Volatile Time
We entered a new market cycle...
I’ve been focused exclusively on real estate for the past 4 years.
Because of that, most of what I talked or written has been on real estate.
What some people may not know is that I’ve invested in stocks longer than I have with real estate.
Yesterday’s big drop in stocks and the recovery today is giving us a preview of what’s to come.
Yesterday (August 5), the Dow Jones Industrial Average dropped over 1,000 points.
In case you didn’t see the news, here’s a news article from ABC news - S&P 500 suffers worst loss since 2022
Stocks go up and down.
Big moves like yesterday doesn’t scare me,
but it’s a signal that every investor regardless of stocks, real estate, or crypto should pay attention to.
Most news or financial media likes to attribute the drop to a specific event.
While the “event” that caused the drop was about the economy slowing,
which shouldn’t be a surprise to anyone as most of us have heard of people’s finances getting tighter,
the real reason we saw the big drop is because the stock market is overly extended and stocks are priced for perfection.
In an environment like this, investors can react strongly to any news that isn’t favorable.
Markets go in cycles.
We had years of calm since the 2008 crash with the exception of the pandemic in 2020.
When a big move like this happens, it usually means the market is transition into a different cycle.
It doesn’t mean the market will drop or crash right away.
I actually think there’s 1 more move up before the bigger “crash” to follow.
Either way, it’s time to switch the mindset to prepare for a more volatile period.
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What does this have anything to do with real estate?
It doesn’t until it does.
One thing to track closely, is liquidity.
When stocks go down, anyone that’s leveraged will be forced to sell stocks to raise cash.
That means we will see financial conditions tightening up further as liquidity tighten further.
That’s when it will affect real estate.
It won’t affect ALL real estate equally.
People who have been to my previous webinars or seminars know the data I’m tracking.
If you haven’t attended my Economy As I See It webinars, shoot me a message. I might consider hosting it again if there’s enough interests.
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Prepare yourself for the upcoming volatile market cycle.
There’s nothing to be afraid of,
when your eyes are wide open and pantries are fully stocked.
Your thoughts on the big drop of the stock market yesterday? How about where you think the stock market and economy is going in the coming months?
Reply to this email to let us know.
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Eric Chang
Port Alberni, BC
August 6, 2024
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