What are you doing now to profit from the current or upcoming recession?

I haven't been doing anything at all, beside some mechanical tax-loss harvesting. Suffered -21% YTD returns (~$800k lost on paper) on my 3-fund portfolio, which includes roughly 85/15 stocks/bonds.

Thanks to new contributions my net worth since last year is "just" down -11%. I haven't increased the rate of my new contributions because I have always dumped all my savings in the market since forever, I never kept any "dry powder" for moments like these as I always thought it was too much opportunity cost. Actually, thinking about it, the rate of new contributions significantly decreased this year because a good chunk of my pay is in FAANG RSUs :-)

It sucks, but I know I don't know anything and I can't risk timing the market and being double-slapped (first slap: taxes to liquidate the portfolio; second slap: not catching the market rebound, when/if it will happen).

Again, it sucks when you think how much stuff I could have bought with the ~$800k I lost on paper. My parents, old-school folks, think I am completely insane and irrational for letting this happen, and they also though this in March 2020 when I didn't sell. I literally have my dad texting me every other day begging me to sell. But surprisingly you get used to it, and I do not think I would panic, nor change my plans, even if we go much lower from here.

I also sold almost all my non-retirement stocks near the top and stopped purchasing more in mid 2021. I ignored the “timing the market” advice because it was obvious we were in an asset bubble and once inflation was in the mix, given low unemployment, the Fed mandate obviously pointed to interest rate hikes.

I’d not purchase short ETFs unless you know what you are doing. They are not the same as your standard long ETF. They have to pay for the cost to borrow, likely have much higher management fees than eg Vanguard ETFs, and of course in the long run are not something you want to hold.

You’d probably be better off holding short term treasuries (basically cash) hedged with some 1+y calls on broad market funds. If you want to buy back in sooner you could sell medium term puts. Or just lock in the gains you already made by purchasing now.

Please please please before you buy a bond ETF recognize that it’s not the same as buying a bond. With a bond index you can lose money at mark-to-market that you’d only recoup after decades of interest or if we want back down to lower rates.

While, in my opinion, the 1y outlook was clear 1y ago, it’s a lot less clear now. I don’t think anybody knows how high rates are going to have to go to stop inflation, the Fed timeline, and how bad a potential recession would be. An amicable end to the war in Ukraine could also fix the energy crisis quickly.

I've kept my 401k investments the same. I still have a good 30 years before I have to sweat bullets about it. If money is still coming in during low points, I shouldn't have to be too concerned, unless I get laid off.

I'm also stocking up on necessities; food in particular. Not only is there a recession, have you noticed how many crops weren't planted, and how much less fertilizer is being used? Livestock numbers are down, too. Famine is coming.

> I see comments on HN once in a while about how they did [clever thing X] during a recession years ago and made money.

Survivor bias. Most clever financial things/hacks lose money.

Let me start by stating that I'm quite happy for all the wealthy people sharing their insights about finance and how they're planning to stay rich or cut losses during the upcoming recession. Bravo.

I personally however am trying to do nothing. I'm 37 year old and I recently found out that I've high blood pressure and higher than normal cholesterol levels. I also came to know about the passing of a few individuals of similar age brackets in my inner circles.

None of this will matter. Take care of your health. That's what I'm trying to do at this point. Exercise, enjoy a bit walk in the bush, go to beach this summer etc.. I think that's quite a profitable affair!

Philosophical perspective: Should you?

Energy is more expensive, food is more expensive, both due to real shortages. If we are going into a recession it makes it even more difficult to afford on average, a huge chunk of the population is going to struggle to eat, to keep warm, many will die. You want to figure out how to personally profit off the recession - further increasing the difficulty for others to get their share of the limited resources during - so should you?

Unless you are intending to profit by providing some kind of intrinsic value to society which could improve the situation even indirectly, I'd say no, it's unethical to exploit this situation to extract wealth using financial tools.

