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alphaAI's 2023 Recession Playbook

Don't wait to invest during a recession.

It’s a scary time to invest, given all the talk about a coming recession. But recessions can actually be a great time to invest, and here’s why:

  1. The S&P 500 has been up more than 15% on average in the year following a recession. You DON’T want to be caught on the sidelines when the market rebound happens.

  2. We are likely past the worst of it. Historically, the stock market has bottomed out long before the worst of the economic data unfolded. In fact, the S&P 500 has averaged a gain of ~4% DURING a recession.

  3. During recessions, asset valuations get cheaper, presenting once-in-a-lifetime buying opportunities. You need to be ready to take advantage.

alphaAI's Recession Playbook

Follow these steps to recession-proof your portfolio and make the most of your money in 2023:

  1. Create and fund investment account with us. Due to financial regulations, it can take weeks to create and fund an account, so don’t wait. At least have your account made so you’re not stuck on the sidelines when the market rebound happens.

  2. Earn up to 4.5% interest on uninvested cash with our brokerage partner, Interactive Brokers. That way, your cash isn’t just sitting there getting eaten up by inflation.

  3. Choose from one of our recession-proof strategies. Our long-short strategies use short positions to offset market declines and limit portfolio drawdowns.

  4. You don’t have to be 100% invested. Invest anywhere from 20%-80% of your funds and keep the rest in cash. That way, when the rebound happens, you’ll be ready to take advantage of buying opportunities.

What are recession-proof strategies?

You might be wondering how an investment strategy can be recession-proof. After all, aren't all strategies at the mercy of the markets? Well, that's not entirely true. We use market exposure management and long-short positions to reduce portfolio volatility and hedge against market declines.

Market exposure management is one way to control a portfolio's risk. More risk means a higher chance for returns, but also a higher chance for losses. The idea is simple. When market conditions are poor, we gain exposure to an inverse ETF to hedge against and profit from market declines. When conditions are uncertain, we adopt a conservative risk profile to minimize losses. Under normal market conditions, we take on a moderate, well-balanced risk profile. When conditions are ideal, we assume an aggressive risk profile to maximize gains.

Long-short positions are used to generate consistent returns, regardless of the market environment. Long positions profit when the market goes up, and short positions profit when the market goes down. Long and short positions offset each other, which has the added benefit of significantly reducing a portfolio’s volatility and risk.

These are just two of the ways we helped our clients beat the market in 2022. All of our core strategies have outperformed the majority of similar strategies on Wall Street. In 2022 alone, our clients beat the S&P 500 by an average of 5% with 30% less risk.

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