Ask HN: How to best take advantage of the coming recession?

#1

Post by poordadrichson » Tue, Jan 10, 2023, 5:30 PM UTC

I'm 32 years old and living in Europe and come from a blue-collar worker's family.

I'm pretty good at my job (broader data science) and have been earning US-level income while maintaining Eastern Europe-level expenses for the last 7 years or so. Thus, I've managed to have a decent amount of savings in cash and index funds / ETFs .

During the last recession (2007-8), I was just 16yo and my family was hit pretty hard back then. Now, I do believe that recessions are the only realistic way to achieve real social mobility, and have been planning to really benefit from the next one (whenever it happens).

Any additional thoughts, tips, and personal experiences are welcome.

Re: Ask HN: How to best take advantage of the coming recession?

#2

Post by breckenedge » Tue, Jan 10, 2023, 5:47 PM UTC

Depends on how active you want to be with your investments. There are many investments that have the potential to exceed index fund returns, but they come with greater risks and time demands. Do you want to start your own business? Or invest in other assets like real estate? Basically, how willing are you to upset your lifestyle?

I think looking ahead to the next big (known) global risk is wise. From what I can see, there will be a global plateau in working populations in the early 2030s, with many countries seeing a larger percentage of older adults relying on a smaller number of working-age folks. How will that affect you and your community? You may want to prepare now for that.

Re: Ask HN: How to best take advantage of the coming recession?

#3

Post by westonplatter0 » Tue, Jan 10, 2023, 5:56 PM UTC

To rephrase your question, what are the structural alpha opportunities within economic slowdowns/recessions? Check out SSRN for those.

Re: Ask HN: How to best take advantage of the coming recession?

#4

Post by granshaw » Tue, Jan 10, 2023, 5:59 PM UTC

The most talked-about coming recession ever... don't go overboard, in case it doesn't happen...

Re: Ask HN: How to best take advantage of the coming recession?

#5

Post by adenozine » Tue, Jan 10, 2023, 6:00 PM UTC

Realistically, if it’s as bad as they say, it could be wise to become a little bit liquid right now to reinforce your buying power during the apparently inevitable massive dip that’s coming.

Personally, I don’t see it getting nearly as bad as 2008, but I could be wrong. I think some big corps will eat shit, there will be some layoffs, yada yada same old shit. There’s not going to be thousands of people suddenly homeless and destitute like before.

Re: Ask HN: How to best take advantage of the coming recession?

#6

Post by drbeast » Tue, Jan 10, 2023, 6:01 PM UTC

When everyone is expecting a recession, one does not come.

Expecting higher inflation and flat to slightly reduced growth (aka stagflation). Find dividend paying stocks that actually keep up with inflation (10-20%). They exist and have track records of maintaining this pay out, you just need to find them.

Re: Ask HN: How to best take advantage of the coming recession?

#7

Post by zeusk » Tue, Jan 10, 2023, 6:05 PM UTC

drbeast wrote: post #6

When everyone is expecting a recession, one does not come. Expecting higher inflation and flat to slightly reduced growth (aka stagflation). Find dividend paying stocks that actually keep up with inflation (10-20%). They exist and have track records of maintaining this pay out, you just need to find them.

I'm sorry but can you list a single stock with 15% dividend with track record for paying that out consistently?

15%+ growth (considering they pay taxes and have expenses other than dividend) consistently will reach astronomical numbers pretty quick.

Re: Ask HN: How to best take advantage of the coming recession?

#8

Post by monero-xmr » Tue, Jan 10, 2023, 6:07 PM UTC

Income generating assets in industries that are resilient during recessions. Oil and gas, rental property, bedrock consumer goods like toilet paper, owning a business that has cash flow you can access. Diversify.

Re: Ask HN: How to best take advantage of the coming recession?

#9

Post by dzink » Tue, Jan 10, 2023, 6:10 PM UTC

drbeast wrote: post #6

When everyone is expecting a recession, one does not come. Expecting higher inflation and flat to slightly reduced growth (aka stagflation). Find dividend paying stocks that actually keep up with inflation (10-20%). They exist and have track records of maintaining this pay out, you just need to find them.

Dividend paying stocks are from cash cow companies that attract investors not with growth but with a dividend. Many of them are heavily leveraged to take advantage of tax reduction from the payment of debt with their predictable cash. However, if they have a lot of debt, the current interest rate increases are possibly putting a dent in their calculations. Not sure a highly indebted company is a good place to store money in an increasing interest rate situation. Apple and microsoft offer dividends but they are not high.

Re: Ask HN: How to best take advantage of the coming recession?

#10

Post by roflyear » Tue, Jan 10, 2023, 6:10 PM UTC

zeusk wrote: post #7

drbeast wrote: post #6

When everyone is expecting a recession, one does not come. Expecting higher inflation and flat to slightly reduced growth (aka stagflation). Find dividend paying stocks that actually keep up with inflation (10-20%). They exist and have track records of maintaining this pay out, you just need to find them.

I'm sorry but can you list a single stock with 15% dividend with track record for paying that out consistently? 15%+ growth (considering they pay taxes and have expenses other than dividend) consistently will reach astronomical numbers pretty quick.

They do not exist, absolutely. 4% is a good number for dividend paying stocks.

Also inflation isn't over 15% hahaha.