Prepare for Recession?

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Topic Author
apple44
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Prepare for Recession?

Post by apple44 » Wed Aug 21, 2019 5:23 pm

There has been a lot of talk recently about the upcoming recession. The rumor is that a recession is coming in the next 12 months. So do we need to do anything to prepare for it?
All I can think of is to stack up emergency funds because if we lose jobs, it will be difficult to find a new one.
Anybody who's weathered recessions before have any wisdom to share?

UpperNwGuy
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Re: Prepare for Recession?

Post by UpperNwGuy » Wed Aug 21, 2019 5:27 pm

If you’ve been maintaining an asset allocation that matches your risk tolerance, and keeping your emergency fund up to date, then you’re already prepared for whatever the economy might do. No special actions need be taken.

Northern Flicker
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Re: Prepare for Recession?

Post by Northern Flicker » Wed Aug 21, 2019 5:29 pm

apple44 wrote:
Wed Aug 21, 2019 5:23 pm
There has been a lot of talk recently about the upcoming recession. The rumor is that a recession is coming in the next 12 months. So do we need to do anything to prepare for it?
All I can think of is to stack up emergency funds because if we lose jobs, it will be difficult to find a new one.
Anybody who's weathered recessions before have any wisdom to share?
You should always be prepared for a possible recession, even when the outlook is very bullish because nobody knows when a recession will arrive. Thus, the only reason for a change would be if your were not already prepared for a recession. The preparation is choosing an asset allocation where you can tolerate the downturn without pulling out of the market at the bottom, instead just rebalancing back to your allocation when the portfolio has drifted from it.

jebmke
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Re: Prepare for Recession?

Post by jebmke » Wed Aug 21, 2019 5:30 pm

I always tried to make myself as in-expendable as possible. During my career I often took jobs that were essentially lateral but gave me experience and skills that many other people didn't have.
When you discover that you are riding a dead horse, the best strategy is to dismount.

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Toons
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Re: Prepare for Recession?

Post by Toons » Wed Aug 21, 2019 5:33 pm

I have seen quite a few recessions since 1981 when I started investing and the Dow was at 882.
I pretty much ignored the noise and kept investing.
Looking back ,it appears I was purchasing more shares with my money because equity prices were depressed.
One never knows,,,,,anyway....
The Dow is around 26,000
Things have worked out fairly well
:happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

retiredjg
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Re: Prepare for Recession?

Post by retiredjg » Wed Aug 21, 2019 5:38 pm

apple44 wrote:
Wed Aug 21, 2019 5:23 pm
There has been a lot of talk recently about the upcoming recession. The rumor is that a recession is coming in the next 12 months. So do we need to do anything to prepare for it?
All I can think of is to stack up emergency funds because if we lose jobs, it will be difficult to find a new one.
Anybody who's weathered recessions before have any wisdom to share?
Remember that a recession is not the same thing as a market downturn/bear market. Sometimes they occur at the same times. Sometimes, you can have one without the other. There have been dozens of recessions that were not accompanied by bad markets.

You should always be prepared for either a recession or an extended bear market. All the time.

If you are not there yet, things like bumping up your emergency fund and adjusting your asset allocation to what you can tolerate during a bad market are the right things to do. That is how to be prepared all the time.

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Sandtrap
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Re: Prepare for Recession?

Post by Sandtrap » Wed Aug 21, 2019 6:18 pm

apple44 wrote:
Wed Aug 21, 2019 5:23 pm
There has been a lot of talk recently about the upcoming recession. The rumor is that a recession is coming in the next 12 months. So do we need to do anything to prepare for it?
All I can think of is to stack up emergency funds because if we lose jobs, it will be difficult to find a new one.
Anybody who's weathered recessions before have any wisdom to share?
Regardless of recession or not:

One of the most stressful events in life is going to work to find out you're laid-off or the company is downsizing, etc. And, you have 2 weeks at best of work/pay. Worse, that it's your last day. And, rent is due every month, car payments, day care, etc.

Another, is a health event where one can't work for an extended period.

Depending on where one is employed (private vs public vs ?) it's best to always be prepared for job loss.

j
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Trader Joe
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Re: Prepare for Recession?

Post by Trader Joe » Wed Aug 21, 2019 6:21 pm

apple44 wrote:
Wed Aug 21, 2019 5:23 pm
There has been a lot of talk recently about the upcoming recession. The rumor is that a recession is coming in the next 12 months. So do we need to do anything to prepare for it?
All I can think of is to stack up emergency funds because if we lose jobs, it will be difficult to find a new one.
Anybody who's weathered recessions before have any wisdom to share?
Where did you hear this rumor?

Dead Man Walking
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Re: Prepare for Recession?

