For Centimillionaires and Family Offices, this is your wake-up call and case to shift more of your portfolio to real estate and other less liquid alternatives from stocks and bonds.
Smart money is shifting out of stocks.
The growing trend is that more and more family offices and institutions are shifting more and more of their overall investment portfolios into real estate and other select alternatives from the traditional equities and bonds in the stock market.
You should too.
There comes points in the value of the stock and bond market, where things are expensive.
That time is now.
In previous cycles where the price to earnings ratio has gotten very high, The subsequent returns over a 10-year horizon have been quite bad.
If you invested at the high point in the tech bubble of 1999 to 2001 timeframe, it took forever to recoup all those losses, your returns for the next 10 years were really bad.
Real estate, if you invest in certain strategies and certain asset classes, should show a consistently higher than stock market return over the next 10 years.
I see stocks returning 3-4% annually over the next 10 years.
This is a huge difference.
Sure if we have a large correction and P/E ratios swing back to the low teens, from the current high 20s, it’s a completely different ball game, but still.. we are in the phase of all stocks being quite expensive and have hovered in this range for a while now.
I advocate to anyone who will listen that you are investing at a high point if you stay in the market now.
I would shift more and more assets to value-add private real estate funds.
Good operators, with diverse markets and multiple diverse sponsors, will allow a nice diverse real estate portfolio and should help to insulate you.
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