“Curious” investors have a better chance of winning in a recession because those investors who desire to win are naturally curious about what makes up a smart investment. Curiosity is the front-end of learning and creativity, which are both useful in being a winning investor. It is a fact that when emotions are high, reasoning skills in the same person are quieted.
When the daily conversation involves a global pandemic triggering the news of 46 million people having filed unemployment claims in this country, it is easy to become discouraged, angry or both. It is at this moment that you need to apply what Benjamin Graham calls “emotional discipline”.1 The result of practicing this discipline will keep you from a poor overall result in your investment portfolio.
This discipline includes knowing which investments perform best in a recession, and then integrating one or more of these investment products into your investment portfolio to help balance the impact of a recession. The objective is not to sell everything out of fear, but to hold on to high quality investments while making room in your portfolio for those investments that perform best in a recession. Since no one rings a bell to declare when the recession-to-recovery cycle starts and stops, smart investors look at the design of their entire balance sheet to reduce the risk of losing money. Here is a list of the Top 5 investments that act contrary to the downward pressure on stock prices during a recession:
- Precious Metals
- Foreign Currencies
- Equities in Low-Correlation, Non-US Countries
- Real Estate
I have long believed that people prefer to live indoors. I enjoy the creativity of designing a win/win between the residents and the Investors that I serve. Unlike investing in stocks, before I close escrow to buy a property, I am fairly certain how much money we will make. No kidding. I have found that those who do investing best are curious enough to learn their craft. They rule their emotions, or gut feelings, with the knowledge of their industry and the products and strategies within it.
Wouldn’t it be phenomenal to regularly outperform the market? Or heck, just beating your neighbor’s investment performance could be a victory. Let’s look at some of the reasons real estate drives performance in a recession:
- When the market is unpredictable investors often feel the need to invest in things they can touch.
- Investments that provide income are also providing financial feedback about the health of the investment.
- As an investor, I want an investment that people “must have” – most people live or work in buildings, and no matter what may happen, it will remain a societal requirement and necessity to live and work in a form of indoor real estate.
- Additionally, I want investments that pay me more if I am a better investor.
- Lastly, however, I do not want to risk my principal when things don’t go as planned, like an unexpected global pandemic.
Income real estate is the favorite of its category. You can touch it, it generates cash flow, the smarter you are the more you are rewarded, and if you limit the bank debt, you will never lose it to the bank. By the way, you can also positively impact the lives of others, which becomes a reflection of who you are. When you add real estate investing to your portfolio, you have protected your investments in the wisest way.
“WHEN WAS THE BEST TIME TO BUY PROPERTY? 20 YEARS AGO! WHEN IS THE SECOND BEST TIME – TODAY!”
Take a look at the video above and request more information on how you can recession proof your investment portfolio. Reply to this email to get the latest update on the VWC Multifamily Fund III.
Set your mind on investments that last…and start receiving quarterly cash distributions as part of your reward.
You are smart. Join the world’s wealthiest investors. Invest when the investing world is emotional. And be curious enough to learn winning strategies that are best applied in a recession.
1 The Intelligent Investor , pg ix, by Benjamin Graham