Post by Dead Man Walking » Wed Aug 21, 2019 8:19 pm

Jeremy Siegel is predicting a slow down, not a recession in an article at the Knowledge @ Wharton website. He has been wrong in the past. I don’t place much stock in anyone’s predictions.

DMW

Olemiss540
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Re: Prepare for Recession?

Post by Olemiss540 » Wed Aug 21, 2019 8:25 pm

Same thing I did when they predicted (incorrectly) the last 6 recessions. Maintained a comfortable asset allocation and continued to invest every 2 weeks. My goal is to stay employable and hope I can stay greedy while others are fearful.
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.

Vanguard Fan 1367
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Re: Prepare for Recession?

Post by Vanguard Fan 1367 » Thu Aug 22, 2019 8:21 am

apple44 wrote:
Wed Aug 21, 2019 5:23 pm
There has been a lot of talk recently about the upcoming recession. The rumor is that a recession is coming in the next 12 months. So do we need to do anything to prepare for it?
All I can think of is to stack up emergency funds because if we lose jobs, it will be difficult to find a new one.
Anybody who's weathered recessions before have any wisdom to share?
In about 1990 I attended a Financial Concepts class. One of the things that it motivated me to do was to work towards being debt free. It took a while but I am debt free including real estate. That is classic advice for coping with recessions, get out of debt and it helped me go through the recessions since 1990 pain free.

I also thankfully didn't sell any stocks/mutual funds when their value dropped. That is more classic advice, don't sell when things drop even though you are discouraged to see your investments at half their previous value.

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apple44
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Re: Prepare for Recession?

Post by apple44 » Thu Aug 22, 2019 10:19 am

Trader Joe wrote:
Wed Aug 21, 2019 6:21 pm
apple44 wrote:
Wed Aug 21, 2019 5:23 pm
There has been a lot of talk recently about the upcoming recession. The rumor is that a recession is coming in the next 12 months. So do we need to do anything to prepare for it?
All I can think of is to stack up emergency funds because if we lose jobs, it will be difficult to find a new one.
Anybody who's weathered recessions before have any wisdom to share?
Where did you hear this rumor?
I heard it on NPR that more than half of the financial analysts believe a recession is coming in the next 12 months in a recent survey, but couldn't find that survey now. However, I did find this one on Washington Post: 3 out of 4 economists predict a U.S. recession by 2021, survey finds
https://www.washingtonpost.com/business ... vey-finds/.

Also, I'm in the real estate financing industry and my clients are actively preparing for the downturn, by borrowing money from the bank or selling assets now, so that they'll have sufficient capital to buy real estate once price drops.

Topic Author
apple44
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Re: Prepare for Recession?

Post by apple44 » Thu Aug 22, 2019 10:20 am

Vanguard Fan 1367 wrote:
Thu Aug 22, 2019 8:21 am
apple44 wrote:
Wed Aug 21, 2019 5:23 pm
There has been a lot of talk recently about the upcoming recession. The rumor is that a recession is coming in the next 12 months. So do we need to do anything to prepare for it?
All I can think of is to stack up emergency funds because if we lose jobs, it will be difficult to find a new one.
Anybody who's weathered recessions before have any wisdom to share?
In about 1990 I attended a Financial Concepts class. One of the things that it motivated me to do was to work towards being debt free. It took a while but I am debt free including real estate. That is classic advice for coping with recessions, get out of debt and it helped me go through the recessions since 1990 pain free.

I also thankfully didn't sell any stocks/mutual funds when their value dropped. That is more classic advice, don't sell when things drop even though you are discouraged to see your investments at half their previous value.
Both are great advice! Thank you! Definitely not thinking of having more debt now, and will suppress the urge to sell...

Dottie57
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Re: Prepare for Recession?

Post by Dottie57 » Thu Aug 22, 2019 10:22 am

Toons wrote:
Wed Aug 21, 2019 5:33 pm
I have seen quite a few recessions since 1981 when I started investing and the Dow was at 882.
I pretty much ignored the noise and kept investing.
Looking back ,it appears I was purchasing more shares with my money because equity prices were depressed.
One never knows,,,,,anyway....
The Dow is around 26,000
Things have worked out fairly well
:happy
+1

Topic Author
apple44
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Joined: Tue Feb 19, 2019 3:22 pm

Re: Prepare for Recession?

Post by apple44 » Thu Aug 22, 2019 10:23 am

Thanks everyone for the advice. Good to hear no drastic changes are needed.

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Re: Prepare for Recession?

