At the moment, we are in the middle of a ‘hat trick’ with economic factors. If you are familiar with hockey, you know that hat trick means there are three things going on.
Those three things going on in the current economy are:
- inflation is rising
- interest is rising
- savings are falling
The factual reality which is creating uncertainty for many are:
* The increase in the FED rates are pushing down demand.
* The global supply chain is down due to the after affect of covid.
* Crude oil is up due to US oil shut down and the war in Ukraine.
* Mortgage demand is down due to interest rates up.
* There is a movement from stocks into bonds and real estate by investors navigating the market
If you’re spending any time in front of a news channel, you may be cringing or anxious about talk of a recession.
So what is a recession? It’s a term used to signify a slowdown in general economic activity. It is generally recognized after two consecutive quarters of negative growth … lower production and lower consumption.
According to BofA researchers, investors are:
- hoarding cash
- bullish on healthcare stocks and commodities
- bearish on bonds
- selling off most tech stocks
According to Ken McElroy, a massive inflationary hedge moving into a recession is real estate. Also have cash reserves.
Many of you have asked what is the impact on the economy around a ‘Bear’ market that is mentioned often?
A bear market means that the stock market is down 20%. Now if you were buying shoes at 20% off you’d be excited. And if you could buy a car at 20% off you’d be very excited! When stocks are at a 20% off purchase it is often looked at as “oh no look what i’ve lost”. In actuality, nothing is lost unless you have stocks and you sell.
When looking at a stock purchase, it is a long term investment tool. It is not for a two week investment or a two month or even a two year. So when looking to purchase, look at what you think it will be worth in 20 years before buying,
In A Nutshell . . .
Inflation is a factor that is on the rise. A bear market is on the horizon. A recession is very possible as we approach the third quarter of this year.
Your real estate is a hedge against inflation especially when you don’t use it as an ATM machine. Call, text or reply to this email to make a time for us to review your situation with options for you to choose your best next step in your hedge against inflation with your real estate.