Bonds have been pummeled this year - it's going to be time to buy some bond funds soon. Been buying 6-month to 2-year duration treasuries via treasurydirect.gov - 2yr is paying over 4% now. Yeah, that's less than inflation, but definitely way better than what I was getting in the bank. I was going to mention iBonds for an easy 9.6% return, but it's Sept 30 so too late for getting in on that if you haven't (EDIT: apparenlty you can still get in on it through October). Not sure about short ETFs at this point - not saying we've seen the bottom yet, but the market is already down a good bit this year.

Keep some powder dry so you can pick up some good deals over the next 6 to 12 months (bonds and equities). Inflation tends to be sticky so it's quite possible that the Fed will have to raise rates more than their current target (which is something in the 5% range) - if that's the case then you'll probably want to lock in some longer term treasuries if they manage to get over 6% yield (not saying that's going to happen, but it seems like it could be a possibility and you'd want to be positioned to take advantage of that)

The time to make a move into a bubble that has burst is when nobody cares anymore. CNBC has moved onto other things. Cramer has nothing to say. You can go for weeks without it even being a topic of regular conversation. All those house flipper programs have been canceled. When the former golden children come up in conversation, the most likely response is "that's still a thing?"

I guarantee you won't want to buy that market because it looks dead and set to drop further. But it's really instructive to go back and look at charts for various assets after bubble implosions. There's plenty of time to get in after the Johnny-come-latelies have been margin called into oblivion and even the diamond hands have folded.

The absolute worst time to make a move is during a downturn. Things tend to get extremely volatile on both the upside and downside. Everyone is excited. There's hope! Not a chance! Which way will it turn out? It keeps buyers and the faithful clinging to hope. Buy some time after they've capitulated and completely written off the market. Go back to those charts and notice that the strongest rallies happen in bear markets.

Buy after the last bull has admitted defeat. My canary in that coal mine will be Tom Lee:

https://www.cnbc.com/tom-lee/

When this perma-bull turns bearish, you'll know the waters are safe.

To answer your question, I'm waiting. Waiting for stuff to get as boring as watching paint dry.

Improving my DevSecOps skills as folks who can sell themselves as doing the jobs of three people will be more attractive in the eyes of employers (even if it's really just the same dev job I've been doing all along).

Last recession I made millions off real estate. Every $100k invested has grown 3-4X, but more importantly continues to return ~1.5% to 2% monthly in rent, plus offers significant depreciation expense at tax time. I doubt those conditions will ever happen again — I was lucky with timing.

This recession I bought a significant portion of select ‘pandemic stocks’ I thought have good fundamentals after they dropped 70-90% earlier this year (I was already all in cash anticipating a recession). My hope is in ~3 years that investment will 3X when the market recovers.

I wish I had better ideas on the next opportunity this recession, but by definition they will always be contrarian. My next big bet will likely be on myself with a startup, which I haven’t done in a decade.

The 3 thoughts I like to play with when thinking about investments are

1) don't try to time the market

2) be greedy when others are fearful

3) don't measure your portfolio based on the high water mark

I didn't sell everything at the top, though I suspected a drop was coming, I just hodl (not just crypto, stocks too). I have confidence that the companies I stock in and the crypto I keep are in companies/projects that I want to see succeed, not just those that I think will provide the best return, though those two things often overlap.

However, now is the time to be greedy, and I'm sure that time will continue for the next 12-18 months. Is this the bottom? Probably not, but it may be bottom enough.

The last point is what I find interesting where everyone says they "lost 20%, 40%, etc etc" but I've never understood why they take the high water mark and not what the market "should" have been priced at.

We are confident 2020/2021 were significant bubbles driven by monetary policy. So why would we consider the top of the bubble to be what our portfolios should have been valued at?

I prefer to look at the price from 2019, and look at the return on investment from there, or earlier if you like. Compare where your portfolio is to had you been in cash or other investments. To me, this is the way to take the long view. Yes, you could have sold at the top, you didn't, so you never had that value.

