Don’t Wait Too Long To Restructure Your Portfolio

TruePoint Capital

The problem with human nature is we often overreact to certain potential crises (e.g., Y2K) while underestimating others.

“IMF Chief Economist: ‘Worst Is Yet To Come For The Global Economy.'”

-Yahoo Finance.

“5 Signs The World Is Headed For A Recession.” -CNN

‘This Is Serious’: JPMorgan’s Jamie Dimon Warns The U.S. Likely To Tip Into Recession In 6 To 9 Months.” -CNBC

In the category of underestimating an impending crisis, take Hurricane Ian, which made landfall on September 29th, 100 miles south of Tampa, for example. Unbelievably, many Floridians ignored the state’s evacuation orders and rode out Hurricane Ian’s unbelievable fury that caused catastrophic damage and death and prompted a massive search-and-rescue effort.

One survivor described her experience with hurricane-induced flooding. “We floated on the bed up to the ceiling,” Halle B. said. “We only had a foot of air left.” (ABC News).

Hurricanes are the last thing people should wait until the last minute to deal with. Many think somehow they’ll avoid the path of the storm. But is this the decision you want to be on the wrong end of?

Recessions are another type of storm many people think they’ll be able to avoid the path of destruction of. Just like Hurricane Ian, the warning signs are blaring, and just like Hurricane Ian, many are choosing to ignore the sirens.

Those who heed the Hurricane warning signals have one clear path to safety: EVACUATE!

What about investors? What can they do to seek shelter from the coming financial storm? The first step is to PREPARE.

When a hurricane hits, the ones that are least prepared are the ones that are most at risk and are ultimately most devastated. The prepared ones can weather the storm the best and even, in some cases, emerge unscathed.

Smart investors are always prepared. The 17% the Dow has shed this year hasn’t fazed them because their portfolios were already allocated to deal with a recession. The 33% drop in the early days of COVID? These same investors had no reason to panic. It’s because they allocate their portfolios differently than average investors.

Ok, I should probably backtrack…

Smart investors like ultra-high-net-worth investors (UHNWIs) don’t always heed the alarms because the truth is they’re already out of harm’s way even to pay attention to the warning signs. So, while everybody else runs for the hills and starts unloading stocks and other Wall Street products to slow the hemorrhaging of their portfolios, the wealthy ride out the storm.

What can you learn from UNHWIs so you can allocate your portfolios now to shelter from the impending storm instead of waiting until it’s too late? If you want to follow UHNWIs on the path to safety, here is how they’re allocated.

The wealthy weather recessions by allocating their portfolios towards real assets and income-producing businesses (private equity) that are recession-resistant – tied explicitly to essential goods and services. One of these essential goods is commercial real estate (CRE).

Sure, commercial real estate segments like retail and office are affected by economic downturns. Still, some segments thrive in downturns that are recession-proof and inflation-resistant. Multifamily is one such segment that demonstrated its resiliency during COVID, where it recovered more quickly than any other CRE segment. This is largely due to demand consistently outstripping supply, and with home sales slowing, multifamily is poised to be even more in demand as many households look to downsize.

If you’re heavily allocated to Wall Street products, don’t wait until it’s too late to restructure your portfolio. Stocks are the first to suffer in the destructive path of recession. You don’t have to wait for the recession to make landfall. Protect yourself, your family, and your portfolio from impending financial devastation.

The wealthy have long relied on CRE and private equity tied to essential goods and services to counteract the devastating effects of recession and inflation. And through passive private investments, investors can rely on the expertise of others without the headaches or learning curve of doing it on their own.

Through advertising and crowdfunding, private investment opportunities are more accessible than ever – providing investors with opportunities to invest in recession-proof asset segments with low financial and knowledge barriers to entry without sacrificing return.

Reallocate your portfolio to avoid losses, preserve capital, and even thrive during the next recession.

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