A day like last Friday can remind anyone of what a whipsaw really is.
VIX- The measure of fear and volatility in the market, closed out 54% to the upside with another 27% set in futures for the open on Monday. That is a potential 81% increase in fear in two trading days.
S&P 500- closed out the day down 2.25%.
Ten Year Treasury- A rally to the upside of 11%. When bonds rise in price, yield is lowered. This is a reduction in fixed income assets and a clear flight to safety.
Oil - Down 13%
Gold- Up 1%
Crypto- Down 12%
A new variant to the coronavirus, Omicron, as it is called, is supposedly more virulent with fewer symptoms, whatever that means. The market apparently reacted on Friday based on that data.
However, that is not the case, as suggested by two of the most respected economists in the
world,
Larry Kudlow and Mohamed El Erian collectively,
“ The real worry is stagflation.”
Stagflation is simply an economy with lower growth, (GDP) and higher prices
(Inflation).
This is the true measurement of fear in the market as reflected by the VIX. Stocks go up in value because of forward earnings outlook, if that doesn't exist, you have declines in those equity values. Earnings of cyclical companies will suffer as a result of this inflationary pressure.
In other words, Inflation is not transitory, its not going away soon.
Many of you have done extraordinarily well these past two years in your equity positions. We do not advocate panic selling. To the contrary, we recommend prudent stewardship of the gains you have achieved.
Consider the following;
A hypothetical conservative balanced portfolio:
This portfolio would yield approximately 6% with 22.9% YTD total return. Not bad!
However, most macro strategists,including Jim Cramer, are suggesting the possibility of up to a 20% decline in asset values, not a crash, but wiping out much of those gains.
Consider the following portfolio.
If the market declines 20% or more, the allocation to the TCO One REIT is protected. It is not correlated to the markets or inflation, while delivering a 21% total return, negating equity risk, losses and paltry bond yields.
The advantages of diversifying are quite numerous.
Diversification, reduction of asset risk.
Non-correlation to macroeconomic risks
Increased income
Tax advantages
Additionally, the current and anticipated continued performance of the Retail and Residential REITS can be observed below, are substantially outpacing the equity and bond markets.
As you can see, the collective REIT index outperformed the equity markets and will continue to do so.
Our REIT provides this opportunity in the following manner.
The Cawthon TCO One REIT offers you the ability to obtain an inflationary and non-correlated market hedge at 21%. That translates into 14.8% post current inflation. If you have a qualified portfolio, and allocate a minimum of $25k , you have potential 14.8% per year on that allocation. The Cawthon TCO One REIT offers that.
Consider us for a portion of your total return strategy. Our emphasis on intrinsic value through discounted purchases is an assurance that we will provide value to you.
Our REIT, The Cawthon TCO One REIT, delivers the following to all investors:
A principal focus on capital preservation, we cannot make money on capital lost.
Our yield is consistent, and conservative, there is simply no way in this market to achieve this level of yield and diversification outside of real estate, we provide both.
Our capital gain thesis is based upon purchasing discounted assets, thus greatly increasing our upside potential, simultaneously reducing downside risk.
Low Correlation to the capital markets Reduction of entire portfolio volatility.
Tax Advantages
Extremely competitive yield and capital gain
1031 Tax Free exchanges
Buy low and sell high through timely, discounted acquisitions
Substantially greater passive income - 21% TCO ONE / 3.5% Public
Our choices for total return are very limited in this environment. We provide the solution
Call us and find out!
Call our team today to discuss available opportunities.
--
James Fournace II
Managing Director for Investment Sales
"Creating Generational Wealth"
959-245-3023
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