Recession coming (?) any change in investments?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Topic Author
Mrxyz
Posts: 690
Joined: Wed Feb 29, 2012 6:12 am

Recession coming (?) any change in investments?

Post by Mrxyz » Fri May 08, 2020 3:25 pm

Hi all,
So based on many indicators (e.g. unemployment rate), a recession is coming. So does this mean there needs to be any change in investments?
I follow 3 fund portfolio with around 60/40 stocks/bond ratio, and am 50 plus years old with around 5-7 more years before retirement. I have (larger than before) emergency fund, and 3 kids who have around 3/4th of their college education funds saved for. And I can provide any more information that is needed.

Is the 3 fund portfolio just fine through hail and fire and what not ........or does the upcoming retirement 'force' me to go towards more bond allocation ........or most importantly, does the possible upcoming recession change anything at all??? More CDs instead of bonds etc etc.

Suggestions?
Thanks!

(PS - let me edit this a little! So I have more free time - to read and read and read, and watch... so that got me thinking. But as usual, as in the past, every single time I had the urge to make any changes, I place a posting like this, and I simply stop messing with what is a stable, SWAN asset allocation of 3 fund portfolio. Thanks for reading!)
Last edited by Mrxyz on Fri May 08, 2020 3:38 pm, edited 1 time in total.

User avatar
tvubpwcisla
Posts: 517
Joined: Sat Nov 09, 2019 10:09 am

Re: Recession coming (?) any change in investments?

Post by tvubpwcisla » Fri May 08, 2020 3:28 pm

That would be really nice for purchasing at a discount. Most of the money is made during recessions so many would welcome that. What comes after a recession...a HUGE recovery! Stay positive and keep investing for generations to come.
Stay invested my friends.

lakpr
Posts: 5405
Joined: Fri Mar 18, 2011 9:59 am

Re: Recession coming (?) any change in investments?

Post by lakpr » Fri May 08, 2020 3:34 pm

A large emergency fund, upcoming college expenses almost paid for (assuming the shortfall can be cash-flow'ed), and a 60:40 portfolio ...

Sir, I would say you are well set. Just stay the course with that allocation and you will be just fine! Even if a recession arrives, just rebalance your overall portfolio back to 60:40 and you will be well served in the recovery.

BV3273
Posts: 557
Joined: Mon Oct 19, 2015 7:20 pm

Re: Recession coming (?) any change in investments?

Post by BV3273 » Fri May 08, 2020 3:40 pm

Sounds solid to me. How close are you to your retirement number?

KlangFool
Posts: 16672
Joined: Sat Oct 11, 2008 12:35 pm

Re: Recession coming (?) any change in investments?

Post by KlangFool » Fri May 08, 2020 3:43 pm

Mrxyz wrote:
Fri May 08, 2020 3:25 pm
Hi all,
So based on many indicators (e.g. unemployment rate), a recession is coming. So does this mean there needs to be any change in investments?
I follow 3 fund portfolio with around 60/40 stocks/bond ratio, and am 50 plus years old with around 5-7 more years before retirement. I have (larger than before) emergency fund, and 3 kids who have around 3/4th of their college education funds saved for. And I can provide any more information that is needed.

Is the 3 fund portfolio just fine through hail and fire and what not ........or does the upcoming retirement 'force' me to go towards more bond allocation ........or most importantly, does the possible upcoming recession change anything at all??? More CDs instead of bonds etc etc.

Suggestions?
Thanks!
Mrxyz,

<< I have (larger than before) emergency fund, >>

This has no meaning. How many months of expense is it?

<<3 kids who have around 3/4th of their college education funds saved for. >>

How old are the kids?

A) If you are unemployed for more than 2 years and the stock market drops 50%, how much money can you lose?

B) If you are unemployed for 5 years and the stock market drops 50%, how much money can you lose?

I am prepared for 5 years of unemployed/recession/market downturn. I am prepared to outlast most people. What is your number?

1) If you are unemployed, how long before you need to sell your stock at a loss?

2) If you are unemployed, how long before you run out of money?

Do the calculation for (1) and (2). Are you satisfied with the answer? Can you "Sleep Well At Night' (SWAN) with those answers? If not, then, you need to improve your preparation.

KlangFool

Miriam2
Posts: 3010
Joined: Fri Nov 14, 2014 11:51 am

Re: Recession coming (?) any change in investments?

Post by Miriam2 » Fri May 08, 2020 3:59 pm

KlangFool wrote:
<< I have (larger than before) emergency fund, >>

This has no meaning. How many months of expense is it?

<<3 kids who have around 3/4th of their college education funds saved for. >>

How old are the kids?

A) If you are unemployed for more than 2 years and the stock market drops 50%, how much money can you lose?

B) If you are unemployed for 5 years and the stock market drops 50%, how much money can you lose?

I am prepared for 5 years of unemployed/recession/market downturn. I am prepared to outlast most people. What is your number?

1) If you are unemployed, how long before you need to sell your stock at a loss?

2) If you are unemployed, how long before you run out of money?

Do the calculation for (1) and (2). Are you satisfied with the answer? Can you "Sleep Well At Night' (SWAN) with those answers? If not, then, you need to improve your preparation.

KlangFool
Klang - serious Qs that merit serious thought and attention. Thank you for your very important - no, your critical - suggestions.

KlangFool
Posts: 16672
Joined: Sat Oct 11, 2008 12:35 pm

Re: Recession coming (?) any change in investments?

Post by KlangFool » Fri May 08, 2020 4:25 pm

Miriam2 wrote:
Fri May 08, 2020 3:59 pm
KlangFool wrote:
<< I have (larger than before) emergency fund, >>

This has no meaning. How many months of expense is it?

<<3 kids who have around 3/4th of their college education funds saved for. >>

How old are the kids?

A) If you are unemployed for more than 2 years and the stock market drops 50%, how much money can you lose?

B) If you are unemployed for 5 years and the stock market drops 50%, how much money can you lose?

I am prepared for 5 years of unemployed/recession/market downturn. I am prepared to outlast most people. What is your number?

1) If you are unemployed, how long before you need to sell your stock at a loss?

2) If you are unemployed, how long before you run out of money?

Do the calculation for (1) and (2). Are you satisfied with the answer? Can you "Sleep Well At Night' (SWAN) with those answers? If not, then, you need to improve your preparation.

KlangFool
Klang - serious Qs that merit serious thought and attention. Thank you for your very important - no, your critical - suggestions.
Thanks.

KlangFool

Dottie57
Posts: 8675
Joined: Thu May 19, 2016 5:43 pm
Location: Earth Northern Hemisphere

Re: Recession coming (?) any change in investments?

Post by Dottie57 » Fri May 08, 2020 4:46 pm

I did well during the Great Recession by investing at my chosen allocation.

TheDDC
Posts: 978
Joined: Mon Jan 08, 2018 11:11 am

Re: Recession coming (?) any change in investments?

Post by TheDDC » Fri May 08, 2020 4:59 pm

Be prepared to deploy the rest of your cash into equities when we hit bottom. Please tell us when that is, though.

-TheDDC
Rules to wealth building: 90-100% VTSAX piled high and deep, 0-10% VIGAX tilt, 0% given away to banks, minimize amount given to medical-industrial complex

Topic Author
Mrxyz
Posts: 690
Joined: Wed Feb 29, 2012 6:12 am

Re: Recession coming (?) any change in investments?

Post by Mrxyz » Fri May 08, 2020 8:41 pm

TheDDC wrote:
Fri May 08, 2020 4:59 pm
Be prepared to deploy the rest of your cash into equities when we hit bottom. Please tell us when that is, though.

-TheDDC
I have no idea when we will / have hit bottom. That is speculation and I do not know the answer.

