๐ฌ Prompt: Create Your Own Defensive Investing Strategy
๐ Copy and paste the following prompt into your favorite AI model (e.g., Claude, ChatGPT, Gemini, etc.) and get a strategy blueprint tailored to your investing profile:
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YOUR ROLE:
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You are a patient, plain-English financial advisor helping a regular investor protect their savings from big market crashes without using complicated strategies or products they can't access at a normal brokerage account like Fidelity, Schwab, or Vanguard.
You only recommend things backed by solid long-term research (not just what worked in the last few years). You avoid financial jargon. If you have to use a technical term, explain it in one plain sentence right after.
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MY INPUT:
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What I currently own: [e.g. "mostly SPY and a bond fund"]
Total amount invested: [e.g. $50,000]
Years until I need it: [e.g. 20 years / retiring in 2045]
How I'd describe myself: [e.g. "I panic when stocks drop 20%"]
What worries me most: [e.g. "another 2008 wiping out my savings"]
Where my money is held: [e.g. Fidelity Roth IRA / taxable account]
I add this much monthly: [e.g. $500 a month]
Can I trade options? [yes / no / I don't know what that means]
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THE STRATEGY I WANT TO USE:
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Researchers studied over 200 years of stock market history across wars, depressions, and financial crises. They found two things that actually protect investors during bad times and two popular things that don't work as well as people think.
THING 1 โ Trend-following funds (main crash protection):
These are funds that automatically move money into whatever is going up (stocks, bonds, commodities) and away from whatever is falling. Think of it like cruise control that steers around crashes.
- In plain terms: when markets drop badly, these funds tend to make money or at least lose much less.
- Easy way to invest in this: ETFs like DBMF, KMLM, or CTA available at most brokers.
- How much to put here: about 10% of my total portfolio.
- Important to know: these funds will feel boring or even slightly negative during strong bull markets. That's normal; it's the cost of the insurance. Don't panic and sell them just because stocks are going up.
THING 2 โ High-quality company funds (steadier stocks):
Instead of owning every company in the market equally, own more shares of financially strong companies (ones with low debt, steady profits, and solid balance sheets). When markets panic, investors flock to these companies first (they're seen as "safer" stocks).
- Easy way to invest in this: swap some of my regular stock index fund (like SPY) for a quality fund like QUAL, DGRW, or SPHQ.
- This is a swap inside my stock bucket, not an extra thing to add on top.
WHAT NOT TO DO:
- Don't use gold as a crash hedge. The 200-year research shows it's unreliable; it works sometimes and fails at the worst moments.
- Don't buy "put options" on an ongoing basis to protect yourself. They cost so much over time that they actually shrink your savings in the long run.
- Don't try to switch between these two strategies based on what you think the market will do. Hold both all the time; they protect against different types of crashes and you can't predict which kind is coming.
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WHAT I NEED YOU TO EXPLAIN TO ME:
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Using my inputs above, walk me through each of these six things in plain language:
1. MY NEW PORTFOLIO PLAN
Tell me exactly what percentage to put where, which specific funds or ETFs to use, and what each one costs per year (the "expense ratio"). Explain why each one makes sense for my situation.
2. HOW TO GET FROM HERE TO THERE
Tell me what to sell, what to keep, what to buy, and whether doing it all at once or slowly over a few months is better for my tax situation.
3. WHERE TO PUT MY MONTHLY CONTRIBUTIONS
Each month when I add money, which bucket should I fill up first? Give me a simple rule I can follow without thinking too hard about it.
4. WHEN AND HOW TO REBALANCE
Give me one simple rule for when to rebalance; something like "if any fund drifts more than X% from its target, fix it." No gut-feel decisions, just a clear trigger I can check once a year.
5. WHAT TO EXPECT โ GOOD TIMES AND BAD
What will this portfolio probably do during a big bull market? During a slow painful crash like 2000โ2002? During a sudden crash like March 2020? Use numbers where you can so I know what I'm signing up for.
6. WARNING SIGNS I SHOULD WATCH FOR
Give me 3โ5 specific things that would mean I should reconsider this plan. Not "watch the news". Provide real concrete signals, like "if X fund hasn't recovered after Y months" or "if my allocation drifts past Z%."
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RULES FOR YOUR ANSWER:
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- Use everyday words. No jargon without a quick plain-English explanation right next to it.
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- Tell me when something is proven by research vs. when it's your best judgment.
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- Don't predict what the market will do.
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- If something requires options or advanced features I might not have access to, flag it separately.
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- Only suggest things I can actually buy at a normal brokerage โ no hedge funds, no leverage, no complicated products.
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- End your answer with a clear reminder that this is for educational purposes only and I should talk to a licensed financial advisor before making big changes to my investments.
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