Post by abuss368 » Thu Aug 22, 2019 10:37 am

apple44 wrote:
Wed Aug 21, 2019 5:23 pm
There has been a lot of talk recently about the upcoming recession. The rumor is that a recession is coming in the next 12 months. So do we need to do anything to prepare for it?
All I can think of is to stack up emergency funds because if we lose jobs, it will be difficult to find a new one.
Anybody who's weathered recessions before have any wisdom to share?
There is nothing different to do. Tune out the noise. Stay the course and always add to cash, pay down debt, and continue to invest.
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success." || Buy Total Stock until it hurts. Then find a way to buy even more!

IMO
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Re: Prepare for Recession?

Post by IMO » Thu Aug 22, 2019 10:39 am

apple44 wrote:
Thu Aug 22, 2019 10:19 am
Trader Joe wrote:
Wed Aug 21, 2019 6:21 pm
apple44 wrote:
Wed Aug 21, 2019 5:23 pm
There has been a lot of talk recently about the upcoming recession. The rumor is that a recession is coming in the next 12 months. So do we need to do anything to prepare for it?
All I can think of is to stack up emergency funds because if we lose jobs, it will be difficult to find a new one.
Anybody who's weathered recessions before have any wisdom to share?
Where did you hear this rumor?
I heard it on NPR that more than half of the financial analysts believe a recession is coming in the next 12 months in a recent survey, but couldn't find that survey now. However, I did find this one on Washington Post: 3 out of 4 economists predict a U.S. recession by 2021, survey finds
https://www.washingtonpost.com/business ... vey-finds/.

Also, I'm in the real estate financing industry and my clients are actively preparing for the downturn, by borrowing money from the bank or selling assets now, so that they'll have sufficient capital to buy real estate once price drops.
I also listen to NPR and other sources of news/commentary.

[Comment removed by moderator oldcomputerguy]

Is there validity that a recession is looming? Maybe or maybe not. It kind of falls in line with market timing of the stock market and/or the real estate market. I suppose if you feel the surveys are correct and the predictions are correct, perhaps you should sell stocks now and sell your home now to get ahead of the looming recession. There will then be people in the know who will tell you when things are about to boom again and you can buy back in.

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Re: Prepare for Recession?

Post by abuss368 » Thu Aug 22, 2019 10:50 am

No one knows when, if ever, the next recession (or worse) will occur. Anyone who claims they can should be a warning sign. If we could forecast market and economic trends in advance we would all be a lot wealthier!
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success." || Buy Total Stock until it hurts. Then find a way to buy even more!

rascott
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Re: Prepare for Recession?

Post by rascott » Thu Aug 22, 2019 10:57 am

apple44 wrote:
Wed Aug 21, 2019 5:23 pm
There has been a lot of talk recently about the upcoming recession. The rumor is that a recession is coming in the next 12 months. So do we need to do anything to prepare for it?
All I can think of is to stack up emergency funds because if we lose jobs, it will be difficult to find a new one.
Anybody who's weathered recessions before have any wisdom to share?

Economists are worse at predicting recessions than a weather person predicting the weather next month.

Ignore the noise.

3funder
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Re: Prepare for Recession?

Post by 3funder » Thu Aug 22, 2019 11:02 am

1) No one knows for sure when a recession will hit, and recessions are often identified after the fact.

2) In what industry do you work? Some aren't nearly as economically sensitive as others. For example, I'm a high school special education teacher in a large, generally well-funded school district. Despite being relatively new (but certainly not the newest) in terms of seniority, even the Great Recession didn't threaten my job security.
Last edited by 3funder on Thu Aug 22, 2019 11:17 am, edited 2 times in total.

wolf359
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Re: Prepare for Recession?

Post by wolf359 » Thu Aug 22, 2019 11:13 am

IMO wrote:
Thu Aug 22, 2019 10:39 am
apple44 wrote:
Thu Aug 22, 2019 10:19 am
Trader Joe wrote:
Wed Aug 21, 2019 6:21 pm
apple44 wrote:
Wed Aug 21, 2019 5:23 pm
There has been a lot of talk recently about the upcoming recession. The rumor is that a recession is coming in the next 12 months. So do we need to do anything to prepare for it?
All I can think of is to stack up emergency funds because if we lose jobs, it will be difficult to find a new one.
Anybody who's weathered recessions before have any wisdom to share?
Where did you hear this rumor?
I heard it on NPR that more than half of the financial analysts believe a recession is coming in the next 12 months in a recent survey, but couldn't find that survey now. However, I did find this one on Washington Post: 3 out of 4 economists predict a U.S. recession by 2021, survey finds
https://www.washingtonpost.com/business ... vey-finds/.

Also, I'm in the real estate financing industry and my clients are actively preparing for the downturn, by borrowing money from the bank or selling assets now, so that they'll have sufficient capital to buy real estate once price drops.
I also listen to NPR and other sources of news/commentary.

