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

• livinglist 5y ago
  learn to increase your job security. it’s okay to learn all kind of stuff when you just graduated from college, but years later you should start focusing on few things and be really good at them. full stack engineer? what would make you stand out since there are so many boot camps for full stack engineer right now? software engineers specializing in fields that require specific knowledge which can only be obtained through serious education or years of experience, for example, those who works for semiconductor industry.
  • ostenning 5y ago
    Upskilling is always a good thing to do, but don't always expect a job out of it. The reality is most developer jobs are pretty bog standard webdeveloper roles. Webdev is in serious demand because thats where most companies need a developer. If you want an embedded developer job for example, arguably its more complex and closer to silicon, but there are significantly less jobs and from what I've seen webdev pays better anyway
• morelandjs 5y ago
  1. Plan to continue investing in index funds on a schedule 2. Watching myself for lifestyle creep. Would like enough reserves on hand that I’m not a cornered animal if I lose my job. 3. Building up separate savings (brokerage) for a house. Will pounce a little early if the housing bubble pops. 4. Applying some healthy skepticism toward “too good to be true” investment schemes 5. Unplugging from the click bait cycle to preserve my sanity 6. Staying heavily invested in tech stocks. They seem to just scale better over long time horizons, and I’m in it for the long haul.
  • mr337 5y ago
    > 2. Watching myself for lifestyle creep. I feel this all the time and haven't been able to quite formulate it. I like to think of this as convenience things like subscriptions or fancy items that we can live without.
    • MandieD 5y ago
      Keeping a separation between wants and needs can be trickier than it sounds. Avoiding a want becoming a need is important to preventing lifestyle creep. Over the top example: buying a travel trailer because you think it will save money on hotel rooms, and you have a large SUV already that you like. Now you have pushed your large SUV a step closer to a need, because without it, your rapidly-depreciating travel trailer is worthless to you. More HN-relevant: you have a bunch of streaming subscriptions because there are series on each of them that you can’t bear the thought of dropping in the middle. You slowly accumulated this collection of subscriptions as you started watching other, previous series that “everyone” was talking about.
  • pedalpete 5y ago
    I agree with most of these things. The one caveat is #1. Though index funds have historically been the best investment, the past does not equal the future. With EVERYONE getting the advice to invest in index funds, that pushes up the price of the stocks in the index. That's where all the competition is. I'm more a fan of Peter Lynch's philosophy of investing where you have an advantage. I'm not saying don't do index funds at all, and niehter is morelandjs, but just be conscious of this dynamic. My personal approach is to invest directly in industries that I know well, like tech, and to find funds to invest in industries that I think are promising but I don't know enough about to make good investment decisions, like ARK Genomics. And I'd add to the list "get some reputable crypto (BTC, ETH, ETC)".
    • tiahura 5y ago
      investing where you have an advantage. Do you spend 40 hours a week pouring over the 10-Q’s of any particular company, and its competitors and customers and suppliers, or directly engaging with upper management and bankers? Then why would you think you have any advantage over the insiders that do?
• opportune 5y ago
  Maybe you mean stock market correction, as a result of tightening of monetary policy? There is a difference between that and a true recession (which is a sustained contraction in GDP or real GDP). The Fed is very conservative lately. Monetary tightening is not likely to be drastic, Volcker era stuff unless things considerably worsen. Keep in mind tightening means reducing open market operations, not even stopping them or selling off the assets on the Fed balance sheet. We are still a long way from objectively tight policy, we are just not going to be as ridiculously loose as we were.
• AnEro 5y ago
  Know your budget and what you can and can't cut, I'm not the money manager in the house investment wise, but I do the purchasing around the house. I really think people will underestimate how much stuff you don't think about adds up, especially food wise if you're trying to be healthy or athletic. What are cheap enough proteins may just jump out of budget very quickly when you're eating what avg people consider 3-4x the amount of protein you should eat.
• gmiller123456 5y ago
  What evidence do you (or anyone) have to support that there is an incoming recession?
  • AnEro 5y ago
    I think it's fair regardless to try to prepare or ask how one would prepare for it, economic down turns happen it's a case of when not if. (Well, to be fair I'm extremely curious regardless.)
