Investing In A Stimulus Environment 

“Biden’s Stimulus Will Keep America’s Economy Humming for Years, Goldman Sachs Predicts.” CNN

“U.S. Stimulus Set to Turbocharge World Economy…” —Bloomberg

“U.S. Growth Could Surge on Stimulus and Vaccine Rollout.” –NY Times

With the passing of the recent $1.9T stimulus, the consensus among pundits and the public is that the economy will get a much-needed jolt.

Along with the widespread availability of the COVID vaccine, stimulus money should give the economy a much-needed boost. Pent-up demand for travel, entertainment, and social gatherings, along with a nationwide easing of lockdowns and mask mandates, will grow the GDP while shrinking unemployment in the process.

The country has never seen stimulus of the likes experienced in the past year as the country wrestled with the devastating economic effects of the pandemic. Three rounds of stimulus checks have had the intended effect of bolstering businesses and employment. Still, it has also had another unintended effect – creating a feeding frenzy in the stock market.

For investors, it would be easy to follow the crowds into the stock market. Everyone’s doing it, and the economy is recovering. What could go wrong?

For one, many experts are warning against a stock market correction. Fueled by stimulus checks and millions of newbie investors, the stock market has attracted intense attention. The result has been a bounce in stock prices across the board – even for struggling companies. The stock market is overvalued – at levels eerily similar to the height of the dot-com bubble.

Although the economy is certain to surge in the next year and beyond, the stock market is more shrouded in uncertainty. Elite investors have taken notice and allocated away from volatile equities into assets offering more certainty.

Where are savvy investors turning their sights?

If 2020 is any indication, many are looking to the multifamily segment of commercial real estate (CRE). Compared to other segments, multifamily reinforced its resilience in 2020. Compared to other segments, multifamily experienced smaller declines in rents and occupancy.

With the reopening of the economy, CBRE, in its 2021 U.S. Real Estate Market Outlook, predicts a return to the commercial asset class’s full market recovery with continuing growing demand in multifamily.

Why do the ultra-wealthy zig towards tangible assets like commercial real estate and the multifamily segment when fools are rushing into the stock market?

CERTAINTY

You cannot manipulate commercial real estate. Because of illiquidity, it has proven to be a long-term performer immune from the masses’ volatility. In times of uncertainty, it has proven to be a reliable source of income and growth – as 2020 has shown.

Now is the time to invest before the rebound.

While the masses pour into the stock market, the overlooked CRE segment is poised to generate above-market returns shielded from market volatility – especially in the multifamily segment.

The rich have long included CRE in their portfolios with strategic investments across geographic markets and segments to avoid the broader markets’ ups and downs.

The illiquidity, income stream, and stable appreciation of CRE ensure a firm foundation ideal for cultivating wealth insulated from market uncertainty.

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About the author

Kyle Jones is a co-founder and Key Principal of TruePoint Capital, LLC. Kyle is responsible for the company’s strategic planning, investment decisions, asset management, and overseeing all aspects of the company’s financial activities, operations, and investor relations.

Kyle obtained a Bachelor of Science degree from Texas State University – San Marcos, where he also played Division 1 Baseball.