If you know a big recession is coming in 2 years

[BMBiology]

...what would you be doing now (i.e., career, investment, saving, etc)? How would you prepare for it?

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[Argentium]

Shift a bit more into bonds in your retirement accounts and/or hold a bigger cash position now and redistribute as the market plummets during recession. (e.g. 80/20 stocks/bonds right now; shift to 60/40 and re-balance throughout the recession). Of course, the years/months leading up to a recession are also some of the biggest boom times from an equity standpoint so you're missing out on that ... depends on your risk tolerance but overall timing the market is difficult and is pretty much a gamble.

Career/savings - 6 month fund, pay off cc debts, etc.

 

[Gombrich12]

Besides the obvious such as paying down debt and building an emergency fund I would make sure to get any dental/health problems fixed now. Also learn to cook your own healthy and cheap meals in case you need those skills.

 

[gwarm01]

My plan is to continue my current strategy up to and through the next recession. I'm not going to try to time the market. As long as my employment holds, things should turn out alright.

 

[sozetone]

I don't know if i would invest my money anywhere right now. Personally, I am stashing my cash simply in a checking account and invest as a play thing here and there and make a few bucks. You may need that money to leave the country. I'm talking over 500,000 in your bank. Max out your cards, cash advance ...etc. and get your passport ready. Go weather the storm in london. Live simple, pack your lunch (everyday), Stay healthy, and be prepared to dip out of america. This ,may get so bad we have no idea ya know? just my take.

 

[wagrxm2000]

Simple, buy SPXU

Who here has the cajones to put 500k in SPXU?

 

[wagrxm2000]

I don't know if i would invest my money anywhere right now. Personally, I am stashing my cash simply in a checking account and invest as a play thing here and there and make a few bucks. You may need that money to leave the country. I'm talking over 500,000 in your bank. Max out your cards, cash advance ...etc. and get your passport ready. Go weather the storm in london. Live simple, pack your lunch (everyday), Stay healthy, and be prepared to dip out of america. This ,may get so bad we have no idea ya know? just my take.

Cash loses value, at least buy short term CDs. Keep up with inflation.

 

[pencilandpen]

save up as much cash as possible and buy the dip.
stocks are so high right now its bad for people who wants entry....

 

[PharFromNormal]

Nice try Russia. You won’t give me panic and anxiety. Extremely Long S&P. Buy even more on dips.

 

[PharmtoCS]

Save up at least a year of emergency funds + relocation expenses in case I need to move where there is a job.

 

[lord999]

...what would you be doing now (i.e., career, investment, saving, etc)? How would you prepare for it?

This advice is more for longer-term recession, the above advice is sound on the investment rebalancing and the job retention.

I am saying this in complete seriousness:

1. Make some friends, preferably friends that AREN'T in your line of work. Social capital helps especially because you can make up for skills that others don't have (you are the easiest person to get drugs if needed, legally) and others may fill in gaps (you don't have any idea how the plumbing works). This is where religion helps. Don't get married if you aren't already married.

2. Have some tradeable goods and more importantly, in tradeable quantities. That's some cash, some specie (silver or gold), and a couple of other things. Real important, you need them in quantities that you can trade in unequally (like the Oregon Trail). So, don't get a gold bar, get gold strips or something in 1/2 oz or less quantity but a lot of it.

3. You and your spouse need to learn autarkic skills - How to grow, how to repair things, how to do general handyman things around the house.

4. If you have addictions, particularly tobacco and alcohol, get rid of them. These get exploited heavily in recession situations and these products are bought and sold at a premium.

The point is that you cannot predict the nature of how the recession affects you, but to have the diversity that as the problems come up, that you have something to offer to deal with the problem. Specialization of labor DOES NOT work when there is no market, and when there is no cash market, there still are skill markets and social capital markets.

For good reading, you might want to read history books written about times of want: around the post-war German Weimar Republic, the Chinese Great Leap Forward, and the Soviet Collapse. I would put more stock in lifestyles closer to our time, so the Soviet collapse and the Swedish bank runs in the 00s give a good overview about how lifestyles have to adapt or not. If you're really, really pessimistic, then John Michael Greer is worth a read.

My favorite books about those periods are Orlov - Reinventing Collapse (how to live when your government has collapsed and there are no markets which has lots of gallows humor), Gaidar - Collapse of an Empire (more political than social history, but the point is that the technocracy never figures out how badly they screwed up until they start getting murdered with impunity by the citizens and the military), and Cowie's - Staying Alive in the 1970s, where it goes into how Nixon's withdrawal from the gold standard and the increases in globalization screwed over a generation of uneducated American factory workers. If you would care for any of these books in ebook form, let me know in a PM with your email, and I'll send copies.