  • anm89 5y ago
    That's not how recessions, economics, or finance works. No one has evidence for any future events. People have theories and models when it comes to economic and financial forecasting, not evidence.
    • gmiller123456 5y ago
      Theories and models would count as evidence, just like it does for the weather. When someone talks about "the incoming rescission", it sounds an awful lot like they've read or heard something that convinced them one is on the way. It's worth asking them to share that with us.
      • anm89 5y ago
        It seems that you define the difference between "talking" and and "a theory" as the stuff you like is theories and therefore evidence and the stuff you dislike is talking therefore not evidence. you'll have to excuse me for not finding this compelling. A theory means people talking about what they think. Go read this thread. it's full of theories.
      • wnkrshm 5y ago
        People knowing the weather prediction doesn't change the weather though. In terms of non-linearity, economy is way harder to predict because of that.
        • 5y ago
• claudiulodro 5y ago
  I thought we're just getting out of a 2020 "recession"? Asset prices may not continue growing at the rate they have been, but there seems to be more demand for things/services/everything/etc. than ever at the moment, and the boomers are retiring en masse. Either way, my strategy is (and will continue to be) to have a modest payed-off house in a low cost-of-living area. Worst case, I could afford my bills doing e.g. one of the food delivery services (which is how I payed the bills for part of the 2008 recession).
• ilaksh 5y ago
  Recessions we know we can handle. In some ways we have been experiencing it within the last few years. People should acknowledge the possibility of worse - a depression and/or world war. The extreme currency problems that some countries have had actually can come to the United States if countries like Russia and China somehow gain some mindshare or advantage that causes a global shift in favor. And what would cause other countries to try to attack the status quo of the US global reserve currency? Severe economic recessions and/or strategic plans of their own countries. War could be the only choice the US has in order to defend it's control over the system (and therefore the currency value). Do I think these types of scenarios are necessarily likely or on a short time frame? No. But they can't be ruled out by anyone who has taken a history course. And it's those types of really severe circumstances where preparation can make the most difference.
• ohiovr 5y ago
  If it is true that supply lines are collapsing, then obtaining necessities may come closer to home. My town of Marion Ohio, with a fairly stable population of about 35k people, used to be more more industrialized. There was a factory to make pianos, steam engine powered tractor makers, small metal refiners, at one time there was a car factory, all at the turn of the 20th century. I'm not optimistic that all that will come back, but for things like foods, especially fermented food and drink will be in demand out stripping supply for a while. Even packaging, may be done more and more by cottage industries.
• paxys 5y ago
  "The stock market has correctly predicted nine of the past five recessions". A recession may be "incoming", or it may not. People have been sure of one every day since 2011. If you had listened then and liquidated all your investments/overly hedged your bets you would have missed out on the biggest bull market in history. The same could be true today. You should always have enough in savings to withstand 6-8 months of market turmoil and no income. To be conservative you can even increase that to 12 months. And keep your skills up to date so you have an advantage over the crowd in a bad job market. Beyond that, you don't really have to plan for any specific global economic disaster.
• rexstjohn 5y ago
  The problem with incoming recessions is if everyone expects them, then everyone knows they are coming, so they price it in, then they go “well, we priced that in, so now we can go back to business as usual.” It’s a reflexive system. Honestly- unless something has demonstrably “broken,” such as Lehman or AIG collapsing, then nothing systemically has actually changed. There is so much nonsense and speculative Austrian economic discourse every time the market hits a speed bump that you can’t actually rely on anything anyone says. Here is the real test for you: “have you seen any major institutions fail, implode or go under?” If not, we aren’t in trouble yet. The stock market and economy have incredible ability to make adjustments, rebalance and repair themselves when provided information and time. Yes the federal reserve will raise interest rates. But that doesn’t mean the entire economy will implode. It might just mean that resources are allocated from some sectors to others. This information is almost entirely priced in now. Unless more surprises occur (unexpected rate hikes or rate hikes happening too fast, or more rate hikes announced or institutions randomly imploding because debt burdens too high, or Russia invades Ukraine) we are probably ok. And then again; the federal reserve is not a passive actor. They might announce a rate increase, watch what happens, then change their minds if things correct too far. Suddenly your Peter Schiff scenario changes under your feet as the federal reserve unleashes the flood gates after allowing a calculated cooling off in speculation. So that’s it: Has anything failed yet? Any imploding banks? Did Russia invade? If not, we aren’t in crisis mode yet so just chill out and watch. If you are worried about a crisis; watch for institutional failure as your signal that real crisis has arrived. Everything else is just hot air.
