Ask HN: What are you doing now to profit from the current or upcoming recession?
217 comments
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.
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.
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.
There's no difference between investing and trading for the average retail stock market dabbler. Anytime you trade money for a stock, you are speculating that the asset will go in the direction you want, mostly up. If someone is looking through financial statements and has intimate knowledge of the industry, more power to you since you are more likely to be the classical definition of an investor.
I can give you loads and loads of examples where you could have held and suffered much greater losses over time. Last year I "invested" in $FSLY. Look at the stock performance. It would need to go up 900% to get back to its 2021 peak. Can it happen? Sure. Would you buy the stock thinking it could do a 900%?
I can give you loads and loads of examples where you could have held and suffered much greater losses over time. Last year I "invested" in $FSLY. Look at the stock performance. It would need to go up 900% to get back to its 2021 peak. Can it happen? Sure. Would you buy the stock thinking it could do a 900%?
It wasn't the panicking that lost you money.
Ethereum is now at $1,328, 15x what I paid for it four years ago. $GME went back up after I sold. Neither purchase would have been a loss if I had held through paper losses.
You weren't investing. You were gambling.
Gamestop? Come on.
Gamestop? Come on.
Hindsight. You couldn’t have known at the time.
Yep, I feel lucky I experimented with bitcoin around 5-10 years ago. Its cycles are short so I got a much more intuitive understanding of timing vs buy-and-hold and how to avoid panicking, which has helped a lot now.
Easy come, easy go. We made great returns since 2008 for doing absolutely zero work except buying index funds and letting it ride. Nothing goes up forever, we'll probably give more back in the next 12 months, or not, nobody knows and that is beautiful.
Unfortunately for me, I got my first retirement account about a year ago. At least I managed to buy my first house before the market went totally bananas.
I have to say: hats off to you, Sir! The whole buy-and-hold thing, while technically simple, is really hard psychologically — and that’s when you have to deal with only your inner demons, fears, and greed.
Having a close relative, and one that many people look up to, actively „sabotaging“* your resolution, is really next level!
*) I know your father only wants the best for you and this is in no way meant as an attack.
Having a close relative, and one that many people look up to, actively „sabotaging“* your resolution, is really next level!
*) I know your father only wants the best for you and this is in no way meant as an attack.
> The whole buy-and-hold thing, while technically simple, is really hard psychologically
It's easy(er) if you never log into your account(s). I haven't gone in since January when I topped up by TFSA (~Canadian IRA), and my retirement account (RRSP ~ 401(k)) is automatically deducted from my chequeing account.
I have no idea if I'm up or down and by how much.
It's easy(er) if you never log into your account(s). I haven't gone in since January when I topped up by TFSA (~Canadian IRA), and my retirement account (RRSP ~ 401(k)) is automatically deducted from my chequeing account.
I have no idea if I'm up or down and by how much.
Great job sticking to your investment principles. Every investor needs a 'Ulysses pact' that ties them to the ship to prevent the sirens from eating them.
It sounds like your account is mostly taxable, have you ever considered getting your 3-fund exposure through a '90/60' fund like NTSX? The fund uses bond futures to get the increased exposure. It also has some tax efficiencies vs bond etfs. There is a US (NTSX) and International (NTSI) version.
You could allocate 2/3 of the portfolio to NTSX/NTSI to achieve a 60/40 and then have the rest for either opportunistic market timing/security selection ("dry powder") or as an allocation to alternative beta (say something like managed futures, MLPs, private businesses, etc.)
Obviously, taxes are a primary consideration, but I find these types of funds interesting in theory!
It sounds like your account is mostly taxable, have you ever considered getting your 3-fund exposure through a '90/60' fund like NTSX? The fund uses bond futures to get the increased exposure. It also has some tax efficiencies vs bond etfs. There is a US (NTSX) and International (NTSI) version.
You could allocate 2/3 of the portfolio to NTSX/NTSI to achieve a 60/40 and then have the rest for either opportunistic market timing/security selection ("dry powder") or as an allocation to alternative beta (say something like managed futures, MLPs, private businesses, etc.)
Obviously, taxes are a primary consideration, but I find these types of funds interesting in theory!
I am generally not interested in taking more risk (I’m not saying your fund has more exposure to risk, I haven’t checked), and for the bonds part of my taxable portfolio I invest in diversified muni funds, VWIUX specifically. At the current SEC yield of 3.2% and my marginal tax rate of 40.8% this implies a tax-equivalent yield of 5.4%, which is good enough in my books.
Totally, understand what you are saying and I think you will have success. I'm not saying to necessarily take more risk, I am saying to use 2/3 of capital to get access to tax efficient 60/40 exposure. Then I would look to further diversify. Whether it's munis to capture credit risk premiums, managed futures for commodity risk premiums, or taleb-style option trading for tail risk premiums. I think these simple liquid alternative funds could improve risk adjusted returns for boglehead style X-fund investors and not increase complexity or break the investment philosophy. Happy investing.
800k down and 11% loss. Was your portfolio 8 million at the start of the year?
800k is 11 % of ~7.272 million, so no it wasn't 8 mill.
How can it be any of those?
I said my net worth is down 11% from last year, and my YTD portfolio return is roughly -21% or $800k.
I said my net worth is down 11% from last year, and my YTD portfolio return is roughly -21% or $800k.
My bad. I assumed they only messed up the math, not everything. 00k is 21% of ~3.8mm, which, coincidentally, is also about the size of my portfolio in the public market prior to the big tastefest. Congrats on being financiall secure everywhere except San Francisco, Singapore, central London and maybe Hong Kong.
This is smart and obvious but I need to be reminded of it. I am down barely 10% of what you are but still panic every few weeks.
Dollar cost averaging is my favorite strategy. No anticipation of risk, no timing the market. Just gains all the way up.
If it sounds too good to be true...
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
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
I could have written a nearly identical comment. Stay with your plan and good luck!
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
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.
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.
While recessions are normal, I don't think this one will be. There are some major changes happening in the world that are permanent. For instance, the Brookings Institute estimates that Long Covid has already taken up to 4 million Americans out of the workforce. If we continue at that pace (~2M a year), then by 2025 we'll have 5% of our workforce too disabled to work, and many more workers impacted by reduced functionality, or by caretaking responsibilities.
In this sense it will be much different from your average recession. Add to that the other demographic changes as Baby Boomers age out of the workforce, and we're going to have a labor shortage for the next several decades at least.
Some people with Long Covid can still work, but their brain fog makes them unable to work in their former capacity. So any job that involves a very high-functioning brain -- from coding to surgery to piloting an aircraft -- may become extremely hard to fill as time goes on.
In this sense it will be much different from your average recession. Add to that the other demographic changes as Baby Boomers age out of the workforce, and we're going to have a labor shortage for the next several decades at least.
Some people with Long Covid can still work, but their brain fog makes them unable to work in their former capacity. So any job that involves a very high-functioning brain -- from coding to surgery to piloting an aircraft -- may become extremely hard to fill as time goes on.
> While recessions are normal, I don't think this one will be.
So this time it's different? You may be interested in the book This Time Is Different: Eight Centuries of Financial Folly:
> Throughout history, rich and poor countries alike have been lending, borrowing, crashing--and recovering--their way through an extraordinary range of financial crises. Each time, the experts have chimed, "this time is different"--claiming that the old rules of valuation no longer apply and that the new situation bears little similarity to past disasters.
* https://www.goodreads.com/book/show/6372440-this-time-is-dif...
