By John Grace
Contributing Columnist
In the same decade, the securities industry failed investors twice, in 2000-02 and 2008-09. It happened again in 2022.
As a 15-year-old Boy Scout working as a summer camp counselor living in the forest at Lake Arrowhead Scout Camps determined to attain the rank of Eagle Scout, I well remember learning from the U.S. Forest Service foresters about the substantial dangers of fire suppression.
The Fed’s monetary policy intervention reminds me of forest fire suppression. When you suppress fire too much, any fire can become too big and intense to control. Similarly, investors can ill afford to have all of their eggs in any one basket because that basket could easily blow up in smoke, leading to significant losses.
Investors in stocks, bonds and real estate have been severely impacted. However, active management can play a crucial role in limiting losses in stocks and bonds, and most importantly, in reducing risk by diversifying your portfolio with a mix of alternative assets.
This is an opportune time to consider reducing your exposure to traditional real estate and stock market exposure. Take a closer look at employing active management and consider adding options, such as positions in data center infrastructure (Artificial Intelligence is here to stay), diversifying into student housing, multi-family dwellings affordable housing and industrial properties, with a focus on the Sun Belt outside of California.
Thanks to technology and the work of agile financial advisors, investors no longer need to live with losses. As we demonstrated to investors in 2008 and 2022, there are ways to limit your losses.
This time is different. Don’t drown. Turn your assets around.
John Grace is a registered representative with LPL Financial. His On the Money column runs monthly in The Wave. The opinions expressed here are for general information only and are not intended to provide specific advice or recommendations for any individual.
LIFTOUT
Investors can ill afford to have all of their eggs in any one basket because that basket could easily blow up in smoke, leading to significant losses.
