invest wisely and grow your money no matter what happens to the economy I'm
gonna show you two ways to do that in this video hey everyone I'm rose and
welcome back to my channel the number one place for financial education
empowerment and inspiration today we're gonna talk about recession proof
investing I know it can be scary to get started investing given all of these
financial news headlines predicting doom and gloom and that's why I wanted to
make this video so I can educate you a little bit about how you should approach
your own investing ahead of a market crash yes there are some indicators that
point to how some aspects of the economy are shaky right now and how it looks
similar to the economy before the 2000 komm crash and the 2008 financial crisis
and I do talk about all that in this video right here however the problem is
that when you avoid investing completely because you're afraid of experiencing a
downturn then you also miss out on a lot of returns in fact if you have listened
to all the doom and gloom headlines that you see in the news then you would have
missed out big time I mean just check out all these articles people were
predicting catastrophic stock market crashes
ever since 2013 they were predicting it in 2014 2016 2018 I mean every year
there's literally someone who is predicting a stock market crash and you
know what meanwhile the S&P 500 between 2013 and now has almost doubled can you
imagine how much it would suck to have sat in cash all those years just because
you've read something in the news that's why not investing at all because you're
expecting a recession sometime soon isn't a good idea either yes we need to
be mindful of cycles and whatnot but in general it's always better to be
invested than to not be invested cash is the absolute worst place to be in long
term it doesn't grow and only loses purchasing power from inflation over
time and that's a guarantee that being said it's important to have a good
investing strategy now any sort of market timing investing strategy is a
really dicey way to invest because as you saw with all those r2
it's really hard to call the exact timing of a recession sure if you can do
it well all the time then yeah you'll get rich really fast in which case I
want to be your friend and you should totally share your money with me but the
average person can't time the market get lucky once or twice short but investing
by trying to predict where the economy is headed is not a reliable strategy and
look I'm speaking from personal experience back in 2015 I started
reading a bunch of articles about a coming US economic collapse and how the
US dollar was gonna lose all of its value and all this crazy stuff and so I
moved a lot of my money out of stocks and bought a bunch of gold and about a
year or two later I essentially broke even on that gold investment and I
actually missed out on a lot of stock market growth so all in all that was a
really humbling experience for me because I pride myself on being pretty
smart and well-informed but I was totally wrong about what I thought was
gonna do well I speak from personal experience it's really hard to time the
market no matter how convinced you are that you're gonna be right it's just
impossible to know because the markets are so large and dynamic that's why I'm
convinced that these two strategies that I'm gonna share with you in this video
are the best way to go both of these strategies rather than relying on market
timing in other words predicting correctly when the recession is going to
happen instead these two strategies rely on timeless investing principles
timeless principles that are gonna make you money in all markets regardless of a
recession or no recession so the first strategy that I want to talk to you
about is Ray Dalio all-weather portfolio Ray Dalio is a
master investor he's the founder of Bridgewater associates and he is
regarded by many to be one of the best investors in the world in an interview
he did with Tony Robbins in the book Ronnie master the game Ray Dalio
explains that the best way to invest is by creating a balanced portfolio that is
designed to succeed in any economic environment even during recessions his
reasoning is that there's only four things that move the
price of assets there is inflation and then the opposite of inflation deflation
there's economic growth and then the opposite of that which is declining
economic growth and depending on what economic season were in there will be an
asset class that is performing better than all the others for example stocks
they do well during times of rising economic growth and moderate inflation
bonds they do well during times of declining economic growth and deflation
and gold does well during times of hyperinflation or really out of control
inflation kind of like I was explaining with my own personal story if I had been
right and gold was the asset class to be in you know I would have done really
well but the problem is it's actually hard to know when these economic seasons
will hit or even if they'll hit and when they do how long they're gonna last so
right now we're in a season of strong rising economic growth and moderate
inflation so stocks are doing really well and if you're all in stocks right
now you're probably doing really well however we don't know how long the
season is gonna last it could be two more months or even two more years and
then when that season ends we don't know what season is gonna be next and
therefore we don't know which asset class to be invested in so going back to
the all-weather portfolio this portfolio is designed to have the ideal ratio of
gold commodities stocks and bonds so that it's gonna make money regardless of
which economic season were in the all-weather portfolio has earned an
average of nine point seven two percent in the 30 year period between 1984 and
2013 and what's crazy about the all other portfolio is that it only had four
down years in all of those thirty years its worst year was in 2008 and it lost
3.9 3 percent however we all know what happened in 2008 the S&P 500 actually
lost 37 percent a loss of 3.9 3 percent for the all-weather portfolio is peanuts
compared to what most people experienced during that crisis so I would say the
all-weather portfolio is pretty bulletproof and
as recession-proof as it gets now here's how to create your own all-weather
portfolio the proportions that Ray Dalio recommends of each asset class is the
following 30% in stocks 40% in long-term Treasury bonds 15% in intermediate term
