

If you’re like me, you are probably trying to get ahead of this potential recession. I have been reading books, listening to podcasts, and watching YouTube videos by people much smarter than myself.
I realized very quickly that I should have been reading these books last year. A lot of the factors that are discussed as signs of a “peak” market cycle are either currently upon us or have already happened.
In the military, we have a phrase: “You should always hope for the best, but prepare for the worst.”
Specific to a recession scenario, it is much better for you to prepare for the market to crash and nothing to happen than it is for you to prepare for the market to continue going up in value but instead a recession hits. For this reason, you should act fast and start planning for all of the “what ifs” that COVID-19 could inflict on the economy.
The reality is that you are late to the party, but it is still better late than never.
Understanding the economic cycle is critical in the big picture of investing. You need to understand debt cycles and the levers that governments can pull to cause “beautiful deleveraging” out of bubbles.
Big Debt Crises explains how inflationary and deflationary deleveraging works. If you purchase the hard copy version, it comes with three books. (Alternatively, it’s available as a free PDF.) The first explains these cycles, and the second and third books go through a number of case studies on recessions and depressions from various countries over the last century.
This is a very interesting read and will absolutely help you understand the bigger picture of economic cycles—something undeniably beneficial as an investor.
Fair warning: it’s a pretty dense read but absolutely worth it.

J does a great job talking through not only debt cycles but also which strategies work well in each part of the cycle.
The book breaks down how you can change your business during different parts of the cycle to maximize the potential return on your investments. It also discusses how to tell which part of the cycle is approaching just by observing trends. These are not hard and fast indicators, but they are certainly things to take note of when markets are changing. As an investor, I found these especially helpful—I’ve noticed several in the recent economic landscape and can now identify what they mean.
Related: Recession Prep 101: Investing in Real Estate During a Financial Crisis
Warren Buffett famously said: “Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1.”
The reason it is so crucial that you focus on never losing money is because of the effect a loss has on your portfolio. A 50% loss requires a 100% return to bring you back to zero. Conversely, a 50% gain requires only a 33% loss to bring you back to ground zero.
You need to hedge your bets and be sure that you spend time defending yourself against possible worst-case scenarios.
Incerto is not a single read but rather a collection of five books: Fooled by Randomness, The Black Swan, The Bed of Procrustes, Antifragile, and Skin in the Game. This series is long and full of a lot of contrarian viewpoints that are sure to make you rethink the way you… well, think.
Here’s one of Nassim’s concepts I really like, paraphrased:
Don’t be a turkey.
A turkey that is fed by a farmer for 1,000 days is always happy to see the farmer. Eventually, the turkey comes to expect that visits from the farmer mean more good food. That is all that has ever happened, so the turkey believes that is all that can, or will, ever happen. But when day 1,001 arrives, and it is the day before Thanksgiving, the farmer is not bearing food. The farmer is bearing an ax, and the turkey will learn very quickly that its expectations were very wrong.
The lesson of this story is the central problem of unexpected, “black swan” events. There isn’t enough data to reach accurate conclusions about how risk will manifest itself, and how bad it will be.
We can only measure the risk associated with what we have seen in the past. Unfortunately, that doesn’t mean worse things won’t happen in the future.
Incerto is intense and filled to the brim with information. I have become a huge fan of Nassim Taleb, and I bet you will be, too!
After you’ve researched the economic cycle and begun thinking more thoroughly about risk mitigation, it is important to continue building your financial foundation. The more money you have saved up when a recession hits, the better positioned you are to take advantage of opportunities that may arise. And this holds true at all times—you should constantly look to improve your finances. The more of your income you can save, the better!

Related: 3 Productivity Books That Changed My Life
While the other books provide insight on how to avoid losing money, these books will open the door for you to earn large returns with your investing strategies.

What books have you been reading to prepare for 2020’s recession?
https://www.biggerpockets.com/blog/top-9-books-how-to-survive-recession