[HN Gopher] Ask HN: What are you doing now to profit from the cu...
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Ask HN: What are you doing now to profit from the current or
upcoming recession?
I see comments on HN once in a while about how they did [clever
thing X] during a recession years ago and made money. With
volatility comes profit potential, and it seems clear to everyone
that rough seas are ahead. What are people doing _now_ to
potentially profit, or at least insulate themselves, during this?
I liquidated my discretionary equities portfolio (not much in it
anyway) about a year ago already. Still have my retirement in its
roboadvisor mix of bonds, equities and don't plan to touch it.
Wondering if it might be worthwhile to invest in short ETFs like
SH, SQQQ.
Author : carabiner
Score : 73 points
Date : 2022-09-30 20:18 UTC (2 hours ago)
| tester756 wrote:
| 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.
| aabbyyzz wrote:
| camnora wrote:
| 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.
| deanmoriarty wrote:
| 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.
| ZoomerCretin wrote:
| As I learned the hard way with Ethereum (bought at $87, sold at
| $83) and Gamestop (bought at $60 and $200, sold at $50),
| panicking is the easiest way to lose your money when investing.
| Thankfully it wasn't too expensive of a lesson, but I'm now
| done gambling and stick with buying ETFs that track the stock
| market.
| RobRivera wrote:
| good for you. you're the tupe of person who would listen to my
| advice on wealth management.
|
| tax implications, asset diversification, ebbs and flows of
| markets, etc. all things that can be rationally discussed from
| a risk management perspective. wealth management strategies
| that are reactive? eep
| boomchinolo78 wrote:
| Man, you're not one of those hopeless souls that "don't know
| anything and can't risk timing the market" your folks do seem
| to have a clue
| ZoomerCretin wrote:
| Timing the market is almost always a bad idea. If he had sold
| in March 2020, he almost certainly would not have bought back
| in until the market picked up again, losing out on a lot of
| market gains.
| noahtallen wrote:
| Is that the case? Recessions are "normal" (in that it's not a
| once in a life time experience), and I thought the best
| practice for long-term investments was to 1. Keep them
| invested permanently, at least until you're close to needing
| them, and 2. Buy low, sell high.
|
| Under either of those, now is not a good time to sell. The
| only reason it would be a good time to sell is if the economy
| never recovers... now that would be a once in a lifetime
| experience.
|
| This all operating under the assumption you don't actually
| need the cash in the near future if you have enough liquid to
| cover a few months of no income.
| [deleted]
| glouwbug wrote:
| Buy the dip
| gmays wrote:
| 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.
| outside1234 wrote:
| 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.
| ManuelKiessling wrote:
| Let my accumulating ETFs accumulate cheaper for a while.
| theandrewbailey wrote:
| 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.
| youainti wrote:
| > Survivor bias. Most clever financial things/hacks lose money.
|
| Thanks for pointing this out. The other option is that the
| clever thing ties you up so you miss out on other
| opportunities.
| [deleted]
| kypro wrote:
| 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?
| djbusby wrote:
| Which ETF is that?
| opportune wrote:
| 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.
| johnyzee wrote:
| 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.
| imnotreallynew wrote:
| > If you are liquid, a good time to pick up some real estate
| will probably be in about a year's time.
|
| Why do you say that?
|
| There seems to be this idea among younger individuals online
| that because prices jumped so quickly that a correction is
| inevitable, and it's just not. There's a ton of demand still
| out there, and the second any sort of meaningful dip is
| perceived all those buyers will be right there.
|
| Prices went up because a shit ton of money was printed with
| sub-3% rates. Why would any sane person with a 3% mortgage ever
| sell, especially when inflation is 9%? It's quite literally
| free money.
| [deleted]
| opportune wrote:
| Because they died or need to move? Because they have no
| liquidity?
|
| I agree in general that waiting on the sidelines doesn't
| guarantee you a better price later. The problem of there
| being other buyers wanting to scoop dips providing price
| support would only be fixed by those buyers loosing
| liquidity, which would likely impact any individual waiting
| on the sideline too.
| zmmmmm wrote:
| 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.
| compumike wrote:
| 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
| zenbryo wrote:
| 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.
| inerte wrote:
| 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.
| rvz wrote:
| 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
| [deleted]
| UncleOxidant wrote:
| 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. 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)
| smaddox wrote:
| Looks like the iBond rate applies through Oct, so not too late.
| tylorr wrote:
| You'll get a months worth of that rate but then it will
| change. Could go up or down.
| abeppu wrote:
| But the rate is set off inflation, which has still been
| high. Whatever they set it to next, it's still likely to be
| about the best available place to put 10k.
| smaddox wrote:
| > KEY FACTS: I Bonds can be purchased through October 2022
| at the current rate. That rate is applied to the 6 months
| after the purchase is made. For example, if you buy an I
| bond on July 1, 2022, the 9.62% would be applied through
| December 31, 2022. Interest is compounded semi-annually.
|
| https://www.treasurydirect.gov/indiv/research/indepth/ibond
| s...
|
| So 6 months of that rate, regardless of when during the
| window it was purchased. But, yeah, after that it could
| either up or down. And you have to hold for at least 1
| year, and lose 3 months of interest if you cash out prior
| to 5 years.
| roland35 wrote:
| Nope, you actually lock in 6 months of whatever the rate is
| time of purchase! It's a good deal!
| dom96 wrote:
| > Been buying 6-month to 2-year duration treasuries via
| treasurydirect.gov - 2yr is paying over 4% now
|
| Anyone know what the equivalent of this is in the UK?
| jiggywiggy wrote:
| 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.
| robcohen wrote:
| 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.
| carabiner wrote:
| Nice. I'm unemployed right now (by choice) with minimal
| savings, but if I was still working I'd definitely be buying
| right now via DCA or value cost averaging. I bought a lot when
| pandemic started, mostly S&P 500 and Norwegian Cruise Lines and
| profited a lot. Sold them after a year to avoid the short-term
| tax hit.
| potatototoo99 wrote:
| In the event crypto craters hard, how likely are Gemini and
| Abra Earn not to go bankrupt if they're offering 7% returns
| guaranteed (I assume).
| cheriot wrote:
| This. Any time there's a rate of return above short term
| treasuries the question becomes, "what's the risky asset this
| is invested in?"
| mikece wrote:
| 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).
| mxuribe wrote:
| Its funny this comment was more of what i was expecting to see
| here...but am seeing all this finance hustle and shuffle! :-D
| softcactus wrote:
| 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.
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(page generated 2022-09-30 23:00 UTC)