My Last Hoorah with the Stock Market

Well, it’s officially the end of an era. I will now begin liquidating my stock holdings and licking my wounds as I do it. What was once a 60% gain has now been reduced to 15% (so much pain writing this). I know I’m not the only one who is feeling this!

Now, you may be saying out loud, “But Jonny, it’s not a loss until you realize it. Just wait till it goes back up.”

This is a very good point, and you’re right. The market will indeed go back up, as it always does, and history tells us that it will go even higher than before. However, I need the capital now. I need it to invest in growing my business, as well as to invest in my own deals and others, as I want to also be a passive investor.

Now ultimately, things will work out, as they always do. But imagine for a moment that you just retired, and you had your IRA and 401k in the stock market (as most people do), and you just lost 50% of its value. Will you be able to survive for 8-10 years (a typical recovery period)? Will you have income from your investments to get you through?

The crypto market has followed suit, crazy that it follows the same patterns as the stock market, despite being ‘decentralized’ and unregulated (that will be another blog post). So now imagine you’re a millennial like me, all your life savings is in crypto, and now it’s been completely wiped out. We don’t know if it will come back. There is no guarantee with any of the coins, as there are now 18,000 of them. You may be familiar with Luna Coin and the absolute disaster is just went through (I encourage you to Google it). It went from $116 per coin to 0. That’s right ZERO! $40 BILLION DOLLARS IN VALUE COMPLETELY WIPED OUT! (had to say it loud for the people in the back). Those investors will get nothing. It’s all gone.

Minus those that were overleveraged in 2008, I’m yet to hear anything remotely similar from a real estate investor. While all of this is happening to stocks and crypto, rents are continuing to rise, and we are seeing asset prices continue to appreciate.

None of this is meant to be advice, if anything I may be venting, but the proof is in the pudding for real estate, so I know where I will deploy my capital.

Below is a chart comparing the returns from commercial real estate to the S&P 500 since 2000. Again, the proof is in the pudding.

Source: Marcus & Millichap Research Services, CoStar Group, Inc., Real Capital Analytics, Standard & Poors


Jonathan Cattani

Managing Partner, Cattani Capital Group

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