Market Crash Investment Strategy

MinstrelJunkie

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I'm looking to discuss how best to invest capital, given that the economy is looking like it's going to take a complete nosedive. I know the probability of a crash is being discussed in the Semi-Conductor Shortage thread - but feel like specific investment strategy surrounding a crash warrants it's own thread.

Personally, I'm close to closing a sale on my main site, which will springboard me into having mid 6-figures in liquid capital. I've only ever focused on growing my business to this point - and trying to quickly learn how to take care of this amount of money. I feel like I'm going to have limited amount of time to receive and invest that cash before everything goes tits up (sale will likely complete in September, will be doing an AMA if/when it does).

For those with 6, 7, or 8 figures in investable assets, what does your portfolio look like in terms of percentages? Have you moved things around to prepare for a potential recession? Are there any resources you found particularly helpful in your asset allocation?

All opinions appreciated.
 

Potatoe

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For me it's always index funds that cover the market pretty broadly on a regular schedule without trying to time the market or pick individual stocks but aside from the boring and smart shit, I've been yeeting into tech stocks that have been getting really beat up like Shopify, Meta, and a couple others.

I plan to just keep buying as they fall, I see it as an opportunity. If it turns out that FB genuinely did lose half of it's value as a company in the past 6 months, or if Shopify truly is 20% of the company that it was a year ago, then fair enough, I'm fucked (not really tho), but it's a worthwhile risk for me right now, all things considered.

Aside from the index shit which is objectively the correct way to go about this, Shopify is my main boo and I'm being pretty irresponsible about it.. I just have a feeling, y'know? We'll see in a few years, people can laugh at me or laugh with me.

(Edit: I re-read OP and should clarify a few things. I'm not investing 6, 7 or 8 figures and I don't think anyone should follow what I do and I don't think it's necessarily the best strategy for everyone or anyone.)
 
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Never let FOMO be the reason you make an investment.

Hire a fee-based financial advisor (that acts as a fiduciary) to create a plan and walk you through it. Shouldn't cost more than $500.

You're about to have a life-changing amount of money in your bank account. Don't trust idiots on the internet.
 

MinstrelJunkie

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Thanks both - and don't worry, planning to do much more research. Just looking to see if there's anyone with serious amounts of capital invested, and into what. Particularly looking to see if they're choosing to stock up on commodities.
 

stackcash

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Hire a CFP / RIA if you need advice. Use AAII.com for education if you want to go DIY.
 
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I’m interested in this topic too, but from a standpoint of business creation rather than raw investing.

Clarifying question:

are you most interested in starting a recession-oriented biz or are you looking to invest into other assets that do well during recessions?
 
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I’m holding my main site for another year. I think the value of holding a cash flowing asset during a recession is immense and outweighs selling right now.

with the cash flow I will buy more houses as the market declines. Then once I feel things are about to start improving again I will sell the site and buy into index funds just in time for the run up again.

not expecting this to happen to 2024 so I have a year more of holding the site.
 
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I'm reading this book expat millionnaire, and in one part the author compares two 20 year periods:

1995-2015 (i think): market grew 9.5% per year on average, and markets grew in the first 3 years.
2000-2020 : market grew 6.3% per year, and markets fell the first three years.

At the outset, it looks like the first period is the clear winner. But according to his calculations, you endup with more money at the end of the second period. This is because when markets fall, you buy more shares off the same amount of money, and so end up with more wealth when they rebound.

He also makes other points about not timing the market, and making more money when you invest lumpsum at the start, instead of investing in chunks over time.

Easy for me to advice, but I think given that the YTD value for the stock market is already downward, your money is already going to be getting stocks at a good deal. As and when you close the sale, buy a well assorted portfolio of index funds, and you are probably making a good investment.
 
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Just a couple of things that I've personally learned...

1) We assume that our cash flow will not be affected during a downturn... absolutely false.
2) Debt obligations DGAF about your decrease in cash flow.
3) Always hold a good cushion of cash.

You can invest in individual stocks during downturns. My advice would be to choose the ones with the lowest debt. Run the numbers and find one where you impair their cash flow and see how long they can hold out until they bankrupt. If they can weather 2-3 years, that's golden.

It's all about the debt.
Debt.
Debt.
Debt.

The absolute best financial book that I read last year was by Morgan Housel. It is an easy read and not technical at all. Made for everyday consumers.
 

MinstrelJunkie

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Thanks all - appreciate the comments. Definitely will be chucking a load into an index fund, but my whole (quite naive) plan was to just smack everything into an index fund if I ever got a windfall like this.

Now reading into it and finding asset allocation is a big deal, and should maybe be thinking about diversifying into real estate/commodities like gold and silver and so on.

He also makes other points about not timing the market, and making more money when you invest lumpsum at the start, instead of investing in chunks over time.
Interesting - will take some guts but probably best to just chuck most of it in.

I’m holding my main site for another year. I think the value of holding a cash flowing asset during a recession is immense and outweighs selling right now.

with the cash flow I will buy more houses as the market declines. Then once I feel things are about to start improving again I will sell the site and buy into index funds just in time for the run up again.
Think you're bang on with this - would be aiming to hold as well if I had capital reserves to take the risk.

How have you find owning a whole bunch of real estate? Do you have estate agents handling the management, and has it added any level of stress/mental load knowing you've got all those renters and loans etc?

Think real estate is a great play but wondering if there's some underlying anxiety/stress that comes with ownership.
 
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I use a management company to look after everything so it’s totally hands off. I get a phone call asking for approval for any repairs etc but because I only buy quality homes there’s rarely an issue.

literally zero anxiety or stress and it’s my exit strategy from websites.

in order of risk I see it like this (first riskiest)

crypto
Seo reliant websites
Individual stock picks
Global index funds
Rental property

that should explain why it doesn’t cause me stress to have rentals :smile:
 

jetfinder

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A very successful long time stock investor recommended 3 standout books which, he said, if he started again. are the only 3 he'd pay attention to:
  • Active Value Investing - Making Money in Range-Bound Markets by Vitaliy N. Katsenelson
  • The Five Rules for Successful Stock Investing - Morningstar's Guide to Building Wealth and Winning in the Market by Pat Dorsey
  • Deep Value: Why Activist Investors and Other Contrarians Battle for Control of Losing Corporations by Tobias E. Carlisle
They aren't the easiest books to buy - but worth the investment to gain some solid principles.

Best wishes for your sale - hope it completes successfully for you.
 
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I don't get why people on here are recommending financial advisors and other people like that. These guys are 9-5 people making like 1/10th of people on here make, why would you ever trust people like that over many millionaires who are on this forum??