Let’s say there is recession Q3/Q4 ’22?

John Grayman - May 1, 2022

Advice

We have seen two inverted bond yield-indexes since the pandemic began; the first one was alleviated /avoided statistically (and perhaps part of why we have inflation). When the the GR hit around ’08, I was penniless and single. Now, as a middle of the road ‘Merican with a mortgage and some kiddos, I am very intrigued as to what I can do to prepare if a recession does come, beyond common sense/general family financial planning (hat tip ethics/advice from The Prepared)…

To a sharper point-what businesses and incomes did well during the Great Recession? Handymen and self-repair auto parts/service seems to survive when there isn’t enough money for something ‘new’ but rather needing a fix. Is lumber and building materials something viable/smart to stockpile? 

Thank you all in advance for your experience and/or feedback shared! 

5  

John, lumber is about $1/BF now, prior to the pandemic, about 30¢ and during the recession as low as 15¢.

Prime interest rates are going up in an attempt to slow inflation (caused by 0% effective rates for a decade) and that will lower real estate demand as well as likely cause a needed reset of the economy. Lumber is about the last thing I’d to buy because it will likely come way down—at least that is my guess.

What we have is a zombie economy that never did take its medicine after the last recession. The way the cycle works I think is that “over exuberance” and over investment are apparently inevitable so need to be cleared out like an overgrown forest so the good timber can grow rather than wait for a fire to burn everything down. That is where we are.

When I say I am guessing that lumber will come down I am doing exactly that, waiting on the crash to buy a small plot and build a house.

As far as what is safe, I really can’t guess but it seems like anything in the stock market going for 30+ times earnings is a fair bet to fall. But I’m just some guy on the internet and don’t even get paid to guess, LOL

 

Try and study what has happened during the ’08 recession and the Great Depression to figure out what might happen in the end of ’22 if things go bad. From what I’ve learned, people will repair more than buy new. So handyman or auto mechanic are good traits that will always be in demand.

Instead of stockpiling on building materials now, perhaps slowly buy over time like you do your food storage? 

On a personal level, everyone should have some spare parts to perform repairs on their own stuff. An oil change kit for the car, extra air filter, headlights, and then for the house some things like scrap lumber, nails, tools, caulk, and things like that. 

 

everyone should have some spare parts –Peter

That’s what I’ve been telling my wife for 45 years now! She still says I’m a hoarder… LOL

I’m self-employed, I do print graphics, mostly marketing type stuff. Nobody was doing that in 09-11, ditto 20-22. The best investment is in things that make you a little independant. 

Some things I’m spending on right now, not so much consumables (though my shelves are groaning) but things that will give a return:
laying hens, hen house (about half new half recycled), feed
canning supplies, jars, lids
garden amendments, cattle panel or re-mesh (for trellis & protection), bought some compost, new drip line
permanent plantings: blueberries, brambles, grapes, asparagus (some new but lots of new-from-cuttings)
weatherization – never ending!
everyone is tired of hearing about my PV and new batteries

It is easy for preppish folks to buy a bunch of stuff that sits on the shelf. I have stuff (I hope is still sitting there when I kick the bucket) but I want also to have investments. Improving the garden is an investment, planting perennials is an investment, raising some chicks is an investment. I may be here only 6 months but I may never be able to move again. Every little bit that I can put toward future production rather than just future consumption is a positive.

 

That’s a good way to look at it. Investment. Buy and stock up the supplies that will turn around and either make you money or keep you alive. Gardening stuff is a good example of that. 

I was looking at all of my stuff the other day and thinking about what would happen to it when I die. Would most of it get tossed? I need to talk to my family about  my preps and supplies so they see the value in it and will be able to use it instead of saying “here’s dad’s old junk to throw away”.

 

Good stuff, Pops and Peter 44. I fully assumed lumber was hot back then, but it makes sense now that you mention no one was wanting to do new construction which I am assuming is a larger portion than Harry Homeowner repairs. 

As for autos, there a million different parts and widgets per manufacturer, so I like the idea Peter 44 had about oil change kits. Maybe keep on hand generic stuff like filters, different oil weights, etc. I already do all that on my own but it could be a service to my neighbor…

Investing in self or home is a great principle. I taught myself to solder during the pandemic, as well as lock pick/smith. Books might also be a good investment, particularly for trade school references!