As for me, I'm already prepared as best as i can be. Still working on better cooking and handyman work, but it's a living. By the way, I don't mean (and don't agree with) the whole catastrophic fall of civilization disaster porn peddled by some groups (John Michael Greer does go there at times), but diversifying and going the antifragile route seems to be the only viable strategy for tackling problems that you cannot put to words yet.

 

[Pacho From Cali]

LOL "gold strips" just stop. WTF did I just read

 

[lord999]

LOL "gold strips" just stop. WTF did I just read

Yeah, I know, doom porn and all. That said, it's a recurring theme in any of the major recession history books that having mutable forms of currency was a major preoccupying problem and was the deciding factor in quite a number of cases whether a family kept their property or not. In Germany after both World Wars, Korea, and the Soviet Union after collapse, it was that, bartering at major loss, or prostitution to the civil and military forces' pleasure to avoid starvation when compensated work was unavailable.

The last minor recession is why I never made IT a full-time career. I saw many of those people in health sciences school (physician, PA, pharmacy, PT) when sales and programming jobs dried up in the late 90s into the early 00s. Maybe, it's our turn now, but I've always been aware that there is always an end to the good times due to the business cycle.

You should think about the anxiety of being precarious labor for a while, because with your career choice, plan on having a personal recession (unemployment) at least once in your career even if you are the .00001% that avoids it. Meanwhile, now that my household has enough, we're just learning how to live and figuring out more ways to get our time back (and not simply like the FIRE people, just liking cooking and crafts, the cleaning is left to the service).

 

[pezdispenser]

Get all your debts paid off including your mortgage so you don't have any big payments to make in case you get laid off. If you do manage to hang on to your job during a recession, consider refinancing to cash out your equity and buy stocks for cheap. The Fed will probably cut interest rates to encourage this.

Career-wise, I'm ready to stop working full-time and just do prn. I live a fairly simple life so I don't need much money. Plus I enjoy DIY things so I'll probably ramp that up.

Right now I'm still investing but have 30% of my portfolio in cash and bonds to buy stocks in case there is a dip. It's too hard to predict when exactly a crash will occur and in the meantime you'll miss out on gains while the market is going up. So probably a strategy in the middle ground is best.

 

[wagrxm2000]

All these people saying they are loading up on cash.

If you think stocks are going to fall why not make money on the collapse?

 

[lord999]

All these people saying they are loading up on cash.

If you think stocks are going to fall why not make money on the collapse?

Because it doesn't work that way. A recession works by contraction, that no bet is a winning one. Try the Japanese one on for size.

 

[wagrxm2000]

Because it doesn't work that way. A recession works by contraction, that no bet is a winning one. Try the Japanese one on for size.

What I'm saying is short the market.

 

[Pretty Pretty]

A bad sign is all these zero cost ETFs and funds being offerred now.

Institutions are looking for bagholders. Moms and Pops who sat out, jealous of neighbors and friends bragging about 401k balances, are easy marks.

Also seeing angry immediate pushback in various forums from novice investors at the suggestion assets are overvalued. The cycle continues. Three times in 2 decades and people still have not learned. This one will be a doozy. A financial collapse for sure. Economic, hopefully not. Question is, where do we stop on Orlov's heirarchy?

 

[BidingMyTime]

Party up and live today like there is no tomorrow.

 

[gwarm01]

What I'm saying is short the market.

We all know a recession is coming eventually, but hopefully no one here thinks they are smart enough to actually call it. People have been missing out on growth for years because they thought the market was going to pop in 2012, 2013, etc.

My plan is to just continue monthly contributions into a 403(b), Roth IRA, and my taxable account. No HSA at my current job unfortunately. When the market finally crashed, I will continue dollar cost averaging through the entire thing. It may not be sexy and it won't make me an instant millionaire, but hopefully it will produce a decent profit by the end. You know, assuming I stay gainfully employed.

 

[confettiflyer]

If I knew for a certainty the exact date of the market peak and trough, I’d short the **** out of the market.

I’m talking like I would withdraw everything I own and bet it all on red.


But actual real life recession planning? Not really changing much of anything. Maybe I’ll buffer my cash position so I can take advantage of misery once we’re in true bear territory.


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[awval999]

I agree that current US equity P/E's are overvalued based on historical norms. But a 20% haircut on US equities does not necessary imply a "big" recession.

