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If you are sure about the recession and expect the stock market to crash, you could short it. Short it directly, or buy a short ETF, or buy put options
by benibela 4y ago
If you are sure about the recession and expect the stock market to crash, you could short it.
Short it directly, or buy a short ETF, or buy put options
- hnfong 4y agoThere are additional risks associated with shorting stocks, for example: - When you buy a stock normally you can basically hold it indefinitely even when the price tanks. When you short a stock and it goes up, at some point your broker will have to force you to recall your position and you'll have to realize your losses - When you buy a stock normally the maximum amount you can lose is the original investment amount. When shorting a stock, before a forced recall, in theory the downside is unlimited (and the upside is limited). - stonks go up (in markets that are generally doing fine), so in general it's not a good idea to keep a short position on markets (unless you believe the country in question is trending towards destruction). A recession may come but stocks don't necessarily have to reflect the actual economic conditions in the short term. In general, I'd say use it sparingly. Probably not a sound "investing strategy" but more of a short to mid term speculation tool, or a tool for hedging long positions.