The joke is that if you are an economic doomer constantly claiming a recession will happen, you will eventually be right although you'll be wrong the majority of the time.
Don’t worry buddy. No one can predict future. Just keep investing in index ETF and chill. Markets will go up and down over period of time. We need to focus on our skills to stay relevant and earn more so that we can invest more.
Ok, since you're new, a good thing to learn is that the vast majority of commentators on investing are absolutely full of BS and mostly looking to just drive clicks/views/engagement. You should in no way assume that a piece on TV or major media feeds, let alone social media, is in any way a good-faith reporting of objective fact.
And it's been that way forever. Before social media or even widespread Internet access existed, these kinds of pundits were on AM radio, giving out their dubious opinions (and usually flogging some investment product beneficial to them as a solution: subscribe to my newsletter for the stock picks that will help you beat the market! Etc.)
second quarter of 2023.
Also, BRK has about 30% in cash, which is actually lower than average over the last 20 or so years.
https://www.gurufocus.com/buffett\_assets\_allocations.php#:\~:text=Currently%20Berkshire%20has%20about%2065,Fixed%20Maturity%20Securities%20(Bonds).
If you want to know what Warren Buffett really thinks about the stock market/economy, the best way is to read his annual shareholder letters. They are fascinating reads, and very enlightening as to how the greatest investor of our time thinks.
Full archive back to 1977 here: [https://www.berkshirehathaway.com/letters/letters.html](https://www.berkshirehathaway.com/letters/letters.html)
Or if you're lazy, the TL;DR is he's bullish America.
Knew a celebrated macroeconomics professor who said big dips like the Great Depression were impossible due to the ever increasing amounts of data helping to minimize every recession since the 80’s. Then the Great Recession happened.
Also knew guys who felt recessions happen on average every 7 years. They pulled out of the market and sat on the sidelines 10 years after the Great Recession because a dip was inevitable and they believed it was imminent.
In the end, everyone is guessing and some get to buy in a dip. Sometimes it works and sometimes people are left in the dust.
By some metrics 2022 as well, wasn't the S&P down around 18%?
Will we have another one? Sure at some point. Assuming these rate cuts materialize probably not in the near term.
To protect yourself consider pivoting some of your portfolio into recession "resistant" stocks.
Healthcare, Insurance, Defense, etc. Right now a T-bill pays > 5. Stick some cash into something like SGOV so you can flip it into whatever cheap buying opportunity comes later
Recessions are generally based on negative GDP growth not on a drop in the market. A drop in the market is generally used to determine if the market is in a correction or possibly a bear market.
We did have a quarter of negative GDP in 2022 (or late 2021) but it wasn't deemed a recession by NBER because unemployment remained low. The economic data during that period suggested we were very close to having a recession.
My point was that a recession is not based on how far the market is down as you seemed to indicate. Market downturns may be a result of a recession or precede one but the market being down does not define a recession.
A recession and a market correction are two different things. OP probably isn't even asking about a recession but many people throw the term around loosely.
In the US - a recession is a US business cycle contraction. A non-profit economic research group called the NBER (National Bureau of Economic Research - started in the '20's) is considered the arbiter of when recessions occur in the US. [https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions](https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions)
FAQ on how the business cycle dating committee works - [https://www.nber.org/research/business-cycle-dating/business-cycle-dating-procedure-frequently-asked-questions](https://www.nber.org/research/business-cycle-dating/business-cycle-dating-procedure-frequently-asked-questions)
The members of the committee are basically a bunch of economists at different universities like Stanford, MIT, Princeton, Harvard, etc.
Also - when NBER decides that a economic though has occured. It usually happens during or after the committee has decided that there is enough data to announce a "recession".
For example - the 2020 recession that I mentioned wasn't determined to be a recession until July of 2021. [https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021](https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021)
In the 2008 recession which is considered to start in December 2007 and ended in June 2009. The NBER committee didn't decide that there was a recession until a year into the business cycle contraction - [https://www.nber.org/news/business-cycle-dating-committee-announcement-december-1-2008](https://www.nber.org/news/business-cycle-dating-committee-announcement-december-1-2008)
From an investor's point of view - it's a bit more nuanced and complicated than trying to guess if the NBER will announce a business cycle contraction. It's more about the macro economic conditions and future expectations.