Remember, the vast majority of the US population doesn't invest in the stock market. The stock market going up or down only affects them on the margins.

What nearly brought down the entire economy was that the last recession dealt with the housing market. Which Average Joe is heavily invested in (on margin). Why do you think the Fed is trying to increase interest rates? They don't want to play around with the housing market again. Raising interest rates, removing the SALT deductions, the idea is to cool down the housing market. And the 2001-2002 recession had the 1-2 punch of the tech stocks failing PLUS the Sept 11 attacks.

FAANG stocks taking a bath isn't going to affect anyone (besides Bay Area housing prices).

Remember, Australia hasn't had a recession in over 20+ years.

Sometimes I think the posters here focus on a small portion of the economy (example: the economy and supply/demand of non-residency trained community pharmacists in large metro areas) and try to extrapolate that to everything else. Just like in 2008 when our pharmacist economy was BOOMING doesn't mean the rest of everything else was. And now in 2018, just because the local supply/demand of non-residency trained community pharmacists in large metro areas is terrible doesn't mean the entire US economy is terrible.

 

[Unchained]

If I were to guess the cause of the next recession I would look externally. Euro-debt always seems to rear its ugly head every couple of years. Greece is merely a rounding error. Italy is one domino that could start the tumble down.

 

[wagrxm2000]

I agree that current US equity P/E's are overvalued based on historical norms. But a 20% haircut on US equities does not necessary imply a "big" recession.

Remember, the vast majority of the US population doesn't invest in the stock market. The stock market going up or down only affects them on the margins.

What nearly brought down the entire economy was that the last recession dealt with the housing market. Which Average Joe is heavily invested in (on margin). Why do you think the Fed is trying to increase interest rates? They don't want to play around with the housing market again. Raising interest rates, removing the SALT deductions, the idea is to cool down the housing market. And the 2001-2002 recession had the 1-2 punch of the tech stocks failing PLUS the Sept 11 attacks.

FAANG stocks taking a bath isn't going to affect anyone (besides Bay Area housing prices).

Remember, Australia hasn't had a recession in over 20+ years.

Sometimes I think the posters here focus on a small portion of the economy (example: the economy and supply/demand of non-residency trained community pharmacists in large metro areas) and try to extrapolate that to everything else. Just like in 2008 when our pharmacist economy was BOOMING doesn't mean the rest of everything else was. And now in 2018, just because the local supply/demand of non-residency trained community pharmacists in large metro areas is terrible doesn't mean the entire US economy is terrible.

Um I don't think you realize what happens when the market collapses.

 

[APN-59 rph]

I don't know if i would invest my money anywhere right now. Personally, I am stashing my cash simply in a checking account and invest as a play thing here and there and make a few bucks. You may need that money to leave the country. I'm talking over 500,000 in your bank. Max out your cards, cash advance ...etc. and get your passport ready. Go weather the storm in london. Live simple, pack your lunch (everyday), Stay healthy, and be prepared to dip out of america. This ,may get so bad we have no idea ya know? just my take.

WHY on earth would you "weather the storm" in London??! Could you find a more expensive..crowded place?? It's been 5 years but I dropped 100 bucks US on a cab ride from the outer burbs to Gatwick...the tube was down on Sunday...And...you can't tote much real cash money overseas....

 

[Prosperity8]

You save as much as possible in cash and go all in on blue chip stocks (Boeing, Apple,Chevron,JP Morgan) once it drops 40% and emerge filthy rich.

 

[Pretty Pretty]

You save as much as possible in cash and go all in on blue chip stocks (Boeing, Apple,Chevron,JP Morgan) once it drops 40% and emerge filthy rich.

How does one lose 80%? First you lose 30% Then you lose another 30% Then you drop 60%

Deleveraging begets deleveraging. This is why markets don't revert to the mean but blow right thu it. We will see PE's at 7 again and nobody will want to buy them when they get there.

 

[wagrxm2000]

How does one lose 80%? First you lose 30% Then you lose another 30% Then you drop 60%

Deleveraging begets deleveraging. This is why markets don't revert to the mean but blow right thu it. We will see PE's at 7 again and nobody will want to buy them when they get there.

Hmm an account made that has only posted on the market. Is you know who back?

 

[sozetone]

WHY on earth would you "weather the storm" in London??! Could you find a more expensive..crowded place?? It's been 5 years but I dropped 100 bucks US on a cab ride from the outer burbs to Gatwick...the tube was down on Sunday...And...you can't tote much real cash money overseas....

