Dow Plunges More Than 1,000 Points
Why I love real estate during times like this
The market was in free fall for the past month.
Taking the NASDAQ and S&P 500 into correction territory last Wednesday.
As of today (March 18, 2025), NASDAQ has dropped over 13%, Dow Jones down almost 8%, and S&P 500 down shy of 10%.
The "fear index" or volatility index, VIX for short is a popular way to measure the "fear" in the market.
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You can RSVP here: https://lu.ma/adviia7aWithout getting too technical and "in the weeds", the higher the number means lots of fear with investors with regards to the S&P 500 stocks, lower the number means low fear or no fear.
If you're interested to learn more about how VIX works, you can read it here:
https://www.investopedia.com/articles/optioninvestor/09/implied-volatility-contrary-indicator.asp
As you can see, during a calm market, the VIX is usually between 12.50 to 17.50
When there's some volatility, translation - fear in the market, we'll see the VIX spikes up to 20 from time to time.
Usually every year or 2, the market will go into a "correction", dropping around 10% and the VIX will spike up much higher.
In the past month, we saw VIX spiked up to almost 27.50 which happened 2 times in the past year.
One was during the big sell off in August last year due to unwinding of YEN carry trade.
If you attended my previous Market & Economy Prediction seminars, we went over what happened and the consequences of the unwinding of YEN carry trade.
For many stock investors who invested in the market the past few years, we have had a pretty calm market
Other than the COVID "crash", which didn't last long, most investors haven't really experienced much volatilities.
It's natural to feel a bit unease and concerned.
I remember experiencing some crazy markets when I first got into stock investing.
You see, I had very little money when I first graduated from university.
I put what I had in the market from my internship and lost most of it during the market crash.
It taught me a lot of lessons.
That's one way to learn something.
Like a child, you could tell them how they will burn their hands if they touch the fire-hot element on a stove, it doesn't matter how many times you remind them or pull their hands away, the quickest way for that kid to learn, is by touching it and burn their fingers.
Some kid is smarter than me.
They knew they should listen to their parents.
Well, I'm not that smart.
I'm that kid that had to burn his own fingers to learn the lesson...
Quickly.
But that's all it took for me to learn.
That one time of burning my finger, that one time of losing money in a volatile market, to learn what not to do.
The first lesson I learned: Don't freak out
I overreacted, that's why I lost so much so fast.
Looking back, the amount was small from where I stand today, but the impact was huge.
That was ALL I had at the time.
It felt really weird to lose "everything".
It also didn't help that my brother reminded me (multiple times) I lost the equivalent of a brand new Toyota Corolla.
In a way, the "you're wrong" hurts more than losing the money itself.
After that, I walked away from the market for few years.
I didn't log into my brokerage account.
I simply walked away.
Then I found real estate
I wanted something that doesn't go to zero.
I wanted something that even at it's worst, it doesn't "crash" at the speed stock market could behave.
I wanted something that will be there in 25 years to count on for my retirement.
Does the real estate market go up and down?
Of course.
For whatever reason, I could wrap my emotions around it much better than I could with stocks.
It could be an age thing.
I was in my early/mid 20s.
Very much led by emotions more than logic.
Even though intellectually I could understand the concept of stocks and financial statements, I couldn't master the emotions.
Like anything, real estate isn't for everyone
For people who wants that dopamine hit every time they invested in something or clicked on buying a stock, real estate isn't going to do that for them.
Real estate is a slow grind.
It's so boring in most days that put many to sleep.
I joked sometimes that I lost count of the exact number of "doors" I own.
Unless I look at the spreadsheet, I really don't know.
Because they are just there.
Each building collects rent each month.
Paying down a small amount of mortgage.
And appreciates with inflation over time.
.
In days like the past month, it reminded me how much I love real estate.
They are there, doing their thing.
Slowly, but surely.
Building wealth, one day at a time.
This is why the ultra wealthy owns real estate.
A lot of them.
Because it serves as a foundation to their portfolio and wealth.
Building wealth is simple, when one simply follows what the wealthy does.
Want to chat about All Things Investing?
Let's grab a drink and chat
At Wednesday 26th, I'm hosting a "Meet the Editor" zoom call, with no topic in mind, open mic style, discussing the Economy, Markets and Investing and answering any questions you may have
You can RSVP here: https://lu.ma/adviia7aIf you like my work, I invite you to share it with others.
Eric Chang
Calgary, Alberta
March 18, 2025
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