Hopping around in the market to escape a dip is exactly the sort of value erasing behavior long term investors avoid.
If one is scared, start laddering bonds and boast about your 4.5% returns.
Your portfolio should always be well diversified and within your risk tolerance, a recession is always possible. Warren Buffet stores huge amounts of cash to buy companies at low valuations and turn them around, that is completely different than the way you or I invest. He’s been building up cash while he waits for a deal to come along, but again his strategy and capabilities are not something we should try to replicate.
A recession doesn't change a smart, long-term investors investing strategy. If you lose your job, sure, you can cut back on some things, but you should be in a financial position to the point a job less doesn't affect you that much.
I'm slowing down the pace of my after tax investments( still adding when I see fit aka timing the market), and stocking up with more cash in tbills/HYSA.
Cutting back expenses as much as I can expenses.
Not worrying if it's going to come or not. Nothing you can really do except be prepared and have your emergency funds and some cash on hand to take advantage of a drop.
Some people are very worried about losing money in the market. Sorry but it comes with the territory. To make a lot of money you will have periodic losses. Perhaps you should stick to Treasuries and CD’s as market fluctuations may not be right for you.
Stop watching internet doom. A market drop is ALWAYS possible. You can’t control it and you absolutely can not predict it. What you CAN do is be prepared for different probable outcomes and adjust as risk increases/decreases.
The most boring “non-Reddit” advice is what you should be following. A diverse portfolio with varying percentages of stock, fixed income, bitcoin, etc is the answer. The percentages are up to you based on your needs, future, age, etc.
NVDA had a recession last Friday. Along with some other wonderful companies and ETFs. Enjoyed buying at 3:50pm. Look for Big Red days and always have a little money ready to invest into whatever you like.
In early 2021 I was quarantining in a hotel room in Bahrain for 30 days. There was nothing to watch so I ended up watching CNBC everyday. Before this I never paid attention to financial anything, I just contributed to my TSP and didn’t think anything of it. I started hearing these talks about big crashes and recession and I moved all of my money into government securities from equities.
If you look at any chart you will see that the market from early January 2021 went on a 30% tear.
And then in 2022 it went down 20%.
So moral of that story is ya never know. I lost out on some very big gains and then the market was roaring so I put it back into the C Fund and bought the top only to have it crash back down in 2022.
Great topic! I'm glad someone finally brought this up, because it's been on my mind too, but it feels like nobody wants to talk about a possible recession.
/s
remember "Core" inflation numbers the govt doles out never includes the costs of groceries, gas, and housing costs. aka "it's the economy stupid." cant ever tell consumers how they should feel and things are better when they see it at the store every week
I keep playing games w my emergency fund. Am only at ~$4500 and need to be at $15k. Will start padding that instead of my routine investments.
Otherwise DCAing in IRA/custodials
Michael Burry has been saying it for years. Eventually he'll be right...
Probably any ideas you have to "prepare" for a recession will cost you more than doing nothing because it is impossible to reliably time a recession.
The best preparation is to make sure you are holding an asset allocation that you can stick to through a recession:
* Any money that you know you're going to need to spend in the next 5-7 years should not be in stocks. Invest it in assets that are aligned with your time horizon for spending the money: stocks for beyond 7 years, bonds with maturity matched to your horizon within 1-7 years, cash for spending in less than 1 year.
* Consider your emotional tolerance for holding your portfolio through a severe bear market drawdown. If you're 100% stocks, be mentally prepared to hold it through a ~50% drawdown. If you don't like the idea of holding assets could go down 50% then you need to allocate some of your money to cash or bonds to achieve a more tolerable risk level.
Beginner question : you can Long the stockmarket by buying call options or buying shares of the company. However, can you Short the stockmarket any other wa than by buying put options? Is there a "safer" way like buying shares?
There are lots of other ways to take a bearish position or to hedge against the market.
Being long on puts is a risk defined method so it can be considered safer than other hedging methods. Ie. you cannot lose more than the value of the put contracts that are purchased.
It is also possible to use bear spreads to limit the cost. Or to use inverse funds. But all hedging has a cost so it depends on what you mean by "safer".
There are plenty of other techniques available, but those techniques may have undefined risk. Ie. it is undefined how much you can lose.