I find this mentality helps me keep an eye on the longer-term. YMMV

It's only ever clever in hindsight. It's possible the best move right now is to buy 3x levered NASDAQ ETFs. And in hindsight it will look genius and obvious - market is down, buy levered ETFs. But the fact the market is down so much and you're now thinking about shorting kinda explains why it's not easy.

Also, bare in mind the only way to make money from a short position is to know when to sell - so how much further do you think markets will fall?

If you are liquid, a good time to pick up some real estate will probably be in about a year's time.

Around 2008, a typical property dropped to half its value, then doubled and tripled in the next five-six years. Just buy it and rent it out on a time limited contract while you wait for the property rebound.

I'm always hedging against my current employer by having a public presence and building my personal brand.

I don't need to be rich. But I want to have a job I like and work on interesting work. If my current employer has layoffs, my boss is bad, or I have to deal with some crappy situation - I'm always in a position to leave. I like to regularly interview (well really 'take calls/offer advice/talk to people') and get into the habit of advertising my skills.

During a recession this is more important than ever...

I wouldn't suggest investing in short ETF or buy puts or anything like that if you don't know what you're doing and don't have to ask me about it.

In past tightening cycles the Fed has had to hold interest rates elevated for around a year before a recession set in. If that happens again then we may see a dead cat bounce over the 6-12 month time period and everything may recover. You could wind up shorting the market right at a medium term low. The fact that we're talking about doing that on HN could be a contrarian indicator that near term sentiment is way too pessimistic.

I do strongly believe that we're not anywhere near the bottom yet since inflation is being driven by wage growth and the Fed has announced that they're going to increase unemployment. With unemployment still so historically low this is not the time to buy yet either. The roller coaster ride is going to get a lot lower, I just don't know what the exact path it is going to take to get there or exactly when the ETA is, so I can't see there's any useful way to trade it.

You might be able to guess the correct path and just get lucky and have it work out, but you will be straight up gambling. You should know your exit strategy if you do that and understand what information coming in will make you abort your strategy if you recognize that reality isn't agreeing with your model in order to limit your losses.

Doing the same as I ever did over the last 9 years since I moved to the US. Buying Vanguard funds, going index with 401k. My only recent addition was Fundrise 2 years ago.

Considering borrow AUD to finance a property in London in a FX play of sorts. I am keeping an eye out and if the GBP crashes more I might go ahead. The "hedge" might be, if it the GBP crashes even more after to live in the UK, and earn a remote salary.

I am waiting longer for a deeper crash. If I miss the boat, that is fine (I would rather miss the boat than risk getting on a rocky boat).

Weirdly, for us non-US tech people who haven't accumulated millions at FAANGs, finding a good remote job could be the best move. In tech, your "recession" is still better than our non-recession!

Main thing is look after your health.... !

First thing is stand back a little from the hype and don't buy 100% into whatever consensus that there is going to be a recession. We may be looking back in retrospect and picking "right now" as the bottom and you liquidated everything at the worst possible time.

It is pretty hard to profit from short ETFs. The two you mentioned (SH, SQQQ) are pretty good destroyers of purchasing power: https://totalrealreturns.com/s/SH,SQQQ

I'm planning to buy a lot of T-bills. Not treasury indices or funds: Actual T-Bills. A person might sell their holdings in like a TIPS fund when the general market crashes b/c they need liquidity. So you need the underlying treasury.

And also put the max into series i bonds, currently at ~9%. If you're a couple, you can put $20k in now and $20k in January, all paying the CPI as the interest rate.

I tried a few "clever" options positions this year, not with a lot of money. Even when I was right I still wasn't really able to capitalize on it, b/c you have to be right at the exact right time, not when your options expire or dwindle to worthlessness. It's a tricky game.

Just keeping your powder dry and staying in cash and cash equivalents will see you doing well. Then in 2-3 years when real estate crashes, buy something.

