On this episode of The Impatient Investor, Andrew discusses why it is so important to adjust your investments as needed and place them into alternative assets that are recession-resistant. Investors who are waiting for the market to settle down are missing out on moving forward with their schedule for achieving financial freedom.
“Not only are the sideline sitters losing money as their investment capital is eroded by inflation, but there is also an opportunity cost of not putting this capital to productive use.”
A Colorado man made the local news for missing out on a lottery payment because he failed to claim the prize by the deadline. Peter Bailey played the lottery and he had up to six months to redeem his winning ticket for $1500. He missed the deadline by three days. And as required by Colorado law, the unclaimed money was distributed to various state wildlife and educational agencies. $1500 isn’t exactly chump change, but if you think missing out on $1500 stings, what about missing out on $20.5 million?
Well, that’s exactly what happened to one person here in Arizona last year. The winning ticket was sold on June 5, in Goodyear, Arizona, and the winner had 180 days to claim the prize. That deadline came and went, and no one showed up to claim his or her prize. Nobody even knows if the owner of the ticket ever realized they missed out on a fortune. But ignorance is probably bliss in this case.
Sitting on the sidelines and missing out on a lottery prize, not only stings psychologically, but the hard-luck owner of the ticket also misses out on money that perhaps could have let them retire, spend more time with their families, donate to good causes, invest, you get the idea. I’m sure you can think of a million ways to spend $20.5 million.
In the world of investing, there are plenty of investors that miss out by sitting on their hands, just like the lottery ticket holder who waits too long to claim their prize. And right now these investors have all the excuses in the world for sidelining their money. There’s too much uncertainty surrounding COVID. What if we go back to lockdowns, or the timings not right? Timing the market is not a winning strategy. It’s speculative and no better than gambling. Guessing on market shifts and moving money in and out to profit from upswings and minimizing losses from downturns is a recipe for losing money. Nobody’s ever made money from doing that. This is evidenced by the fact that the average retail investor does worse than inflation when playing the market.
Waiting is not a virtue. The myth many investors claim to is that waiting is harmless and that not making a decision won’t have any repercussions. This could not be further than the truth. Professional poker players say that sometimes not making a choice can have just as much impact as actively making one. One of the professional poker players Annie Duke had this to say about the choice not to make a choice; “there is no such thing as not deciding, a decision to wait and see while you gather more information is an active decision to stick with the status quo, and a decision to defer any changes to the status quo is a decision to stay the strategic course you were already on”
Investors who chose to do nothing are actively deciding to stay the strategic course they are on. What is that strategic course? Choosing to miss out on the opportunities to proactively grow money. This is a strategic course whether or not investors believe it. In economic terms, not only are the sideline sitters losing money, as their investment capital is eroded by inflation. But there is also an opportunity cost of not putting this capital to productive use. I am not advocating diving back into an unstable stock market. I’m advocating against doing nothing because there are investment assets out there you can commit your capital to right now that are insulated from market volatility and that offer recession-resistant income and growth.
The problem for many investors is they think the stock market is the only way to get back in the game and just seems too daunting. And that’s what’s stopping many investors from getting back on the road to financial freedom. What many investors who are suffering from analysis paralysis don’t realize is there are other roads to financial freedom. Maybe it’s time to pivot, consider other investments, it’s better to adjust than wait. If your goal is to generate long-term wealth, then you should consider adjusting your asset allocation to assets that will help you accomplish your goal. That’s why you should consider alternative assets that savvy institutional and individual investors have long-term to for building wealth. Assets insulated from Wall Street volatility that generates stable consistent income and growth even in uncertain times, like the ones we’re going through right now. Alternative assets like real estate, private equity commodities, precious metals, and venture capital behave differently than traditional stocks that fluctuate with the broader market and economic movements.
There are select alternative assets that are not only recession-resistant but thrive in one. One of those asset classes is affordable housing and specifically mobile home parks. How do we know mobile home parks thrive in a recession. During the pandemic, even as multifamily saw a rise in vacancies and a decrease in rents, the opposite was true for mobile home parks that saw vacancies decrease and rents increase. Investors who are waiting for the market to settle down are missing out on moving forward with their schedule for achieving financial freedom.
Don’t wait for the broader markets to settle down. Pivot to markets like the market for affordable housing in the mobile home park space where income and appreciation are not only stable during a recession, but grow. The bottom line don’t do nothing. If you’re interested in learning more, go to www.stoptradinghours.com