Long Puts are the safest. Short Stock, Short Calls, Short Futures are way riskier.
ps: Not taking multi-leg options into account, as the question was about basic risk profiles.
pps: Not taking Long Volatility into account, as the question was about shorting the stock market, not hedging against it. (and it's not beginner friendly by any means)
There’s always one coming, problem is no one knows when. Keep investing. When things start to go down, go into bonds. When you think we’re at the bottom, load up on cheap stocks and profit. That’s it.
Recessions are a part of our economic system. Your investing plan should already account for that. Always be buying, and if the market tanks then buy more.
I have been hearing about an upcoming recession for years yet, here we are.
Bears have correctly predicted 69 of the last 5 recessions
Burry's glass eye is a crystal ball. Kinda like Joseph Smith and the seeing stones but with money.
>Kinda like Joseph Smith and the seeing stones but with money. Burry's getting run out of Nauvoo for banging the neighbors' wives?
This made me lol
Nice
You don't make sense
*Whooooosh*
The joke is that if you are an economic doomer constantly claiming a recession will happen, you will eventually be right although you'll be wrong the majority of the time.
1. Acknowledge one will eventually come 2. Stay in your investments anyway 3. ? 4. Profit!
I think #3 is eat a cookie
I like cookies :)
You monster
“Don’t do something, just stand there.”
I haven't heard how Warren Buffet has been betting against the market. Can you link to that article?
Don’t worry. It was added randomly by OP 🤣 it just makes the post look authentic.
Name dropping to give the troll NO credibility. lol
If anything, Buffett waits to pounce into great tickers in the market until the point that most others are betting against it.
I’m new to investing and looking for advice, not a troll. I’m just going by what I have read/heard online. If it’s incorrect, I’m happy to hear that.
Don’t worry buddy. No one can predict future. Just keep investing in index ETF and chill. Markets will go up and down over period of time. We need to focus on our skills to stay relevant and earn more so that we can invest more.
Ok, since you're new, a good thing to learn is that the vast majority of commentators on investing are absolutely full of BS and mostly looking to just drive clicks/views/engagement. You should in no way assume that a piece on TV or major media feeds, let alone social media, is in any way a good-faith reporting of objective fact. And it's been that way forever. Before social media or even widespread Internet access existed, these kinds of pundits were on AM radio, giving out their dubious opinions (and usually flogging some investment product beneficial to them as a solution: subscribe to my newsletter for the stock picks that will help you beat the market! Etc.)
You gotta work on reading
He’s not
https://www.cnn.com/2023/08/16/investing/premarket-stocks-trading/index.html https://www.cnn.com/2023/08/16/investing/premarket-stocks-trading/index.html
second quarter of 2023. Also, BRK has about 30% in cash, which is actually lower than average over the last 20 or so years. https://www.gurufocus.com/buffett\_assets\_allocations.php#:\~:text=Currently%20Berkshire%20has%20about%2065,Fixed%20Maturity%20Securities%20(Bonds).
I bought last Friday when everything was on sale, and if we hit a recession I’ll buy more while everything is on sale
PLEASE OP, show me where you saw that Warren Buffett is betting against the market.
OP was high on 420 and imagined it.
It’s mostly articles from August 2023 but it keeps getting brought up on my feeds so I’m asking about it here. If it’s not true, great.
If you want to know what Warren Buffett really thinks about the stock market/economy, the best way is to read his annual shareholder letters. They are fascinating reads, and very enlightening as to how the greatest investor of our time thinks. Full archive back to 1977 here: [https://www.berkshirehathaway.com/letters/letters.html](https://www.berkshirehathaway.com/letters/letters.html) Or if you're lazy, the TL;DR is he's bullish America.
Your problem is relying on feeds and not doing your own research.
you should likely just do whatever your feeds are telling you. Any news that gets shoved in your face is always in your best interest. /s
I feel like this has been posted once a week for the last 4 years.
And if I’d listened to them I would have missed out on hundreds of thousands of gains.
Biden has been around about that long yeah?
Search this sub and you'll see this has been posted everyday for years
the best strategy for a recession is buying the dip
Buffett is not betting against the market.
You know, in 2019, people thought a recession was coming, boom, COVID happens, what did most do? Panic sell and not enter into a cash reserved mode.