[Comment removed by moderator oldcomputerguy]

Is there validity that a recession is looming? Maybe or maybe not. It kind of falls in line with market timing of the stock market and/or the real estate market. I suppose if you feel the surveys are correct and the predictions are correct, perhaps you should sell stocks now and sell your home now to get ahead of the looming recession. There will then be people in the know who will tell you when things are about to boom again and you can buy back in.
I think we should nix any talk of whether or not any specific news outlets are slanted for or against the President. That's clearly going into politics, and is against forum rules.

The source of the article is irrelevant, other than to indicate that NPR is perhaps a better source of information than "my friend Bob at the water cooler."

One thing that I have observed is that there has been a constant drumbeat of worry about the economy collapsing back into recession since this bull market began ten years ago. There is a saying that bull markets climb a wall of worry. When everybody is convinced that the markets are about to collapse, then they tend to act on that belief. They put their new money into bonds and money flows out of stock mutual funds.

What that also means is that there is a lot of room for stocks to climb. If stocks move up anyways, then all the money on the sidelines starts rushing back in (Fear of Missing Out), and the market ends up at a higher level.

When everybody is bullish, then there's nobody left to buy, which leaves the market with no support. At that moment, it's ripe for collapse.

What I'm saying has been said more eloquently by others, "Nobody knows nothing." Predicting the market, interest rates, and future economic growth has been fruitless, regardless of the prestige, education, and data. Perhaps someone will be able to accurately do so eventually. Right now, nobody has a known working crystal ball. I have made my own personal predictions (and written them down.) I have found that I have been both right and wrong, but I have no way of knowing which until after the fact.

This does not mean things are hopeless. The entire Bogleheads philosophy is based on the concept of not knowing what the future holds. Hold an asset allocation that you find acceptable if the market goes up or down. Statistically, the market tends to go up in any given year. But it might not.

Edit: That said, when you're convinced that we're about to head into a recession, take steps to double-check that you're ready for one. Be prepared for job loss, beef up your emergency fund, make sure you're happy with your asset allocations, review your investors policy statement for what you will do in times of panic. I have found myself battening down the hatches more times than we've actually had downturns, but that is how it works.

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Re: Prepare for Recession?

Post by JHU ALmuni » Thu Aug 22, 2019 11:25 am

apple44 wrote:
Wed Aug 21, 2019 5:23 pm
There has been a lot of talk recently about the upcoming recession. The rumor is that a recession is coming in the next 12 months. So do we need to do anything to prepare for it?
All I can think of is to stack up emergency funds because if we lose jobs, it will be difficult to find a new one.
Anybody who's weathered recessions before have any wisdom to share?
Serious question, how do you prepare for recession assuming it's coming??

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Re: Prepare for Recession?

Post by Smoke » Thu Aug 22, 2019 11:26 am

UpperNwGuy wrote:
Wed Aug 21, 2019 5:27 pm
If you’ve been maintaining an asset allocation that matches your risk tolerance, and keeping your emergency fund up to date, then you’re already prepared for whatever the economy might do. No special actions need be taken.
+1
Arguing for the sake of arguing is something I am not going to engage in.

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JPH
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Re: Prepare for Recession?

Post by JPH » Thu Aug 22, 2019 11:40 am

I guess I feel pretty well prepared now with my level of savings and AA. I have lived through past recessions. I stayed the course, and my standard of living did not change. I would rather not live through another recession but do not worry about it.
While the moments do summersaults into eternity | Cling to their coattails and beg them to stay - Townes Van Zandt

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Sandtrap
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Re: Prepare for Recession?

Post by Sandtrap » Thu Aug 22, 2019 11:46 am

apple44 wrote:
Thu Aug 22, 2019 10:19 am
Trader Joe wrote:
Wed Aug 21, 2019 6:21 pm
apple44 wrote:
Wed Aug 21, 2019 5:23 pm
There has been a lot of talk recently about the upcoming recession. The rumor is that a recession is coming in the next 12 months. So do we need to do anything to prepare for it?
All I can think of is to stack up emergency funds because if we lose jobs, it will be difficult to find a new one.
Anybody who's weathered recessions before have any wisdom to share?
Where did you hear this rumor?
I heard it on NPR that more than half of the financial analysts believe a recession is coming in the next 12 months in a recent survey, but couldn't find that survey now. However, I did find this one on Washington Post: 3 out of 4 economists predict a U.S. recession by 2021, survey finds
https://www.washingtonpost.com/business ... vey-finds/.

