I still hope we can avoid the full blown recession, but everyone should be prepared, Europe will be hit the hardest, US should be in better position.
Ask HN: How can I prepare for hard economic times?
21–30 of 341 posts
Re: Ask HN: How can I prepare for hard economic times?
#22If you think its coming, move your money to hedges. But people have been predicting the next big crash for the last 5 years to no avail, so don’t be surprised if you miss out on major gains.
Really? Everything points to 'economy is fucked for the foreseeable future', people are worrying about possible food and energy shortages, and your take is 'don't forget your FOMO though, stonks still go up'?
You mean like in 2020 when the entire world was shut down because of COVID?
Or in 2018 when a trade war between china and US was just around the corner?
Or in 2016 when Brexit was the fall of the EU and Trump just got elected?
There's always something, and it's never clear that that something is going to actually be the real deal.
Re: Ask HN: How can I prepare for hard economic times?
#23If you think its coming, move your money to hedges. But people have been predicting the next big crash for the last 5 years to no avail, so don’t be surprised if you miss out on major gains.
Nasdaq is down 19% for the year. Looking at one of the best biotech hedge funds, YoY% is -5% (March 2021-March 2022). These don't qualify as a major gain in my book.
The "major gains" don't come during the time in which all signs seem to point towards the end of the world being near.
The gains materialize when the end of the world that everyone expected yesterday eventually fails to materialize.
Re: Ask HN: How can I prepare for hard economic times?
#24If you think its coming, move your money to hedges. But people have been predicting the next big crash for the last 5 years to no avail, so don’t be surprised if you miss out on major gains.
Really? Everything points to 'economy is fucked for the foreseeable future', people are worrying about possible food and energy shortages, and your take is 'don't forget your FOMO though, stonks still go up'?
If you’re so confident, buy shorts and VIX calls. The stock market has proven to be largely detached from economic reality in the last few years, so don’t think any few indicators are proof that anything will happen.
Re: Ask HN: How can I prepare for hard economic times?
#25Simulate various scenarios. The point is to have made some tough decisions ahead of time, while you still have some peace of mind. Because the decisions you make now will be of higher quality than the ones you make when you are under more stress.
How would you scale down your expenses (if at all?) if your real income decreased by 10 %? What about 50 %? How long could you survive if you end up with no income? What consumption can you reduce, and what can you cut out entirely? When will you start cutting some things out? How much longer will that make any savings last?
Similarly, how would you scale up the household income if your expenses increased? At what rate can you withdraw from any savings?
A secondary benefit of this exercise is that it lets you find the pain points and see if you can do something now to limit their consequences later. (Is there e.g. preventative maintenance you can do on a car or your teeth that would avoid a more expensive breakdown later?)
----
In contrast to many others, I don't place such a high value on having an exact day-to-day budget. Generally, both expenses and income follow a fairly statistically stable pattern, i.e. it averages out.
You do want to know what the averages are, of course, but you don't need to meticulously track daily expenses and income to learn that -- it's enough to go back in history and sample, say, every sixth day. Much less work for basically all the same benefits.
Re: Ask HN: How can I prepare for hard economic times?
#26Re: Ask HN: How can I prepare for hard economic times?
#27Leave the city.
I actually am doing this.
With Covid-lockdown and remote jobs, you can drastically cut your expense if you can move out of the city.
Re: Ask HN: How can I prepare for hard economic times?
#28Diversify you risks. As much as you can: ETFs, property, rents, commodities, crypto, private funds, currencies.
Genuine question. How does retail investor invest in commodities which are all future contracts?
Re: Ask HN: How can I prepare for hard economic times?
#29If you think its coming, move your money to hedges. But people have been predicting the next big crash for the last 5 years to no avail, so don’t be surprised if you miss out on major gains.
> predicting the next big crash for the last 5 years to no avail
It's precisely when no one (i.e mainstream media) is expecting, things go south. E.g 2008
However, ppl predicting crash will be right eventually because boom-bust happens in cycles. We just don't know when. Even a broken clock shows the right time twice a day.
Re: Ask HN: How can I prepare for hard economic times?
#30Leave the city.
I am thinking of establishing secondary rural location and investing in full off grid capability