  • techsin101 5y ago
    evergrande
  • sl8r 5y ago
    what major institution failed in the early stages of [1] the japan asset bubble or [2] the dot com bubble? Or farther back, the 1840s railroad mania or the south sea bubble? credit bubbles often pop when some institution can't cover its obligations, but asset bubbles don't seem to need such a failure — and can deflate on their own.
• nabaraz 5y ago
  Nothing, just keep dollar coast averaging VTI+VXUS. I do think economy is about to slow down rapidly but will there be a recession? It's anyone's guess.
• throwaway22032 5y ago
  Bought and rent out property, rebalancing my portfolio so that I have cash to buy things if there's an overcorrection.
• WestCoastJustin 5y ago
  Highly recommend Ray Dalio's new book: Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail [1]. If you want interview style he was on the Lex Fridman Podcast #251 too [2]. Takes a look at historical ups and downs and gives hard data without too much colour being added. [1] https://www.amazon.com/Changing-World-Order-Nations-Succeed/dp/1982160276 https://www.amazon.com/Changing-World-Order-Nations-Succeed/... [2] https://www.youtube.com/watch?v=TISMidxdZoc https://www.youtube.com/watch?v=TISMidxdZoc
  • eande 5y ago
    +1 That Book was eye opening and learned a lot in the big picture, which is sometimes hard to see.
• onemoresoop 5y ago
  Learn to have fun without spending much money, learn to cook and prepare food so as to lower food expenses. Time to bring hobbies and things you always planned to learn up in plane one and perhaps join clubs to replace expensive social interactions with more wholesome and oldschool ways of having fun that costs next to nothing.
• poorbutdebtfree 5y ago
  You'll be fine if you keep your head. I'm 41 years old. When I was 23 years old in 2004, my first full time job was as a software quality assurance engineer, and with that salary I bought a 2 bedroom house in an "undesirable" suburb right outside of a major population center. During the 2008-2010 recession I kicked myself everyday for not waiting to buy when I watched my equity go inverse by at least 33%. Today, a decade later, I have 3 kids, and this suburb has become a haven for young families with professional incomes. During all this time I very slowly built a 3rd bedroom and 2nd bathroom myself with nothing but 19.2v Craftsman tools. The building inspector was impressed. There's less than 5 years left on my mortgage.
  • syspec 5y ago
    Great actionable advice
• Terry_Roll 5y ago
  I think the Ukraine crisis is an attempt to get the oil price back up to pre covid19 price levels because its still too low, even Putin needs oil at $50/barrel + inflation since mid 00's when that figure was banded about. I think it can become a self fulfilling prophecy, recessions dont stop people spending, you all need to eat/sleep but if the fear gets a grip, do more selling, go where there is no recession which could be abroad or across country, find out what companies profit massively and target their customers. Stock markets are good places to look for the most profitable. There is plenty of money out there for everyone, its just not in your pocket! To offset fear with customers, offer fixed term contracts, banks love contracts on paper like that, it helps for taking on more debt and if the inevitable occurs just make sure you go out with a massive bang where the banks have no chance of recovering the money. Also worth diversifying, any new business or income streams can always be sold off in the future, pay attention to the news, demographics, find out where the money is. Alot of boomers have assets, younger generations dont, cater for the needs of those with money. I dont think I've missed anything?
  • kylehotchkiss 5y ago
    I never thought of the Ukraine thing being about oil prices but that’s a really interesting idea. USA has done plenty of unsavory things for oil in the past too, maybe more towards lowering the prices, but the world revolves around oil
• d13 5y ago
  I’m moving all my cash into Ether, which is a hedge against inflation, and very likely under valued by about 10x: https://docs.google.com/spreadsheets/u/0/d/1-0o-KePU8Pny4iQRw4xJ1EprHBdqOjAz2YoF5yj0DzM/htmlview#gid=0 https://docs.google.com/spreadsheets/u/0/d/1-0o-KePU8Pny4iQR...
