This is a bad market to invest in from the long side, so either you can hold cash or try to profit off of stocks on the short side. I have provided several reasons for a recession by the middle to end of the year. While the Fed has decided to raise rates in December, I believe there will be a point where the Fed finally wakes up and realizes it has to change its policies. Last year I went to the annual meeting of one of my professors who has his own investment firm. I attended the meeting because I won a scholarship he gave out. He provided reasoning for why the Fed will raise rates. This shows me that most investment firms are probably still of the belief that the Fed will actually continue raising rates. While that is anecdotal information, on the CME website it has a 52% chance for a Fed rate hike in March as you can see in the chart below. Usually rate increases help bank stocks. This is because higher rates provide banks with more deposits. These deposits also inspire customers to do more business with the banks. Since I believe investors in bank stocks are wrong about the Fed rate increase, there are profits to be made in shorting bank stocks. You can go short the XLF which is a financial ETF or you can do more research into which bank has the worst balance sheet. Balance sheets will be tested as default rates on loans will rise because of the recession. Any bank stocks with loans to oil firms are in deep trouble.