So this time it's different? You may be interested in the book This Time Is Different: Eight Centuries of Financial Folly:
> Throughout history, rich and poor countries alike have been lending, borrowing, crashing--and recovering--their way through an extraordinary range of financial crises. Each time, the experts have chimed, "this time is different"--claiming that the old rules of valuation no longer apply and that the new situation bears little similarity to past disasters.
* https://www.goodreads.com/book/show/6372440-this-time-is-dif...
Sometimes things happen that change dynamics for generations or longer. The Black Plague changed worker-employer dynamics because of the shortage of workers. Software has made plenty of professions obsolete. etc.
In this particular time, there are in my opinion some extra gnarly risks that most people aren't talking about.
In this particular time, there are in my opinion some extra gnarly risks that most people aren't talking about.
Everyone is entitled to their own opinion, but there are a lot of assumptions baked into your analysis. Particularly, around long covid recovery times and that trend continuing. Also, what percentage of that cohort makes up “skilled labor”? I hate the term, but you get the idea…
You're right, I'm making a lot of assumptions. OP asked each person for their opinion, not a crystal ball with 100% accuracy, I gave mine.
That said, I've been a reluctant member of the disability community for several decades, and I can also state that ME/CFS has a heckuva lot of overlap with Long Covid. The disabled community has called a lot of the things that have happened this entire pandemic, while 'experts' have gotten a lot of things wrong. I'm telling you what all the disabled people, who have been right this entire time, are saying: a lot of businesses are on the verge of collapse, because of long covid and other covid-related reasons (like, getting burned out from getting covid 3 times a year).
Go to a subreddit for nurses and see how things really are. Go to a subreddit for teachers. Our hospitals are going to collapse, I predict in a few years, if we don't change course. Our schools are going to buckle under this strain. How functional is an economy with a 36 hour wait to get in the ER and terrible educational options? What happens when all the flight attendants, teachers, nurses, doctors, bus drivers, waiters, cooks, and so on either get too sick or too burnt out and quit en masse?
That's why I'm saying it's not just "a recession," it's that plus...a whole lot of other huge economic issues.
I understand if you think this makes me sound alarmist. But, FYI, when I lived in NYC and I warned that our laissez faire attitude to the air at Ground Zero was going to give thousands of people cancer, I was also called alarmist.
As Sarah Kendzior says, it's a sin to be right too early.
That said, I've been a reluctant member of the disability community for several decades, and I can also state that ME/CFS has a heckuva lot of overlap with Long Covid. The disabled community has called a lot of the things that have happened this entire pandemic, while 'experts' have gotten a lot of things wrong. I'm telling you what all the disabled people, who have been right this entire time, are saying: a lot of businesses are on the verge of collapse, because of long covid and other covid-related reasons (like, getting burned out from getting covid 3 times a year).
Go to a subreddit for nurses and see how things really are. Go to a subreddit for teachers. Our hospitals are going to collapse, I predict in a few years, if we don't change course. Our schools are going to buckle under this strain. How functional is an economy with a 36 hour wait to get in the ER and terrible educational options? What happens when all the flight attendants, teachers, nurses, doctors, bus drivers, waiters, cooks, and so on either get too sick or too burnt out and quit en masse?
That's why I'm saying it's not just "a recession," it's that plus...a whole lot of other huge economic issues.
I understand if you think this makes me sound alarmist. But, FYI, when I lived in NYC and I warned that our laissez faire attitude to the air at Ground Zero was going to give thousands of people cancer, I was also called alarmist.
As Sarah Kendzior says, it's a sin to be right too early.
"Go to a subreddit for nurses and see how things really are. Go to a subreddit for teachers."
Go out, in real life and you'll see that it is not that bad as media, full of emotions and sensations, told you.
Go out, in real life and you'll see that it is not that bad as media, full of emotions and sensations, told you.
FYI, telling a disabled person to get out more is not a great look.
That said, the places I do get out to -- medical facilities -- are the places I've been talking about. In the red state I used to live in, I saw tons of unmasked or poorly-masked healthcare workers, many of whom had had covid. In the blue state I now live in, healthcare facilities are understaffed, and it's only getting worse.
I repeat: if the question is about how to profit (or at least not lose) in the upcoming economic climate, one way to do that is to understand that healthcare, transit, education, and other in-person workforces will be severely stressed. I don't know how to make money on that, but at least you have the full picture.
That said, the places I do get out to -- medical facilities -- are the places I've been talking about. In the red state I used to live in, I saw tons of unmasked or poorly-masked healthcare workers, many of whom had had covid. In the blue state I now live in, healthcare facilities are understaffed, and it's only getting worse.
I repeat: if the question is about how to profit (or at least not lose) in the upcoming economic climate, one way to do that is to understand that healthcare, transit, education, and other in-person workforces will be severely stressed. I don't know how to make money on that, but at least you have the full picture.
Where are you living? Sorry about that, but disabled or not, it doesn't change whats going on in real life.
What is wrong with unmasked healthcare workers?
What is wrong with unmasked healthcare workers?
The latest studies show that being vaccinated only reduces the risk of Long Covid by something like 20%. So while the vaccine is good for reducing acute sequelae -- much less hospitalization -- it's not doing that much for the folks who have a seemingly mild case, feel fine after a couple weeks, go back to work....and then 3 months down the line they start feeling awful.
Brain scans of folks with Long Covid are showing brain shrinkage. PET scans are showing many areas of the brain affected.
The only prevention for Long Covid is not getting Covid, and that's still mostly achieved the old-fashioned way with a combination of high-quality masks, ventilation, and air fitration.
The Texas Infectious Disease clinic has been using elastomeric respirators for years with their TB patients -- that's honestly the standard all healthcare workers should be using right now.
Brain scans of folks with Long Covid are showing brain shrinkage. PET scans are showing many areas of the brain affected.
The only prevention for Long Covid is not getting Covid, and that's still mostly achieved the old-fashioned way with a combination of high-quality masks, ventilation, and air fitration.
The Texas Infectious Disease clinic has been using elastomeric respirators for years with their TB patients -- that's honestly the standard all healthcare workers should be using right now.
You shouldn't apply collective rules for everyone. For most people, covid is no threat. If you are in risk group, I'm sure that you can individually make arrangements about masking, etc.
Btw, long covid could be a consequence of lock-downs and interruption of social contacts that we never had in history. Anxiety, reduction of movement, less working, increased consumption of fear spreading news and amount of time a front of screen... But sure, you can blame virus if you want. Or experimental vaccines.
Btw, long covid could be a consequence of lock-downs and interruption of social contacts that we never had in history. Anxiety, reduction of movement, less working, increased consumption of fear spreading news and amount of time a front of screen... But sure, you can blame virus if you want. Or experimental vaccines.
Thank you for asking a question about Long Covid recovery times. This article goes into more detail than I can in just one post: https://www.theatlantic.com/health/archive/2022/09/mecfs-chr...
But the TL;DR is: - Long Covid is for many sufferers, MECFS plus some extra issues like breathing problems and organ damage - MECFS is one of the most disabling illnesses out there, with some of the least-good treatment options - Some folks with either illness improve with time, but many do not, especially because there really aren't treatments right now except for rest - The level of brain fog is so severe people often become aphasic and disoriented. So it's not only that brain surgeons will have to stop doing surgery. It's that people working at an ice cream shop may not be able to count change. Severity varies by individual of course.
And finally, at the beginning of the pandemic we were hearing about the concept of "hybrid immunity" -- that basically, getting covid was good for you, because it made you extra immune to getting it again.
