It is not unjustified to start building your financial bunker. No one wants things to get messy, but there are a lot of idiot lights flashing on the economic dashboard.

Minimize Risk

This is not the time to be taking high risk long shots. The big wins in this environment come from consistent gains and minimized losses. Get out of losing trades quicker than you normally would. If you have ever held on to a bad trade thinking it would bounce back and then it did, this is not the time to test your luck again. Take smaller positions in your trades. An absolute way to reduce losses is to trade less. There are still good trades in the market but they are fewer and farther between. As we have seen lately, the swings related to a chaotic financial climate can be costly. Smaller positions put a smaller hard stop on what you could possibly lose.

Look At Precious Metals

We looked at using precious metals ETFs like GLD in a recent article as a way to counter the potential recession. (you can read that article here) It has not disappointed.

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Tough markets create more demand for precious metals as a potential safe haven. Using an ETF like GLD offers an easy way to take advantage of the shift that often is part of a recession.

Consider Dividend Stocks

The rally we saw at the end of last year through the first few months of 2023 came on the heels of a rough market. It wasn’t easy to pull a profit out last year. That said, the dividend stock based ETF JEPI pulled in an 11% yield in 2022. As you are adjusting your portfolio, this is a place to consider putting a portion.

Other Ways to Prepare

Interest rates are high and are likely to get higher. using your capital to pay down any debt with a higher interest rate is the same as making money. Also, while mortgage rates are at a high compared to the historic lows we saw in recent years, real estate is something to consider. If you able, investing in rental property can provide income similar to a dividend on an asset that could grow in value.

Most importantly, slow down. Triple check your strategies and follow your trading rules strictly.

Keep learning and trade wisely,

John Boyer


Market Wealth Daily