I have been investing in ETFs and stocks since 2015 and manage my portfolio myself. I live off the capital growth and dividends, so it is important for me to be mentally prepared for a recession. That is why I have studied more than 20 investment books in the last 10 years.

Stock market valuations are at an all-time high right now. Warren Buffett is holding record-high cash reserves. Many top investors argue that the market is at a record high, and some predict a crash soon. No one really knows when, or if, a crash is coming — so what should you do?

I set myself a stock allocation target of 50–60%. My stock portion consists mainly of an MSCI World ETF, an MSCI Emerging Markets ETF, and some blue-chip companies. The recent growth of the stock market has pushed my holdings above my limits.

I remember the sentiment during the 2009 crash very well, but I was not invested at that time. I was building a company from zero, so every bit of growth felt new to me, and I had no stocks or ETFs. I also lived through Covid and the 2022 downturn, but both were short-lived. I am fortunate that I stayed the course and did not sell.

My biggest lesson from The Intelligent Investor is that it is very hard to stay the course when you have not experienced a recession that lasted many years, or even decades. That is why I set a comfortable stock percentage.

These tips help me feel okay about a possible recession:

• Re-reading some of my favorite investment books. When I am unsure and too much noise is bothering me, I grab one of my favorite books and read it again.
• Journaling my thoughts and putting my fears on paper. I write down my fears and thoughts so I can come back to them later.
• Using an AI chat to run simulations of recession scenarios based on my current holdings. This has been the biggest help for me. I let it do the math for various outcomes, including what would happen if I reduced my stock positions now. I don't let it make the decision — I use it to work through the possibilities.

My conclusion is that I would survive the worst-case scenarios, and reducing now would trigger taxes. So I decided not to reduce my positions and to stay the course.

My favorite books

• The Intelligent Investor
• The Psychology of Money
• The Most Important Thing
• Antifragile
• The Little Book of Common Sense Investing

Happy investing!