compete against re-sales that were priced much lower than new homes.

So lets see.

I sold my irvine house in 2016 for a net gain after fees, etc of around 1.1 million and took a 500K cap gain exclusion. I moved to legacy and that house will have about an 800K gain minus another $500K exclusion.

I have no mortgage or any other loan for that matter.

I'm not waiting around to see if prices drop and heading out of town to lower prices and taxes. Unfortunately rent has skyrocketed and I'm not a rent type of girl anyway so I'm buying a spec home to sit in while my "real" house is being built. So happens that the base is now higher than my purchase price with lots of upgrades in it. Win for me.

The little one is right under 2000 sq feet 4 bed house in a nice neighborhood within walking distance to a great park with pool etc. Nice to have in the az heat. Cost to live there, property taxes, HOA, insurance etc $5-6K for a YEAR........... sub $500 per month. Meanwhile my "real" house gets built.

The real house has gone up 20% just for the base price since they got my deposit. I have no idea how much upgrades have gone up. Chose those already.

Paying cash for both. What do I care? No uhauls behind a hearse. Kids are going to get all my cash, etc anyway and they would love to get those two properties free and clear.

The little temp house rents for over $2500 per month. Easy rental for that flooplan within walking distance to schools and they do walk there, moms with strollers in tow. Irvine used to be like that too but now it's too expensive to have a stay at home mom. Too bad. U don't get time with the kids back.

I plan on selling it but say rents drop to $2000 and the property tanks too along with the equity I've got. That is $24K per year. Costs are $5-6K. Accounting for vacancies, it's still not going to be a problem for me.

If it sells for a net loss of $30K I'm even on the rent I'd be paying, so most likely I'm good.

Now the main house is much lower than Legacy house. In fact I could buy another one of those plus these two houses for what I'm getting here for cash. Total outlay for that house is maybe $8K - $9K per year........ $750 per month.

ADD UP BOTH HOUSES! $1250 per month letting them sit. Rent the one and I'm um.............. making money. Yes I have cash just sitting but I don't need cash. I've got lots of cash plus the money I made selling Legacy house.

But maybe I should STAY HERE in my house I own now in Legacy because what is the other option? Sell and buy some ridiculously priced house here with higher taxes? I think not. What if prices drop as you say? Well..................... which is going to hurt me more? $1250 per month with rental income that completely pays for that or paying property taxes, HOA, insurance etc here which is more than that? And don't forget, I'm taking a $500K exclusion and CASH even after buying the two properties in AZ and I get to be near two of my kids.

AND to top it off income taxes are L O W E R in az. I make money from stock trading and it's going to save me 10% in income taxes.

HELLO! I think I got this covered!

See that's the thing, LL provides general recommendations which don't cover different individual situations that buyers and sellers have.  It's not black and white in real estate, there's many shades of grey, and like you mentioned all local markets are different.  As IHO said, if you can comfortably afford the cost to own and you plan on owning for 5+ years then I just don't see any material downside in buying in good locations like Irvine and other parts of Orange County.

Irvine will always be a great location within the OC.......... always. The Irvine company has lots of rentals and when there is no more land will still be here and a force in keeping up the city. The city itself has one of the best balance sheets in the entire country and if there are issues with school funding there are outside sources which will pour money in. Most of the city has HOAs and they will most likely keep up their own areas.

And then there is the location........ smack dab in the center of the county near freeways and jobs.

UCI will fuel tech here. Plenty of medical facilities.

If/when a housing downturn comes, Irvine probably will go down too but when people want to buy they will buy in the better areas. Why buy crappy when everything is down? Irvine and view homes is what you want if prices significantly drop. Avoid value when things go down. It's like value trap stocks. They lag on the upswing.
comparing a primary residence to stocks is like comparing apples to oranges.

The best always rises to the top. But if you think buying some crappy value in Stanton will outperform Newport with a view, try it and see what happens.

The ONLY reason crappy is selling now is reduced inventory but when a slowdown comes those that had trouble selling when times were good are the ones who will once again find no buyers.

Now is the time to sell into strength anything that has "issues" including location, floorplan, condition. Same as stocks....... sell into strength because crap is only being pulled up because of FOMO.
Stocks that are up in this market is because they have strong balance sheets. There are good quality stocks that aren't up at all or down a lot but a lot of it has to do with yields going higher and not necessarily the fundamentals changing. For example, AMD/NVDA. Do you really think that chip demand is going to slow in the future? No, it won't.

