Recessions / market corrections / downturns when wealth is destroyed ... market values gets eroded, companies get bankrupt , job market worsens . Non of these on the face of it look like great money making opportunities !!
So how to go about making money when volatility increases . Some of the investments I can think of are :
1) Buy a lot of put options on all those assets that are expected to collapse.
2) Sell in the money call options and collect the premium , that will any way expire worthless as the market falls.
3) Hold a lot of cash/ liquid assets to buy assets when every one sells.
4) Buy Gold .. when everything collapses everyone will rush to the safety of Gold.
5) Sell your house and stay in a rented apartment .
The problem is we are not sure if there will be a recession or even a correction tomorrow. If you are sure about the market direction there are tools available to make money .
The key is knowing the direction of the market or at least predicting it with high probability.
Is it a good time to invest Rs 10,00,000 or is there going to be an upcoming market crash soon like some experts have predicted?
One person was waiting on the sea shore . Someone came across and asked him what he is waiting for ? He said he was waiting for the waves to reduce so that he can take a bath !!
Thus the lesson is volatility will always be a part of the market . We have to invest in this volatility and make money too !!
Returns will depend on your investment choices. Even in a bad market there will be companies that will give more than 20% annualized returns .
Thus the challenge is to :