I think to answer you question you need to be able to define the meaning of the term “long slump” scenario more specifically. The Japan example suggests a low deflation, low but slight growth scenario, steadily decreasing asset prices. This would suggest buying longer dated puts on indexes and rolling these over when they come due. Alternatively longer dated puts on stocks which maybe vulnerable (e.g. those with significant debt).
The difference in the next 30 years to the Japan situation is that presumably under this type of scanario the situation would be a global one—which you would expect to significantly change dynamics. E.g. possible tension between countries with increasing protectionism etc. In this case you would be short exporters, especially those with some local competition in their export markets.
Another scenario would be loss of faith in faith money due to high inflation and/or loss of faith in US dollars as reserve currency due to high gov adn private debt etc. Gold is the obvious way to go. For small money you’d probably at risk buying longer dated calls on gold and roll them over.
This is stuff off the top of my head. To get into it more deeply I think you need to think about what the self reinforcing dynamics would be and why these dynamics wouldn’t be inevitably self defeating. I discuss this in terms of George Soros ideas on reflexivity at http://reflexivityfinance.blogspot.com/
Interesting topic!
I think to answer you question you need to be able to define the meaning of the term “long slump” scenario more specifically. The Japan example suggests a low deflation, low but slight growth scenario, steadily decreasing asset prices. This would suggest buying longer dated puts on indexes and rolling these over when they come due. Alternatively longer dated puts on stocks which maybe vulnerable (e.g. those with significant debt).
The difference in the next 30 years to the Japan situation is that presumably under this type of scanario the situation would be a global one—which you would expect to significantly change dynamics. E.g. possible tension between countries with increasing protectionism etc. In this case you would be short exporters, especially those with some local competition in their export markets.
Another scenario would be loss of faith in faith money due to high inflation and/or loss of faith in US dollars as reserve currency due to high gov adn private debt etc. Gold is the obvious way to go. For small money you’d probably at risk buying longer dated calls on gold and roll them over.
This is stuff off the top of my head. To get into it more deeply I think you need to think about what the self reinforcing dynamics would be and why these dynamics wouldn’t be inevitably self defeating. I discuss this in terms of George Soros ideas on reflexivity at http://reflexivityfinance.blogspot.com/
Cheers Steve van Emmerik