Also, I'm in the real estate financing industry and my clients are actively preparing for the downturn, by borrowing money from the bank or selling assets now, so that they'll have sufficient capital to buy real estate once price drops.
A thought with implications.. . .
"There are 6 major companies that own nearly "all" of the media (print/digital/video/etc)"
Source:
https://www.webfx.com/data/the-6-compan ... all-media/
This is a very good reason to be careful with the information we are exposed to, ignore the noise, and stay the course.
j
Last edited by Sandtrap on Thu Aug 22, 2019 12:20 pm, edited 1 time in total.
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HomerJ
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Re: Prepare for Recession?

Post by HomerJ » Thu Aug 22, 2019 11:50 am

retiredjg wrote:
Wed Aug 21, 2019 5:38 pm
You should always be prepared for either a recession or an extended bear market. All the time.

If you are not there yet, things like bumping up your emergency fund and adjusting your asset allocation to what you can tolerate during a bad market are the right things to do. That is how to be prepared all the time.
This. And then you don't have to worry about it anymore.
The J stands for Jay

student
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Re: Prepare for Recession?

Post by student » Thu Aug 22, 2019 12:01 pm

Trader Joe wrote:
Wed Aug 21, 2019 6:21 pm
apple44 wrote:
Wed Aug 21, 2019 5:23 pm
There has been a lot of talk recently about the upcoming recession. The rumor is that a recession is coming in the next 12 months. So do we need to do anything to prepare for it?
All I can think of is to stack up emergency funds because if we lose jobs, it will be difficult to find a new one.
Anybody who's weathered recessions before have any wisdom to share?
Where did you hear this rumor?
https://www.youtube.com/watch?v=m-DZQ80vEVI

(joke)

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Re: Prepare for Recession?

Post by abuss368 » Thu Aug 22, 2019 12:03 pm

Sandtrap wrote:
Thu Aug 22, 2019 11:46 am

A thought with implications.. . .
"There are 6 major companies that own nearly "all" of the media (print/digital/video/etc)"
This is a very good reason to be careful with the information we are exposed to, ignore the noise, and stay the course.
j
Well said! :sharebeer
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success." || Buy Total Stock until it hurts. Then find a way to buy even more!

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Re: Prepare for Recession?

Post by Hockey10 » Thu Aug 22, 2019 12:07 pm

As others have said, ignore the noise and stick to an asset allocation that you are comfortable with.

Nobody knows when the next recession will hit, but I can guarantee you that the word recession will be mentioned in the daily news cycle every day for the next 14.5 months. [Deleted -- mod oldcomputerguy]

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Re: Prepare for Recession?

Post by Oak&Elm » Thu Aug 22, 2019 12:16 pm

apple44 wrote:
Wed Aug 21, 2019 5:23 pm
There has been a lot of talk recently about the upcoming recession. The rumor is that a recession is coming in the next 12 months. So do we need to do anything to prepare for it?


If you know for certain this recession is going to take place than sell everything you can, stocks/bonds and purchase SPXS, 3X S&P bear stock. you could triple your money and once the market hits bottom sell and go back to your logical well planned out AA. Or just stay the course since nobody knows if or when a recession will take place... but hey, somebody's going to be right :)

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Re: Prepare for Recession?

Post by sman » Thu Aug 22, 2019 12:35 pm

I'll echo what what everyone else said about prediction and noise, you won't know until it happened. I'd be more concerned about what they're not openly predicting than what they're predicting.

How I prepared was to make sure I paid everything off as soon as possible (car, house, etc), have an emergency fund, learn to grow my own food, make sure to stay healthy, diversify my skills in case I need to supplement or replace my income, and continue investing accordingly.

I developed this mindset early on, cause after I quit my corporate job, my former employer closed their business and laid off several hundred employees without telling them. They kept the lights off, kept the doors closed, and put a flyer inside saying they were closed when everyone showed up the next morning. I get there was sensitive customer information and didn't want to run the risk of stolen data, but what I don't get is how they refused to pay contractual bonuses and severance. So that really made sure I knew there were no guarantees in employment, and you must save and plan accordingly.

I had the aforementioned mindset reinforced later. Before 2008 happened, I worked for the military at a base under BRAC (Base Realignment and Closure), where the local economy was heavily dependent on the base's existence, but was pretty insulated from the housing crash. My mindset before accepting the job was not to commit for a year or more to long-term stuff like housing (loan or rental agreement). I didn't want to be stuck with a 30-year home loan with no job. The local mindset was, 'They have been saying for years this base is closing. It won't happen before I retire (10+ years)' or 'They said they will retrain everyone, so I would worry about finding another job.' I left a few years later. The base closed a few years later and a bunch of people weren't retrained as promised, couldn't find work, had their homes repossessed, etc.