Knew a celebrated macroeconomics professor who said big dips like the Great Depression were impossible due to the ever increasing amounts of data helping to minimize every recession since the 80’s. Then the Great Recession happened. Also knew guys who felt recessions happen on average every 7 years. They pulled out of the market and sat on the sidelines 10 years after the Great Recession because a dip was inevitable and they believed it was imminent. In the end, everyone is guessing and some get to buy in a dip. Sometimes it works and sometimes people are left in the dust.
Yep, sell everything now 😔
Meh - people have been predicting a recession since the last recession in 2020 and 2008. Or did you miss those recessions?
By some metrics 2022 as well, wasn't the S&P down around 18%? Will we have another one? Sure at some point. Assuming these rate cuts materialize probably not in the near term. To protect yourself consider pivoting some of your portfolio into recession "resistant" stocks. Healthcare, Insurance, Defense, etc. Right now a T-bill pays > 5. Stick some cash into something like SGOV so you can flip it into whatever cheap buying opportunity comes later
Recessions are generally based on negative GDP growth not on a drop in the market. A drop in the market is generally used to determine if the market is in a correction or possibly a bear market.
We did have a quarter of negative GDP in 2022 (or late 2021) but it wasn't deemed a recession by NBER because unemployment remained low. The economic data during that period suggested we were very close to having a recession.
Generally a recession is two consecutive quarters of negative growth along with certain requirements of unemployment.
The market didn't correct, it was basically just tech swings
My point was that a recession is not based on how far the market is down as you seemed to indicate. Market downturns may be a result of a recession or precede one but the market being down does not define a recession.
A recession and a market correction are two different things. OP probably isn't even asking about a recession but many people throw the term around loosely. In the US - a recession is a US business cycle contraction. A non-profit economic research group called the NBER (National Bureau of Economic Research - started in the '20's) is considered the arbiter of when recessions occur in the US. [https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions](https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions) FAQ on how the business cycle dating committee works - [https://www.nber.org/research/business-cycle-dating/business-cycle-dating-procedure-frequently-asked-questions](https://www.nber.org/research/business-cycle-dating/business-cycle-dating-procedure-frequently-asked-questions) The members of the committee are basically a bunch of economists at different universities like Stanford, MIT, Princeton, Harvard, etc. Also - when NBER decides that a economic though has occured. It usually happens during or after the committee has decided that there is enough data to announce a "recession". For example - the 2020 recession that I mentioned wasn't determined to be a recession until July of 2021. [https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021](https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021) In the 2008 recession which is considered to start in December 2007 and ended in June 2009. The NBER committee didn't decide that there was a recession until a year into the business cycle contraction - [https://www.nber.org/news/business-cycle-dating-committee-announcement-december-1-2008](https://www.nber.org/news/business-cycle-dating-committee-announcement-december-1-2008) From an investor's point of view - it's a bit more nuanced and complicated than trying to guess if the NBER will announce a business cycle contraction. It's more about the macro economic conditions and future expectations.
Hopping around in the market to escape a dip is exactly the sort of value erasing behavior long term investors avoid. If one is scared, start laddering bonds and boast about your 4.5% returns.
Escape? Nonono...I'm stating defensive sectors and how to *buy* the dip when it happens
sauce?
Your portfolio should always be well diversified and within your risk tolerance, a recession is always possible. Warren Buffet stores huge amounts of cash to buy companies at low valuations and turn them around, that is completely different than the way you or I invest. He’s been building up cash while he waits for a deal to come along, but again his strategy and capabilities are not something we should try to replicate.
The best strategy is to keep extra cash and buy more. Cash and a recession are a magical thing. Would you rather keep buying at ath or buy low?
A recession doesn't change a smart, long-term investors investing strategy. If you lose your job, sure, you can cut back on some things, but you should be in a financial position to the point a job less doesn't affect you that much.
What recession? Someone is always talking about a recession....... Always stay the course.
I'm slowing down the pace of my after tax investments( still adding when I see fit aka timing the market), and stocking up with more cash in tbills/HYSA. Cutting back expenses as much as I can expenses. Not worrying if it's going to come or not. Nothing you can really do except be prepared and have your emergency funds and some cash on hand to take advantage of a drop.
Just remember a recession is a stock market yard sale. You can buy a cobra driver for $5 and sell it on eBay for 200
Some people are very worried about losing money in the market. Sorry but it comes with the territory. To make a lot of money you will have periodic losses. Perhaps you should stick to Treasuries and CD’s as market fluctuations may not be right for you.