  • throwawayffffas 5y ago
    I am not going to comment on the under valued bit, it could be true for all I know. My 2 cents, It appears that ether along with the other cryptocurrencies are behaving like speculative assets, move in the same general direction as stocks do. Thus I think cryptocurrencies make a bad recession hedge. Additionally the inflation seems to me to be driven by the covid-19 crash recovery. The fear in the markets again seems to me to be that measures to contain inflation are going to harm the recovery and put us in a recession. As such in case the recession does come, I would expect it to come along with lower inflation.
  • culopatin 5y ago
    How’s eth safer in a scenario where people need cash to compensate for the potential income slowdown and start selling their holdings? Wouldn’t all that supply of people selling kill the value of it?
• zriha 5y ago
  First, incoming recession is happening right now, so there is no dilemma, will it happen. Second, let me answer your questions: - What do you anticipate? It depends on geopolitical situation, if Ukraine become a crisis center, it will be much worst for us in the Europe (I live in Croatia, EU member state). We are small 3rd world country in Europe, heavily depending on others recourse, so the first strike will be LNG prices, and yes, gasoline prices. So, I anticipate chaos. - Do you have plans incase you get laid off? I have some savings, I can survive until the end of this year with no income and selling my car. Plan is to work whatever is needed to survive. - Savings? If so for how long? As I said, I always have at least 1 year in advance for surviving. Spending side is also adjusted to the income side. - Are you sitting on an inflation hedge? I would say. - What business plans may thrive in a recession? Any plan that finds the sweet spot of USP. I am economist, not a dev, so, for your business to survive in times of recession, sometimes a good plan is to do the opposite, if you can, this can be a investment for the future. For example, car prices are going high, and you are selling used cars. You know people are getting less for their money, so you have a whole lot of cars siting in the yard, not selling. You could easily drop your maring to bear minimum, just to start selling, and you start driving revenue. What is here much more important, if all in your industry, start to rise prices, if start lowering, you will win on the market.
• fbrncci 5y ago
  I have prepared by networking and making sure that I can work remotely. Spending a lot of time on refining my skills, and making sure I get noticed. I'll also be moving to SEA very soon, where if its absolutely necessary could live spending 1/8th of my current salary. However, more reasonably, 1/4th of my salary spend on base necessities and food is probably what my budget boils down to. In case I do lose my job, I'd have about 5-10 years in savings. If I'd stay where I am now, I am not comfortable in saying that the same amount would even carry me to 2 or 3 years. Not counting emergencies. Seeing prices rising everywhere is a pretty scary sight. I earn a decent amount of money, but I can't buy a house, and renting an apartment is so expensive that I would need to look for another job, with a higher salary first. Then I am not even addressing the energy costs or the food prices. It feels like such a hopeless situation. Moving somewhere "poor" (excuse me for using that word), is what feels the easiest way to offset any possible inflation in the short/medium term. In 5-10 years from now, I will move back with savings; unless of course I have grown too fond of SEA
• kbreezy 5y ago
  Yes I anticipate a large recession upcoming. My plans for getting laid off include a long sabbatical until the political situation becomes less tenuous (I'm not vaccinated and have no plans to do so, I'm not going to wrangle with some HR chick over this either). I have saved enough for about a year, if I'm not working or earning at all, I wish I had a bit more and will for as long as I'm employed, but don't anticipate that to last much longer. This recession is a bit different than others; as the culture has devolved into factions so badly; however I would wager that the same businesses that performed well during '09-12 will perform well now.
• bcrl 5y ago
  My company has >$60k/month in recurring revenue from our FTTH network. If things get tight, we can just stop expanding and coast instead. I am not worried, as people are not likely to give up their internet when they're stuck at home. We could even cut prices to help our customers through the recession if needed. ISPs have the ultimate in buy low, sell high once the physical assets are paid for.