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In addition to the comments about diversifying your skills and being frugal, you can start to rebalance your investment portfolio towards safer assets. This mea

In addition to the comments about diversifying your skills and being frugal, you can start to rebalance your investment portfolio towards safer assets. This means reducing exposure to volatile stocks (tech / biotech startups, emerging markets, crypto). This strategy will likely mean you see your friends and peers getting richer than you for a period of time, maybe even years. If you can deal with that as a price to pay for more financial security, then go for it If you really want to get aggressive you can get short exposure to risky stocks, but this is an incredibly risky strategy that rarely makes money and requires considerable expertise, research, and luck to make it work Overall your best bet is to not try to time the market, but if you are worried about a recession and have an investment portfolio with risky assets, maybe take some of that risk of the table understanding that you may sacrifice real financial gain

tapatio 9y ago
I ended up cashing out my stocks last month and moving the $ to another asset class. We'll see how I fare in 5 years.
michaelthiessen 9y ago
This only makes sense if you are planning on using that money in the near term (< 5 years from now). Like you say, timing the market is a bad idea, and that is what you are doing if you try to move to "safer" assets when you "think" the market will go bad. If you keep your assets in riskier stocks (which have higher long-term returns) for more than a decade, you may take a huge hit during a recession, but you'll come out the other end way ahead than if you try to time the market.
- aaavl2821 9y ago
  It depends on the stock. I'm referring more to stocks with a high chance of going to zero (like early stage biotech) than small cap high vol stocks There's a subtle difference between market timing and adjusting your portfolio as risk / reward changes. As an example, suppose you invest in a stock thinking it will give you a 40% return in one year. The stock does just that, and in a year it has risen 40%. At that higher price, the risk / reward is no longer the same as it was, and you will need to re-evaluate that investment. However, many people just hold on to these stocks because they made money without rationally re-evaluating their investment vs other options probably didnt make that as clear in the above in any event, investing strategy is based on personal goals. if your personal goal is to protect yourself more against a recession, selling risky assets is a good way to do so

tapatio 9y ago

I ended up cashing out my stocks last month and moving the $ to another asset class. We'll see how I fare in 5 years.

michaelthiessen 9y ago

This only makes sense if you are planning on using that money in the near term (< 5 years from now). Like you say, timing the market is a bad idea, and that is what you are doing if you try to move to "safer" assets when you "think" the market will go bad. If you keep your assets in riskier stocks (which have higher long-term returns) for more than a decade, you may take a huge hit during a recession, but you'll come out the other end way ahead than if you try to time the market.

aaavl2821 9y ago
It depends on the stock. I'm referring more to stocks with a high chance of going to zero (like early stage biotech) than small cap high vol stocks There's a subtle difference between market timing and adjusting your portfolio as risk / reward changes. As an example, suppose you invest in a stock thinking it will give you a 40% return in one year. The stock does just that, and in a year it has risen 40%. At that higher price, the risk / reward is no longer the same as it was, and you will need to re-evaluate that investment. However, many people just hold on to these stocks because they made money without rationally re-evaluating their investment vs other options probably didnt make that as clear in the above in any event, investing strategy is based on personal goals. if your personal goal is to protect yourself more against a recession, selling risky assets is a good way to do so