Michael Shustek, a leading real estate investment company executive, offers the following perspective after the stock market dive:
The big stock market sell-off from this week looks to be a reaction to rising interest rates. However, by focusing on the fundamentals, investors may help avoid reactive decision making.
When there is the potential for more volatility in the U.S. stock market, it is a great time to consider real estate as an effective hedge against inflation. This is especially true when part of the cause of stock market volatility is inflation and rising interest rates. In certain real estate assets rents can rise to keep pace with inflation, especially when there are shorter term leases providing investors flexibility in rent adjustments. On the contrary, longer term leases provide some protection against vacancy risk, but expose investors to interest rate risk in times of rising rates.
It is important today to look at where there is an absolute return with as little correlation to the stock market as possible. Real estate continues to be a good diversifier during these turbulent times.
On a positive note, it appears the previous risk of a military engagement with North Korea seems to be minimal. Typically you are able to protect your investment and sleep well at night when you have prepared for any type of chaos by diversifying your portfolio.
This weeks activities present a time to step back, look globally and consider the benefits of diversification. Its important not to sell out of fear, but instead ensure your portfolio accurately represents your time horizon and risk tolerance, and then to leave it alone.
In times of transition, it is also a good idea to consider factors such as trade uncertainty. Until something positive is agreed upon with China, you may find solace in an asset more dependent on local market conditions, like real estate. These strategies are part of the ˜look globally approach.
For more information about Michael Shustek, visit www.michaelshustek.com.
Opinions, forecasts and other views contained in this page are those of Michael Shustek personally and do not necessarily represent the views of The Parking REIT or its management.
Malkus Communications Group
Chuck Malkus, 954-523-4200