To be honest the dot com crash caught me unprepared, and the feeling of having 10+ million dollars in future equity go to less than $100K is not something I'd wish on anyone. But not all of my investment value was "future", I had a bit more than $500k in Sun stock that I could sell at "any time." When I sold it when Oracle bought them it was worth about $12K.<p>I did not make the mistake of buying a big house on the promise that in the future I'd be able to afford it. A friend of mine bought his house and his neighbor's house to combine into a larger lot, but since the stock was going up he got jumbo loans and was selling stock periodically to make the payments. When things went south he ended up selling the neighbors house at a loss refinancing his own house at a lower rate to stay in it affordably. But I did make the mistake of not paying off my house when I could have using "bubble" stock (like that Sun stock). 2001 to probably 2006 were very wintry years.<p>I analyzed my behavior during the last dot com bubble and my biggest driver was tax avoidance. How stupid is that? I would say "sure this stock is 'worth' $500K but if I sell it I'm going to have to pay a huge amount of tax on it and that will net out to a smaller number." I was looking at "losing" 25% of the value of the investment by turning it into cash. Ridiculous right? Well now I think it is ridiculous.<p>Every 3 months I take a long look at my assets and debts and future plans and re-balance as necessary to avoid a single thing from killing me financially.
If you think winter might be coming and want to prepare financially, the #1 most important piece of advice is this:<p>Lower your expenses.<p>Nothing gets you into trouble more than having a high expense load. Get as close as you can to spending nothing.<p>The next most important piece of advice is to build up cash. 6 months of your monthly burn is cutting it way too close. You should save until you have at least two years. What's more, you should save until you can actually invest some money.<p>These two bits of advice go hand in hand. The lower your expenses, the easier is to save 24+ months of runway up. And the reverse is true too.<p>Beyond that, you can do a couple other things to prepare yourself. You could join a larger, profitable company with no history of major layoffs. (Eg Google, Facebook, many others.) Or, you could take the opportunity now to start your own company, and maybe think about what sorts of businesses could benefit from an economic downturn when you do so. Focus on getting it profitable, rather than focusing on rapacious growth. Obviously, these moves (getting a job at a stable company or stating a company and getting it profitable) are more out of your control and harder to pull off. Which is why cutting expenses and saving as much as possible are the most critical endeavors.
> I’ve been telling my students, “Take a chance, you can get another job on Monday.”<p>For students, maybe, especially if they're entry level jobs. However, for anyone even mid-level, I don't think this has been good advice for several years. Perhaps in SF it's been fine, but even for many mid-level (and certainly sr folks) I know, finding another job "on monday" has not been the case. (getting an <i>interview</i>, especially via a recruiter, has still been relatively quick, from what I hear).<p>Employers have been far more picky than I think many people expect. Compounding this is that they sometimes have suboptimal folks in particular roles, and those people tend to exacerbate the problem when interviewing/finding new folks.<p>In any event, glad to see somewhat balanced view, vs the extremes we normally see.
I just have a point about the last piece of advice:<p>"Make small convex investments. Learn a little bit of a lot of things–machine learning, internet of things, virtual and augmented reality, 3D printing."<p>I find a lot of advice to be diametrically opposed to this. Many other people advise you to "go deep" in a single topic and be the expert on that topic. (It also seems to contradict the point above it, but only if they are both read a certain way.)<p>So which is better advice? Is there a study out there?
I appreciate this author's "hope for sunshine but prepare for rain" philosophy as opposed so many others view that either "the sky is falling" or "the good times will last forever" narratives. An ounce of prevention is worth a pound of cure.
Certainly interesting. This felt out of place to me in the concrete actions you can take now: "Keep having children because a) the world needs more smart children and b) by the time they get really expensive, who knows what things will be like." Sure these are fair points but dependents do limit ones ability to make decisions 'suddenly'
I agree with the mentality, but the advice doesn't seem great. In particular, I already follow all of it (even in good times you should have 6 months savings).<p>Since I wasn't around during the dot-com crash, could some of the veterans on HN give more practical advice on how to position yourself to ride out a crash?<p>Right now, my theory is to try to get yourself a job at a stabler tech company with proven profitability (ex. Google). Does that make sense?
FTA: talking about a tech dip with a big external shock. He quotes: "another US genital waving adventure" as one of the shocks along with banking crises, trade route blocking, war, etc.<p>I had quite the wtf? moment with this one. Can someone explain to me what "another US genital waving adventure" means?
Not a huge fan of the 'have kids, the world needs smart people' this seems to pretend that his intended audience holds the key to wisdom and the only way to keep that going is for his audience to have kids.
I don't live in Silicon Valley so this is a genuine question: Are things starting to fall apart over there or is Kent Beck just offering up some sage advice? (Either way: Thanks, Kent!)
<i>Defer gratification until you have six months in the bank, if that’s an option.</i><p>Phenomenal advice. Having some cushion when between jobs is great. It's also peace of mind.
He does not seem to state any reasons he thinks "Winter is Coming".<p>The earnings of Facebook, Apple, Amazon, and Google tell a different story than his.
I have noticed that people who have lived through dramatic downturns tend to look for a pattern or signs of it happening again. It's probably basic human behavior, once you get burned by something you tend to flinch when you see something similar.<p>I am also not saying he is wrong of course... But I have noticed similar pessimism since 2012. People justifying being unadventurous with "the bubble is gonna burst soon. I have lived through it before."<p>I wonder where else there can be growth though?
People have been beating the drums pretty loudly lately for a global downturn. It almost feels like mainstream media is trying to cheer it into existence.<p>Yes there are "concerning" signals if you look - a decline in China's GDP, the plunging price of a barrel of crude oil, Britain leaving the EU. There are always areas of concern in even "good" times. However Op Ed columnists and Cable TV pundits seem to be falling all over themselves warning of the impending doom. And honestly it feels like sport.<p>Yes its always wise to have some saving, the more the better to a point any way. However it also wise to realize that a lot of this is fear mongering by the news media. And for an industry that has less credibility and relevance in people's daily lives than it once did, a lot of this just feels very contrived. Bad news sells, bad news is always good for the news media. There's an old newsroom adage "If it bleeds it leads." I realize this was a FB post and not a mainstream news media post but the fear mongering is starting to have this effect.<p>My coat is in the closet right where I left it, its August now, the sun is out and I'm wearing shorts.
I think this is good advice- risk management is important in managing your own career. It's easy to get complacent with recruiter outreach hitting your InMail at a steady clip but macro, micro, exogenous, endogenous factors can shift your short-to-medium term career prospects significantly.
I would slightly disagree with the housing. At least in some areas, owning is cheaper than renting, especially if you plan to stay in the area long term. Seattle is definitely that way. Mostly you have to be smart and buy something you can't afford. A decent fixer upper will put you in great financial shape.
6 months in the bank is pretty standard personal finance advice. The rest is just good, solid career advice that applies to a greater or lesser extent any time.