As time has gone on though, it appears the opposite is true. Each infection has the potential to age / deplete T cells, making a person less immune not only to another round of Covid, but to a variety of infections. So a lot of mild diseases that maybe before were kept in check and had an R0 of .95 will, with a more immune-compromised populace, turn into having an R0 of 1.15 or something. People in general will be sicker, longer, than before, with a variety of ailments, because Covid is harming their immune systems.
But the TL;DR is: - Long Covid is for many sufferers, MECFS plus some extra issues like breathing problems and organ damage - MECFS is one of the most disabling illnesses out there, with some of the least-good treatment options - Some folks with either illness improve with time, but many do not, especially because there really aren't treatments right now except for rest - The level of brain fog is so severe people often become aphasic and disoriented. So it's not only that brain surgeons will have to stop doing surgery. It's that people working at an ice cream shop may not be able to count change. Severity varies by individual of course.
And finally, at the beginning of the pandemic we were hearing about the concept of "hybrid immunity" -- that basically, getting covid was good for you, because it made you extra immune to getting it again.
As time has gone on though, it appears the opposite is true. Each infection has the potential to age / deplete T cells, making a person less immune not only to another round of Covid, but to a variety of infections. So a lot of mild diseases that maybe before were kept in check and had an R0 of .95 will, with a more immune-compromised populace, turn into having an R0 of 1.15 or something. People in general will be sicker, longer, than before, with a variety of ailments, because Covid is harming their immune systems.
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.
I think it's somewhat possible to time the markets given monetary policy.
Monetary policy and stimulus during COVID caused a currency devaluation. If nothing else changes, the value of assets should increase, relative to a currency.
The same thing happened with monetary policy in March 2022. Interest rates went up, stocks went down.
I'm curious what others think.
Monetary policy and stimulus during COVID caused a currency devaluation. If nothing else changes, the value of assets should increase, relative to a currency.
The same thing happened with monetary policy in March 2022. Interest rates went up, stocks went down.
I'm curious what others think.
It's not possible, because monetary policy tends to be a lagging indicator of recessions [1] whereas the stock market is a leading indicator of recessions [2]. Also, there's the problem that dropping the interest rate doesn't mean the Fed will continue to drop it to zero. Similarly increasing the interest rate doesn't mean the Fed will continue to increase it until we hit a recession. The predictive power provided by such a lagging indicator combined with an imperfect correlation means that monetary policy alone isn't enough to time the market.
[1] https://fred.stlouisfed.org/series/INTDSRUSM193N
[2] https://fred.stlouisfed.org/series/NASDAQCOM
[1] https://fred.stlouisfed.org/series/INTDSRUSM193N
[2] https://fred.stlouisfed.org/series/NASDAQCOM
It's easy to time the market when you know exactly what happened and have an explanation why it happened :P
I think it's fine to try to "time the market" and/or do many other things.
But don't do it with more than 5-10% of your savings on one assumption/prediction.
But don't do it with more than 5-10% of your savings on one assumption/prediction.
[deleted]
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’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 also sold almost all my non-retirement stocks near the top
You're halfway there. Let us know when you get back in.
You're halfway there. Let us know when you get back in.
I’m personally planning on starting to buy back next week now that I am seeing so many retail investors interested in purchasing short ETFs. As I buy back in I hope to sell some puts with my cash
In case you’re being snarky, it’s easy for me to “beat” the market now because I just have to buy back below like 5% off ATH. I also don’t think I can time the market any more, I (and many others actually) just saw a special macro opportunity during the end of the last bull run
In case you’re being snarky, it’s easy for me to “beat” the market now because I just have to buy back below like 5% off ATH. I also don’t think I can time the market any more, I (and many others actually) just saw a special macro opportunity during the end of the last bull run
Yeah that's true, but the closer you get to ATH I would imagine the harder it becomes psychologically to buy back in, because it feels like you're losing on the way up.
If you go all in next week then yeah you're all the way there so congrats. If you take your time getting back in then it may work, may not, but good luck either way.
If you go all in next week then yeah you're all the way there so congrats. If you take your time getting back in then it may work, may not, but good luck either way.
> 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.
Sounds super interesting but could you give a layman's explanation please?
Sounds super interesting but could you give a layman's explanation please?
Bonds pay a fixed return. You buy it and there is no question what the return is for the term of the bond. Bond funds on the other hand, buy and sell bonds in an attempt to do better but there is also risk of doing worse.
You buy a $1000 bond that pays 2 percent for 5 years. Great, that's what you get. A fund buys the same bond and then interest rates rise, so they sell the bond at a slight loss (vs $1000) so they can invest in something with a better return. It becomes a bit of a game and can lose or gain vs the fixed return of buying and holding actual bonds.
You buy a $1000 bond that pays 2 percent for 5 years. Great, that's what you get. A fund buys the same bond and then interest rates rise, so they sell the bond at a slight loss (vs $1000) so they can invest in something with a better return. It becomes a bit of a game and can lose or gain vs the fixed return of buying and holding actual bonds.
This article may be helpful: https://www.bogleheads.org/wiki/Individual_bonds_vs_a_bond_f...
Specifically: “Thus, the distinction between a non-rolling ladder (designed to meet date-certain future liabilities) and a rolling ladder (which essentially represents a personal bond fund) is much more important than the difference between a rolling ladder and a bond fund.”
A one-off individual bond purchase, held to maturity, would be the simplest example of a “non-rolling ladder”.
But even then, the individual bond if marked-to-market (or if you needed to liquidate it before maturity date) would have fluctuating market price. It’s only the intent to hold it to maturity that gives one the ability to choose to ignore the intermediate market price. And if you’re reinvesting it into more bonds (a “rolling ladder”) then you do have to care about market prices at reinvestment time regardless.
Specifically: “Thus, the distinction between a non-rolling ladder (designed to meet date-certain future liabilities) and a rolling ladder (which essentially represents a personal bond fund) is much more important than the difference between a rolling ladder and a bond fund.”
A one-off individual bond purchase, held to maturity, would be the simplest example of a “non-rolling ladder”.
But even then, the individual bond if marked-to-market (or if you needed to liquidate it before maturity date) would have fluctuating market price. It’s only the intent to hold it to maturity that gives one the ability to choose to ignore the intermediate market price. And if you’re reinvesting it into more bonds (a “rolling ladder”) then you do have to care about market prices at reinvestment time regardless.
You buy a bond from the government for $1000 paying 5% interest and, as long as you keep the bond, you're guaranteed to get that interest money and get your $1000 back when the bond matures. A bond fund has no "maturation date" therefore the only money you get back from it is the current market rate of the bonds in it which could easily go up or down.
"predicting the future was obvious in the past, but a lot harder in the present."
...really?
...really?
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.
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.
> 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.
Thanks for pointing this out. The other option is that the clever thing ties you up so you miss out on other opportunities.
[deleted]
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!
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!
Nothing stops you from looking after your health and your future financial situation. That’s what I do.
The subtext here is that worrying about optimization can impact their health, especially with them maybe being in a more susceptible population.
Aptly written. Yes, that's exactly what I meant. Thank you.
@mbrodersen I don't disagree with you. But at this stage I'm just trying to be content with whatever I have. I like my job, hopefully that's not going to be impacted. Just trying to take a break from overthinking.
@mbrodersen I don't disagree with you. But at this stage I'm just trying to be content with whatever I have. I like my job, hopefully that's not going to be impacted. Just trying to take a break from overthinking.
