Entrepreneur of the Week - Karin Howard - # Post4
The market is shifting
The market is changing. We are seeing a cooling. From a very strong market of sellers the segment has changed to a market of buyers.
Why did this happen and my analysis of what else is going to happen?
War in Europe, closures in China that lead to serious problems in the global supply chain, and especially the huge amounts of money printed by governments during the corona periods have led to inflation. We currently stand at 8.6 percent annually which is inflation that has broken 40-year highs.
To fight inflation, governments are raising interest rates, interest rates have skyrocketed in recent months, and are expected to continue to rise soon.
Suppose I have a million dollars of liquid cash in the bank, and instead of sitting on a beach in Thailand I choose to invest the million dollars in various investment channels - what alternatives do I have?
Hiding the money in embossments - what am I, Pablo Escobar? Do not hide money in embossments it is strange.
Leaves the money in the bank in a savings account and earns 0.04 percent annually - data from Bank of America.
Transferring the money to a stock account - the S&P 500 index, deleted 4% of its value yesterday, and fell by 22% compared to the all-time high it recorded in January 2022. A decrease of 20% since the peak is a situation known as the "bear market". The NASDAQ technology stock index has been on the bear market since March.
A bear market is a sign of a recession, raising interest rates is not only hurting us real estate investors, it is slowing down the economy and hurting corporate profits. Therefore investing in the capital market is now good for someone who has high risk tolerance and is investing in the long term because historically there have been ups and downs and the opposite of a bear market is a bull market.
Crypto Bitcoin or digital currencies of all kinds - a huge drop here too because of the fear of interest rate hikes, the share base of Conebase has fallen by 80% since the beginning of the year and Bitcoin stands at $ 21,000.
Bonds - The ten-year US bond yield currently stands at 3.44%
So what do we see, we see instability in all markets and if there is one thing that investors hate it is instability, then what do we do? Here it is already related to your financial situation and I can not advise without understanding everyone's personal data.
So I'll talk about myself, I'm buying real estate, I'm not just a realtor, I own 14 homes in Austin, and I continue to buy here. The reason is simple I buy now that the market has changed to a buyers market because I believe in the Austin market. I believe in its future growth potential and even if in the next two years the market has gone down a bit, for Long Run it just does not matter. Look at the statistics of the last five years attached.
People need a place to live, if they do not buy residential houses, they will rent, they will not live on the street. So for an investor like me who buys for a term of 25 years and aims for a pension, it's good, the rent I charge increases.
Compared to alternatives I prefer to invest in real estate, the money keeps working, any increase in value works in my favor is aggregate, I put in 25% of the amount and the bank participates with me in the risk.
Oh and I promised you a story about Bambi, Bambi is a term in economics that says Buy me buy you and talks about partnership situations. But in Austin the Bambi are the residents' pets, just a cute anecdote.
The post tomorrow will deal with the Austin market and talk about an increase in value against Cash Flo.
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