Hey man you got a better idea? what if our dollar is worth pennies? then nobody goes anywhere, i dunno....do what you want. its your life.

 

[sozetone]

hey people , lets face it, if our economy drops to the point our dollar is worth nothing, we are all done for. And if we were all millionaires ans billionaires , we would not be here posting about how to make money.

 

[confettiflyer]

hey people , lets face it, if our economy drops to the point our dollar is worth nothing, we are all done for. And if we were all millionaires ans billionaires , we would not be here posting about how to make money.

Best time to make money is during turmoil. Losers just give up.


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[wucool33]

Hey man you got a better idea? what if our dollar is worth pennies? then nobody goes anywhere, i dunno....do what you want. its your life.

Better idea? Literally anywhere would be better than London...

 

[BidingMyTime]

Hey man you got a better idea? what if our dollar is worth pennies? then nobody goes anywhere, i dunno....do what you want. its your life.

You go somewhere with a very cheap cost of living, like Mexico, for example.

 

[wagrxm2000]

Today's homework assignment: Artemis Capital's July 2018 letter to investors by Chris Cole, the cat who predicted the short VIX ETN fiasco.

The irony of the Bogle-head crowd is that they tout efficient market hypothesis to support passive investing while simultaneously failing to comprehend how the dominance of the strategy causes markets to become highly unstable and inefficient. The most immediate realities are the ones that are the hardest to see… If you want to know when volatility will truly arrive, watch the shift in the medium.

When this puppy turns the algos will disappear if not go short. Aug 24th 2015, Brexit, Election Night, the VIX Implosion were all previews of the main attraction to come...systemic flash crashes. Only this time the PPT won't be able to save the day. Circuit breakers will be tripped, markets halted only to be tripped again. Own what you want own before this happens. There will not be an opportunity to react on the fly.

It's official, welcome back Carol

 

[BMBiology]

Today's homework assignment: Artemis Capital's July 2018 letter to investors by Chris Cole, the cat who predicted the short VIX ETN fiasco.

The irony of the Bogle-head crowd is that they tout efficient market hypothesis to support passive investing while simultaneously failing to comprehend how the dominance of the strategy causes markets to become highly unstable and inefficient. The most immediate realities are the ones that are the hardest to see… If you want to know when volatility will truly arrive, watch the shift in the medium.

When this puppy turns the algos will disappear if not go short. Aug 24th 2015, Brexit, Election Night, the VIX Implosion were all previews of the main attraction to come...systemic flash crashes. Only this time the PPT won't be able to save the day. Circuit breakers will be tripped, markets halted only to be tripped again. Own what you want own before this happens. There will not be an opportunity to react on the fly.

What do you think we should buy?


Sent from my iPhone using SDN mobile

 

[sozetone]

Today's homework assignment: Artemis Capital's July 2018 letter to investors by Chris Cole, the cat who predicted the short VIX ETN fiasco.

The irony of the Bogle-head crowd is that they tout efficient market hypothesis to support passive investing while simultaneously failing to comprehend how the dominance of the strategy causes markets to become highly unstable and inefficient. The most immediate realities are the ones that are the hardest to see… If you want to know when volatility will truly arrive, watch the shift in the medium.

When this puppy turns the algos will disappear if not go short. Aug 24th 2015, Brexit, Election Night, the VIX Implosion were all previews of the main attraction to come...systemic flash crashes. Only this time the PPT won't be able to save the day. Circuit breakers will be tripped, markets halted only to be tripped again. Own what you want own before this happens. There will not be an opportunity to react on the fly.

Are you off your meds man?

 

[sozetone]

You know what I found out today? QE in the US never ended. While the Fed pretends it's reducing its balance sheet the rules were changed to allow commercial banks to in effect buy infinite amounts of US Treasuries with no consequences if they are held in a Hold-to-Maturity account.

1.What are the reserve requirements for U.S. government debt owned by a CB?
2.What are the mark-to-market rules for government debt owned by a CB?
3.Where does a CB get the funds to buy government debt?
4.What are the Basel III capital requirements for government debt owned by a CB?

Believe it or not, the answers to these questions are

1.Zero.
2.They are not marked to market.
3.It creates the money out of thin air.
4.None.

This explains why the long end of the curve is not rising with the deluge of new supply. It's here. Technocratic Fascism. Should this be a new variable for the Drake Equation? A civilization developing into a space-faring ones is contingent on overthrowing its financial overlords?

Your in the wrong forum...Quantum Physics and Banking is available on another board! lol