I understand. But let me note that I spend maybe 1 hour a week looking after and optimising my long term investments. So it isn’t a time burden. The “one clever trick” is to invest 10% of your monthly income in long term investments (index funds for example) and reduce your living standards accordingly. Sacrificing a bit of the here and now for the future. As for health I have spent maybe 10 hours listening to many of the great talks on health by experts on YouTube (Low Carb Down Under for example) and adjusted my diet accordingly. And I spend 30 min a week improving my muscle mass (following the book “Body by Science”). So in summary it doesn’t have to take a lot of time to look after both your financials and your health.
I think the point is a physical limitation of time will get us all in certain situations. It's great you have time for both, and maybe they don't.
I've some money invested in shares. Most of them are down. I think just managing one job and studying part time is stressful enough. Everyone's circumstances are different. I personally need to invest more time into my health at this point. But you're absolutely correct. It's great if one could have time for both.
Watch the videos on the YouTube channel “Low Carb Down Under”. Just watch one video a week (45 min a week). It will give you all the info you know to improve your diet step by step.
Mate, I can't thank you enough for suggesting this one. I think I've been a subscriber and I generally follow ketoish diet (At least used to). But I've been binging on junk food since last few months. It feels like I've had some sort of flu/covid since the beginning of this year and it doesn't want ditch me! I've gained about 6 kilos just around my abdomen and my cholesterol levels are elevated!
The doctor actually recommended reducing carb intake and processed food as well. Good advise. But my wife has seen me eating large quantities of butter with sourdough toasts and oftentimes combined with salami/ham! Now I can't blame her for thinking that fat has been the problem all this time. It's difficult to explain to her. But anyway, I've just started eating mostly chicken, broccoli and other veggies. Exercising whenever possible and health allows. Thank you again for the recommendations. I'll look into it. Cheers.
The doctor actually recommended reducing carb intake and processed food as well. Good advise. But my wife has seen me eating large quantities of butter with sourdough toasts and oftentimes combined with salami/ham! Now I can't blame her for thinking that fat has been the problem all this time. It's difficult to explain to her. But anyway, I've just started eating mostly chicken, broccoli and other veggies. Exercising whenever possible and health allows. Thank you again for the recommendations. I'll look into it. Cheers.
Read “Body by Science”. That will take care of your physical body. Spending 15 min a week. I have so far doubled my muscle strength by following it.
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.
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.
You should. Like it or not the world is finite with limited resources. There are winners and losers. If you want to help people, then win and start a scholarship or pay off someone's medical debt. No sense in suffering with everyone else when you were smart enough not to.
The finance industry argues publicly that it's responsible for funding the sciences and the study of Old Nature while it builds an opaque jungle of New Nature in which it preys on other humans.
When the "losers" wise up to what you claim and collectively want to kill you, who will the smart person be then? I'm not personally feeling that towards you, just illustrating a completely rational hypothetical response of a large group of someone you'd label suckers or losers.
When the "losers" wise up to what you claim and collectively want to kill you, who will the smart person be then? I'm not personally feeling that towards you, just illustrating a completely rational hypothetical response of a large group of someone you'd label suckers or losers.
I think everyone should look after themselves first, so that they can be in the position to look after others. Like oxygen masks on a plane. If I can profit today I'll have more to donate tomorrow.
Lets be honest here, in your analogy someone already has an oxygen mask and is figuring out how to get a few more canisters of oxygen even though there is (or possibly was) enough to go around.
We shouldn't conflate competition for the finite resources (food, energy, etc.) with creating wealth (which is not finite).
If I invest in bonds and make some money, it's not taking food or warmth away from anyone else. On the contrary, I might be helping fund additional food and warmth. (In this example, my analogy is backwards because I'm actually profiting later in order to feed someone today).
If I invest in bonds and make some money, it's not taking food or warmth away from anyone else. On the contrary, I might be helping fund additional food and warmth. (In this example, my analogy is backwards because I'm actually profiting later in order to feed someone today).
When there is an economic event that pushes a massive portion of the population under or very close to the line that allows them to buy their fair share of those finite resources, then redistribution of wealth is competing for those finite resources.
This makes it sound as if wealth is being taken from the unfortunate and given to the fortunate. But the unfortunate are going to be at/below the line regardless, even if the fortunate all decide not to profit off the event. On the other hand, if some people get to profit (responsibly, in a way that doesn't make anyone else worse off), that seems like a net gain.
Quite literally, no. We're literally seeing rich energy companies profit off of the energy crisis by increasing prices more than they need to. Salaries for their CEOs are at all time highs.
OK, but my point is it's possible to be a responsible investor.
My example was bonds. The US helped the poor with stimulus checks when COVID hit. Where did the money come from? They issued bonds. Same deal with the Ukraine aid.
Meanwhile I'm buying treasury bonds which I'll profit off. Please tell me who is getting screwed here.
Thank you for being a voice of compassion amongst all the vultures here.
People out there aren't planning to avoid struggling to live during the crash, while people here are planning to avoid struggling to buy a second home after the recession.
Who should be rewarded? It's complicated. I tend to agree with what you suggest though. Some limit needs to be in place to avoid unnecessary cruelty to humans, as humans in cruel situations produce volatile outcomes. The finance industry is opaque by design, and the average person shouldn't be punished by being deliberately led into the dark.
Who should be rewarded? It's complicated. I tend to agree with what you suggest though. Some limit needs to be in place to avoid unnecessary cruelty to humans, as humans in cruel situations produce volatile outcomes. The finance industry is opaque by design, and the average person shouldn't be punished by being deliberately led into the dark.
I know, it's hard to answer because the more you dig the more you start to ask uncomfortable questions about the fundamental nature of our economy and the emergence of varying degrees of wealth inequality... at which point saying when you should or shouldn't be greedy seems arbitrary.
People can debate and justify varying degrees of inequality all day long... but I think it's reasonable to draw a hard line at "surviving". If there is an economic event that cuts of a huge chunk of the population from being able to meet basic needs, even though regardless of money the resources are there, then clearly an adjustment is needed.
People can debate and justify varying degrees of inequality all day long... but I think it's reasonable to draw a hard line at "surviving". If there is an economic event that cuts of a huge chunk of the population from being able to meet basic needs, even though regardless of money the resources are there, then clearly an adjustment is needed.
Yes, you should.
If you should, if your philosophy is to take advantage of the weakest, I hope you won't cry if in the not too distant future someone takes advantage of your weaknesses. Otherwise, your philosophy should be reviewed for being incoherent.
And remember, kids, this strange gluttony that our civilization possesses is the cause of many of the world's problems.
And remember, kids, this strange gluttony that our civilization possesses is the cause of many of the world's problems.
I don't find your argument valid. People struggle to survive based on their own merits, choices and situation(luck).
OP is just asking for ways to profit from a recession. Not in any way contributing to other people's suffering.
For an analogy, I do think it's unethical to hoard medical supplies during covid to resell. But it's perfectly fine to have bought oil or oil stocks and make a killing!
OP is just asking for ways to profit from a recession. Not in any way contributing to other people's suffering.
For an analogy, I do think it's unethical to hoard medical supplies during covid to resell. But it's perfectly fine to have bought oil or oil stocks and make a killing!
> OP is just asking for ways to profit from a recession. Not in any way contributing to other people's suffering.
My entire argument is that these two things are related, and become more so when times are hard. People like to believe they are not, that their rewards are entirely created with their own two hands, but the world is not that simplistic.
My entire argument is that these two things are related, and become more so when times are hard. People like to believe they are not, that their rewards are entirely created with their own two hands, but the world is not that simplistic.
Yeah I don't agree. Making wealth is not a zero sum game. If that were true, the global supply of money would be finite and long term all money would be deflationary as the population has increased. And if truly an exchange of goods/money left no one better off, then markets would not exist. Why would anyone give their labor or money to someone else if they end up worse off for it?
