The safest investment is Treasury Inflation Protected Securities (TIPS). Ordinary investors should avoid investing in derivative securities such as options. If you are rationally pessimistic go with TIPS.
Also, you would never get the 1⁄100 odds because in a sense money is more valuable in the state in which the economy is doing poorly. So say there are two bonds, each in 30 years have a 99% chance of paying 0 and a 1% chance of paying $1,000. The first bond pays off in a state in which the economy has done very poorly, the second in a state in which the economy has done OK. The first bond will cost a lot more than the second.
If you do want to play with derivative securities just maintain a short position in the S&P 500. If you think the decline will be gradual rather then all at once you could just keep buying short term put options on the S&P 500. As the market declines you will gain wealth which you could use to increase your short position.
If you are really, really pessimistic spend your money stocking up on canned goods and guns.
The safest investment is Treasury Inflation Protected Securities (TIPS). Ordinary investors should avoid investing in derivative securities such as options. If you are rationally pessimistic go with TIPS.
Also, you would never get the 1⁄100 odds because in a sense money is more valuable in the state in which the economy is doing poorly. So say there are two bonds, each in 30 years have a 99% chance of paying 0 and a 1% chance of paying $1,000. The first bond pays off in a state in which the economy has done very poorly, the second in a state in which the economy has done OK. The first bond will cost a lot more than the second.
If you do want to play with derivative securities just maintain a short position in the S&P 500. If you think the decline will be gradual rather then all at once you could just keep buying short term put options on the S&P 500. As the market declines you will gain wealth which you could use to increase your short position.
If you are really, really pessimistic spend your money stocking up on canned goods and guns.