If you’re looking to put money to work in today’s markets, it’s easy to feel like there is nowhere to turn. The stock market has officially entered bear territory, and once-beloved growth names (Disney, Netflix, Apple) are deeply in the red.
For some, the sharp decline is an opportunity to acquire shares at discounted levels, with the expectation that they will eventually come back.
But Bank of America recently explained that 2022 is the worst “buy the dip” year since 1974 as of May 2022.
Bond investors are faring no better, as real yields largely remain in negative territory. As of May 2022, Bitcoin has plunged more than 50% from November highs. Meanwhile, those with cash waiting on the sidelines are losing 8.5% of their purchasing power per year due to inflation.
Despite the turmoil, there are still pockets in the market offering an opportunity for safe haven, and even the potential of substantial appreciation, to investors.
1. Real Estate
Real estate is one of the largest and most well-known asset classes. A real estate portfolio can be as simple as a primary residence or other residential property. However, the category also includes commercial properties like office buildings and shopping malls, as well as industrial properties like manufacturing facilities.
This asset class is favored in down markets because it is viewed as a market with stable demand. People will always need a place to live and work. Investors may especially flock here when inflation is high, because real estate is viewed as a potential hedge.
In the US, home prices are at record levels, with median sales prices up 17% from the prior year. In the long term, housing prices increase about 4.5% annually on average. Despite the frenzy, there may still be deals to be found in certain markets.
2. Gold and Other Precious Metals
Gold is viewed as a portfolio diversifier and inflationary hedge because of a prevailing belief that the metal can maintain its value through numerous market cycles.
In a recent interview with the Economic Times, hedge fund manager Ray Dalio expressed support for precious metals. The investor blamed current high inflation on the reckless printing of currency by the Federal Reserve, and pointed to gold as an asset that could offset the debasement.
Following a slump from 2013-2019, gold prices have continued to rise in recent years. Prices have come down since the beginning of the year, but remain near all time highs.
3. Contemporary Art
As financial markets have continued their downward slide through May, the art market has proved its resilience. In May 2022, the top three auction houses achieved more than $2.5 billion in sales.
Contemporary art is viewed as a store of value to hedge against inflation because it can appreciate in value over time despite the movements of the stock market, and does not generate cash flows subjected to purchasing power declines.
This asset class is often reserved for the rich and famous, but there’s a new platform called Masterworks that lets members bypass all the insane barriers to entry to art investing.
Additionally, art has very low correlation to public markets. In its latest art market report, Citi concluded that art has historically had a near-zero correlation of -.04 to developed equities, the lowest of any major asset class.
Masterworks: Opening up the Potential of a $1.7 Trillion Art and Collectibles Market
Previously, blue-chip art was an asset class only accessible to the ultra-wealthy due to its enormous price tag.
But Masterworks is here to change that. Valued at $1 billion dollars, this fintech platform allows everyday investors to invest in blue-chip arts by famous artists like Piccaso, Warhol, Banksy, and many more.
Masterworks has tracked over 5 million data points and 340,000 auction transactions (from Christie’s and Sotheby’s going back to the 1970s) to determine which artworks are exhibiting signs of price momentum.
Masterworks then purchases potentially appreciating artworks, securitizes the piece of art, and offers the platform members an opportunity to invest in the art.
Plus, once you become a member of Masterworks, this information is yours for FREE.
Get ahead of the curve and invest in this exciting asset class by signing up today.