User avatar
AerialWombat
Posts: 1504
Joined: Tue May 29, 2018 1:07 pm
Location: Cash Canyon / Cashville

Re: Recession coming (?) any change in investments?

Post by AerialWombat » Fri May 08, 2020 8:46 pm

.....
Last edited by AerialWombat on Sun May 17, 2020 2:49 pm, edited 1 time in total.

User avatar
tvubpwcisla
Posts: 517
Joined: Sat Nov 09, 2019 10:09 am

Re: Recession coming (?) any change in investments?

Post by tvubpwcisla » Fri May 08, 2020 8:46 pm

"If you have trouble imagining a 20% loss in the stock market, you shouldn't be in stocks." -Bogle

:moneybag
Stay invested my friends.

Topic Author
Mrxyz
Posts: 690
Joined: Wed Feb 29, 2012 6:12 am

Re: Recession coming (?) any change in investments?

Post by Mrxyz » Fri May 08, 2020 8:51 pm

KlangFool wrote:
Fri May 08, 2020 3:43 pm
Mrxyz wrote:
Fri May 08, 2020 3:25 pm
Hi all,
So based on many indicators (e.g. unemployment rate), a recession is coming. So does this mean there needs to be any change in investments?
I follow 3 fund portfolio with around 60/40 stocks/bond ratio, and am 50 plus years old with around 5-7 more years before retirement. I have (larger than before) emergency fund, and 3 kids who have around 3/4th of their college education funds saved for. And I can provide any more information that is needed.

Is the 3 fund portfolio just fine through hail and fire and what not ........or does the upcoming retirement 'force' me to go towards more bond allocation ........or most importantly, does the possible upcoming recession change anything at all??? More CDs instead of bonds etc etc.

Suggestions?
Thanks!
Mrxyz,



My replies are in green:



<< I have (larger than before) emergency fund, >>

This has no meaning. How many months of expense is it?

I have around 12 months of expenses instead of 6 months worth last year.

<<3 kids who have around 3/4th of their college education funds saved for. >>

How old are the kids?

13,15, 18 (this one going to college this year )

A) If you are unemployed for more than 2 years and the stock market drops 50%, how much money can you lose?

I have around 2.7M saved which is enough for retirement as my expenses are low (50G/year), but future medical care expenses are tricky to figure out. With a 60/40 portfolio - and a 50% market drop, I will lose networth/value - based on ;

https://personal.vanguard.com/us/insigh ... llocations


and

https://www.bogleheads.org/wiki/Asset_allocation


B) If you are unemployed for 5 years and the stock market drops 50%, how much money can you lose?

I am prepared for 5 years of unemployed/recession/market downturn. I am prepared to outlast most people. What is your number?

Same here, I can hold tight for longer than 5 years based on savings alone, not including SS.

1) If you are unemployed, how long before you need to sell your stock at a loss?

Not likely to sell anything for at least a year

2) If you are unemployed, how long before you run out of money?

Again, this would be around 20 years? Depends on expenses and the main one I cannot figure out are medical expenses.

Do the calculation for (1) and (2). Are you satisfied with the answer? Can you "Sleep Well At Night' (SWAN) with those answers? If not, then, you need to improve your preparation.

KlangFool

KlangFool
Posts: 16672
Joined: Sat Oct 11, 2008 12:35 pm

Re: Recession coming (?) any change in investments?

Post by KlangFool » Fri May 08, 2020 8:55 pm

Mrxyz wrote:
Fri May 08, 2020 8:51 pm
KlangFool wrote:
Fri May 08, 2020 3:43 pm
Mrxyz wrote:
Fri May 08, 2020 3:25 pm
Hi all,
So based on many indicators (e.g. unemployment rate), a recession is coming. So does this mean there needs to be any change in investments?
I follow 3 fund portfolio with around 60/40 stocks/bond ratio, and am 50 plus years old with around 5-7 more years before retirement. I have (larger than before) emergency fund, and 3 kids who have around 3/4th of their college education funds saved for. And I can provide any more information that is needed.

Is the 3 fund portfolio just fine through hail and fire and what not ........or does the upcoming retirement 'force' me to go towards more bond allocation ........or most importantly, does the possible upcoming recession change anything at all??? More CDs instead of bonds etc etc.

Suggestions?
Thanks!
Mrxyz,



My replies are in green:



<< I have (larger than before) emergency fund, >>

This has no meaning. How many months of expense is it?

I have around 12 months of expenses instead of 6 months worth last year.

<<3 kids who have around 3/4th of their college education funds saved for. >>

How old are the kids?

13,15, 18 (this one going to college this year )

A) If you are unemployed for more than 2 years and the stock market drops 50%, how much money can you lose?

I have around 2.7M saved which is enough for retirement as my expenses are low (50G/year), but future medical care expenses are tricky to figure out. With a 60/40 portfolio - and a 50% market drop, I will lose networth/value - based on ;

https://personal.vanguard.com/us/insigh ... llocations


and

https://www.bogleheads.org/wiki/Asset_allocation


B) If you are unemployed for 5 years and the stock market drops 50%, how much money can you lose?

I am prepared for 5 years of unemployed/recession/market downturn. I am prepared to outlast most people. What is your number?

Same here, I can hold tight for longer than 5 years based on savings alone, not including SS.

1) If you are unemployed, how long before you need to sell your stock at a loss?

Not likely to sell anything for at least a year

2) If you are unemployed, how long before you run out of money?

Again, this would be around 20 years? Depends on expenses and the main one I cannot figure out are medical expenses.

Do the calculation for (1) and (2). Are you satisfied with the answer? Can you "Sleep Well At Night' (SWAN) with those answers? If not, then, you need to improve your preparation.

KlangFool
More questions:

Does the 2.7M include or exclude the college education expenses?

KlangFool

User avatar
greg24
Posts: 3895
Joined: Tue Feb 20, 2007 10:34 am

Re: Recession coming (?) any change in investments?

Post by greg24 » Fri May 08, 2020 8:56 pm

A recession is guaranteed. The question is "how bad?"

Either way, you have a very good plan in place.

:sharebeer

Topic Author
Mrxyz
Posts: 690
Joined: Wed Feb 29, 2012 6:12 am

Re: Recession coming (?) any change in investments?

Post by Mrxyz » Fri May 08, 2020 8:57 pm

KlangFool wrote:
Fri May 08, 2020 8:55 pm
Mrxyz wrote:
Fri May 08, 2020 8:51 pm
KlangFool wrote:
Fri May 08, 2020 3:43 pm
Mrxyz wrote:
Fri May 08, 2020 3:25 pm
Hi all,
So based on many indicators (e.g. unemployment rate), a recession is coming. So does this mean there needs to be any change in investments?
I follow 3 fund portfolio with around 60/40 stocks/bond ratio, and am 50 plus years old with around 5-7 more years before retirement. I have (larger than before) emergency fund, and 3 kids who have around 3/4th of their college education funds saved for. And I can provide any more information that is needed.

Is the 3 fund portfolio just fine through hail and fire and what not ........or does the upcoming retirement 'force' me to go towards more bond allocation ........or most importantly, does the possible upcoming recession change anything at all??? More CDs instead of bonds etc etc.

Suggestions?
Thanks!
Mrxyz,



My replies are in green:



<< I have (larger than before) emergency fund, >>

This has no meaning. How many months of expense is it?

I have around 12 months of expenses instead of 6 months worth last year.

<<3 kids who have around 3/4th of their college education funds saved for. >>

How old are the kids?

13,15, 18 (this one going to college this year )

A) If you are unemployed for more than 2 years and the stock market drops 50%, how much money can you lose?

