U.S. stock markets were beaten as Trump’s tariff rushers continue to defend investors. However, according to a prominent bear, the worst has not yet arrived.
Mark Spitznagel, founder and chief investment officer of Universa Investments, warned in a comment on MarketWatch that a historic collapse may be imminent.
“I expect 80% of crashes. I just don’t think it’s a trap,” he said on April 7 when he announced plans to increase tariffs in most countries.
The stock market recovered some losses in that announcement, but that is still a shocking prediction from Spitznagel. The S&P 500 has fallen by about 7% so far, enough to inspire investor confidence – but Spitznagel believes that this may just be the beginning of a much larger fall.
His warnings go beyond that.
He added: “This is another polish that abandons people. It’s not the end of the world. That’s when it will come with the bubble bursting.”
Spitznagel is no stranger to market chaos. He was notorious in the 2020 Covid crash, when Universal’s flagship Black Swan Conservation Agreement fund returned 4,144% in the first quarter of that year.
Today, his phone even stands out in Wall Street’s growing caution. Several major companies have cut their S&P 500 forecasts, although no one is close to the tone of Spitznagel’s apocalyptic world.
The market is essentially volatile. Whether you accept Spitznagel’s prospects or not, it may be a good time to think about how to diversify traditional stocks. Here are three simple ways to start.
Ray Dalio is the founder of Bridgewater Associates, the world’s largest hedge foundation, recently highlighting the importance of diversity and the lasting value of a classic asset.
“People usually don’t have enough gold,” he said in a February interview. “Gold is a very effective diversifier when bad times come.” He recommends investing in 10-15% of the portfolio that invests in gold.
Gold is considered the preferred safe haven. It cannot be printed out of thin air like Fiat, and since it has nothing to do with any single currency or economy, investors often flock to it during times of economic turmoil or geopolitical uncertainty, thereby increasing its value.
Gold prices have soared more than 35% over the past 12 months.
Nowadays, there are many ways to get gold.
Investors can invest their funds in gold ETFs or their own gold mining companies. They may also buy gold bars – many online platforms offer a variety of gold and silver bars and coins at fair prices – and even take advantage of potential tax advantages with gold IRA.
Read more: The “fear gauge” in the U.S. stock market exploded, but the 1 “shockproof” asset grew 14% and helped American retirees stay calm. Here’s how to have it as soon as possible
Like stocks, real estate has its cycles, but it does not rely on a booming market to generate returns.
Even during a recession, high-quality basic real estate can continue to generate passive income through rent. In other words, you don’t have to wait for the price to rise to see the return – the asset itself can serve you.
It’s also a time test against inflation. As materials, labor and land rise costs, property values often increase. Meanwhile, rental income tends to climb, providing landlords with a source of income adjusted with inflation.
Owning a rental property allows investors to charge monthly rent, but being a landlord rarely sounds like a passive one. Managing a property involves finding and screening tenants, collecting rent, and handling maintenance and repair requests (from your own pocket) – assuming you can save enough money to pay for payments and get a mortgage to buy the property first.
Good news? Today, you don’t need to buy real estate directly to get the benefits of real estate investment. Real Estate Investment Trusts (REITS) provide a great avenue for those looking to acquire this asset class without the massive declines or management headaches traditionally associated with real estate ownership.
Additionally, crowdfunding platforms allow day-to-day investors to own stocks in rental properties, but this option has risks that ordinary investors should be aware of, such as low liquidity and no guaranteed returns.
It’s easy to see why great works of art tend to be appreciated over time. Supply is limited, and many famous works have been stolen by museums and collectors. This also makes art an attractive option for investors looking to diversify.
In 2022, the late Microsoft co-founder Paul Allen sold a range of art for $1.5 billion in Christie’s New York, making it the most valuable collection in auction history.
Art is also very low in correlation with stocks and bonds, which helps diversify. But this is not without its drawbacks: fine art is a liquid, high-risk asset whose value may be influenced by the transferred tastes, trends and inner circles of the art world. It also requires proper storage, insurance and care – adding cost and complexity.
Indeed, art investments like Banksy and Andy Warhol were once super rich choices. But with a new investment platform, you can also invest in iconic art like Jeff Bezos and Peggy Guggenheim.
This article provides information only and should not be construed as advice. It is without any warranty of any kind.