But if I buy some rice from the Indian market, then we are both better off because we've made an exchange for items that have greater value for us. I don't see why it's any different for investments when no one is compelled to buy or sell.
But if I buy some rice from the Indian market, then we are both better off because we've made an exchange for items that have greater value for us. I don't see why it's any different for investments when no one is compelled to buy or sell.
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)
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)
NEVER EVER buy bond funds or bond ETFs. In an increasing interest rate environment like this, you will suffer terrible losses when the fund buys and sells positions. If you want, buy bonds outright, like US treasuries or commercial paper of reliable companies. Also stick with short-dated paper until we get to a peak in interest rates. The Fed has already said they will keep raising rates so we know rates will keep climbing for a while.
This is overblown, because there are cases where you do want bond funds and bond ETFs. Was just reading this article today [1], which presents some of their benefits.
- More convenient than individual bonds.
- Can't estimate future liabilities perfectly and therefore won't be able to perfectly duration match using individual bonds.
- If we hit a recession and interest rates drop, you'll get a nice price bump from your bond funds when your stocks are dropping.
That being said, I do agree that the dangers and risk of bond funds and ETFs don't get talked about often enough, and that you should know what you're doing before buying them. If you have a short-term need for the money (e.g. need 100k for downpayment in 12 months' time), you should not buy a bond fund with a duration longer than 12 months. That is when you will hit the danger parent brought up where you will get a NAV drop and won't have enough money at the end of 12 months to meet your liabilities. In that case, you should really duration match [2] with individual bond that matures in 12 months.
[1] https://occaminvesting.co.uk/against-duration-matching/
[2] https://occaminvesting.co.uk/duration-matching-an-introducti...
- More convenient than individual bonds.
- Can't estimate future liabilities perfectly and therefore won't be able to perfectly duration match using individual bonds.
- If we hit a recession and interest rates drop, you'll get a nice price bump from your bond funds when your stocks are dropping.
That being said, I do agree that the dangers and risk of bond funds and ETFs don't get talked about often enough, and that you should know what you're doing before buying them. If you have a short-term need for the money (e.g. need 100k for downpayment in 12 months' time), you should not buy a bond fund with a duration longer than 12 months. That is when you will hit the danger parent brought up where you will get a NAV drop and won't have enough money at the end of 12 months to meet your liabilities. In that case, you should really duration match [2] with individual bond that matures in 12 months.
[1] https://occaminvesting.co.uk/against-duration-matching/
[2] https://occaminvesting.co.uk/duration-matching-an-introducti...
> NEVER EVER buy bond funds or bond ETFs.
This is bad advice to give generally.
Yes there are tradeoffs but that doesn't make them bad investments.
As rates rise, the bond fund is buying new bonds with higher yields, so the fund owner makes up for NAV losses as long as they hold it long enough to match the fund duration.
This is bad advice to give generally.
Yes there are tradeoffs but that doesn't make them bad investments.
As rates rise, the bond fund is buying new bonds with higher yields, so the fund owner makes up for NAV losses as long as they hold it long enough to match the fund duration.
No. As rates rise, when you sell your lower yielding stocks you are selling low and buying high, iteratively. Rising rate environments like we are in right now are a disaster for any bond etf that doesn't have short duration. You need to wait until interest rates have peaked or at least eased off.
You seem to be only concerned with the price of the fund while ignoring the yield. You have to look at the total return.
Yes you're selling lower yielding bonds but like I said your replacing them with higher yielding ones, which contributes to your total return. This is true for short and long term funds. The key is to buy a bond fund with a duration that matches your planned holding time.
Yes you're selling lower yielding bonds but like I said your replacing them with higher yielding ones, which contributes to your total return. This is true for short and long term funds. The key is to buy a bond fund with a duration that matches your planned holding time.
Looks like the iBond rate applies through Oct, so not too late.
You'll get a months worth of that rate but then it will change. Could go up or down.
> 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/ibonds...
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.
https://www.treasurydirect.gov/indiv/research/indepth/ibonds...
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.
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.
Nope, you actually lock in 6 months of whatever the rate is time of purchase! It's a good deal!
> 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?
Anyone know what the equivalent of this is in the UK?
UK gilt is issued by HM Treasury you can buy it in the open market (most banks buy it all so you can never really buy from the Treasury directly).
_Again_ buying gilt and buying an ETF that tracks gilt is not the same.
_Again_ buying gilt and buying an ETF that tracks gilt is not the same.
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.
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.
> But it's really instructive to go back and look at charts for various assets after bubble implosions.
Be careful not to just look at assets that survived. There are plenty of things that people stopped caring, for a reason, which did not survive.
Be careful not to just look at assets that survived. There are plenty of things that people stopped caring, for a reason, which did not survive.
Man, with that theory, it's time to buy weed stocks!
zomg, genius! I can't wait for Monday now.
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).
Its funny this comment was more of what i was expecting to see here...but am seeing all this finance hustle and shuffle! :-D
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.
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.
Which recession stocks did you pick?
- Affirm
- Coinbase
- Cloudflare
- Netflix
- Peloton
- Roblox
- Shopify
- Snapchat
- Snowflake
- Unity
Peloton is the only one I regret so far — seems to be a falling knife I tried to catch, but still have some hope they can offload the inventory, grow distribution through Amazon/retail and drive up subscription revenue. But seems increasingly unlikely.
- Coinbase
- Cloudflare
- Netflix
- Peloton
- Roblox
- Shopify
- Snapchat
- Snowflake
- Unity
Peloton is the only one I regret so far — seems to be a falling knife I tried to catch, but still have some hope they can offload the inventory, grow distribution through Amazon/retail and drive up subscription revenue. But seems increasingly unlikely.
These are all closely correlated as tech stocks. It is probably very similar to a nasdaq index fund.
Not exactly. They are all tech stocks, but NASDAQ has large cap tech stocks, which 'only' saw a ~30% drop YTD in the index.
The ones I invested in were growth stocks that saw particularly steep corrections of around 70-90% when I invested.
My bet was that though they were overvalued, it was an overreaction that would on average get me a ~3X return in 3 years.
So yes, they are similar, but IMO the similarity was an overreaction that was not based on fundamentals. As mentioned earlier, I'd make the same bet again now for all but Peloton.
Keep in mind these are longer-term (3+ year) investments. If you watch the market, the wild swings (especially in these stocks) still tell us the market doesn't know how to value them.
Back to the OP's question, to get any significant outsized return you often have to be contrarian AND right. I felt I knew enough about the fundamentals of these companies and the market that I had enough confidence to make the bet. Only time will tell.
The ones I invested in were growth stocks that saw particularly steep corrections of around 70-90% when I invested.
My bet was that though they were overvalued, it was an overreaction that would on average get me a ~3X return in 3 years.
So yes, they are similar, but IMO the similarity was an overreaction that was not based on fundamentals. As mentioned earlier, I'd make the same bet again now for all but Peloton.
Keep in mind these are longer-term (3+ year) investments. If you watch the market, the wild swings (especially in these stocks) still tell us the market doesn't know how to value them.
Back to the OP's question, to get any significant outsized return you often have to be contrarian AND right. I felt I knew enough about the fundamentals of these companies and the market that I had enough confidence to make the bet. Only time will tell.
Not an expert at all but intuitively I had the same feeling as carabiner. Can someone explain the downvotes?
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
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
I've been measuring my buy'n'hold portfolio in terms of total gain / time. Have I "lost" a bunch of money since the peak? Yes (most of my stocks are tech). Do I care about losses since the peak? No, that isn't how I measure value.