I have around 2.7M saved which is enough for retirement as my expenses are low (50G/year), but future medical care expenses are tricky to figure out. With a 60/40 portfolio - and a 50% market drop, I will lose networth/value - based on ;

https://personal.vanguard.com/us/insigh ... llocations


and

https://www.bogleheads.org/wiki/Asset_allocation


B) If you are unemployed for 5 years and the stock market drops 50%, how much money can you lose?

I am prepared for 5 years of unemployed/recession/market downturn. I am prepared to outlast most people. What is your number?

Same here, I can hold tight for longer than 5 years based on savings alone, not including SS.

1) If you are unemployed, how long before you need to sell your stock at a loss?

Not likely to sell anything for at least a year

2) If you are unemployed, how long before you run out of money?

Again, this would be around 20 years? Depends on expenses and the main one I cannot figure out are medical expenses.

Do the calculation for (1) and (2). Are you satisfied with the answer? Can you "Sleep Well At Night' (SWAN) with those answers? If not, then, you need to improve your preparation.

KlangFool
More questions:

Does the 2.7M include or exclude the college education expenses?

KlangFool
It does not include 529 plans, cars, house (paid for) or any other assets. And we have no other debts.

KlangFool
Posts: 16672
Joined: Sat Oct 11, 2008 12:35 pm

Re: Recession coming (?) any change in investments?

Post by KlangFool » Fri May 08, 2020 9:01 pm

Mrxyz wrote:
Fri May 08, 2020 8:57 pm
KlangFool wrote:
Fri May 08, 2020 8:55 pm
Mrxyz wrote:
Fri May 08, 2020 8:51 pm
KlangFool wrote:
Fri May 08, 2020 3:43 pm
Mrxyz wrote:
Fri May 08, 2020 3:25 pm
Hi all,
So based on many indicators (e.g. unemployment rate), a recession is coming. So does this mean there needs to be any change in investments?
I follow 3 fund portfolio with around 60/40 stocks/bond ratio, and am 50 plus years old with around 5-7 more years before retirement. I have (larger than before) emergency fund, and 3 kids who have around 3/4th of their college education funds saved for. And I can provide any more information that is needed.

Is the 3 fund portfolio just fine through hail and fire and what not ........or does the upcoming retirement 'force' me to go towards more bond allocation ........or most importantly, does the possible upcoming recession change anything at all??? More CDs instead of bonds etc etc.

Suggestions?
Thanks!
Mrxyz,



My replies are in green:



<< I have (larger than before) emergency fund, >>

This has no meaning. How many months of expense is it?

I have around 12 months of expenses instead of 6 months worth last year.

<<3 kids who have around 3/4th of their college education funds saved for. >>

How old are the kids?

13,15, 18 (this one going to college this year )

A) If you are unemployed for more than 2 years and the stock market drops 50%, how much money can you lose?

I have around 2.7M saved which is enough for retirement as my expenses are low (50G/year), but future medical care expenses are tricky to figure out. With a 60/40 portfolio - and a 50% market drop, I will lose networth/value - based on ;

https://personal.vanguard.com/us/insigh ... llocations


and

https://www.bogleheads.org/wiki/Asset_allocation


B) If you are unemployed for 5 years and the stock market drops 50%, how much money can you lose?

I am prepared for 5 years of unemployed/recession/market downturn. I am prepared to outlast most people. What is your number?

Same here, I can hold tight for longer than 5 years based on savings alone, not including SS.

1) If you are unemployed, how long before you need to sell your stock at a loss?

Not likely to sell anything for at least a year

2) If you are unemployed, how long before you run out of money?

Again, this would be around 20 years? Depends on expenses and the main one I cannot figure out are medical expenses.

Do the calculation for (1) and (2). Are you satisfied with the answer? Can you "Sleep Well At Night' (SWAN) with those answers? If not, then, you need to improve your preparation.

KlangFool
More questions:

Does the 2.7M include or exclude the college education expenses?

KlangFool
It does not include 529 plans, cars, house (paid for) or any other assets. And we have no other debts.
Then, you are fine. However, if I am you, I would increase the EF to 2 years. And, I would put 1% of the portfolio into physical Gold and Silver. You can afford this as insurance for hyperinflation.

KlangFool

Topic Author
Mrxyz
Posts: 690
Joined: Wed Feb 29, 2012 6:12 am

Re: Recession coming (?) any change in investments?

Post by Mrxyz » Fri May 08, 2020 9:06 pm

KlangFool wrote:
Fri May 08, 2020 9:01 pm
Mrxyz wrote:
Fri May 08, 2020 8:57 pm
KlangFool wrote:
Fri May 08, 2020 8:55 pm
Mrxyz wrote:
Fri May 08, 2020 8:51 pm
KlangFool wrote:
Fri May 08, 2020 3:43 pm


Mrxyz,



My replies are in green:



<< I have (larger than before) emergency fund, >>

This has no meaning. How many months of expense is it?

I have around 12 months of expenses instead of 6 months worth last year.

<<3 kids who have around 3/4th of their college education funds saved for. >>

How old are the kids?

13,15, 18 (this one going to college this year )

A) If you are unemployed for more than 2 years and the stock market drops 50%, how much money can you lose?

I have around 2.7M saved which is enough for retirement as my expenses are low (50G/year), but future medical care expenses are tricky to figure out. With a 60/40 portfolio - and a 50% market drop, I will lose networth/value - based on ;

https://personal.vanguard.com/us/insigh ... llocations


and

https://www.bogleheads.org/wiki/Asset_allocation


B) If you are unemployed for 5 years and the stock market drops 50%, how much money can you lose?

I am prepared for 5 years of unemployed/recession/market downturn. I am prepared to outlast most people. What is your number?

Same here, I can hold tight for longer than 5 years based on savings alone, not including SS.

1) If you are unemployed, how long before you need to sell your stock at a loss?

Not likely to sell anything for at least a year

2) If you are unemployed, how long before you run out of money?

Again, this would be around 20 years? Depends on expenses and the main one I cannot figure out are medical expenses.

Do the calculation for (1) and (2). Are you satisfied with the answer? Can you "Sleep Well At Night' (SWAN) with those answers? If not, then, you need to improve your preparation.

KlangFool
More questions:

Does the 2.7M include or exclude the college education expenses?

KlangFool
It does not include 529 plans, cars, house (paid for) or any other assets. And we have no other debts.
Then, you are fine. However, if I am you, I would increase the EF to 2 years. And, I would put 1% of the portfolio into physical Gold and Silver. You can afford this as insurance for hyperinflation.

KlangFool
Physical Gold/silver is new to me - how does one buy them? And presume one stores them in bank lockers or somewhere? (serious questions)
Thanks

KlangFool
Posts: 16672
Joined: Sat Oct 11, 2008 12:35 pm

Re: Recession coming (?) any change in investments?

Post by KlangFool » Fri May 08, 2020 9:26 pm

Mrxyz wrote:
Fri May 08, 2020 9:06 pm
KlangFool wrote:
Fri May 08, 2020 9:01 pm
Mrxyz wrote:
Fri May 08, 2020 8:57 pm
KlangFool wrote:
Fri May 08, 2020 8:55 pm
Mrxyz wrote:
Fri May 08, 2020 8:51 pm
More questions:

Does the 2.7M include or exclude the college education expenses?

KlangFool
It does not include 529 plans, cars, house (paid for) or any other assets. And we have no other debts.
Then, you are fine. However, if I am you, I would increase the EF to 2 years. And, I would put 1% of the portfolio into physical Gold and Silver. You can afford this as insurance for hyperinflation.

KlangFool
Physical Gold/silver is new to me - how does one buy them? And presume one stores them in bank lockers or somewhere? (serious questions)
Thanks
Mrxyz,

You can buy Gold and Silver coins and store them in a bank safe deposit box and/or safe at home. You can start a new topic and ask this specific question. Some other folks may have better suggestions.

