The looming recession & your place in line for a Rivian [WARNING: NO POLITICS]

[Honey]

...you don't know shitty.

Not going to play the struggle olympics with you, My family was 2 weeks away from being homeless back in '08... which is why I joined the military in the first place, I did it for the benefits and to send money home to help my family.... having to choose between buying food or paying the electricity/gas bill sucks...

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[SANZC02]

My husband and I work for the (local and federal-DOD)government, our jobs are secure. Not worried about the ression, being a millennials we are just used to having shitty economies.

Really? I would think being a millennial you would think the economy was great. 1995 to present has had some of the best years with low interest rates ever. There were a couple of blips in 2001 and 2008/9 but other than that it was a good stretch.

 

[Lizardo]

I think there is a point where I decide the wait isn't worth it any longer and risk of taking delivery of the R1T is too high.

Don't love my M3 LR. But I own it now with a decent loan. But if the resale value craters on it (don't think it will) it could impact my willingness to get into a new vehicle. If the car loan rates shoot up too much, I may not have the stomach to get into a newer loan with worse rate. So Right now I'm game. In October to December, I may not have the stomach or ability to take delivery because of the economic environment or if I feel like Rivian is at greater risk of going bankrupt.

 

[mabowden]

Raising interest rates bother me more than the current state of the economy.

 

[sevengroove]

Really? I would think being a millennial you would think the economy was great. 1995 to present has had some of the best years with low interest rates ever. There were a couple of blips in 2001 and 2008/9 but other than that it was a good stretch.

You realize that most millenials weren't even of working age between 1995 and 2008, right?

 

[R_1_T]

Raising interest rates bother me more than the current state of the economy.

It's not possible to decouple them - two sides of the same coin if you would. You've had the global economy flooded with countless billions of currency with greatly reduced productivity/industrial output. We've just begun to see the rotten fruits of the dumb fiscal policies. This was going to happen eventually, but the last couple years have put the collapse into overdrive.

 

[Matty J]

The Rivian fiscal year has 8 quarters

And 12 Fridays per month.

 

[SANZC02]

You realize that most millenials weren't even of working age between 1995 and 2008, right?

I do which is why I was surprised by the comment.

The dates vary but usually someone born between 1980 and 1996 fall into that group so the earlier ones would start working late 90s on.

The economy since 2000 has for the most part been very good. Anyone reaching adulthood after 2002 and started working really only had the 2008/9 years, everything else was pretty good and stock market growth form 2001 even with the recent drops have been a rocket ship ride. Dow in Nov. 2001 was around 9800, today closed at 31,392. Nasdaq even better 1900 to 11,340.

 

[yizzung]

It's not possible to decouple them - two sides of the same coin if you would. You've had the global economy flooded with countless billions of currency with greatly reduced productivity/industrial output. We've just begun to see the rotten fruits of the dumb fiscal policies. This was going to happen eventually, but the last couple years have put the collapse into overdrive.

Did someone say dumb fiscal policy? I wonder if anything else was going on in parallel...

 

[sevengroove]

I do which is why I was surprised by the comment.

The dates vary but usually someone born between 1980 and 1996 fall into that group so the earlier ones would start working late 90s on.

The economy since 2000 has for the most part been very good. Anyone reaching adulthood after 2002 and started working really only had the 2008/9 years, everything else was pretty good and stock market growth form 2001 even with the recent drops have been a rocket ship ride. Dow in Nov. 2001 was around 9800, today closed at 31,392. Nasdaq even better 1900 to 11,340.

Those are all great examples assuming you actually had money invested and/or a job earning you more money to invest during that time. Imagine graduating university in 2008/9, not finding a job for a couple of years because of the recession, taking out more loans to go back to grad school because you have no other choice, and finally entering the workforce half a decade later (i.e. no earnings/savings in that timeframe) than planned with more debt than you planned for. Riding out a recession and starting out during a recession are two very very different things.

 

[Gator42]

Imagine graduating university in 2008/9, not finding a job for a couple of years because of the recession, taking out more loans to go back to grad school because you have no other choice, and finally entering the workforce half a decade later (i.e. no earnings/savings in that timeframe) than planned with more debt than you planned for

Now do 1990…

 

[sevengroove]

Now do 1990…

No

 

[Forager]

Caveats: I work in tech / private equity and have a July 2020 order for an R1T.

While I've been somewhat confident that we might pull off a soft landing, my economic outlook has darkened over the last few months. Pick your poison: war in Europe, Russian oil/gas embargo, China lockdown, 40-year high in inflation, supply chain problems (scarcity AND glut), rising interest rates, stock market sell-off, crypto bubble, housing bubble, pandemic, monkey pox, need I go on?

The inflation numbers out today indicate that the Fed has to get way more serious, which means recession is on the way. I'm seeing lots of companies freeze hiring and a trickle of early layoffs. But out in Silicon Valley, down-rounds, bigger layoffs, and liquidations of the more speculative startups are just around the corner.

To date, we've only heard about a steady uptick in Rivian orders. 90,000 (I think) in the last earnings call. But I'm increasingly convinced that a significant number of these orders are going to vaporize. Somebody placing their order 18 months ago when their stock portfolio was 30% higher than today or when they had access to a dirt cheap home equity loan or (worse) when they were gainfully employed, is in a different position today (or very likely will be in a different position six months from now). Not to mention that many folks seem to be hedging by putting multiple deposits on multiple cars.

I suspect that the recession is going to be uglier than most are anticipating. And when perception catches up to reality, I think a lot of people are going to be dialing back their purchases of boats and ski cabins and electric adventure toys. The good news? Well, I suspect that you might get your Rivian sooner than you expect, assuming you decide keep your place in line...

I’d point out that the S&P 500 is still up almost 5% from 18 months ago. Unless you started investing in the last 12 months, you are probably still “up” —inflation not withstanding. Otherwise, I by and large agree with this assessment.

Personally, I’m going to defer my R1 purchase as long as possible. The next 12 months will be telling and I don’t need a new car right now. I’ve been driving the same truck for 12 years, I can go another 3 if need be. As long as inflation remains this high and I’ve got a price lock, I’m saving money.

I’ll switch to a Max pack Explore with Dual Motor if need be, and then revert back to my preferred config when I’m ready. I’m sure there are others that will play this game. I’ve also got my down payment tied up in RIVN so I hope some magic happens in the next 12-24 months.

 

[SANZC02]

Those are all great examples assuming you actually had money invested and/or a job earning you more money to invest during that time. Imagine graduating university in 2008/9, not finding a job for a couple of years because of the recession, taking out more loans to go back to grad school because you have no other choice, and finally entering the workforce half a decade later (i.e. no earnings/savings in that timeframe) than planned with more debt than you planned for. Riding out a recession and starting out during a recession are two very very different things.

I’m not saying you could not draw the short straw in that generation, just that the timing for a short straw is pretty small.

All of my kids are millennials, I’m aware of the challenges for that generation but also aware of the opportunities.

 

[sevengroove]

I’m not saying you could not draw the short straw in that generation, just that the timing for a short straw is pretty small.

All of my kids are millennials, I’m aware of the challenges for that generation but also aware of the opportunities.

I respectfully disagree on the timing for a short straw. There are knock-on effects such as much higher cost of housing (both renting and buying) that the majority of millennials are having to deal with, which only means less equity being built and less money to invest elsewhere. Not trying to paint a bleak picture overall - after all, I am here on a forum as a prospective luxury EV owner - but just trying to balance perspectives.

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