I've taken a similar tack when determining the value I have in a vehicle for example (or the cost/location of an apartment relative to common commute destinations). Basically, the value of the thing is in the utility I get out of it, rather than what others would pay for it. My car, for example, gives me a huge amount of utility in terms of visiting family, friends, engaging in hobbies, traveling relatively unfettered, etc. If I had to value that utility I would compare what I can currently do with the closest conceivable alternatives.
It makes for a fun spreadsheet puzzle, to be honest.
The last time I dug in and did the math, it was for housing location and cost, commute distance and cost, and cost-of-time.
I've taken a similar tack when determining the value I have in a vehicle for example (or the cost/location of an apartment relative to common commute destinations). Basically, the value of the thing is in the utility I get out of it, rather than what others would pay for it. My car, for example, gives me a huge amount of utility in terms of visiting family, friends, engaging in hobbies, traveling relatively unfettered, etc. If I had to value that utility I would compare what I can currently do with the closest conceivable alternatives.
It makes for a fun spreadsheet puzzle, to be honest.
The last time I dug in and did the math, it was for housing location and cost, commute distance and cost, and cost-of-time.
That's really cool.
I hadn't thought of it that way before, but when I think about the tools people use to track spending, etc, I wonder if the metrics you are using could help people use their money more wisely.
I hadn't thought of it that way before, but when I think about the tools people use to track spending, etc, I wonder if the metrics you are using could help people use their money more wisely.
>1) don't try to time the market
> 2) be greedy when others are fearful
Aren't 1 and 2 contradictory to each other. If you don't time the market how exactly are you supposed to be greedy?
> 2) be greedy when others are fearful
Aren't 1 and 2 contradictory to each other. If you don't time the market how exactly are you supposed to be greedy?
Yes, they are contradictory to an extent, which is why I believe it is a powerful strategy to try to balance the two.
I believe it's about deciding how aggressive you are going to be at what time. It doesn't mean sit on the sidelines and wait until everyone is fearful and then get in.
It's about trying to make one or two great moves now, when everything is down.
As things go up, you'll get less aggressive, not more, which is the opposite of how most people react to the markets.
I believe it's about deciding how aggressive you are going to be at what time. It doesn't mean sit on the sidelines and wait until everyone is fearful and then get in.
It's about trying to make one or two great moves now, when everything is down.
As things go up, you'll get less aggressive, not more, which is the opposite of how most people react to the markets.
So it's 100% about trying to time the market then
That's correct if you are only able to operate in absolutes. I think you'll find life is more nuanced than that
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?
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?
Leveraged ETFs are what I consider “pro” level financial instruments. If you don’t trade them for a living you are probably better off not trading them at all. It’s extremely common to misunderstand how the leverage works and think that “oh if I hold a -3x leveraged S&P500 ETF it will give me 3x if the index goes down”. It doesn’t work exactly like that because the time horizon where you hold it matters a lot. A lot of times you only realize that 3x if you trade in and out intraday.
Buying levered ETF and holding for more than a few days is terrible advice. They decay rapidly when QQQ goes sideways or bleeds slowly even.
I like leveraged ETFs but only in market environments with low volatility and high probability of consecutive daily positive returns. Historically those markets environments usually coincide with the major indexes (S&P, Dow, Nasdaq) being above the 200 day moving average, a good benchmark for the market being in an uptrend and volatility being low. Bear markets significantly under the 200 day like right now are generally marked with much less chance of consecutive positive returns and high volatility both of which crush the returns of leveraged ETFs e.g. TQQQ, SOXL, and friends. The upshot is I'm sitting things out for the time being.
NEVER hold levered ETFs for more than a day or so. They decay horribly and in markets where there's a lot of volatility, they decay very quickly. You will lose a lot of money buying and holding any type of levered ETF.
Their real use case is for day-trading.
Their real use case is for day-trading.
Taking in consideration how much the market appreciated, there's still a lot of room for correction. People compare the SPY returns in 2008 to 2022, but pre 2008 we didn't have such a pump like the covid pump and even 10 years of up only before that, financed by low interest rates and QE. Markets need a reset. Be patient, make buck and invest it, we might get a whole decade of ranging markets, be prepared.
Which ETF is that?
TQQQ is an example: https://totalrealreturns.com/s/TQQQ
I’m not recommending this. Be careful. It’s daily leverage (intended for short term use). If you look at it over longer periods, there is very very substantial drag. As a short term gamble with a single digit percentage of your portfolio, maybe.
See also this article about risks of leveraged ETFs: https://www.bogleheads.org/wiki/Leveraged_and_inverse_ETFs
Edit: here’s a chart comparing TQQQ to plain QQQ: https://totalrealreturns.com/s/TQQQ,QQQ
I’m not recommending this. Be careful. It’s daily leverage (intended for short term use). If you look at it over longer periods, there is very very substantial drag. As a short term gamble with a single digit percentage of your portfolio, maybe.
See also this article about risks of leveraged ETFs: https://www.bogleheads.org/wiki/Leveraged_and_inverse_ETFs
Edit: here’s a chart comparing TQQQ to plain QQQ: https://totalrealreturns.com/s/TQQQ,QQQ
Oh, I'm not buying it, am bogelhead. Still off this year but had cash around to "but the dip" as they say.
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.
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.
> 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.
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.
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.
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.
It maybe slightly different in NZ as we are on variable rates, or fixed terms for upto 5 years or so that changes things. But we are now in correction period.
Prices sky rocketed as money was printed, now the shine has worn off and the fundamentals don't support sky high prices. With much the same story as a number of countries - interest rates causing cost of living hikes and wages not keeping place, the "sure bet" of the housing market is no longer, and the prices have dropped.
https://tradingeconomics.com/new-zealand/housing-index
NZ was living off that "they'll never go down" attitude. The people that bought in the last year are starting to hurt, and unfortunately/fortunately (depending on which side of the coin) the sentiment just starts shifting. Once it starts shifting, people get nervous - over confidence bidding is out the window. Even though we (theoretically) have a supply and demand issue, even though construction costs are sky rocketing, people start realising they don't need that 4-5 bedroom monster, or that 2nd holiday home that they can air bnb out.
Seriously at one point during I think it was 2021 - I was in a c/md level position, and our house went up more than I earned in one year - we're talking a fairly standard 3 bdrm house - nothing fancy. That was spectacular... that spurned on a lot of "mom and pop" investors to go nuts buying houses, when they shouldn't have. And now they're looking into negative equity territory.
Prices sky rocketed as money was printed, now the shine has worn off and the fundamentals don't support sky high prices. With much the same story as a number of countries - interest rates causing cost of living hikes and wages not keeping place, the "sure bet" of the housing market is no longer, and the prices have dropped.
https://tradingeconomics.com/new-zealand/housing-index
NZ was living off that "they'll never go down" attitude. The people that bought in the last year are starting to hurt, and unfortunately/fortunately (depending on which side of the coin) the sentiment just starts shifting. Once it starts shifting, people get nervous - over confidence bidding is out the window. Even though we (theoretically) have a supply and demand issue, even though construction costs are sky rocketing, people start realising they don't need that 4-5 bedroom monster, or that 2nd holiday home that they can air bnb out.
Seriously at one point during I think it was 2021 - I was in a c/md level position, and our house went up more than I earned in one year - we're talking a fairly standard 3 bdrm house - nothing fancy. That was spectacular... that spurned on a lot of "mom and pop" investors to go nuts buying houses, when they shouldn't have. And now they're looking into negative equity territory.