KlangFoool

User avatar
HomerJ
Posts: 14774
Joined: Fri Jun 06, 2008 12:50 pm

Re: Recession coming (?) any change in investments?

Post by HomerJ » Fri May 08, 2020 10:34 pm

KlangFool wrote:
Fri May 08, 2020 3:43 pm
I am prepared for 5 years of unemployed/recession/market downturn. I am prepared to outlast most people. What is your number?
You are too old to only have 5x expenses in bonds/CDs/cash.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”

KlangFool
Posts: 16672
Joined: Sat Oct 11, 2008 12:35 pm

Re: Recession coming (?) any change in investments?

Post by KlangFool » Fri May 08, 2020 10:50 pm

HomerJ wrote:
Fri May 08, 2020 10:34 pm
KlangFool wrote:
Fri May 08, 2020 3:43 pm
I am prepared for 5 years of unemployed/recession/market downturn. I am prepared to outlast most people. What is your number?
You are too old to only have 5x expenses in bonds/CDs/cash.
Why do you assume that? I have more than that. I am planning to rebalance down to 5 years of fixed income with 2 years of EF.

KlangFool

User avatar
HomerJ
Posts: 14774
Joined: Fri Jun 06, 2008 12:50 pm

Re: Recession coming (?) any change in investments?

Post by HomerJ » Fri May 08, 2020 10:56 pm

KlangFool wrote:
Fri May 08, 2020 10:50 pm
HomerJ wrote:
Fri May 08, 2020 10:34 pm
KlangFool wrote:
Fri May 08, 2020 3:43 pm
I am prepared for 5 years of unemployed/recession/market downturn. I am prepared to outlast most people. What is your number?
You are too old to only have 5x expenses in bonds/CDs/cash.
Why do you assume that? I have more than that. I am planning to rebalance down to 5 years of fixed income with 2 years of EF.

KlangFool
I don't assume that. You explicitly stated that.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”

KlangFool
Posts: 16672
Joined: Sat Oct 11, 2008 12:35 pm

Re: Recession coming (?) any change in investments?

Post by KlangFool » Fri May 08, 2020 11:06 pm

HomerJ wrote:
Fri May 08, 2020 10:56 pm
KlangFool wrote:
Fri May 08, 2020 10:50 pm
HomerJ wrote:
Fri May 08, 2020 10:34 pm
KlangFool wrote:
Fri May 08, 2020 3:43 pm
I am prepared for 5 years of unemployed/recession/market downturn. I am prepared to outlast most people. What is your number?
You are too old to only have 5x expenses in bonds/CDs/cash.
Why do you assume that? I have more than that. I am planning to rebalance down to 5 years of fixed income with 2 years of EF.

KlangFool
I don't assume that. You explicitly stated that.
I am an engineer. I always build in safety margin for my plan.

KlangFool

bigskyguy
Posts: 141
Joined: Sat Jan 24, 2015 4:59 pm

Re: Recession coming (?) any change in investments?

Post by bigskyguy » Sat May 09, 2020 5:44 am

Bear in mind that the present economic scenario has NO parallel in our (I’m soon to be 71) lifetimes. None of us has dealt with a worldwide pandemic with the potential to kill 70,000,000 people (1% mortality, no sure vaccine yet available, no curative therapeutics yet available). None of us has seen an unemployment rate at 14.7% that could well exceed 20% next month. None of us has seen the Federal reserve effectively take near full control of financing the economy. None of us has seen the National debt at these levels. What I’m driving at is that we have no national experience of the nature, complexity, and magnitude of what has just transpired. So to base any of you decisions upon prior rules, guides, or experiences is simply extrapolating - this has been a truly Black Swan moment, and in my very humble opinion places any and all responses we might make based upon events of the last 100 years on very shaky ground. As a (former) scientist, basing decision making for an unparalleled event on rules or thinking that have no precedent is fraught with danger. We have, in my very humble opinion, entered a time of truly radical uncertainty. On one hand may be a passing event. On the other it may be an economic and societal black hole. And none of us has any real idea.
My only advice is be careful, and even that may not be of real help.

KlangFool
Posts: 16672
Joined: Sat Oct 11, 2008 12:35 pm

Re: Recession coming (?) any change in investments?

Post by KlangFool » Sat May 09, 2020 8:05 am

bigskyguy wrote:
Sat May 09, 2020 5:44 am

Bear in mind that the present economic scenario has NO parallel in our my (I’m soon to be 71) lifetimes. None of us has dealt with a worldwide pandemic with the potential to kill 70,000,000 people (1% mortality, no sure vaccine yet available, no curative therapeutics yet available). None of us has seen an unemployment rate at 14.7% that could well exceed 20% next month. None of us has seen the Federal reserve effectively take near full control of financing the economy. None of us has seen the National debt at these levels. What I’m driving at is that we have no national experience of the nature, complexity, and magnitude of what has just transpired. So to base any of you decisions upon prior rules, guides, or experiences is simply extrapolating - this has been a truly Black Swan moment, and in my very humble opinion places any and all responses we might make based upon events of the last 100 years on very shaky ground. As a (former) scientist, basing decision making for an unparalleled event on rules or thinking that have no precedent is fraught with danger. We have, in my very humble opinion, entered a time of truly radical uncertainty. On one hand may be a passing event. On the other it may be an economic and societal black hole. And none of us has any real idea.
My only advice is be careful, and even that may not be of real help.

bigskyguy,

1) My family history goes back 2,000+ years.

2) My grandparents came from a place with 800+ famines across 800+ years.

3) Personally, I have been through

Houston Oil Bust, Asian Currency Crisis, Telecom Bust, 2008/2009 recession.

SARS and so on.

The lesson is always the same.

1) Be prepared.

2) Diversification is a good thing.

3) People helping people. Friends and families matter.

KlangFool

User avatar
Sandtrap
Posts: 11035
Joined: Sat Nov 26, 2016 6:32 pm
Location: Hawaii No Ka Oi , N. Arizona

Re: Recession coming (?) any change in investments?

Post by Sandtrap » Sat May 09, 2020 8:14 am

Mrxyz wrote:
Fri May 08, 2020 3:25 pm
Hi all,
So based on many indicators (e.g. unemployment rate), a recession is coming. So does this mean there needs to be any change in investments?
I follow 3 fund portfolio with around 60/40 stocks/bond ratio, and am 50 plus years old with around 5-7 more years before retirement. I have (larger than before) emergency fund, and 3 kids who have around 3/4th of their college education funds saved for. And I can provide any more information that is needed.

Is the 3 fund portfolio just fine through hail and fire and what not ........or does the upcoming retirement 'force' me to go towards more bond allocation ........or most importantly, does the possible upcoming recession change anything at all??? More CDs instead of bonds etc etc.

Suggestions?
Thanks!

(PS - let me edit this a little! So I have more free time - to read and read and read, and watch... so that got me thinking. But as usual, as in the past, every single time I had the urge to make any changes, I place a posting like this, and I simply stop messing with what is a stable, SWAN asset allocation of 3 fund portfolio. Thanks for reading!)
Of concern for retirees:

Search the forum archives for:
Bond Tent
Sequence of Returns Risk (5-7 years prior to and after retiring)

Read:
W. Bernstein's missives on "Life Cycle Investing". in his book "Ages of the Investor

j :happy
Wiki Bogleheads Wiki: Everything You Need to Know

Call_Me_Op
Posts: 7878
Joined: Mon Sep 07, 2009 2:57 pm
Location: Milky Way

Re: Recession coming (?) any change in investments?

