How To Make Millions Of Dollars During A Recession

A billionaire’s guide to getting rich during an economic collapse

During the 2008 Financial Crisis, Michael Burry made $800 million for his hedge fund. Of which, $100 million was personal profit.

He’s not the only person to get wealthy during an economic collapse.

In an interview with CNBC, Warren Buffet, who has a net worth of $110 billion, says he hopes to see a lot more recessions in the future.

The reason? Stock prices nosedive during recessions. Millionaires and billionaires purchase them for pennies on the dollar. Then, once stock prices recover, the value of their holdings skyrocket, causing them to get significantly richer.

Here’s a more detailed explanation of the strategies billionaires can use to become wealthy during a recession:

Short The Market And Wait For The Price To Go Down

“Short selling is an investment or trading strategy that speculates on the decline in a stock or other security’s price,” according to Investopedia. “Short-sellers bet on, and profit from, a drop in a security’s price. This can be contrasted with long investors who want the price to go up.”

This is exactly what Michael Burry did leading up to the Financial Crisis of 2008. He spotted a macro-economic trend and believed subprime mortgages would lose value. So, he shorted the real-estate market by purchasing credit default swaps against subprime deals he saw as vulnerable.

Eventually, Michael Burry’s prediction came true. When the housing market collapsed, he made more than $700 million for his hedge fund and a personal profit of $100 million.

The mayhem of the housing market collapse extended across the finance industry by the summer of 2008. Many prominent businesses, such as Bear Stearns and Lehman Brothers, were forced to close their doors. It’s also worth noting that the bankruptcy of Lehman Brothers frightened the stock market, causing it to plummet rapidly.

Many billionaires and rich investors short the market whenever they think a bubble is about to pop. Even if millions of people lose their jobs and homes during a recession, they’ll be happy as long as their portfolio balance grows.

Invest At The Bottom Of A Crash And Wait For The Economy To Bounce Back

Warren Buffet said, “I will tell you the secret to getting rich on Wall Street. You try to be greedy when others are fearful. And you try to be fearful when others are greedy.”

Let’s do a mental exercise together.

Imagine a scenario where a company’s stock price falls to $100. Then, imagine that a billionaire invests $50 million in that company’s stock. If the value of that stock rose from $100 to $200 during an economic recovery after the recession, the billionaire would double their money and make $100 million from that trade alone.

That happens all the time during recessions and economic collapses. Investors wait until they believe the market has reached a bottom. Then, they invest a few million dollars and wait a few months (or years) for the economy to rebound. Quoting an article published by Forbes:

“A market crash creates opportunities, especially for savvy investors. You may be able to splurge on stocks and funds you’ve had your eyes on at steep discounts — or you can simply continue buying shares on your regular investing schedule.”

Millionaires and billionaires are almost guaranteed to make a lot of money if they buy stocks/assets during a recession and sell them for a higher price at a later date. Plus, they can rinse and repeat the same strategy whenever there’s a market crash.

Millionaires love to profit during a recession and get even wealthier during an economic collapse. They’ve done it before, and chances are, many will continue to do it for as long as they possibly can.

They’ll sit at home and “buy the dip” while their neighbors struggle to pay rent and put food on the table due to widespread job losses. They’ll watch their portfolio and bank balances grow, while normal people see their savings and income decline.

It’s a shame.

Wealth inequality is rising. Billionaires and millionaires are hiding their money in tax havens around the world. And, of course, many wealthy individuals don’t care about normal people like you and me.

As long as the wealthy get wealthier during an economic collapse, that’s the only thing that matters.

Want to be notified whenever I publish a new article? Click here.

Disclaimer: This article is for informational purposes only. Therefore, it should not be considered Financial or Legal Advice. Please consult a financial professional before making any major financial decisions.