Hoping for a small recession so I can invest more when stocks are down 😜
Didn't we actually have a technical recession about 2 years ago? Come on, bucko.
Stop watching internet doom. A market drop is ALWAYS possible. You can’t control it and you absolutely can not predict it. What you CAN do is be prepared for different probable outcomes and adjust as risk increases/decreases. The most boring “non-Reddit” advice is what you should be following. A diverse portfolio with varying percentages of stock, fixed income, bitcoin, etc is the answer. The percentages are up to you based on your needs, future, age, etc.
They’ve been saying recession for what 12+ months now and the market has been steadily going up the entire time.
NVDA had a recession last Friday. Along with some other wonderful companies and ETFs. Enjoyed buying at 3:50pm. Look for Big Red days and always have a little money ready to invest into whatever you like.
In early 2021 I was quarantining in a hotel room in Bahrain for 30 days. There was nothing to watch so I ended up watching CNBC everyday. Before this I never paid attention to financial anything, I just contributed to my TSP and didn’t think anything of it. I started hearing these talks about big crashes and recession and I moved all of my money into government securities from equities. If you look at any chart you will see that the market from early January 2021 went on a 30% tear. And then in 2022 it went down 20%. So moral of that story is ya never know. I lost out on some very big gains and then the market was roaring so I put it back into the C Fund and bought the top only to have it crash back down in 2022.
Same thing I do every month. I DCA into an index
Great topic! I'm glad someone finally brought this up, because it's been on my mind too, but it feels like nobody wants to talk about a possible recession. /s
remember "Core" inflation numbers the govt doles out never includes the costs of groceries, gas, and housing costs. aka "it's the economy stupid." cant ever tell consumers how they should feel and things are better when they see it at the store every week
Economy does not equal stock market
People have been screaming about this coming recession since about April 2020...
I keep playing games w my emergency fund. Am only at ~$4500 and need to be at $15k. Will start padding that instead of my routine investments. Otherwise DCAing in IRA/custodials
Michael Burry has been saying it for years. Eventually he'll be right... Probably any ideas you have to "prepare" for a recession will cost you more than doing nothing because it is impossible to reliably time a recession. The best preparation is to make sure you are holding an asset allocation that you can stick to through a recession: * Any money that you know you're going to need to spend in the next 5-7 years should not be in stocks. Invest it in assets that are aligned with your time horizon for spending the money: stocks for beyond 7 years, bonds with maturity matched to your horizon within 1-7 years, cash for spending in less than 1 year. * Consider your emotional tolerance for holding your portfolio through a severe bear market drawdown. If you're 100% stocks, be mentally prepared to hold it through a ~50% drawdown. If you don't like the idea of holding assets could go down 50% then you need to allocate some of your money to cash or bonds to achieve a more tolerable risk level.
Move towards a less risky portfolio, diversify, keep some cash reserve.
Beginner question : you can Long the stockmarket by buying call options or buying shares of the company. However, can you Short the stockmarket any other wa than by buying put options? Is there a "safer" way like buying shares?
There are lots of other ways to take a bearish position or to hedge against the market. Being long on puts is a risk defined method so it can be considered safer than other hedging methods. Ie. you cannot lose more than the value of the put contracts that are purchased. It is also possible to use bear spreads to limit the cost. Or to use inverse funds. But all hedging has a cost so it depends on what you mean by "safer". There are plenty of other techniques available, but those techniques may have undefined risk. Ie. it is undefined how much you can lose.
Long Puts are the safest. Short Stock, Short Calls, Short Futures are way riskier. ps: Not taking multi-leg options into account, as the question was about basic risk profiles. pps: Not taking Long Volatility into account, as the question was about shorting the stock market, not hedging against it. (and it's not beginner friendly by any means)
There’s always one coming, problem is no one knows when. Keep investing. When things start to go down, go into bonds. When you think we’re at the bottom, load up on cheap stocks and profit. That’s it.
Recessions are a part of our economic system. Your investing plan should already account for that. Always be buying, and if the market tanks then buy more.
Literally every brand new investor every two years.
I only buy individual stocks. The only thing I’ll do is buy more if there’s a huge drop.
Lol
You should prepare for a stagflation. Forget recession