Post by Call_Me_Op » Sat May 09, 2020 8:45 am

Mrxyz wrote:
Fri May 08, 2020 3:25 pm
Hi all,
So based on many indicators (e.g. unemployment rate), a recession is coming.
Too late to capitalize on this well-known fact.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein

KlangFool
Posts: 16672
Joined: Sat Oct 11, 2008 12:35 pm

Re: Recession coming (?) any change in investments?

Post by KlangFool » Sat May 09, 2020 9:43 am

Call_Me_Op wrote:
Sat May 09, 2020 8:45 am
Mrxyz wrote:
Fri May 08, 2020 3:25 pm
Hi all,
So based on many indicators (e.g. unemployment rate), a recession is coming.
Too late to capitalize on this well-known fact.
It is not. 70+% of the unemployed believed that they could get their jobs back. There is still plenty of irrational exuberance.

KlangFool

bigskyguy
Posts: 141
Joined: Sat Jan 24, 2015 4:59 pm

Re: Recession coming (?) any change in investments?

Post by bigskyguy » Sat May 09, 2020 10:14 am

KlangFool wrote:
Sat May 09, 2020 8:05 am
bigskyguy wrote:
Sat May 09, 2020 5:44 am

Bear in mind that the present economic scenario has NO parallel in our my (I’m soon to be 71) lifetimes. None of us has dealt with a worldwide pandemic with the potential to kill 70,000,000 people (1% mortality, no sure vaccine yet available, no curative therapeutics yet available). None of us has seen an unemployment rate at 14.7% that could well exceed 20% next month. None of us has seen the Federal reserve effectively take near full control of financing the economy. None of us has seen the National debt at these levels. What I’m driving at is that we have no national experience of the nature, complexity, and magnitude of what has just transpired. So to base any of you decisions upon prior rules, guides, or experiences is simply extrapolating - this has been a truly Black Swan moment, and in my very humble opinion places any and all responses we might make based upon events of the last 100 years on very shaky ground. As a (former) scientist, basing decision making for an unparalleled event on rules or thinking that have no precedent is fraught with danger. We have, in my very humble opinion, entered a time of truly radical uncertainty. On one hand may be a passing event. On the other it may be an economic and societal black hole. And none of us has any real idea.
My only advice is be careful, and even that may not be of real help.

bigskyguy,

1) My family history goes back 2,000+ years.

2) My grandparents came from a place with 800+ famines across 800+ years.

3) Personally, I have been through

Houston Oil Bust, Asian Currency Crisis, Telecom Bust, 2008/2009 recession.

SARS and so on.

The lesson is always the same.

1) Be prepared.

2) Diversification is a good thing.

3) People helping people. Friends and families matter.

KlangFool
I get your 30000 foot view perspective. Let me explain mine. Economics and investing as a discipline is very young, and have built guides to our actions based upon experience and experimentation. In medicine, my chosen profession, we rely upon evidence based research to guide our clinical actions. We also are humble enough to realize that there are always outliers, events or results that are not consistent with our preconceptions. We consider those events random occurrences. My point is that what is today occurring has no precedent in our lifetimes, and may well not comply with the standard economic or financial "rules of engagement." Even John Maynard Keynes recognized that when situations change, he was ready and willing to change his perspective. This disruption may prove on a par, or even more severe, than what occurred in 1929, and markets did not fully recover for well more than a decade, requiring a world war. If that should be the case with our present disruption, even a 5 year emergency fund may not prove adequate, and diversification may not be a good thing. We may well be in uncharted territory. And I'm not sure how we prepare for that.

User avatar
ruralavalon
Posts: 18574
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Recession coming (?) any change in investments?

Post by ruralavalon » Sat May 09, 2020 10:14 am

Mrxyz wrote:
Fri May 08, 2020 3:25 pm
Hi all,
So based on many indicators (e.g. unemployment rate), a recession is coming. So does this mean there needs to be any change in investments?
I follow 3 fund portfolio with around 60/40 stocks/bond ratio, and am 50 plus years old with around 5-7 more years before retirement. I have (larger than before) emergency fund, and 3 kids who have around 3/4th of their college education funds saved for. And I can provide any more information that is needed.

Is the 3 fund portfolio just fine through hail and fire and what not ........or does the upcoming retirement 'force' me to go towards more bond allocation ........or most importantly, does the possible upcoming recession change anything at all??? More CDs instead of bonds etc etc.

Suggestions?
Thanks!

(PS - let me edit this a little! So I have more free time - to read and read and read, and watch... so that got me thinking. But as usual, as in the past, every single time I had the urge to make any changes, I place a posting like this, and I simply stop messing with what is a stable, SWAN asset allocation of 3 fund portfolio. Thanks for reading!)
Your 60/40 asset allocation is within the range of what is reasonable in my opinion. I do not see anything that needs to change.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

User avatar
midareff
Posts: 6946
Joined: Mon Nov 29, 2010 10:43 am
Location: Biscayne Bay, South Florida

Re: Recession coming (?) any change in investments?

Post by midareff » Sat May 09, 2020 10:20 am

I am in the process of doing a very un-Bogelish realignment of investments. I have moved some IT Tax-Ex (VWIUX) money to LT Tax-Ex (VWLUX) to capture an additional 39 bps of SEC yield per additional year of duration, which is a minor addition at 1.41 years of duration extra, without sacrificing quality. I also rolled some of the cash I harvested at the end of January back in to LT Tax-Ex for the 3% tax-exempt yield. All tax-ex distributions will now be taken to bank for spending along with the distributions of TSM there in taxable. All asset sales in taxable have been terminated.

With this years RMD cancelled I'm going to roll the balance of this year's remaining RMD (7 monthly draws) to my Roth which is tech fund concentrated and from which I do a 5.5% WR.... although that may cease this year too.... have to see how the flow goes, it is not necessary for lifestyle support currently and would just accumulate in our bank. I also change it to match Roth account balance as needed.

End on January and early February this year with the market hitting new highs and Covid in China in the news I harvested some equities back to bonds and cash to trim the bull's excess equities over allocation baseline.

Roth excluded I will not sell anything the rest of the year. Pension, SS and dividends will fund everything needed and some play money since luxo international travel and pricey toys are not on the horizon this year, and probably next. We are retired with risk factors and basically in hiding until there is a successful immunization vaccine available. Portfolio moved around some to support moderated lifestyle while selling almost nothing... dam we miss our favorite restaurants. Stay safe y'all.
Last edited by midareff on Sat May 09, 2020 10:27 am, edited 3 times in total.

User avatar
tvubpwcisla
Posts: 517
Joined: Sat Nov 09, 2019 10:09 am

Re: Recession coming (?) any change in investments?

Post by tvubpwcisla » Sat May 09, 2020 10:22 am

Mrxyz wrote:
Fri May 08, 2020 3:25 pm
Hi all,
So based on many indicators (e.g. unemployment rate), a recession is coming.
If they announce a cure for the virus today or next week, will that change anything?

It's difficult, but best to ignore these indicators and keep investing for future generations to come.

:moneybag
Stay invested my friends.

User avatar
midareff
Posts: 6946
Joined: Mon Nov 29, 2010 10:43 am
Location: Biscayne Bay, South Florida

Re: Recession coming (?) any change in investments?

Post by midareff » Sat May 09, 2020 10:25 am

tvubpwcisla wrote:
Sat May 09, 2020 10:22 am
Mrxyz wrote:
Fri May 08, 2020 3:25 pm
Hi all,
So based on many indicators (e.g. unemployment rate), a recession is coming.
If they announce a cure for the virus today or next week, will that change anything?

It's difficult, but best to ignore these indicators and keep investing for future generations to come.

:moneybag
Cure will not be announced today or next week...... that's for sure. Some of us are not interested in investing for future generations.

TheDDC
Posts: 978
Joined: Mon Jan 08, 2018 11:11 am

Re: Recession coming (?) any change in investments?

