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Ask HN: How are you preparing for the recession?

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Re: Ask HN: How are you preparing for the recession?

#51

Post by kentrado »

MacsHeadroom wrote: post #48

1. DON'T save. DON'T sell equity (ie. Don't raise capital). DO take on as much debt as feasible. DO use said debt to employ the inevitable cheap labor and capital goods to run profitable ventures. 2. Yes, I was laid off from a start-up then joined as one of the first at an already profitable pre-seed start-up that would raise $20M with 3. Mistake #1: I saved instead of doing the smart thing and taking on massive debt…

The thing that causes the recession is that debt has become more expensive. It is counter intuitive to say that now it is the time to take up debt.

Re: Ask HN: How are you preparing for the recession?

#52

Post by landemva »

MrGuts wrote: post #5

A recession is not the worst thing in the world. It's a business cycle, and happens on a regular basis. A recession might (hopefully) chase out some inflation; and it might clarify where some opportunities reside (like new infrastructure, or worker retraining/relocation). A little bit of inflation isn't too bad, either. It helps people pay off debt with less valuable dollars. Bottom line: A little bit of inflation is…

Inflation causes people to become investors/speculators just to keep up with loss of purchasing power. Inflation is theft by decree of the money printer.

Re: Ask HN: How are you preparing for the recession?

#53

Post by ramish94 »

If history is any indicator, starting a company during or shortly after a recession has yielded some massively successful results. Not only does it crowd out parties that would enter easily during good times, you also have access to incredible talent on the market due to a high supply. Yes, access to capital is definitely more strained, however PG has said that technology progresses more or less independent of the stock market and economic cycles.

All this to say, I’ll probably look to start something. Anyone else down?

Re: Ask HN: How are you preparing for the recession?

#54

Post by MacsHeadroom »

kentrado wrote: post #51
MacsHeadroom wrote: post #48

1. DON'T save. DON'T sell equity (ie. Don't raise capital). DO take on as much debt as feasible. DO use said debt to employ the inevitable cheap labor and capital goods to run profitable ventures. 2. Yes, I was laid off from a start-up then joined as one of the first at an already profitable pre-seed start-up that would raise $20M with 3. Mistake #1: I saved instead of doing the smart thing and taking on massive debt…

The thing that causes the recession is that debt has become more expensive. It is counter intuitive to say that now it is the time to take up debt.

It is counterintuitive, which is why it was a learning for me.

The reason to take on debt in a recession is simple; others aren't doing it because it's expensive.

This mass obstension causes investments to appear to lose value, evidenced by dropping market prices.

In reality the investments are just as valuable as before. Only their "marginal" value has dropped. In fact, you may now have access to even MORE valuable investments and opportunities that were out of reach pre-recession.

For example, high performing developers laid off from their $200k/yr positions, now competing with each other for your open $80k/yr position.

Or the opportunity to cannibalize the customers of competitors failing to raise capital or trim their fat quickly enough.

Or foreclosed homes that will double in value as soon as banks find a new way to make lending cheap again.

The list goes on and on.

Re: Ask HN: How are you preparing for the recession?

#55

Post by bogomipz »

rvz wrote: post #28
my69thaccount wrote: post #11

If you're asking how to prepare for a recession, the recession has already begun. Changing your behavior now is just going to lock in your losses. Stay the course and don't be distracted by changes around you.

Exactly. We were already in a recession months ago, since November.

No. That is completely false. We are most certainly not in a recession. Nor did one start in November. You can check the Fed data here and verify you claim is false[1]

The economy is considered to have entered into a recession if it experiences a decline in GDP for two consecutive quarters. And that has not happened. There has been no sustained contraction and there has been no significant rise in the unemployment rate either. In fact unemployment is at historic lows.

The US gross domestic product shrank at an annualized rate of 1.4% in the first quarter of 2022. This was also the quarter where Omicron became prevalent. Further this was also the first time in contracted since the begin of pandemic 2+ years ago.

[1] https://fred.stlouisfed.org/series/JHDUSRGDPBR

Re: Ask HN: How are you preparing for the recession?

#56

Post by landemva »

MichaelBurge wrote: post #33
toomuchtodo wrote: post #6

1. Keep 6-12 months of expenses in cash on hand. Cash. Not SPY, not I bonds, not HELOCs or lines of credit. Cash. When you are in financial peril, you don’t want to deal with a closed credit line, deeply depressed assets, or locked up instruments. 2. Don’t lose your job. 3. Network in case #2 doesn’t pan out. (lessons learned from the 2001 and 2008 crises)

With #1, you count money in a checking account as cash right? Even though it's technically a line of credit that happens to have an insurance policy attached? Or do you mean strictly physical cash under the mattress(or in a safe)?

When the debit card does not work due to network failure or bank holiday, crisp paper money will still spend.

Re: Ask HN: How are you preparing for the recession?

#58

Post by mikercampbell »

ramish94 wrote: post #53

If history is any indicator, starting a company during or shortly after a recession has yielded some massively successful results. Not only does it crowd out parties that would enter easily during good times, you also have access to incredible talent on the market due to a high supply. Yes, access to capital is definitely more strained, however PG has said that technology progresses more or less independent of the st…

Count me in. I've got ideas and am Fullstack.

Re: Ask HN: How are you preparing for the recession?

#59

Post by tomcam »

I’ve been paranoid since before you were born ;) Here is what I did long before the current downturn.

* Cleared up credit card debt (actually all debt) 25 years ago

* Paid off mortgages

* Sold office and bought farm with year-round creek

* Stored lots of freeze-dried food

* Bought precious metals

* Kept my coding and writing skills up to date

* Moved some investments to cash positions so we have 1 year of expenses (arguably not smart due to inflation)

* Made friends with my neighbors

* Guns, duh

* Did massive infrastructure work like new plumbing, electrical, generators, roofs, decks, etc. before prices went up too high

Re: Ask HN: How are you preparing for the recession?

#60

Post by fbrncci »

I went the route of geoarbitrage. A few months ago I moved across the world, where cost of living are -70% from where I earn my salary. Financially, I couldn't be in a more stable spot, recently also changed jobs with a 80% salary raise. Every month that I work, effectively is a budget on which I could survive 6+ months on right now, if I really had to cut down my spending, I could survive a whole year on two months worth of salary.
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