Treasury bonds seven and a half percent in gold and seven and a half percent in
commodities now the way you can do this for yourself is either invest in a
combination of ETFs or mutual funds according to these percentages so for
the stock portion you can invest in for example vanguards total stock market
ETF BTI or if you prefer mutual funds which is my personal preference you
could do vanguards total stock market mutual fund which trades on the under
the stock ticker VTS ax and for the long-term Treasury allocation of 40
percent you could do the iShares 20 plus year Treasury ETF TLT or you can do
vanguards version of the long-term Treasury bonds their mutual fund V us TX
and for the 15 percent allocation to intermediate Treasury bonds you could do
I shares the iShares sevens 10-year Treasury ETF which also trades under the
stock ticker IEF or you can do vanguards mutual funds the FIU X and then for the
gold allocation of seven-and-a-half percent the Spyder gold shares ETF or
GLD is a good one and for the commodities allocation you can try the
PowerShares DB commodity index tracking fund which trades under the ticker
symbol DBC and there aren't any mutual fund versions of these gold and
commodity ETFs but that's gonna be fine so all in all the all-weather portfolio
is what he calls a portfolio that will do well in 2022 even though we can't
possibly know what the world would look like in 2022 that is the ultimate
recession-proof portfolio and it's really easy to implement the second
recession-proof investing strategy that I want to talk to you about is investing
in individual stocks Warren Buffett style this is a type of investing also
known as investing where you only buy stocks at a
margin of safety price a margin of safety price is when you buy a stock at
a price that's so low that you basically are getting it at a huge discount and
that discount compared to the fundamentals of the company that you're
buying means that you got the stock basically on sale essentially it's when
the stock is worth this but you're actually paying this just because a
stock is trading at a market price of I don't know hundred dollars doesn't mean
that it's actually worth a hundred dollars the intrinsic value of a stock
always comes back to the cash flow of the company the earnings of the company
back to the fundamentals and sometimes the stock price gets overvalued and
sometimes it gets undervalued so the key with Warren Buffett's investing strategy
is to make the markets wild emotional price fluctuations work in your favor so
that you can scoop up great stocks when they're on sale as Warren Buffett says
price is what you pay but value is what you get so what we're looking to do is
buy stocks at a price that is lower than its value the idea here is that if you
pay less for a stock than what it's actually worth in other words at a
margin of safety price then it's impossible to lose money because you
already paid so little for the stock now if you own these stocks during the
recession yes you'll probably experience some temporary paper losses since
everyone is pessimistic and stock prices are probably declining across the board
but eventually the idea is that the price corrects back to its intrinsic
value because you bought something at lesson it's worth and eventually that
price will converge back to what it's really worth if done right as a value
investor you eventually come back out on top always because irrationally
depressed prices they always correct back to intrinsic value for this type of
investing strategy you also want to assess fundamentals such as the
company's cash flow and its ability to service its debt with its cash flow
because as long as the company's cash flow is strong enough to get it through
a recession without defaulting on its debt and having to go into bankruptcy
then you know that company's going to in business and whether the recession
and get back to business as usual the opposite of this type of investing is
for example during the.com bubble there were a bunch of these New Age technology
web like Internet companies that basically had an intrinsic value of zero
because they weren't making any money yet they were actually not profitable
and those stock prices were at these crazy high valuations and people were
just paying a ton of money for these stocks that didn't have any fundamental
intrinsic value and so when the.com bubble bursts those investors lost a
hundred percent of their money because they had no heart margin of safety and
in fact did the opposite which is just paying way more than what those stocks
were actually worth examples of these were the pets.com
stock there was a company called etoys com
neither of these companies had any prospects for making profit any time
soon yet investors were happy to pay like
ridiculous prices for these stocks so inevitably they lost all their money
there's a lot more to value investing because first of all you have to know
how to do a little bit of number crunching to calculate a stock's
intrinsic value and I do talk a little more about that in this video so make
sure to check it out and I'll also link to a couple books that I recommend if
you're interested in learning more about this type of strategy the bottom line is
focus on what you can control you can't control the economy or when a recession
happens and you can't time it the best you can do is to have a recession proof
investing strategy a strategy that's based on timeless investing principles
such as having a balanced portfolio that does well in any economic season radios
all-weather portfolio or doing it the Warren Buffett way and investing in
stocks of great companies at a margin of safety price some other things you can
do is to have an emergency fund in advance of a recession because having a
bit of cash cushion ensures that you won't have to dip into your investments
during a downturn and sell your stocks at the worst possible time it also gives
you a measure of psychological comfort so that you'll be more comfortable
investing your extra money knowing that you have a bit of cash cushion to fall
back on so there are recession proof investing
strategies as taught by experts like Ray Dalio and Warren Buffett and they're
proven to get you through recessions and ultimately leave you with a lot more
money than you started with whether you are expecting the recession or not I
would say find a great strategy and get invested did you like this video if you
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instagram at investing with rose always remember to go after your dreams