Again, a primary residence is completely different. "Crappy" is subjective, there is only so much land left. A primary residence isn't about ROI. Hence comparing apples to oranges.

Offline Liar Loan

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Re: Arizona Real Estate (Bubble)
« Reply #18 on: April 13, 2022, 10:50:53 AM »
See that's the thing, LL provides general recommendations which don't cover different individual situations that buyers and sellers have.  It's not black and white in real estate, there's many shades of grey, and like you mentioned all local markets are different.

Haha... That is not what you said while heckling me for selling my multi-unit rentals.

Most of what I'm posting are macro economic articles that provide a balanced look at the real estate market... not the myopic Irvine-can-never-go-down due to supply mythology that dominates here.  Readers are free to do with the information as they please.  I've acknowledged many times that buying a home is an emotional thing, but that doesn't mean people should go into it blindly believing they are immune to significant losses.

Stocks that are up in this market is because they have strong balance sheets. There are good quality stocks that aren't up at all or down a lot but a lot of it has to do with yields going higher and not necessarily the fundamentals changing. For example, AMD/NVDA. Do you really think that chip demand is going to slow in the future? No, it won't.

Chip companies are highly cyclical and the market is pricing in the odds of a recession, so along with home builders and other cyclicals, chip stocks are getting hammered.  In the long run, chips will be in high demand, but during a recession people can hold off buying new electronics for a couple years.

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Re: Arizona Real Estate (Bubble)
« Reply #19 on: April 13, 2022, 11:31:24 AM »
Reddit Poll:  Should the REBubble burst, which US areas do you think would see the largest housing price corrections?

Most upvoted answer:  Las Vegas & Phoenix

https://www.reddit.com/r/REBubble/comments/u2c7l2/rebubble_burst_most_impacted_us_areas/

Offline momopi

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Re: Arizona Real Estate (Bubble)
« Reply #20 on: April 13, 2022, 01:34:51 PM »
Inland areas of California are subject to huge swings as well.  Riverside County, Palm Springs, etc.

I've seen small SFR's in Riverside County area appreciate >400% from 2012-2022.  I suspect it will crash hard in down cycle.

Offline sleepy5136

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Re: Arizona Real Estate (Bubble)
« Reply #21 on: April 13, 2022, 01:36:18 PM »
Unless you’re telling me the internet is no longer going to exist, you will always have a high demand of chips. Companies are going to cloud and even if they are not, they have their own data centers. That all require chips. I’m sure during a recession that people will still go on the internet.

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Re: Arizona Real Estate (Bubble)
« Reply #22 on: April 13, 2022, 01:52:22 PM »
LL predicting pain in chips?

Now it all makes sense. :)
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Re: Arizona Real Estate (Bubble)
« Reply #23 on: April 13, 2022, 02:20:18 PM »
LL predicting pain in chips?

Now it all makes sense. :)

Not me.  The stock market.  AMD has a history of losing 90-95% of it's value during recessions.

Inland areas of California are subject to huge swings as well.  Riverside County, Palm Springs, etc.

I've seen small SFR's in Riverside County area appreciate >400% from 2012-2022.  I suspect it will crash hard in down cycle.


I completely agree.  This is why I sold my inland multi-families.

You can get rich quick during the upcycles - my properties more than doubled in price in five years while throwing off tons of cashflow - but you can also get absolutely destroyed during downturns.

Offline sleepy5136

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Re: Arizona Real Estate (Bubble)
« Reply #24 on: April 13, 2022, 07:21:41 PM »
LL predicting pain in chips?

Now it all makes sense. :)

Not me.  The stock market.  AMD has a history of losing 90-95% of it's value during recessions.

Inland areas of California are subject to huge swings as well.  Riverside County, Palm Springs, etc.

I've seen small SFR's in Riverside County area appreciate >400% from 2012-2022.  I suspect it will crash hard in down cycle.


I completely agree.  This is why I sold my inland multi-families.

You can get rich quick during the upcycles - my properties more than doubled in price in five years while throwing off tons of cashflow - but you can also get absolutely destroyed during downturns.
what stock doesn’t go down significantly during a recession?

