Investing In Certainty In An Uncertain World
The average investor doesn’t react well to uncertainty, and there is a lot of uncertainty going on in the world right now.
Questions like these are keeping investors up at night:
- Is Ukraine going to fall to Russia?
- Will the price of gas continue to skyrocket?
- How will company bottom lines respond to a loss of business in Russia?
- How will world events affect the economy at home?
- Are we headed for a recession?
In the face of uncertainty, the knee-jerk reaction of the average investor is to retreat. They liquidate their holdings and put their cash in a holding pattern. If there’s a slight hint of hope, they quickly rush back in, only to withdraw again at the next sight of trouble. This exact scenario has played out in the stock market the past 15 days since the Russian invasion.
The problem with reacting to uncertainty by sidelining cash is that inflation depletes that cash while it sits on the bench. These days, as inflation hits 40-year highs, the sidelining strategy is even less advisable.
So how to invest in an uncertain world: Take the uncertainty out of it.
Since most of the uncertainty revolves around international issues and macroeconomic concerns, focusing on local investments or in markets and industries insulated from uncertainty is the most prudent way to invest.
By focusing on assets, you can touch and feel in markets you or trusted partners have experience with can eliminate uncertainty from your investing decision-making.
Even as the world reels from uncertainty, you may be a little more sure about assets and markets with which you’re familiar…
- Maybe you know there has been mass immigration into your state with no signs of letting up and that the businesses and residents moving to your area will need commercial spaces and homes to meet their needs.
- Maybe you know that a certain industry in which a private fund is investing is essential and will have strong demand for years to come.
Whatever it is, investing in certainty in an uncertain world will give you a leg up on the average investor hanging their hopes on public markets that don’t do well in the face of uncertainty.
Do you want to insulate your portfolio and yourself from the uncertainties plaguing the world right now?
Try investing in certainty. Invest in assets with familiarity, with a track record of success – even through downturns and bubbles – and in markets with which you have experience. This could give you the peace of mind elusive to public investors right now.
Michael Foley, president and CEO of Humabilt Capital, oversees the entitlement process, funding, and operations for Humabuilt Capital. Mr. Foley has been a full-time real estate investor since 1995 during which time he has developed hundreds of single-family homes, townhomes, condominiums, and apartments. Mr. Foley started his investment ventures in Long Beach, California, and has expanded to Apex and Durham North Carolina. Mr. Foley is a graduate of the University of California at San Diego.