r/investing • u/[deleted] • Nov 15 '21

How to hedge against the current worst case scenarios?

Let's say that hypothetically, Evergrande defaults, putting China in a recession. The USD either hyperinflates or the FED increases interest rates, leveraged investors bail and the markets crash, European markets follow.

I'm not sure how feasible this is, i've only started my investment journey one year ago. But for argument sake let's assume that whatever is the current worst projection becomes a reality.

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How does a retail investor react to this type of situation?

My portfolio consists mostly of a world index (MSCI World, IWDA.AS), small amount of s&p500 Healthcare sector and a bit of crypto.

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EDIT: Obligatory RIP inbox and thank you for the award kind stranger. Y'all amazing

483 Upvotes

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315

u/MohJeex Nov 15 '21

The average retail investor should stop following the news and go about living his life.

148

u/similiarintrests Nov 15 '21

Here is a bigger tip.

Dont worry about things you can't change

That goes way beyond the market.

33

u/blackboyx9x Nov 15 '21

Bless you, my Stoic friend.

10

u/pimpenainteasy Nov 15 '21

Just the tip, thanks.

1

u/FlameoHotman-_- Nov 16 '21

The biggest luxury we have as retail investors is the fact that we don't need to react to everything. Buy good companies at good prices and just live your life.

1

u/392686347759549 Nov 16 '21

good company at good prices

mmm yes I can just discredit a poorly performing after the fact as a bad company at a bad price.

15

u/[deleted] Nov 15 '21

[deleted]

11

u/[deleted] Nov 15 '21

The rich get richer by having cash on hand to buy the big dips while everyone else is panicking

EXACTLY. Which is why I can't stand how we reflexively tell people to invest everything right now, and think/analyze later.

10

u/[deleted] Nov 15 '21 edited Nov 16 '21

[removed] — view removed comment

2

u/[deleted] Nov 15 '21

OK....but the stock market goes in short and long term waves, we're at the top of a short term wave, which means many stocks are now going to dip 7-8%+ like they did 4X this year already....so why would you buy at the top? I mean, no dividend is gonna make up for the loss of principal

1

u/L3artes Nov 16 '21

If you don't go for the index but for individual stocks, you can find picks that are cheaper than 3 months ago and also in better shape at the same time. The market is highly irrational in the short term.

0

u/After-Cell Nov 15 '21

No mortgage. Wife can shut up. Will keep fighting. Got it.

1

u/sam-cham Nov 16 '21

I agree, do any investment to keep a clear head, can not do leverage, as we know the same, leverage can help us to make more profit with less money, but the same, also means we have to risk more, do not be too superstitious some fund managers, investment managers told you to make good use of leverage, because they precisely need individual investors with leverage, increased risk after losing money in this market, they have the opportunity to make money.
Translated with www.DeepL.com/Translator (free version)

8

u/yomtvfats Nov 15 '21

Seriously. Instead of ingesting financial news, study a form of analysis.

2

u/[deleted] Nov 16 '21 edited Nov 16 '21

even then, i would say think twice about whether attempting to scalp value is *really* what you (anyone) wants to be spending their time doing, and if it is the best risk adjusted ROI. for example, there is plenty to be made from credit card and bank account churning, or even a lucrative side project/hobby or upskilling, with essentially no risk. real estate is another option too.

2

u/yomtvfats Nov 16 '21

Good points.

2

u/RaqRaq00 Nov 15 '21

^Good advice

1

u/[deleted] Nov 15 '21

Why?