Post by TheDDC » Sat May 09, 2020 10:28 am

midareff wrote:
Sat May 09, 2020 10:25 am
tvubpwcisla wrote:
Sat May 09, 2020 10:22 am
Mrxyz wrote:
Fri May 08, 2020 3:25 pm
Hi all,
So based on many indicators (e.g. unemployment rate), a recession is coming.
If they announce a cure for the virus today or next week, will that change anything?

It's difficult, but best to ignore these indicators and keep investing for future generations to come.

:moneybag
Cure will not be announced today or next week...... that's for sure. Some of us are not interested in investing for future generations.
I’m investing for both current and future, personally. I am continuing to do what I’m doing now and investing new money: 40% VIGAX, 40% VTSAX, 20% International. Okay, I do have some cash for the EF. It is not quite “KlangProof” in that I could get by for two to three whole years with no income at all and not the five that he proposes.

Gold/silver is just silly and I don’t do that stuff. Plus, anything of monetary value should not be kept in a safe deposit box if your state has any sort of inheritance tax as the banker turns into “state snoop” in the case of a death and inventories all things in a safe deposit box. I have witnessed this twice with two separate family members.

-TheDDC

-TheDDC
Last edited by TheDDC on Sat May 09, 2020 10:31 am, edited 1 time in total.
Rules to wealth building: 90-100% VTSAX piled high and deep, 0-10% VIGAX tilt, 0% given away to banks, minimize amount given to medical-industrial complex

User avatar
tvubpwcisla
Posts: 517
Joined: Sat Nov 09, 2019 10:09 am

Re: Recession coming (?) any change in investments?

Post by tvubpwcisla » Sat May 09, 2020 10:29 am

midareff wrote:
Sat May 09, 2020 10:25 am
tvubpwcisla wrote:
Sat May 09, 2020 10:22 am
Mrxyz wrote:
Fri May 08, 2020 3:25 pm
Hi all,
So based on many indicators (e.g. unemployment rate), a recession is coming.
If they announce a cure for the virus today or next week, will that change anything?

It's difficult, but best to ignore these indicators and keep investing for future generations to come.

:moneybag
Cure will not be announced today or next week...... that's for sure. Some of us are not interested in investing for future generations.
No one knows when the cure will surface, but I have a feeling it is going to be pretty quick. We have great medicine, scientists, doctors, etc... I wouldn't bet against those folks. I agree not everyone invests for future generations, but a lot of investors do so they simply ignore the noise and keep buying.

:moneybag
Stay invested my friends.

User avatar
midareff
Posts: 6946
Joined: Mon Nov 29, 2010 10:43 am
Location: Biscayne Bay, South Florida

Re: Recession coming (?) any change in investments?

Post by midareff » Sat May 09, 2020 10:32 am

tvubpwcisla wrote:
Sat May 09, 2020 10:29 am
midareff wrote:
Sat May 09, 2020 10:25 am
tvubpwcisla wrote:
Sat May 09, 2020 10:22 am
Mrxyz wrote:
Fri May 08, 2020 3:25 pm
Hi all,
So based on many indicators (e.g. unemployment rate), a recession is coming.
If they announce a cure for the virus today or next week, will that change anything?

It's difficult, but best to ignore these indicators and keep investing for future generations to come.

:moneybag
Cure will not be announced today or next week...... that's for sure. Some of us are not interested in investing for future generations.
No one knows when the cure will surface, but I have a feeling it is going to be pretty quick. We have great medicine, scientists, doctors, etc... I wouldn't bet against those folks. I agree not everyone invests for future generations, but a lot of investors do so they simply ignore the noise and keep buying.

:moneybag
While I generally agree with you about investors buying ... but, some of us are retired and in decumulation rather than buyers and are optimizing our positions and structure based on our current station and needs in life. I'm not betting against our medical and research folks, there just is a timetable for testing... we/they want to make sure the Walking Dead doesn't live here.

User avatar
arcticpineapplecorp.
Posts: 5298
Joined: Tue Mar 06, 2012 9:22 pm

Re: Recession coming (?) any change in investments?

Post by arcticpineapplecorp. » Sat May 09, 2020 10:33 am

KlangFool wrote:
Fri May 08, 2020 9:01 pm
And, I would put 1% of the portfolio into physical Gold and Silver. You can afford this as insurance for hyperinflation.

KlangFool
Really? I see that "Gold Won't Protect You From Hyperinflation"
Claude Erb isn’t surprised that bolivar-denominated gold has failed to keep up with inflation. He is a former commodities and fixed income manager at TCW Group and the author, with Campbell Harvey, a Duke University finance professor, of a study that was circulated a few years ago by the National Bureau of Economic Research. They found that gold typically doesn’t maintain its purchasing power during a hyperinflation. In other words, its real price usually declines during such periods.

... As a result, gold's inflation-adjusted return should be roughly the same regardless of the currency in which gold is bought or sold...

“There is no reason to expect that the real return will be positive when a specific country experiences hyperinflation.”

Gold bugs object to this conclusion, often pointing to a book that has acquired near-Biblical status among gold’s true believers: The Golden Constant: The English and American Experience 1560-2007, by the late Roy Jastram, then a professor of business at the University of California, Berkeley, and originally published in the 1970s. Jastram found from his analysis of the historical record that gold is a decent inflation hedge over the long term.

But it’s crucial to understand that the long term for Jastram is much longer than any of our investment horizons. Erb’s and Harvey’s study reached a similar conclusion, since they also found that over very long periods—measured in many, many decades—gold does keep pace with inflation. Erb points out that for both Jastram as well as for his and Harvey’s study, “the short run was the next few years, and the long run was perhaps a century.”

To be sure, it’s always possible that—over the shorter term—gold will produce a positive real return during a period in which a country somewhere in the world experiences hyperinflation. But the crucial takeaway from Erb’s and Harvey’s study is that you can’t count on it.

If you’re looking for an investment that is guaranteed to keep pace with inflation, a better alternative to gold might be Treasury inflation-protected securities, or TIPS.

source: https://www.barrons.com/articles/gold-w ... 1534952739
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

KlangFool
Posts: 16672
Joined: Sat Oct 11, 2008 12:35 pm

Re: Recession coming (?) any change in investments?

Post by KlangFool » Sat May 09, 2020 10:38 am

arcticpineapplecorp. wrote:
Sat May 09, 2020 10:33 am
KlangFool wrote:
Fri May 08, 2020 9:01 pm
And, I would put 1% of the portfolio into physical Gold and Silver. You can afford this as insurance for hyperinflation.

KlangFool
Really? I see that "Gold Won't Protect You From Hyperinflation"

“There is no reason to expect that the real return will be positive when a specific country experiences hyperinflation.”


source: https://www.barrons.com/articles/gold-w ... 1534952739
1) Straight from your article. The person missed the point totally. The goal has nothing to do with whether the real return is positive. If we hit hyperinflation and you need some money to get out of the hyperinflated country, gold will do much better than almost everything else.

2) If all your other asset is worth close to zero due to hyperinflation, zero real return of Gold would sound pretty good by comparison.

KlangFool

User avatar
arcticpineapplecorp.
Posts: 5298
Joined: Tue Mar 06, 2012 9:22 pm

Re: Recession coming (?) any change in investments?

Post by arcticpineapplecorp. » Sat May 09, 2020 11:17 am

Mrxyz wrote:
Fri May 08, 2020 3:25 pm
Hi all,
So based on many indicators (e.g. unemployment rate), a recession is coming. So does this mean there needs to be any change in investments?
"a recession is coming"?
Perhaps we're already in one.

"many indicators"?
you list only one: unemployment rate.