I'm on the west coast. If I woke up tomorrow seeing markets taking a huge fall the past few hours on the news, I wouldn't be thinking where my next meal is going to come from. I'd probably have 10-seconds of 'Oh, this sucks. Time to make breakfast' followed by, 'Mmm... this omelette is good.
Well, I guess lots of company stocks are going on sale. Lets see whats available.' :)

7eight9
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Re: Prepare for Recession?

Post by 7eight9 » Thu Aug 22, 2019 12:45 pm

Have cash. And a low-budget life style.

I lost my job in January 2010. Theoretically the recession was over (https://www.nber.org/cycles/). But not for me. It took 9 months to find a job that paid only 77% of my former salary. I was in Las Vegas. We were hit pretty hard.

I'm unemployed again. For a little over 5 months. For me the recession has already started. Regretfully I'm less confident that I'll find a job again.

Best of luck to you in your decisions.
I guess it all could be much worse. | They could be warming up my hearse.

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Re: Prepare for Recession?

Post by TomatoTomahto » Thu Aug 22, 2019 1:06 pm

How about we stick to actionable posts that avoid casting doubts about the media’s veracity? Heh?

As to the question asked: make sure your EF is topped up, don’t overestimate your risk tolerance in your AA, make sure you are considered a good worker at your job if you have one.
Okay, I get it; I won't be political or controversial. The Earth is flat.

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Re: Prepare for Recession?

Post by sunny_socal » Thu Aug 22, 2019 1:27 pm

First it was "The Walls Are Closing In"

Now it is...

"There's Going To Be a Recession"

Turn off the TV and put your phone away. Carry on, stay the course.

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Re: Prepare for Recession?

Post by oldcomputerguy » Thu Aug 22, 2019 2:09 pm

I removed a couple of comments that were political in nature. As a reminder, discussion of political topics is prohibited by forum policy. See Unacceptable Topics:
In order to avoid the inevitable frictions that arise from these topics, political or religious posts and comments are prohibited.
Please keep the discussion centered on the OP's question regarding any preparations you may or may not be making for a possible recession. -- Moderator oldcomputerguy
"I’ve come around to this: If you’re dumb, surround yourself with smart people; and if you’re smart, surround yourself with smart people who disagree with you." (Aaron Sorkin)

retiredjg
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Re: Prepare for Recession?

Post by retiredjg » Thu Aug 22, 2019 4:09 pm

JHU ALmuni wrote:
Thu Aug 22, 2019 11:25 am
Serious question, how do you prepare for recession assuming it's coming??
A recession is always coming. A recession is an economic downturn. It is not a market downturn.

You should always be prepared for a recession by having an adequate emergency fund in case you lose your job. Sharpening and broadening job skills in case you need to get a job. Keeping debt reasonable. Living below your means. Things like that.

Bacchus01
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Re: Prepare for Recession?

Post by Bacchus01 » Thu Aug 22, 2019 4:16 pm

apple44 wrote:
Wed Aug 21, 2019 5:23 pm
There has been a lot of talk recently about the upcoming recession. The rumor is that a recession is coming in the next 12 months. So do we need to do anything to prepare for it?
All I can think of is to stack up emergency funds because if we lose jobs, it will be difficult to find a new one.
Anybody who's weathered recessions before have any wisdom to share?
Work on making yourself invaluable at work. No investing strategy lasts a job loss.

Grt2bOutdoors
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Re: Prepare for Recession?

Post by Grt2bOutdoors » Thu Aug 22, 2019 4:45 pm

Bacchus01 wrote:
Thu Aug 22, 2019 4:16 pm
apple44 wrote:
Wed Aug 21, 2019 5:23 pm
There has been a lot of talk recently about the upcoming recession. The rumor is that a recession is coming in the next 12 months. So do we need to do anything to prepare for it?
All I can think of is to stack up emergency funds because if we lose jobs, it will be difficult to find a new one.
Anybody who's weathered recessions before have any wisdom to share?
Work on making yourself invaluable at work. No investing strategy lasts a job loss.
Better yet, work on establishing a network of contacts who know you and the high quality work you can deliver. When the next recession, or company specific downturn develops, leverage those contacts to help you find employment. Don't be dependent on any one company, no matter how "invaluable" you are, companies can and do fail even if they've been established for long periods of time, new management can come in and in one fell swoop classify your job as extinct. Two, save a lot, by saving and investing you create a scenario of forced economic deprivation for current spending while building up a substantial pile of reserves to tide you over in the event of a job loss. Three, don't hold leverage or if you do, keep it to a manageable level even with a job loss.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

SovereignInvestor
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Re: Prepare for Recession?