Yeah my friends purchased at the peak thanks to FOMO. Now they owe over half a million on a small provincial home. On a teacher's salary I'm not sure how they're going to survive if rates continue to climb.
My house has dropped more than a years income since it peaked. That's an average 4 bedroom place in Palmy.
My house has dropped more than a years income since it peaked. That's an average 4 bedroom place in Palmy.
> Why would any sane person with a 3% mortgage ever sell
Because they can no longer afford their morgage as the economy goes to the gutter and they get laid off + their purchase power gets eroded due to inflation? Or they got a new job, but now they have to relocate? Many reasons.
Because they can no longer afford their morgage as the economy goes to the gutter and they get laid off + their purchase power gets eroded due to inflation? Or they got a new job, but now they have to relocate? Many reasons.
> 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.
There's the idea among the older generation that just because assets have been in a secular bull market, that they will continue to rise up in price, and it's probably not the case.
There's the idea among the older generation that just because assets have been in a secular bull market, that they will continue to rise up in price, and it's probably not the case.
People living in homes financed with a generous rate (~3% like you mentioned) mortgage are unlikely to move - that's correct. However, that's not the only piece of the puzzle. Keep in mind that home builders have recently produced at the highest level since 2008 [1]. When you pair this with high rates [2], it's likely that we will see inventory sitting on the market.
[1] https://calculatedrisk.substack.com/p/new-home-sales-decreas...
[2] https://www.freddiemac.com/pmms
[1] https://calculatedrisk.substack.com/p/new-home-sales-decreas...
[2] https://www.freddiemac.com/pmms
[deleted]
Hiring slows, wages go down, remote work becomes less normal, rates go up, prices cool to offset rates, boomers downsizing (pass passing property to heirs) increase supply as part of the largest generational wealth transfer ever…
People who stretched to buy at the peak of the market end up upside down, refinancing gets harder, selling takes longer, foreclosure starts… 2008 all over again.
May not be likely, but wouldn’t be surprising
People who stretched to buy at the peak of the market end up upside down, refinancing gets harder, selling takes longer, foreclosure starts… 2008 all over again.
May not be likely, but wouldn’t be surprising
This makes a (pretty huge) assumption that the characteristics of this recession will match the last one. But the underlying fundamentals appear to be very different, so far.
... indeed, to the point where there is still debate about this actually is a recession. NBER, for example, have not yet called it (likely on account of the employment situation, which is very non-recession-like).
The Fed first claimed that there would be no inflation due to their COVID monetary policies and the fiscal policies of the government, then that it would be transitory. https://www.businessinsider.com/fed-keeps-key-rate-near-zero...
Take what theses official mouthpieces say with a pinch of salt, because part of their box of tools is jawboning on TV. Fake it till you make it policymaking.
Take what theses official mouthpieces say with a pinch of salt, because part of their box of tools is jawboning on TV. Fake it till you make it policymaking.
This is why my original comment ended with "so far".
In any case, we definitively do not have millions of people sitting on ARMs that just went from from 2% to 7% like we saw in '08.
In any case, we definitively do not have millions of people sitting on ARMs that just went from from 2% to 7% like we saw in '08.
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 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.
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.... !
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
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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.
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.
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.
- 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
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.
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.
> 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.
You might end up regretting this one.
You might end up regretting this one.
My weight fluctuates pretty normally depending on my exercise level. When I'm actively lifting weights I am in a calorie surplus and usually end up a bit overweight. Losing weight is fairly easy. You just count calories, avoid sugars, and eat high-fiber foods at the start of the meal to feel more full for longer.
I recognize that 'gain weight for the winter famine' is a bit extreme but I'm just willing to gain 5 extra lbs than I normally would.
I recognize that 'gain weight for the winter famine' is a bit extreme but I'm just willing to gain 5 extra lbs than I normally would.
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.
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.
What is your criteria for whether we are in/not in a recession?
There’s never been one coinciding with a full-employment unemployment rate. If this is a recession, it’s unusual.
Doesn’t unemployment follow a contraction in the economy? We’re seeing a lot of layoffs* right now because business has slowed down, and if other companies also have hiring freezes, those people will stay unemployed.
*and it looks like just the beginning
*and it looks like just the beginning
It's not typical to have rock-bottom unemployment and blowout monthly job numbers on the way into a recession, no.
https://www.shrm.org/resourcesandtools/hr-topics/talent-acqu...
> Yet economists seem to agree that if the U.S. is in a recession, it's unlike any previous one.
> "This is going to be about the most pleasant way to go through a recession," said Ron Hetrick, senior economist at Lightcast. "Employers are still starving to get employees. They were never able to hire them when they had so much demand. I absolutely believe this is not going to be the kind of pain that we usually associate with a recession, historically speaking."
https://www.shrm.org/resourcesandtools/hr-topics/talent-acqu...
> Yet economists seem to agree that if the U.S. is in a recession, it's unlike any previous one.
> "This is going to be about the most pleasant way to go through a recession," said Ron Hetrick, senior economist at Lightcast. "Employers are still starving to get employees. They were never able to hire them when they had so much demand. I absolutely believe this is not going to be the kind of pain that we usually associate with a recession, historically speaking."
We are already in a recession. Maybe not by the official definition that you can only measure after 2 quarters, but it is pretty clear that the country is producing fewer goods and services, especially after adjusting for inflation.
That is not the official NBER definition. You can find that here: https://www.nber.org/research/business-cycle-dating/business...
Compared to 2019, a million died, some became disabled, and plenty of people have checked out with early retirements / sabbaticals / downgrading to less stressful jobs / quiet quitting. And I don't care what people say, teams get less done in a remote environment.
There is just no way that the same amount of work is getting done now compared to 3 years ago.
There is just no way that the same amount of work is getting done now compared to 3 years ago.
And yet ...
> But it is. Total employment is half a million higher than it was before the pandemic, and this recovery includes virtually every individual industry. The only real exceptions are restaurants and hotels, which are 300-400,000 short of their pre-pandemic numbers, and government, which is 500,000 short.
https://jabberwocking.com/employment-has-recovered-to-pre-pa...
> But it is. Total employment is half a million higher than it was before the pandemic, and this recovery includes virtually every individual industry. The only real exceptions are restaurants and hotels, which are 300-400,000 short of their pre-pandemic numbers, and government, which is 500,000 short.
https://jabberwocking.com/employment-has-recovered-to-pre-pa...
I am genuinely both surprised and fascinated by this. So many industries cite a shortage of people (pilots, truck drivers, doctors, and so on), whereas this shows an increase in the amount of employees in those industries. What is generating all the extra demand? Or were we just more efficient in 2019, getting the same or more done with less? GDP certainly doesn't seem to have risen at the rate of employment which leads me to believe the latter.
Were we more efficient in 2019?
Of course! Rich CEOs fired a bunch of otherwise competent blue collar people when Covid hit to protect their downside cash flow risks .. which turned out to be short-term risks, and now those workers have moved to new employers and are still getting up to speed. Or they have left the market completely.
My guess anyway, having watched my F100 company seemingly do this.
Of course! Rich CEOs fired a bunch of otherwise competent blue collar people when Covid hit to protect their downside cash flow risks .. which turned out to be short-term risks, and now those workers have moved to new employers and are still getting up to speed. Or they have left the market completely.
My guess anyway, having watched my F100 company seemingly do this.
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’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.
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).
That's definitely a risk, but typically when crypto craters hard it's actually quite difficult to quickly get money into the markets. Wire transfers and ACH transfers usually take forever or deposits get shut down. It's much better to have stablecoins in that situation.