"change in investments"?
you don't make changes to long term plans based on short term events. That's not investing, that's speculating.

I'm surprised you included a link to Vanguard's Portfolio Allocation Models (https://personal.vanguard.com/us/insigh ... llocations) but didn't notice that the all stock portfolio earned 10.1% per year since 1926.

So that means you didn't have to avoid all the bad stuff (starting with the Great Depression in 1929 and going through the 20% decline of 2018) to earn 10.1% per year since 1926. Buy and hold works. More people should try it sometime.

But everyone needs to take an amount of risk that they have the need, ability and willingness to take. Perhaps you have a lower risk tolerance than you previously believed. This is very common. People shouldn't take risk quizes when the market has gone up, they should take a risk quiz/assessment during the midst of a crisis to understand how risk tolerant they are/are not, which they often understimate.
Last edited by arcticpineapplecorp. on Sat May 09, 2020 11:22 am, edited 1 time in total.
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

User avatar
arcticpineapplecorp.
Posts: 5298
Joined: Tue Mar 06, 2012 9:22 pm

Re: Recession coming (?) any change in investments?

Post by arcticpineapplecorp. » Sat May 09, 2020 11:19 am

KlangFool wrote:
Sat May 09, 2020 10:38 am
arcticpineapplecorp. wrote:
Sat May 09, 2020 10:33 am
KlangFool wrote:
Fri May 08, 2020 9:01 pm
And, I would put 1% of the portfolio into physical Gold and Silver. You can afford this as insurance for hyperinflation.

KlangFool
Really? I see that "Gold Won't Protect You From Hyperinflation"

“There is no reason to expect that the real return will be positive when a specific country experiences hyperinflation.”


source: https://www.barrons.com/articles/gold-w ... 1534952739
1) Straight from your article. The person missed the point totally. The goal has nothing to do with whether the real return is positive. If we hit hyperinflation and you need some money to get out of the hyperinflated country, gold will do much better than almost everything else.

2) If all your other asset is worth close to zero due to hyperinflation, zero real return of Gold would sound pretty good by comparison.

KlangFool
your premise hinges on the fact that you can get out of the country. Because of the exchange rate, you might do fine in another country exchanging your gold, but if you can't get out of the country, you're exchanging your gold for worthless dollars (bolivars, or whatever currency).

Sometimes it's not easy to get out of a country when all hell is breaking loose. And just because you get out, doesn't mean you won't be sent back.

Don't forget you have to insure the gold, lest it gets lost/stolen. That's a cost that must be accounted for, but no one ever does.

I also don't think 1% is going to save your bacon. Might buy you some though.
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

KlangFool
Posts: 16672
Joined: Sat Oct 11, 2008 12:35 pm

Re: Recession coming (?) any change in investments?

Post by KlangFool » Sat May 09, 2020 11:31 am

arcticpineapplecorp. wrote:
Sat May 09, 2020 11:19 am

your premise hinges on the fact that you can get out of the country. Because of the exchange rate, you might do fine in another country exchanging your gold, but if you can't get out of the country, you're exchanging your gold for worthless dollars (bolivars, or whatever currency).

Sometimes it's not easy to get out of a country when all hell is breaking loose. And just because you get out, doesn't mean you won't be sent back.

Don't forget you have to insure the gold, lest it gets lost/stolen. That's a cost that must be accounted for, but no one ever does.

I also don't think 1% is going to save your bacon. Might buy you some though.
arcticpineapplecorp,

<<if you can't get out of the country, you're exchanging your gold for worthless dollars (bolivars, or whatever currency).>>

Versus not having anything to exchange.

<<Don't forget you have to insure the gold, lest it gets lost/stolen. >>

I can afford to lose 1%. Aka, no insurance is needed.

<<I also don't think 1% is going to save your bacon. Might buy you some though.>>

It is a risk versus reward. It is big enough to buy me something. It is small enough that even I don't use it, it won't matter.

My question is you what would you do instead?

Nothing and hope for the best?

KlangFool

P.S.: my 1% is about 10K to 15K.
Last edited by KlangFool on Sat May 09, 2020 11:34 am, edited 1 time in total.

User avatar
midareff
Posts: 6946
Joined: Mon Nov 29, 2010 10:43 am
Location: Biscayne Bay, South Florida

Re: Recession coming (?) any change in investments?

Post by midareff » Sat May 09, 2020 11:33 am

arcticpineapplecorp. wrote:
Sat May 09, 2020 10:33 am
KlangFool wrote:
Fri May 08, 2020 9:01 pm
And, I would put 1% of the portfolio into physical Gold and Silver. You can afford this as insurance for hyperinflation.

KlangFool

Klang... 1% of anything won't protect you from anything unless your portfolio is so absurdly large 1% would not matter anyway.

bigskyguy
Posts: 141
Joined: Sat Jan 24, 2015 4:59 pm

Re: Recession coming (?) any change in investments?

Post by bigskyguy » Sat May 09, 2020 1:01 pm

tvubpwcisla wrote:
Sat May 09, 2020 10:29 am
midareff wrote:
Sat May 09, 2020 10:25 am
tvubpwcisla wrote:
Sat May 09, 2020 10:22 am
Mrxyz wrote:
Fri May 08, 2020 3:25 pm
Hi all,
So based on many indicators (e.g. unemployment rate), a recession is coming.
If they announce a cure for the virus today or next week, will that change anything?

It's difficult, but best to ignore these indicators and keep investing for future generations to come.

:moneybag
Cure will not be announced today or next week...... that's for sure. Some of us are not interested in investing for future generations.
No one knows when the cure will surface, but I have a feeling it is going to be pretty quick. We have great medicine, scientists, doctors, etc... I wouldn't bet against those folks. I agree not everyone invests for future generations, but a lot of investors do so they simply ignore the noise and keep buying.

:moneybag
Consider the following. As of today nearly 80,000 fellow Americans have died from Covid-19. With a best guess estimate of a 1% mortality, that implies that 8,000,000 of us have been infected. Mid-2020 population of US estimate is 331,000,000, suggesting that leaves 323,000,000 uninfected.

Developing and perfecting a vaccine is complex, and not guaranteed (https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5518734/#). Once a vaccine is perfected, production must ramp up, and historically takes between 8-36 months. Once produced, it needs to be distributed AND administered to approximately 2/3's of the at risk population for effective herd immunity to occur, meaning the vaccination of approximately 200,000,000 Americans. So under the best of circumstances, herd immunity is years in the future.

Similarly, the time course of development and production of successful antivirals is measured in years, not months.

Absent either vaccine or antiviral, our only recourse is reducing human to human transmission, which means staying the course with social distancing and diminished human to human contact.

Any way you slice this, we are in this for the duration.

John Maynard Keynes once said that Markets can remain irrational longer than we can stay solvent. I suspect COVID-19 may stay virulent longer than markets can stay irrational.

RomeoMustDie
Posts: 165
Joined: Sat Mar 14, 2020 6:07 pm

Re: Recession coming (?) any change in investments?

Post by RomeoMustDie » Sat May 09, 2020 1:39 pm

KlangFool wrote:
Sat May 09, 2020 10:38 am
arcticpineapplecorp. wrote:
Sat May 09, 2020 10:33 am
KlangFool wrote:
Fri May 08, 2020 9:01 pm
And, I would put 1% of the portfolio into physical Gold and Silver. You can afford this as insurance for hyperinflation.

KlangFool
Really? I see that "Gold Won't Protect You From Hyperinflation"

“There is no reason to expect that the real return will be positive when a specific country experiences hyperinflation.”


source: https://www.barrons.com/articles/gold-w ... 1534952739
1) Straight from your article. The person missed the point totally. The goal has nothing to do with whether the real return is positive. If we hit hyperinflation and you need some money to get out of the hyperinflated country, gold will do much better than almost everything else.

