Regime Shift Resilience
A transparent, auditable framework for measuring household and portfolio hardening across four macro scenarios: employment shocks, sticky inflation, policy fragmentation, and bear markets.
This tool does not predict markets, elections, or wars. It measures preparedness given assumptions about shock severity.
Four Dimensions of Resilience
Components:
- •Emergency Fund (40%) — months of expenses saved
- •Income Diversity (35%) — number of income streams
- •Debt Burden (25%) — monthly payments as % of income
Components:
- •Emergency Fund (45%) — pure safety net
- •Debt (30%) — obligations that limit flexibility
- •Defensive Assets (25%) — bonds/cash/stable holdings
Components:
- •Diversification (45%) — exposure beyond US markets
- •Position Limits (30%) — largest holding size
- •Defensive Mix (25%) — allocation to bonds/commodity hedges
Components:
- •Documented rebalance schedule
- •Job loss emergency plan (6-month runway)
- •Written position size limits (% of portfolio)
Thresholds & Rationale
Target: 12 months of living expenses in cash or equivalents (not invested).
Why: Covers most job-search scenarios (ave. 3-6 months), major health events, or required time off. Allows you to avoid forced selling during market downturns.
How it's scored: (actual months ÷ 12) × 100. 6 months = 50/100, 12 months = 100/100, 24 months = capped at 100/100.
Target: Total monthly debt payments (mortgage, car, student loans, credit cards) should not exceed 35% of gross income.
Why: Beyond 35%, debt service crowds out emergency savings and forces reactive decisions. Conventional lending standards cap here for good reason: it's the inflection point where flexibility collapses.
How it's scored: 100 − (actual % ÷ 35) × 100. 35% = 0/100, 17.5% = 50/100, 0% = 100/100.
Target: 30% or more of invested assets in bonds, utilities, dividend stocks, and other non-correlated holdings.
Why: This allocation acts as a volatility shock absorber without requiring rebalancing or new contributions. During bear markets, defensive holdings typically decline 5–15% while equities fall 30–50%.
How it's scored: (actual % ÷ 30) × 100. 15% = 50/100, 30% = 100/100, 60% = capped at 100/100.
Target: No more than 40% of portfolio in US-only assets. Minimum 60% in international, emerging, or commodity exposure.
Why: Extreme US concentration exposes you to single-country policy risk (debt ceilings, political deadlock, currency devaluation). Global diversification also hedges against USD strength and provides access to growth outside mature markets.
How it's scored: Penalizes US concentration above 40%. At 40% = 100/100, at 100% (all US) = 0/100.
Target: No single position (stock, fund, real estate, or holding) should exceed 10% of total assets.
Why: A single 20% loss on a 15% position destroys 3% of portfolio value. Even "safe" holdings (employer stock, rental property, or concentrated sector funds) suffer idiosyncratic shocks. At 10%, even a 50% collapse in one position costs only 5% of net worth.
How it's scored: Penalizes oversized positions. At 10% = 100/100, at 30% = 50/100, at 60% = 0/100.
Four Stress Scenarios
The tool stress-tests your plan across these four macro shocks, each requiring different defenses:
Stress: immediate 100% income loss, no severance, no new income for 6 months.
Weighs heavily:
- ✓ Emergency fund (can you survive?)
- ✓ Income diversity (backup revenue?)
- ✓ Debt burden (must you sell?)
Stress: 2-3 years of 5–7% inflation, wages lag by 1–2 years, debt and assets both erode.
Weighs heavily:
- ✓ Balance sheet health (do you own real assets?)
- ✓ Portfolio diversification (commodities, intl?)
- ✓ Discipline (are you rebalancing?)
Stress: 10–15% equity decline, USD volatility, flight-to-safety rally in bonds.
Weighs heavily:
- ✓ International diversification (escape US risk)
- ✓ Defensive allocation (bonds rally)
- ✓ Position discipline (no panic selling)
Stress: sustained decline, defaults rise, volatility >30%, forced margin calls.
Weighs heavily:
- ✓ Defensive allocation (bonds, cash)
- ✓ Portfolio concentration (concentrated bets crater)
- ✓ Rebalancing rule (forced buying discipline)
Resilience Bands
You have redundant defenses. Most shocks will sting but not break your plan. Can absorb 1–2 simultaneous scenarios.
Solid footing. You have most defenses in place, but one weak point could cascade into forced decisions.
You have gaps in your defenses. One shock is manageable; two simultaneous shocks require sacrifice (selling, cutting spending, deferring goals).
Multiple critical gaps. Even a mild shock (modest employment loss + small market decline) will force hard choices.
How Scores Are Calculated
1. Dimension Scores (0–100)
Each of the four dimensions is calculated as a weighted average of its underlying metrics:
+ 35% × Income Diversity Score
+ 25% × Debt Score
2. Scenario Scores (0–100)
Each scenario weights the four dimensions based on which defenses matter most:
+ 35% × Balance Sheet
+ 20% × Discipline
3. Overall Resilience (0–100)
The overall score is a weighted average of all four dimensions:
+ 25% × Balance Sheet
+ 30% × Portfolio
+ 15% × Discipline
Note: All scores are clamped to {0, 100} to prevent misleading precision. Scores are deterministic: same inputs = same outputs, always.
Important Limitations
This tool does not predict whether inflation will stick, markets will crash, or wars will start. It measures preparedness if those things happen.
Each scenario assumes a specific severity (6-month unemployment, 50% equity decline, etc.). More severe shocks will expose gaps faster.
Primary residence equity is intentionally not scored. Your home is not liquid; however, equity lines and refinancing can serve as emergency backup.
Real macro shocks often trigger multiple simultaneous stresses (inflation spike + unemployment spike). This tool scores them independently.
Ready to Assess Your Resilience?
Use the Regime Shift Resilience Planner to score your household and portfolio across four macro scenarios and identify your weakest point.
Open Resilience Planner