22
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How does one "deal" with a recession?
From the position of an individual. Are there any financial strategies? Lifestyle choices? Whatever helps stay on top as much as possible. Usually I just let it wash over because I have no idea.
In roughly decreasing order of priority:
Have your resume up to date. Get in with recruiters, especially if you're working somewhere with existing churn or lacking stability. If your a 'low skill' laborer making < $20/hr, start organizing a union. There's a lot of job openings at >$15. The best time to unionize is when unemployment is low, and lock in that job security.
Over the course of 2 months, stockpile at least 2 months of food and about a week of potable water (10 gallons per person should do). This also helps you leverage grocery store sales/coupons better. Having a chest freezer can help, but you risk losing lots of food if there's a >24 hr power outage. Shelf stable is better.
Make sure you have at least 3 months of expenses in a savings account, 6 would be better.
As the interest rates rise, if you have the spare cash building a CD ladder might make sense. Ditto for investing in stable companies after the market crashes, or even if they drop below the average 10yr trendline.
Take a 20 minute walk every night. Good exercise, and meet your neighbors, You might need each other.
Investigate and visit lower cost of living areas you might want to move to if needed. Being able to ditch a car for bike/walking could be a huge cost savings in itself. Better to have an idea than to go in blind.
If you're a Democrat in a 70%+ area, consider moving to 51% Republican areas. If you're a Republican stop voting GOP and start voting third party....you're culpable for the party as a whole. If they are radical, so are you.
That is good advice to prepare for in case of a natural disaster, but how does that help in a recession?
Economic stability. Not all disasters are natural. Plenty of war. Imagine a monkeypox lockdown happening. You don't need to rush to the store to buy TP cause you should have enough for a month or more. Spending that money now means that if times turn tough, you've got 2 months where you have less pressure on your grocery/essentials budget.
$1,000 in food is almost better than $1,000 in the bank. Can't eat currency. If water rationing hits your area, having even a small buffer of potable water will help immensely.
Plus, never running out of the stuff you use...coffee, sugar, flour...it's good for peace of mind.
Thinking more about it, a recession is just a disaster that we foist on ourselves because we religiously adhere to silly rules that let them keep happening.
I think it's good preparation in general to stock up, but remember that even non-perishable food has a shelf life, so you need to make sure you're rotating it. It should be things you actually do eat regularly, or it's going to end up in the trash someday.
But I think for people who aren't already living pretty frugally, there are likely other expenses to look at first? Reviewing your financial situation and figuring out what spending is "wasted" on things you don't really use or enjoy is probably the first step. If you can do that ahead of time you can save up.
Have most professional fields been taken over by recruiters?
I just updated my resume and opened up my profiles on job hunting sites and I have been stampeded by recruiters. I had eight of them call my phone within a single 2 hour window one time. I had to put my phone on do not disturb mode to deal with them.
I’m just wondering how much I should be taking them seriously. The last time I dealt with them they talked to me to do their own interviews but didn’t get me any interviews with actual companies.
I don't post my number publicly for that reason. Lot of scammers. Can't speak for every field, but it makes sense they've nuzzled out a cozy middleman position in the same way real estate agents have.
A good recruiter can save you a lot of hassle, coach you through interviews, and find you jobs before they hit public sites. They'll be an advocate for you, because they want that cut, which can give a leg up in a competitive market.
I don't work with any recruiter that won't send me a copy of the job posting they have me in mind for.
That said, word of mouth and tight social network is probably still best.
I'm assuming by "recruiters" you mean professional, external recruiters. In contrast to a company's internal recruiters (which pretty much all companies of a certain size have, but that seems a fairly normal example of specialization).
Tech is too broad to paint with a single stroke, but I would say much of it is still company internal recruiters and I haven't seen too much use of external recruiting services, at least in my circles. AWS recruiters are especially ferocious right now - they smell blood in the water with all the freezes at other companies.
Really? In my circles it is the opposite. Every time one of my friends has moved companies, it has been through an external recruiting service. All of the times I have considered moving jobs, pretty much every interview came from an external recruiter. Usually, they'll come to me with an interview for one place and they'll ask if I want to hear about other listings they have. It really is the same experience as with real-estate agents in the city I live in. Both of the tech companies my wife has worked in HR for have exclusively hired through external recruiters. Looking through my LinkedIn right now and my inbox is probably 80% external recruiters with Google and Amazon sneaking in to bug me every once in a while. I think the only times I know someone got hired and it wasn't through an external recruiter it was because it was an internal referral.
Startups will usually use external recruiters until they can justify the cost of a full-time internal recruiter.
I can see that, although I haven't personally seen it. Generally startups that have reached out either fall into the 4-6 employee group, who are so selective with expansion (usually a lot of equity that early on) that they exclusively hire from their own networks (e.g mostly hitting up past coworkers or people past coworkers can vouch for) or 50+ at which point they are well funded enough to have at least a single recruiter.
Some startups don’t have professional networks. I guess I don’t know how often that is.
The last startup I worked at had two non-technical founders with primarily financial experience. So their first hires were lucky shots in the dark and then they started going through recruiters in addition to manual resume trawling.
I also used to use TripleByte (as a candidate) back before they changed their business model for the worse. There were a ton of 2-100 person companies there. Some had internal recruiters and were using it as a separate channel. Others didn’t have any talent-specific employees at all.
If your financial situation is currently stable, then there's not much that really can be done on the individual level. If you're planning on borrowing large sums of money, making a large investment in a company, or switching jobs, then it's something to keep in mind and might change your behavior (making all of those things riskier in case that wasn't obvious). If you're the kind of person that ignores common wisdom for long term investing strategies, you can try to time the market since there is likely going to be a general down turn in the markets.
Just follow the usual advice?
The only thing special about recessions is if you have invested in highly volatile crypto/ NFTs/ tech/ growth stocks or are not diversified, maybe reconsider those choices.
Yeah, I think this is basically the plan, which is to say: unless you're as risk of losing your job, ignore the recession and continue living life.
I'd just allocate more money to cash or cash equivalents. Recessions typically mean higher unemployment (which so far has not been the case... which is pretty weird), and that means restricted cash flow for individuals (whether that be because you get laid off, or because you're not getting raises, or if you're independent, your client base shrinks as they get laid off).
It also means capital becomes harder to get. For individuals, that's mainly car loans and mortgages. If you have a large loan that's locked into a low interest from years before, then I'd slow roll it - that loan is a better deal than you'd get right now, and liquid cash is valuable.
Recessions also just means a lot of uncertainty for individuals, and there's nothing more flexible than cash.
So, despite any inflation concerns, I'd increase liquid cash reserves. To what level will depend on you, but some multiple of your monthly expenditures is a good way to calculate it.
I wouldn't try to time the market. If you're able to, continue to put in money at a set rate to well diversified ETFs. If not, then don't. Just pretend the numbers in the stock market don't exist - buying stocks "on sale" is timing the market just as much as panic selling is.
Yes, it's timing to buy when stocks are lower, but I don't think it's a bad thing to take advantage of it, provided it's part of a plan to get the allocation you plan on sticking with. That is, it's only for people who were significantly under-allocated in stocks before.
This probably make less sense in unstable economies where the currency can lose value very quickly. Unless you're saving in US dollars, which is something a lot of people do in some parts of the world.