One thing I did that really, really didn't work is buying a lot of bond funds. Just buying a lot of individual bonds seemed too complicated, so I did that and apparently bond funds don't behave like bonds and just go down on sentiment... It's my biggest ever loss investing anything so far, and unlike stocks I suspect it won't go up very fast. Painful lesson, I now buy some bonds but only individually - i.e. treasuries or Goldman Sachs/Bank of America bonds on dips. Dunno much about bonds though, so I don't buy much.

Another thing that didn't work out so well although on a much smaller scale are international funds. What's up with international funds, I don't know. Seems like whatever international things they are investing in have been going nowhere for the last 5 years, luckily I only have very little. I wish there was ELI5 somewhere about this.

One of the things that worked surprisingly well in a sideways/down market is selling a cash-covered put ladder on SPY. I try to get $650-850 for a 3mo put, resulting in rather implausible strike prices. Unlike stock puts, where you can automatically catch a falling knife, I am not actually sure what the catch is with SPY, other than if it's the money you might need soon (i.e. you don't want to have to sell when you get assigned). I feel like, in the absolute worst case, you get assigned a lot and SPY tanks for a long time a-la Japan; that would be bad but most other investments you could have conceivably made, including just buying SPY, would do just as bad or worse. If OTOH we say buying SPY low is good, you basically only get assigned at big drops - it's automatic market timing (that also takes care of "oh noes it's going to hell I cannot buy now" mental block - I wish I this going during the COVID drop!). I got assigned once last year, I think around the dip in June, so it's still barely in the red, even after the horror show last month, compared to my buy-and-hold SPY purchases since then. OTOH if you don't get assigned you make 7-10% interest on cash used to cover, effectively (e.g. selling a 3mo SPY 335 put for $650). I also sell implausible 3mo calls on that SPY I got assigned, mostly because I have lots of index funds already via buying and holding so I don't care if it misses a huge market rally.

They say you shouldn't try to time the market, which is probably good advice. However, my approach is/was:

- back in April, moved 401k fund from S&P allocation to cash equivalent (2% yield). Note: this wasn't a cash out, just reallocation.

- Bought long-dated treasuries (10 yr and 30 yr). Allocated through July and August. This one is not doing well, but allocation was sized appropriately (< 2% of portfolio).

- pooling any excess capital in a savings account until volatility calms down.

- have a couple rentals and plan to continue holding. It will be interesting to see some buying opportunities in the upcoming year or two.

Let my accumulating ETFs accumulate cheaper for a while.

I'm keeping up my regular purchases while the market is on sale. I intend to keep doing that for the next 30 years and am banking on none of this mattering in the long term.

It maybe a bit late to enter in a short now over a potential reversal over the whole market slide. Perhaps it may reverse shortly up and then after another week or so it go down further. So I'd wait for it to reverse a bit first.

I'd argue we were already in a 'recession' many months ago. [0]

[0] https://news.ycombinator.com/item?id=29508238

Build up my savings to the point where I can live comfortably for 2+ years without a paycheck, or 4+ on a tight budget.

DCA into ETFs with the leftovers.

Buy a little bit more non-perishable food than I need every time I go to the store. Extra bag of beans and rice here and there. Also eating unhealthier than usual since I figure if there's a food shortage or energy shortage during the winter I'd rather be 15lbs overweight.

Continue to learn skills that I think will be valuable in the future/will get me ahead of the average person in my field. I was a child in 2008 so I have never experienced a bad labor market, but I figure I just need to be more employable than average (if I am mistaken then that's what the 2+ years of savings are for). There is always money to be made and people will want to hire those with skills that can make them money. If tech is in a bubble then just being able to make CRUD apps wont land six figure salaries anymore. I'll need a good reason for someone to hire me.

Just sold 10% of my business for £1.1m. Sitting on it, waiting to see what the world does next

So crazy that we are just all mutually agreeing there is a recession when it is not clear that there is going to be. Group psychology is just amazing like that.

