Unusual investments for a potential market downturn (and how to capitalize before the end of 2021)
On March 23, 2020, the pandemic dropped the S&P 500 by 34% in a single month. And after a month, the market hit an all-time high, with the S&P closing above 4,700 for the first time in its history. And if you had the foresight to catch up with the previous low, this could have been an opportunity to buy low and sell high.
Now, the new Omicron fear could potentially be a similar great investment opportunity, but with a catch …
Unlike familiar strains like the Delta variant, the Omicron strain is still relatively unknown. Yet it has already been detected growing at a faster rate than other strains. In fact, the World Health Organization says it poses a “very high” global risk because of its potential for immune evasion and its transmissibility benefits.
This means that this new strain could potentially create an even bigger drop than that of 2020. Just recently, on November 26, the Dow Jones fell 900 points due to the new fear (the worst day of the year until now for the Dow Jones). So if the market collapses again, there could be an even greater opportunity to buy from the new market low and profit from the rally.
This is important because in the last pandemic, the BBC reported: “More than 5 million people became millionaires across the world in 2020.”
While many have benefited from the economic recovery thanks to low interest rates, incredible relief bills passed by Congress, and the huge housing market, the biggest gains have been made in the market by buying simply at a low price and by selling at the highest level.
Is the market about to dip again?
With the market at an all time high, many people are concerned that the bull may not last forever. And with inflation at an all time high (more than double the rate each year over the past decade), âThe Great Resignation,â and now the new Omicron strain, people are bracing for what could be a huge history, once in a lifetime crash.
48-year-old market veteran David Hunter warns the stock market could collapse by more than 80%, due to spike in inflation and the Fed’s new control policies. All of this to say that the potential further downturn in the market could offer discerning investors a unique opportunity to buy at a low price.
Source: American accident confidence index by Robert Shiller (Yale economist).
Take a look at stock market confidence indices, developed by renowned Yale economics professor Robert Shiller. You can see how people’s confidence in the market hit an all-time low in August 2020. And while there is a rally, this new tension could cause market confidence to drop again. This time it could be much worse due to the potentially more deadly and uncertain transmissible effects of this new strain.
Keep in mind that this index is just one of many ways to say that a downside opportunity may present itself soon. And remember this: when people are afraid they tend to sell their investments causing the market to fall. And when the market plunges, it has historically always rebounded.
An alternative investment?
The problem is, if the economy falters, we have no idea when the market will recover. We can’t read the future after all. And we certainly don’t know if the market will recover as quickly as last time around (which only took a month.)
This means that investing in the stock market could be very risky at present, especially with the uncertainty of the effects that the new strain could have on the market.
Here are some unconventional investment tips:
If you want to invest in alternative assets, then consider this “unpopular” asset: the fine arts.
Source: Returns of asset classes in a pandemic context (Citi).
According to Citi Private Bank, in the first seven months of 2020, the art market outperformed ten major asset classes, with contemporary art making the biggest gains.
In addition, Art Basel and UBS. reported that the art market has an estimated total global value of $ 1.7 trillion, roughly equivalent to the total capitalization of each cryptocurrency combined.
And with works of art sold 15 times their asking price, the Wall Street Journal recently declared that “art is one of the hottest markets on the planet.”
Some of the rich have invested in art. And while the art market was once reserved for the super rich who could afford a painting by Banksy, Picasso or Andy Warhol, that has changed.
Because with this new investment platform, you can also invest in high priced artwork, but without needing to have millions of dollars in equity. Bill Gates and Warren Buffett invest in art, now you can too.
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