Post by SovereignInvestor » Thu Aug 22, 2019 5:29 pm

Conference board leading economic index just printed a fresh clean new high for July.

What recession?

brandy
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Re: Prepare for Recession?

Post by brandy » Thu Aug 22, 2019 6:11 pm

"If you are not there yet, things like bumping up your emergency fund and adjusting your asset allocation to what you can tolerate during a bad market are the right things to do. That is how to be prepared all the time."

"have cash be debt free live below your means"

My "cash" is mostly in CDs at a distant credit union--they are my emergency fund. Should I end those coming to maturity to put greenbacks in a local CU or under the mattress?
I'm on SS with a tiny pension and standard bills--utility, insurance, taxes, food, etc.

Small Change
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Re: Prepare for Recession?

Post by Small Change » Thu Aug 22, 2019 6:23 pm

For what it is worth, consumer confidence in July 2007 hit a nearly six year high, five months before the start of the Great Recession.

Here is a story about that.

https://money.cnn.com/2007/07/31/news/e ... /index.htm

Grt2bOutdoors
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Re: Prepare for Recession?

Post by Grt2bOutdoors » Thu Aug 22, 2019 6:26 pm

brandy wrote:
Thu Aug 22, 2019 6:11 pm
"If you are not there yet, things like bumping up your emergency fund and adjusting your asset allocation to what you can tolerate during a bad market are the right things to do. That is how to be prepared all the time."

"have cash be debt free live below your means"

My "cash" is mostly in CDs at a distant credit union--they are my emergency fund. Should I end those coming to maturity to put greenbacks in a local CU or under the mattress?
I'm on SS with a tiny pension and standard bills--utility, insurance, taxes, food, etc.
No. You should only hold "cash" as in liquid, immediately accessible funds to meet a set period of months expenses. You determine how much "cash" you should hold or need to hold. The remainder can be invested in "cash like" instruments like CD's. CD's can be accessed at almost any time, but you may incur a penalty to do so unless you are holding a "penalty free" CD.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

CurlyDave
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Re: Prepare for Recession?

Post by CurlyDave » Thu Aug 22, 2019 6:34 pm

Recessions are good times to buy hard assets, like real estate.

We have a small real estate business in our retirement due to buying a few unloved houses during bad times.

MindBogler
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Re: Prepare for Recession?

Post by MindBogler » Thu Aug 22, 2019 6:41 pm

Everyone is so sure that a recession is imminent that I'm inclined to believe nothing of the sort.

H-Town
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Re: Prepare for Recession?

Post by H-Town » Thu Aug 22, 2019 6:44 pm

apple44 wrote:
Wed Aug 21, 2019 5:23 pm
There has been a lot of talk recently about the upcoming recession. The rumor is that a recession is coming in the next 12 months. So do we need to do anything to prepare for it?
All I can think of is to stack up emergency funds because if we lose jobs, it will be difficult to find a new one.
Anybody who's weathered recessions before have any wisdom to share?
The following is true, to a certain extent: When enough people are talking about recession, there won't be "castle in the sky" type scenario. The fall should be soft and quick. No one is making a quick buck. No passing around a ticking bomb and waiting for the music to stop.

Valuethinker
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Re: Prepare for Recession?

Post by Valuethinker » Fri Aug 23, 2019 4:15 am

H-Town wrote:
Thu Aug 22, 2019 6:44 pm
apple44 wrote:
Wed Aug 21, 2019 5:23 pm
There has been a lot of talk recently about the upcoming recession. The rumor is that a recession is coming in the next 12 months. So do we need to do anything to prepare for it?
All I can think of is to stack up emergency funds because if we lose jobs, it will be difficult to find a new one.
Anybody who's weathered recessions before have any wisdom to share?
The following is true, to a certain extent: When enough people are talking about recession, there won't be "castle in the sky" type scenario. The fall should be soft and quick. No one is making a quick buck. No passing around a ticking bomb and waiting for the music to stop.
I can think of a few ticking bombs, though.

One Japanese financial institution (it seems to be a bank for their agricultural cooperatives) owns 10% of all the CLOs out there, and 18% of the AAA tranches. The quality of the leveraged loans that are securitized into these things has been falling - cov lite and dare we call it cov lite lite? That's one bomb.

There's others. Real estate in any number of cities. Chinese real estate. Etc etc.

There are pass-the-parcel games being played out there, if not on the obvious scale of the internet bubble of 2000 or the US housing bubble that blew up in 2007-08.

It feels as if we are more likely to get a "black swan" on the geopolitical front. Something like Saddam's invasion of Kuwait in Aug 1990. For any number of reasons the intelligence system is distracted and probably frayed. There's a lot of random factors out there.

