What To Invest In Now

What To Invest In Now

What should we really be investing in now?

There is a lot of hype in the media. Many don’t want to acknowledge the potential financial side effects of the current crisis. Others will say anything to sell what they have, even if it is the worst investment in history.

So, what should we be investing in? What should we be cashing out of?

The New Crisis

Unless the COVID-19 situation is turned around and we return to normal life within 2-4 weeks, the chances are we’ll experience a new economic crisis that is at least 2x more severe than 2008.

This is like a Cat 5 hurricane hit the whole country at once. There’s no toilet paper, no (appealing) dry foods, no water to ration in many grocery stores, and even no furniture or car parts due to a lack of imports.

At least the fed is lowering interest rates this time. However, 40% of the working population who hadn’t already switched to remote work is in for a big shock. In California, the new ban on freelancers means 100% of the population there is pretty much unemployed at this point. Unless you are a doctor, are in the national guard, or you own your own business.

Things will bounce back. We will adapt though it’s likely to get deeper for longer than most appreciate. It may be two months, six months, 12 or more.

What do we do right now?

What Not To Invest In

There are some pretty obvious don’ts when it comes to investing right now. There are some pretty clear assets it doesn’t make sense to invest in.

This includes:

• Retail
• Bitcoin
• Muni bonds
• Most tech startups
• New cars and homes to live in (unless you are downsizing)

While it is virtually impossible for even the best to precisely pinpoint the bottom, we know these things likely have a long way to go down before they come back up. It will probably be at least 6 to 12 months before they bottom out and can hope to rebound.

You can always buy these assets back cheaply at appetizing discounts if you cash out now and still have the cash to work with then.

Do Invest In

What do we all need right now?

We need solid, tangible assets with limited downside exposure. We’re going to need cash flow and alternative income streams.

The best asset class appears to be apartment buildings—specifically, those in the working class or workforce housing sector.

They will survive best when it comes to asset values. Whether people are moving up or down, this space will be in demand.

Even if some tenants struggle, you have diversification. In the worst-case scenario, you can give tenants a couple of weeks break on rents and tack it onto the end of the lease.

The Bottom Line

Don’t panic. Don’t wait to sell bad and declining assets. Do act and invest smartly now.

As Warren Buffett has said, “Be Fearful When Others Are Greedy and Greedy When Others Are Fearful.” Keep cash on hand and be on the lookout for opportunities.