Don't time your investments - use asset allocation to decide what you invest in and then always just do what it says.

So if your target allocation is 75% stocks and 25% bonds, just buy stocks and bonds in the appropriate mix with your savings to keep your ratio level. This tends to have you buy stocks when they are low and sell high by the nature of maintaining this ratio.

Do this rebalancing twice a year. For most of this, this will mean just buying more of something to rebalance with the savings from the previous six months.

Well, this isn’t a great plan, but I’m betting that the bottom will fall out at one point and crypto will crater hard. Until then, I’m taking my DCA (dollar cost average) funds and keeping them in Gemini and Abra Earn (50% each) and getting 7.15/7.5% return. When that happens, I’ll move quick to transfer my funds to whatever exchange has the most liquidity and I’ll pick either Ethereum or Cardano and spend half of my DCA money, then continue to buy more if anything drops 20% or more.

I’ve done this twice before, and it’s worked pretty well so far. My DCA funds will likely be 5-10% of my net work at that point.

I am trying to build new skills by learning front-end / back-end dev. I don't know whether its ever going to be useful to me, but I really freaking enjoying it! Aside of that, I am also investing in understanding myself better and see what can be done in the next professional chapter to maximise free time and not the income.

On the investment side, I am just keeping on buying ETFs but not looking at whats the value.

Always on the lookout for new shifts and new markets appearing to potentially start exploring new topics and feeding the curiosity.

I think all this recession talk is not good. Consumer confidence will affect recessions so planning for it like this makes it a certainty instead of a possibility. You should always have a risk averse financial plan, nothing happened as far as I know that requires a drastic change in financial planning by everyone.

Very encouraged to read all the Boglehead-type comments here.

Kudos to you, Hacker News! Financial literacy is important.

The statistical probability is a deep depression, the "k-wave" is about time to crash now in its fifth cycle. Making a profit is probably unlikely, but getting rid of all your personal debt and stocking up or investing in stuff people cant be without like food, medicine or energy might be a good bet.

Sell cash covered puts at a strike price you would be willing to buy back into the market at.

Honestly: trying to get a job that pays enough to let me save something.

> Wondering if it might be worthwhile to invest in short ETFs like SH, SQQQ.

Geared ETFs only maintain their benchmark intraday. They aren’t something you want to hold unless you really know what you’re doing.

I'm purchasing cheap stocks of two companies that went really down, but have (in my opinion) strong assets/capabilities that will get them to old prices or more within next:

company 1: 2-3 years

company 2: 2-5 years

again.

I've been short since November, and my portfolio is up about 100% YTD. I think the market is going to drop even further, 2008-2009 style, so I'm gearing up for that.

It really depends a lot on how secure your job is, if you have a big mortgage etc. Shorting is really risky, in any bear market you get massive upswings that can really hurt.

Seems like the time to short the market was before it crashed. If your were lucky enough to have sold the top it’s probably time to start thinking about buying again.

I invested in shell big time corona times was down for stupid reasons went up 50%. Still paying off. Still a safe bet. Although not much growth expected.

I read somewhere hedge funds are investing heavily in private prisons. Make of that what you will.

ride out the recession and not waste time or lose money trying to time the market

a friend of mine is all about buying gold.

It feels like a safe thing to do. but tbh I'm a bit bewildered by the state of the world atm.I'm trying hard to not get into further debt and just keeping my head down.

Sell tickets to stoicism seminars.

Buy the dip

This is called "disaster capitalism". Why not choose a different path?

I had a big bonus from my employer getting acquired, so I went and bought a house with cash rather than getting a mortgage and investing it. Sure, I might have lost out on potential returns in the long term, but if I invested it and the market immediately tanked I’d be out a bunch of money. With the house, no matter what happens to home values (or my employment), I’ve got a house.

(Honestly after seeing what the markets have been doing lately, I’m glad I did.)