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The stock market has shown signs of recovery since the U.S. and China recently agreed to roll back tariffs for an initial 90-day period. But according to one prominent market bear, the worst is yet to come.
Mark Spitznagel, founder and chief investment officer of Universa Investments, warned that a historic collapse may be looming, in an interview with MarketWatch.
"I expect an 80% crash when this is over. I just don’t think this is it. This is a trap," he said on April 7.
“This isn’t Armageddon. That time will come as the bubble bursts,” he said.
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Spitznagel is no stranger to market mayhem. He gained notoriety during the 2020 COVID crash, when Universa’s flagship “Black Swan Protection Protocol” fund posted an eye-popping 4,144% return in the first quarter of that year.
Whether or not you buy into Spitznagel’s outlook, it might be a good time to consider how to diversify beyond traditional stocks. Here are three simple ways to start.
‘A very effective diversifier’ for bad times
Ray Dalio, founder of the world’s largest hedge fund, Bridgewater Associates, recently underscored the importance of diversification — and the enduring value of one classic asset.
“People don’t have, typically, an adequate amount of gold in their portfolio,” he said in a February interview with CNBC. “When bad times come, gold is a very effective diversifier.” He suggests having 10-15% of a portfolio invested in gold.
Gold is considered a go-to safe haven. It can’t be printed out of thin air like fiat money, and because it’s not tied to any single currency or economy, investors often flock to it during periods of economic turmoil or geopolitical uncertainty, driving up its value.
Over the past 12 months, gold prices have surged by more than 35%.
A gold IRA is one option for building up your retirement fund with an inflation-hedging asset.
Opening a gold IRA with the help of industry leader Goldco allows you to invest in gold and other precious metals in physical forms while also providing the significant tax advantages of an IRA.
Goldco offers free shipping and access to a library of retirement resources. Plus, the company will match up to 10% of qualified purchases in free silver.
If you’re curious whether this is the right investment to diversify your portfolio, you can download your free gold and silver information guide today.
Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
Income, even in a down market
Like stocks, real estate has its cycles, but it doesn’t rely on a booming market to generate returns.
Even during a recession, high quality, essential real estate can continue to produce passive income through rent. In other words, you don’t have to wait for prices to rise to see a payoff — the asset itself can work for you.
It’s also a time-tested hedge against inflation. As the cost of materials, labor, and land rises, property values often increase as well. At the same time, rental income tends to climb, giving landlords a revenue stream that adjusts with inflation.
New investing platforms are making it easier than ever to tap into the real estate market.
For accredited investors, Homeshares gives access to the $36 trillion U.S. home equity market, which has historically been the exclusive playground of institutional investors.
With a minimum investment of $25,000, investors can gain direct exposure to hundreds of owner-occupied homes in top U.S. cities through their U.S. Home Equity Fund — without the headaches of buying, owning or managing property.
With risk-adjusted internal returns ranging from 14% to 17%, this approach provides an effective, hands-off way to invest in owner-occupied residential properties across regional markets.
If you’re not an accredited investor, crowdfunding platforms like Arrived allow you to enter the real estate market for as little as $100.
Arrived offers you access to shares of SEC-qualified investments in rental homes and vacation rentals, curated and vetted for their appreciation and income potential.
Backed by world-class investors like Jeff Bezos, Arrived makes it easy to fit these properties into your investment portfolio regardless of your income level. Their flexible investment amounts and simplified process allows accredited and non-accredited investors to take advantage of this inflation-hedging asset class without any extra work on your part.
The process is simple: browse a curated selection of homes that have been vetted for their appreciation and income potential. Once you find a property you like, you can select the number of shares you’d like to purchase.
Another option is First National Realty Partners (FNRP), which allows accredited investors to diversify their portfolio through grocery-anchored commercial properties, without taking on the responsibilities of being a landlord.
With a minimum investment of $50,000, investors can own a share of properties leased by national brands like Whole Foods, Kroger and Walmart, which provide essential goods to their communities. Thanks to Triple Net (NNN) leases, accredited investors are able to invest in these properties without worrying about tenant costs cutting into their potential returns.
Simply answer a few questions – including how much you would like to invest – to start browsing their full list of available properties.
A finer alternative
It’s easy to see why great works of art tend to appreciate over time. Supply is limited and many famous pieces have already been snatched up by museums and collectors.
Art also has a low correlation with stocks and bonds, which helps with diversification. But it’s not without drawbacks: fine art is an illiquid, high-risk asset whose value can be influenced by shifting tastes, trends and the art world’s inner circle. It also requires proper storage, insurance and care — adding to the cost and complexity.
In 2022, a collection of art owned by the late Microsoft co-founder Paul Allen sold for $1.5 billion at Christie’s New York, making it the most valuable collection in auction history.
Investing in art was traditionally a privilege reserved for the ultra-wealthy.
Now, that’s changed with Masterworks — a platform for investing in shares of blue-chip artwork by renowned artists, including Pablo Picasso, Jean-Michel Basquiat and Banksy. They charge a 1.5% annual management fee and receive 20% of the profit when a painting sells.
It’s easy to use, and there have been 23 successful exits to date that have distributed roughly $61 million back to investors.
Simply browse their impressive portfolio of paintings and choose how many shares you’d like to buy. Masterworks will handle all the details, making high-end art investments both accessible and effortless.
New offerings have sold out in minutes, but you can skip their waitlist here. See important Regulation A disclosures at Masterworks.com/cd.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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