2) If all your other asset is worth close to zero due to hyperinflation, zero real return of Gold would sound pretty good by comparison.

KlangFool
What about vs TIPS?

User avatar
tvubpwcisla
Posts: 517
Joined: Sat Nov 09, 2019 10:09 am

Re: Recession coming (?) any change in investments?

Post by tvubpwcisla » Sat May 09, 2020 1:55 pm

bigskyguy wrote:
Sat May 09, 2020 1:01 pm
tvubpwcisla wrote:
Sat May 09, 2020 10:29 am
midareff wrote:
Sat May 09, 2020 10:25 am
tvubpwcisla wrote:
Sat May 09, 2020 10:22 am
Mrxyz wrote:
Fri May 08, 2020 3:25 pm
Hi all,
So based on many indicators (e.g. unemployment rate), a recession is coming.
If they announce a cure for the virus today or next week, will that change anything?

It's difficult, but best to ignore these indicators and keep investing for future generations to come.

:moneybag
Cure will not be announced today or next week...... that's for sure. Some of us are not interested in investing for future generations.
No one knows when the cure will surface, but I have a feeling it is going to be pretty quick. We have great medicine, scientists, doctors, etc... I wouldn't bet against those folks. I agree not everyone invests for future generations, but a lot of investors do so they simply ignore the noise and keep buying.

:moneybag
Consider the following. As of today nearly 80,000 fellow Americans have died from Covid-19. With a best guess estimate of a 1% mortality, that implies that 8,000,000 of us have been infected. Mid-2020 population of US estimate is 331,000,000, suggesting that leaves 323,000,000 uninfected.

Developing and perfecting a vaccine is complex, and not guaranteed (https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5518734/#). Once a vaccine is perfected, production must ramp up, and historically takes between 8-36 months. Once produced, it needs to be distributed AND administered to approximately 2/3's of the at risk population for effective herd immunity to occur, meaning the vaccination of approximately 200,000,000 Americans. So under the best of circumstances, herd immunity is years in the future.

Similarly, the time course of development and production of successful antivirals is measured in years, not months.

Absent either vaccine or antiviral, our only recourse is reducing human to human transmission, which means staying the course with social distancing and diminished human to human contact.

Any way you slice this, we are in this for the duration.

John Maynard Keynes once said that Markets can remain irrational longer than we can stay solvent. I suspect COVID-19 may stay virulent longer than markets can stay irrational.
Thanks for sharing. When reading those stats it made me feel like I should no longer invest in the financial markets. To be honest, I really don't have any other choice. I am a believer that if you just keep buying low cost index funds and never sell them at the end of the road you will have a big pot of gold for generations to come. I have confidence we will get past this virus and any other situation that comes up along the way.

:moneybag
Stay invested my friends.

User avatar
bt365
Posts: 55
Joined: Thu Mar 26, 2020 1:13 pm

Re: Recession coming (?) any change in investments?

Post by bt365 » Sat May 09, 2020 2:17 pm

No one knows when the cure will surface, but I have a feeling it is going to be pretty quick. We have great medicine, scientists, doctors, etc... I wouldn't bet against those folks. I agree not everyone invests for future generations, but a lot of investors do so they simply ignore the noise and keep buying.:moneybag[/quote]

I've been reading about accelerated testing and trial periods for vaccines. Skimping on necessary long-term trial periods for vaccines could mean trouble down the road. Proper vetting of any potential vaccine is vital. We may have "great" scientists, doctors, etc., but if they are pressured by certain politicians to place expediency over precaution, trouble may ensue.
Last edited by bt365 on Sat May 09, 2020 2:28 pm, edited 2 times in total.

TheDDC
Posts: 978
Joined: Mon Jan 08, 2018 11:11 am

Re: Recession coming (?) any change in investments?

Post by TheDDC » Sat May 09, 2020 2:23 pm

bt365 wrote:
Sat May 09, 2020 2:17 pm
Rolling out vaccines without the usual long-term trials could mean trouble down the road. Proper vetting of any potential vaccine is vital. Note Remdesivir push. A medication that must be carefully subscribed and monitored given its sometimes serious side effects. The benefit with that risk is, for some, a bit faster recovery time. We may have "great" scientists, doctors, etc., but if they are pressured by political people where expediency (sic) trumps precaution, we may really regret it.
I know that will not be taking any new vaccine, and especially not one developed under questionable means as this one.

Bottom line is that you continue investing. This will pass. Is it different this time? Maybe, depending on your industry. Overall, I have no doubt that the 500 largest companies in the U.S. will recover, innovate, and find new ways of doing things that will sell. Will McDonalds, Home Depot, Coca Cola, Google, Microsoft still be around in 50 years? Most likely, and if not, some other similarly weighted company will take its place in the S&P.

Don't believe that? Then you will not want to invest in anything at all.

In the time it took to read this thread you could have bought a few more shares.

-TheDDC
Rules to wealth building: 90-100% VTSAX piled high and deep, 0-10% VIGAX tilt, 0% given away to banks, minimize amount given to medical-industrial complex

illumination
Posts: 672
Joined: Tue Apr 02, 2019 6:13 pm

Re: Recession coming (?) any change in investments?

Post by illumination » Sat May 09, 2020 2:57 pm

If we're going to agree that Corona caused a recession, wouldn't you also have to concede that it's not going to have the same economic impact it had a few weeks ago and now we'll be coming "out" of a recession? The landscape and sentiment have changed dramatically. I'm not saying everything goes back to normal, but I'm very confident a number of indicators will change dramatically over the next few months. Markets are forward looking.

KlangFool
Posts: 16672
Joined: Sat Oct 11, 2008 12:35 pm

Re: Recession coming (?) any change in investments?

Post by KlangFool » Sat May 09, 2020 3:24 pm

RomeoMustDie wrote:
Sat May 09, 2020 1:39 pm
KlangFool wrote:
Sat May 09, 2020 10:38 am
arcticpineapplecorp. wrote:
Sat May 09, 2020 10:33 am
KlangFool wrote:
Fri May 08, 2020 9:01 pm
And, I would put 1% of the portfolio into physical Gold and Silver. You can afford this as insurance for hyperinflation.

KlangFool
Really? I see that "Gold Won't Protect You From Hyperinflation"

“There is no reason to expect that the real return will be positive when a specific country experiences hyperinflation.”


source: https://www.barrons.com/articles/gold-w ... 1534952739
1) Straight from your article. The person missed the point totally. The goal has nothing to do with whether the real return is positive. If we hit hyperinflation and you need some money to get out of the hyperinflated country, gold will do much better than almost everything else.

2) If all your other asset is worth close to zero due to hyperinflation, zero real return of Gold would sound pretty good by comparison.

KlangFool
What about vs TIPS?
RomeoMustDie,

Do you trust the government to report the inflation rate correctly if we hit hyperinflation? You have to assume that to be true if you buy TIPS.

KlangFool

KlangFool
Posts: 16672
Joined: Sat Oct 11, 2008 12:35 pm

Re: Recession coming (?) any change in investments?

Post by KlangFool » Sat May 09, 2020 3:28 pm

illumination wrote:
Sat May 09, 2020 2:57 pm
If we're going to agree that Corona caused a recession, wouldn't you also have to concede that it's not going to have the same economic impact it had a few weeks ago and now we'll be coming "out" of a recession? The landscape and sentiment have changed dramatically. I'm not saying everything goes back to normal, but I'm very confident a number of indicators will change dramatically over the next few months. Markets are forward looking.
illumination,

<<If we're going to agree that Corona caused a recession,>>

I disagreed with that. We were heading towards a recession. Coronavirus is just the shotgun that burst the bubble.

KlangFool

Post Reply