Recession survival for investors Understanding the business cycle doesn't matter much to an investor, unless we know how to apply economic trends to help the growth of our portfolio. Investing is based on the philosophy that what goes up can come down during any point. It’s not always easy to predict which markets will be affected during a recession – until they tell us, and then it’s often too late. What's an investor to do during recession? Unfortunately, there is no easy answer. It really depends on your situation and what type of investor you are – here are a few hints to help you make your decisions. 1. Short selling stocks. A bear market does not mean there’s no money out there. Some investors take advantage of falling markets by short selling stocks. Really, this strategy should only appeal to experienced investors – there are often some serious pitfalls you need to understand. 2. Value investing. Buying stocks that have lost value and treating it like a bargain hunt, with the assumption it will eventually get back on track. (You should rally understand the company and industry - don’t buy randomly.) Value investors use bear markets as buying sprees, picking up high-quality companies that are selling for cheap. 3. Dollar-cost averaging. Don’t flinch, don’t change your strategy. If you can afford to do this, you’ll apply a long-term, buy-and-hold strategy as if nothing in the economy has changed. Many investors don't have the guts for risky techniques such as short selling. Some don’t have the time to research stocks for value investing, either. What is important is to not sell in a panic and take a huge loss. Understand your situation and limitation, and choose your strategy from there. If you are close to retirement, the long-term approach definitely is not for you. The bottom line is that recession is a normal part of the business cycle. We can’t predict how long it will last, but it won’t last forever and generally the economy will revitalize within a few years in different sectors. The key to making decisions in investing during a recession is understanding the business cycle and your individual investment goals.