Over the last year, people who think they know how to invest during normal times have been perplexed – asking me what they should change about their investing strategy during the COVID-19 pandemic. It’s a reasonable question – we’ve had an unprecedented year, a tragic public health crisis coupled with an unprecedented economic crisis.
One thing I say is that the economic crisis did not arise from market conditions, like the overleveraging that helped cause the 2008 recession more than a decade ago. The economic crisis of 2020 and into 2021 was imposed, like a financial version of an induced coma. The fact that the economy is nicely rebounding shows that.
The underlying concern people have is whether they should invest differently during a crisis. The answer is no; don’t panic during normal times, don’t panic during a crisis, and don’t cut and run now. The best strategy is still to think long term.
But you have to be honest with yourself. Do you have the discipline and patience not to react to the gyrations of the market? Investing in real estate helps takes care of that problem, because you can’t sell property immediately in the way that you can quickly unload some volatile housing or technology stock. Investing in rental properties over the long term is still the smartest, most prudent financial choice you can make.
I’ll be offering guidance on a range of topics starting now. Watch this space.