It was that event (3rd Aug 1990, from memory) plus the S&L Crisis which put the USA into recession.

jharkin
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Re: Prepare for Recession?

Post by jharkin » Fri Aug 23, 2019 7:37 am

Northern Flicker wrote:
Wed Aug 21, 2019 5:29 pm
You should always be prepared for a possible recession, even when the outlook is very bullish because nobody knows when a recession will arrive.
+1000

Recessions dont happen on schedule when people are expecting them. I lived though 2000 and 2008... both times the bottom fell out right when the pundits where screaming the loudest that there is nowhere to go but up.

Best thing is to always be prepared. maintain that emergency fund. Keep debt levels managable. But most importantly focus on career growth, develop skills, aim to be the top performer in your department (so you wont be the first one on the layoff list) and work for companies/ on projects that will have some resiliency though a downturn.


I survived both those recessions with my job intact - in high tech! I did it by busting my #(*&$#% to become known as one of the best at what I do in the division, along with networking to build visibility and gain high level management "mentors" (aka playing office politics)

latesaver
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Re: Prepare for Recession?

Post by latesaver » Fri Aug 23, 2019 8:28 am

Valuethinker wrote:
Fri Aug 23, 2019 4:15 am
H-Town wrote:
Thu Aug 22, 2019 6:44 pm
apple44 wrote:
Wed Aug 21, 2019 5:23 pm
There has been a lot of talk recently about the upcoming recession. The rumor is that a recession is coming in the next 12 months. So do we need to do anything to prepare for it?
All I can think of is to stack up emergency funds because if we lose jobs, it will be difficult to find a new one.
Anybody who's weathered recessions before have any wisdom to share?
The following is true, to a certain extent: When enough people are talking about recession, there won't be "castle in the sky" type scenario. The fall should be soft and quick. No one is making a quick buck. No passing around a ticking bomb and waiting for the music to stop.
I can think of a few ticking bombs, though.

One Japanese financial institution (it seems to be a bank for their agricultural cooperatives) owns 10% of all the CLOs out there, and 18% of the AAA tranches. The quality of the leveraged loans that are securitized into these things has been falling - cov lite and dare we call it cov lite lite? That's one bomb.

There's others. Real estate in any number of cities. Chinese real estate. Etc etc.

There are pass-the-parcel games being played out there, if not on the obvious scale of the internet bubble of 2000 or the US housing bubble that blew up in 2007-08.

It feels as if we are more likely to get a "black swan" on the geopolitical front. Something like Saddam's invasion of Kuwait in Aug 1990. For any number of reasons the intelligence system is distracted and probably frayed. There's a lot of random factors out there.

It was that event (3rd Aug 1990, from memory) plus the S&L Crisis which put the USA into recession.
There's a new moniker in town..."covenant loose".

https://www.reuters.com/article/cov-loo ... SL2N25B0ES

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TomatoTomahto
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Re: Prepare for Recession?

Post by TomatoTomahto » Fri Aug 23, 2019 8:48 am

jharkin wrote:I survived both those recessions with my job intact - in high tech! I did it by busting my #(*&$#% to become known as one of the best at what I do in the division, along with networking to build visibility and gain high level management "mentors" (aka playing office politics)
While there are no guarantees, being viewed as someone important to the business will make you among the last to be let go, if it comes to that. Those with the increasingly prevalent “what’s in it for me?” mentality might get a chance to Retire Early even if they’re not quite Financially Independent (FIRE).
Okay, I get it; I won't be political or controversial. The Earth is flat.

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AerialWombat
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Re: Prepare for Recession?

Post by AerialWombat » Fri Aug 23, 2019 8:57 am

The last recession caused me much anguish, but ultimately turned out to be one of the best things to ever happen to me. Put me on a whole new life path.

Now, I view the next recession as an opportunity. In a recession, demand for my core service spikes upward — as more people lose their jobs, as small businesses feel the pinch, that means more people need my help and the help of the other professionals I train. In 2000 and 2008, my industry boomed.

I’m also a real estate investor, long term buy and hold. I don’t really care that much about my property values going up or down, just that mortgages get paid. I have the reserves to be flexible (for a little while) with my tenants if need be, or even lose tenants for 6-12 months. Lower the rent enough and somebody will move in, I figure. If property values do tank, I get to pick up a house or two at a discount.

Market downturn? Great. I get to buy Wellesley and Annaly at a discount every month.

Interest rates keep tanking? Great, my cost to borrow to buy houses goes down, and Annaly gets more profitable.

Interest rates go up? Great, money market yields improve.

Many great fortunes have been made in recessions/depressions. Seek ye first the opportunity, then spring thine profit trap.

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