Distressed Investing: Finding Deals While Markets Soar

So the stock market's on fire right now, but guess what? Smart money is still finding plenty of distressed deals to jump on. Some players in this space are actually pretty pumped about what they're seeing.

The economy's not doing too bad – looking at about 2.2% growth for Q2 after a rough first quarter. But just because the economy looks good doesn't mean there aren't messed up situations where you can make some money.

Trump's tariffs earlier this year definitely stirred the pot, especially during what they're calling "Liberation Day" in April. Things have chilled out since then, but with tariffs at a 100-year high, nobody really knows what's coming next. One guy actually said, "Predictions are more difficult than ever when the economy can change with a single tweet." Not wrong!

That huge budget bill they passed on July 4th (the "One Big Beautiful Bill”) is another wild card. Some investors think regular folks are already feeling the squeeze and just buying stuff now before prices jump.

Interest rates have everyone watching Powell and Trump duke it out. If long-term rates spike, housing could take a hit and that ripples through everything.

The numbers aren't too scary yet – distressed debt is actually pretty low, around $61 billion in high-yield and $46 billion in leveraged loans. Default rates aren't freaking anyone out either.

Where are these folks putting their money? They like building products, power companies, pharma, media, telecom and auto parts. They're also eyeing debt from the COVID era that's about to come due, healthcare companies dealing with budget changes and commercial real estate that needs refinancing.

What are they avoiding? Retail is a big no-no – it's getting hammered by tariffs. They're also staying away from anything too exposed to tariffs and software that might get crushed by AI.

Bottom line: even when markets are hot, there's always something breaking somewhere. And that's where the real money is being made.

#distressed