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Re: Arizona Real Estate (Bubble)
« Reply #25 on: April 14, 2022, 10:13:56 AM »
LL predicting pain in chips?

Now it all makes sense. :)

Not me.  The stock market.  AMD has a history of losing 90-95% of it's value during recessions.

Inland areas of California are subject to huge swings as well.  Riverside County, Palm Springs, etc.

I've seen small SFR's in Riverside County area appreciate >400% from 2012-2022.  I suspect it will crash hard in down cycle.


I completely agree.  This is why I sold my inland multi-families.

You can get rich quick during the upcycles - my properties more than doubled in price in five years while throwing off tons of cashflow - but you can also get absolutely destroyed during downturns.
what stock doesn’t go down significantly during a recession?

Most stocks don't lose 90-95% of their value.  The chart on AMD also looks horrific.  You should at least wait until it shows some price stability, which could be a long time.  Right now, it looks like a falling knife.

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Re: Arizona Real Estate (Bubble)
« Reply #26 on: April 14, 2022, 01:34:53 PM »
I don't think AMD is representative of the microchip market.

How have the other vendors done? Like Intel, etc.
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Offline sleepy5136

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Re: Arizona Real Estate (Bubble)
« Reply #27 on: April 14, 2022, 02:53:57 PM »
LL predicting pain in chips?

Now it all makes sense. :)

Not me.  The stock market.  AMD has a history of losing 90-95% of it's value during recessions.

Inland areas of California are subject to huge swings as well.  Riverside County, Palm Springs, etc.

I've seen small SFR's in Riverside County area appreciate >400% from 2012-2022.  I suspect it will crash hard in down cycle.


I completely agree.  This is why I sold my inland multi-families.

You can get rich quick during the upcycles - my properties more than doubled in price in five years while throwing off tons of cashflow - but you can also get absolutely destroyed during downturns.
what stock doesn’t go down significantly during a recession?

Most stocks don't lose 90-95% of their value.  The chart on AMD also looks horrific.  You should at least wait until it shows some price stability, which could be a long time.  Right now, it looks like a falling knife.
time in market > timing the market

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Re: Arizona Real Estate (Bubble)
« Reply #28 on: April 25, 2022, 11:04:08 AM »
LL predicting pain in chips?

Now it all makes sense. :)

Not me.  The stock market.  AMD has a history of losing 90-95% of it's value during recessions.

Inland areas of California are subject to huge swings as well.  Riverside County, Palm Springs, etc.

I've seen small SFR's in Riverside County area appreciate >400% from 2012-2022.  I suspect it will crash hard in down cycle.


I completely agree.  This is why I sold my inland multi-families.

You can get rich quick during the upcycles - my properties more than doubled in price in five years while throwing off tons of cashflow - but you can also get absolutely destroyed during downturns.
what stock doesn’t go down significantly during a recession?

Most stocks don't lose 90-95% of their value.  The chart on AMD also looks horrific.  You should at least wait until it shows some price stability, which could be a long time.  Right now, it looks like a falling knife.
time in market > timing the market

I fundamentally disagree with this statement.

Offline sleepy5136

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Re: Arizona Real Estate (Bubble)
« Reply #29 on: April 25, 2022, 11:07:58 AM »
LL predicting pain in chips?

Now it all makes sense. :)

Not me.  The stock market.  AMD has a history of losing 90-95% of it's value during recessions.

Inland areas of California are subject to huge swings as well.  Riverside County, Palm Springs, etc.

I've seen small SFR's in Riverside County area appreciate >400% from 2012-2022.  I suspect it will crash hard in down cycle.


I completely agree.  This is why I sold my inland multi-families.

You can get rich quick during the upcycles - my properties more than doubled in price in five years while throwing off tons of cashflow - but you can also get absolutely destroyed during downturns.
what stock doesn’t go down significantly during a recession?

Most stocks don't lose 90-95% of their value.  The chart on AMD also looks horrific.  You should at least wait until it shows some price stability, which could be a long time.  Right now, it looks like a falling knife.
time in market > timing the market

I fundamentally disagree with this statement.
Agree to disagree. Feel free to read this article and let me know how 'Peter Perfect' in the article fairs compared to 'Ashley Action'. https://www.schwab.com/resource-center/insights/content/does-market-timing-work

 

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