If you haven’t been living under a rock you probably noticed the stock market volatility and the wild swings both up and down but most notable darling stocks like Apple (AAPL) taking a 20-30% haircut in value over the last week. (As of this morning it is up 5.9% gaining back some of the losses.
Of course, there is the adage of investing in stocks is to play the long game and not get caught up in the day to day movement of your positions. However, after a 5-6 year run up in value with no corrections in the market many experts have been predicting a sizable correction. That should then lead to a few other questions. Given a five-year run up on value what gains are worth taking off the table and what are worth holding out for the long term? Also, the other most significant question is how diversified are you in your investments?
By diversity, I don't just mean tech, emerging markets, healthcare, large cap, small cap, etc. What I am talking about is equities (stocks), fixed income (bonds), cash, and alternative investments (real estate).
When we meet with clients, the #1 concern by a long shot is CAPITAL PRESERVATION, “I don’t want to make my money again”. Sounds familiar yes?
Most people that have investments are most typically invested in IRAs, 401Ks and individual accounts that are managed by a financial/wealth manager. The issue is that a significant portion of those holdings is all in 1 bucket (equities). So a volatile stock market puts them at a much greater risk of losing capital.
Of course with us being a private equity real estate firm you know we are going to pimp the virtues of real estate. As real estate is a very nice alternative investment bucket to equities as it can be touched, finessed, leveraged, value-added or simply just acquired at below market values. All of which give it a much more consistent and reliable platform to preserve and grow capital.
What does this mean for you?
We are predicting the continued wild up and down swings in the stock market for the remaining of 2015. So, it might be a good time to start looking at your positions and evaluating how much exposure that you have to each of the different asset classes.
Also, note as we are big cheerleaders of real estate we are coming out with a few free informational post and segments about how people can invest their IRA and 401k into real estate.