If market enters recession, how can we maintain the value of our assets?

Question

Please don't simply say diversify your portfolio, because that does not help at all.

Answer 1

If you think that will be the case, go into cash, buy sin stocks and short financials and high P/E stocks.

Answer 2

You can maintain your value by doing a dollar cost averaging investment strategy. Invest the same amount of money every month regardless of what the market does. The farther the market goes into recession the more shares you will be getting. Once the market goes back up you are in the money.

Answer 3

I put the majority of my money into money market funds I guess about a year ago. I won't hesitate to pull out if I think I have a good enough reason, but going over my Vanguard MMF, I see that it even invests in Euro items, so it looks like managers are being vigilant.
I used to be confident of mutual funds until I spoke w/someone who was in the business for 20 years, It was frustrating to watch good gains though, that I missed. I'm reconsidering a little in mutual funds and a foreign etf. I'm still in some stocks, but I'm very hesitant to buy more until I profit on the ones that I thought I had bought low.

Answer 4

If you want to MAINTAIN the value of your assets, then hold mostly inflation-linked government bonds. If you want your assets to have any REAL value in five, ten, fifteen or twenty years or more, the only "safe" place to put them is in stocks.

$10,000 in a shoebox will be worth $10,000 in thirty years. $10,000 invested in the broader market* will fluctuate a little over the months & years, but long-term will return an average of 10-12% per annum, so will be worth $300,000

Which looks like the "riskier" option to you?

Answer 5

On the contrary, diversifying helps a great deal if done smartly.

What you need to decide is your investment timeline. If you're investing for the short term, you need to be more conservative. If your investments are solid and your horizon is long term, your assets will increase in value over the long term, regardless of short term volatility.

Answer 6

Diversification doesn't help?? Gosh, I didn't know that. This whole time I thought my intermediate term bonds (which averaged 10% per year) during the 2000 - 2002 bear, helped me 'weather the storm'.

Ah well, ya live & ya learn.

Answer 7

My husband works in investment banking . . . I worked as an accountant for companies filing for SEC status prior to having children . . . we've already liquidated our accounts and converted to cash. It's better to lose appreciation (which wasn't real in the first place) than to risk depreciation (which is very real).

Answer 8

buy gold.