Also I've diversified my risk by selecting two U.S.-based exchanges/banks (Abra was the first and is currently the only exchange to get a Fed account). The likelihood that both stop withdrawals on the same day seems unlikely. Is it as safe as storing gold under my mattress? No, but the markets move incredibly fast. When I see an opportunity I'll need to move quickly, then get my purchases off the exchanges immediately.
Also I've diversified my risk by selecting two U.S.-based exchanges/banks (Abra was the first and is currently the only exchange to get a Fed account). The likelihood that both stop withdrawals on the same day seems unlikely. Is it as safe as storing gold under my mattress? No, but the markets move incredibly fast. When I see an opportunity I'll need to move quickly, then get my purchases off the exchanges immediately.
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?"
Celsius, anyone?
It's not a risk-free bet, but considering it's not a signficant amount of my net worth I'm happy to take the chance for a multiple ROI.
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.
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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.
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.
There are some very alarming things going on, like the situation in Great Britain, where it's still not clear how bad it is. I am afraid that the same can happen to the euro, lose additional 30-50% buying power vs the Dollar and cause further wreckage in the financial system. Another thing to worry about is if the US will be able to rollover their debt at these elevated interest rates. The cost is becoming huge and the alternative is to inflate it.
I think that in the short term the best position is cash and maybe some commodities, oil is a good entry after a few months of decline. I would definitely buy some Bitcoin and Ethereum, especially if Bitcoin goes sub 15K, but even if the bottom is in, I think some will be good for my portfolio. Stocks are an inflation hedge, especially value and utilities. I don't think it's still a good time for tech stocks, not until the situation with energy and interest rates improves.
In terms of profiting from the crisis, if we get a crash sub 15K in BTC it might be the best multi year opportunity for entry. If you want to bet even bigger maybe buy another L1, since that one might go x25 when BTC goes x10.
I think that in the short term the best position is cash and maybe some commodities, oil is a good entry after a few months of decline. I would definitely buy some Bitcoin and Ethereum, especially if Bitcoin goes sub 15K, but even if the bottom is in, I think some will be good for my portfolio. Stocks are an inflation hedge, especially value and utilities. I don't think it's still a good time for tech stocks, not until the situation with energy and interest rates improves.
In terms of profiting from the crisis, if we get a crash sub 15K in BTC it might be the best multi year opportunity for entry. If you want to bet even bigger maybe buy another L1, since that one might go x25 when BTC goes x10.
Very encouraged to read all the Boglehead-type comments here.
Kudos to you, Hacker News! Financial literacy is important.
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.
It's my luck with this play that I sell the puts with strikes right where I want to buy, the market dips, then bounces before expiration and I don't get assigned. I keep the premium but that's usually a pittance compared to what I could have made had I just bought the dip (that I wanted to buy anyway!). Of course when the price drops to your strikes you could use some extra cash to buy shares but then you're holding shares and the short puts at the same time so there's a trade off, i.e. you can't go all in on both. And you sure don't want to buy those puts back during the dip as they'd be hideously expensive and it'd obviously defeat the purpose of the original trade. This stuff is never easy.
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.
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.
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.
You don't have to necessarily short to express bearish beliefs, right? LEAP options seem like a great way to articulate your financial predictions without being exposed to excess risk, but idk anything.
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.
Finally! They know we're going to soon start locking up white collar criminals with sentences commensurate with the financial value associated with their crimes. It will be a bonanza for the private prison industry! /s
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.
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.
Most of those close to me are buying gold, silver for investments.
Also guns and ammo, which are not bad investments (to be sold at a later time) but can also be used if things get weird.
Me? I'm just trying to keep gas in my car.
Also guns and ammo, which are not bad investments (to be sold at a later time) but can also be used if things get weird.
Me? I'm just trying to keep gas in my car.
Everyone goes through a prepping phase. It's just a phase though.
gold has been dropping in price, so not sure what to think
yeah my earlier mentions friend is also perplexed and puts it down to "people just not understanding how economics works". I'm inclined to agree... before trump I was beginning to see a picture of the world as being a lot less organized and professional than I was being led to believe.. Post Trump and I'm convinced that the world is and has always been an unhinged crazy town. I believe even less in conspiracy theory's than I used to (and I've always been a Occam's Razor sort of guy).
There is no truly organized world order with a great plan... (to borrow from the meme) we're all just a bunch of smooth brains trying to fool each other that we're part of the wrinkled brain elites.
Gold seems like a historically safe bet. thats as close to a plan as I'm going to get, otherwise yeah head down and keep on carrying on.
There is no truly organized world order with a great plan... (to borrow from the meme) we're all just a bunch of smooth brains trying to fool each other that we're part of the wrinkled brain elites.
Gold seems like a historically safe bet. thats as close to a plan as I'm going to get, otherwise yeah head down and keep on carrying on.
Sell tickets to stoicism seminars.
Buy the dip
That is like trying to catch a falling knife right now.
If you're holding for 30 years what does it matter?
Unless this turns out to be the US's equivalent to Japan in 1990, you'll probably end up ahead either way. But you just may have missed the dip!
Even if this is the ninety's NIKKEI you just cut your losses and keep buying. The NIKKIE is up 200%+ since it's drop. There's always money to be made
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This is called "disaster capitalism". Why not choose a different path?
like what? work at a FAANG and enrich them?
There's a huge number of options that aren't "be a disaster capitalist" or "work at a FAANG".
HN et al are keen to "find a pain point" and iterate solutions. The pain point that millions of people are suffering with at the moment (specifically relating to OP's post) is the global economic down-turn. Plenty of opportunity to start a business that might actually help others. Personal budget management, debt consolidation, energy efficiency advice, etc etc etc.... How about trying to make the world a better place while turning a profit? How about "disaster philanthropy"?
OP mentioned ETFs, a pooled investment that typically tracks an index, and specifically "short" ETFs. Shorting is basically gambling that a benchmark will fall in value, i.e. profiting from loss. There's plenty written by economists/politicos about whether this is ethical, whether it actually constitutes "disaster capitalism", and so on. Personally, I find it a shame that a global economic down-turn which will damage millions of lives prompts someone to think how they can use their existing money to make more money for themselves.
I'm not advocating that OP should be negligent about their personal finances. I'm not suggesting that "insulating" themselves (as they quite understandably see it) is a bad plan. I would suggest that these things might be achieved by other means.
My post was simply to say there are choices to be made.
HN et al are keen to "find a pain point" and iterate solutions. The pain point that millions of people are suffering with at the moment (specifically relating to OP's post) is the global economic down-turn. Plenty of opportunity to start a business that might actually help others. Personal budget management, debt consolidation, energy efficiency advice, etc etc etc.... How about trying to make the world a better place while turning a profit? How about "disaster philanthropy"?
OP mentioned ETFs, a pooled investment that typically tracks an index, and specifically "short" ETFs. Shorting is basically gambling that a benchmark will fall in value, i.e. profiting from loss. There's plenty written by economists/politicos about whether this is ethical, whether it actually constitutes "disaster capitalism", and so on. Personally, I find it a shame that a global economic down-turn which will damage millions of lives prompts someone to think how they can use their existing money to make more money for themselves.
I'm not advocating that OP should be negligent about their personal finances. I'm not suggesting that "insulating" themselves (as they quite understandably see it) is a bad plan. I would suggest that these things might be achieved by other means.
My post was simply to say there are choices to be made.
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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.)
(Honestly after seeing what the markets have been doing lately, I’m glad I did.)
> I went and bought a house with cash rather than getting a mortgage and investing it
How much was the bonus?
How much was the bonus?
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.