I think the prior that bubbles usually pop is incorrect. We tend to call something a bubble in retrospect, after it’s popped.
But if you try to define bubbles with purely forward-looking measures, like a period of unusually high growth, they’re more frequently followed by periods of unusually slow growth, not rapid decline. For example, Amazon’s stock would pass just about any test of a bubble over most points in its history.
I expect something similar with education, spending will likely remain high, but grow more slowly than it did in the last 20 years. That’s especially true because of the structure of student loans, people can’t really just default.
But to answer the more direct question: assuming that there is a rapid drop in education spending, how could we profit from it? Vocational schools seem like the most obvious bet, e.g. to become a programmer, dental assistant, massage therapist, electrician, and so on.
Certification services that manage to develop a reputation will become strong as well, e.g. SalesForce certificates are pretty valuable.
You could directly short lenders such as Sallie Mae.
Recruitment agencies that specialize in placing recent college graduates will likely suffer.
Management consulting firms rely heavily on college graduates, and so do hedge funds to a lesser extent.
I think the prior that bubbles usually pop is incorrect. We tend to call something a bubble in retrospect, after it’s popped.
But if you try to define bubbles with purely forward-looking measures, like a period of unusually high growth, they’re more frequently followed by periods of unusually slow growth, not rapid decline. For example, Amazon’s stock would pass just about any test of a bubble over most points in its history.
I expect something similar with education, spending will likely remain high, but grow more slowly than it did in the last 20 years. That’s especially true because of the structure of student loans, people can’t really just default.
But to answer the more direct question: assuming that there is a rapid drop in education spending, how could we profit from it? Vocational schools seem like the most obvious bet, e.g. to become a programmer, dental assistant, massage therapist, electrician, and so on.
Certification services that manage to develop a reputation will become strong as well, e.g. SalesForce certificates are pretty valuable.
You could directly short lenders such as Sallie Mae.
Recruitment agencies that specialize in placing recent college graduates will likely suffer.
Management consulting firms rely heavily on college graduates, and so do hedge funds to a lesser extent.