Stock Market, Interest Rates and REI

2 Replies

As a newbie eagerly looking for his first buy and hold multifamily property, I'm trying to evaluate the direction the market is heading and wanted to get your opinion.

My concern is buying too high with a possible impending shift in the stock market.  As investors in real estate, we should keep our eyes on market volatility and trends since it may be beneficial or detrimental depending on when you buy. 

Interest rates, stock prices, employment and real estate seem to be closely tied together and if you ask me stocks are currently artificially inflated by money being printed like crazy, while wages have not kept up with the rising cost of living (including real estate).  

With interest rates sure to rise, I'm curious to see how the inflation comes into play as well.

Check out this chart that shows a where we are now and the dot com bust and the great recession that bottomed in 09.

http://stockcharts.com/freecharts/historical/spx19...

Either way, I feel real estate is a great hedge against stocks, but also aware they are susceptible to other economic factors. I realize these are some of the possible pains of a buy and hold investor, but I'm also thinking in terms of exit strategy.  I have some cash and want to ensure it is properly placed in RE.

What are your thoughts on this?

Good luck to all!

Adrian Lopez

Originally posted by @Adrian L. :

As a newbie eagerly looking for his first buy and hold multifamily property, I'm trying to evaluate the direction the market is heading and wanted to get your opinion.

My concern is buying too high with a possible impending shift in the stock market.  As investors in real estate, we should keep our eyes on market volatility and trends since it may be beneficial or detrimental depending on when you buy. 

Interest rates, stock prices, employment and real estate seem to be closely tied together and if you ask me stocks are currently artificially inflated by money being printed like crazy, while wages have not kept up with the rising cost of living (including real estate).  

With interest rates sure to rise, I'm curious to see how the inflation comes into play as well.

Check out this chart that shows a where we are now and the dot com bust and the great recession that bottomed in 09.

http://stockcharts.com/freecharts/historical/spx19...

Either way, I feel real estate is a great hedge against stocks, but also aware they are susceptible to other economic factors. I realize these are some of the possible pains of a buy and hold investor, but I'm also thinking in terms of exit strategy.  I have some cash and want to ensure it is properly placed in RE.

What are your thoughts on this?

Good luck to all!

Adrian Lopez

[email protected]

917-293-1004

 No risk, no reward. The stock market will always be volatile, RE will always go up and down. Stocks and real estate are hedges against inflation, and bonds are a hedge against deflation. A well balanced portfolio and making sure you're not over leveraged is crucial. 

Think of your investment horizon as forever and you won't worry yourself with the day-to-day stress of world markets. Think of stocks, bonds, and real estate on a macro level. Are stock indexes, bond indexes, and real estate worth more now than 40 years ago? Yes. Was there volatility in the meantime? Yes. Believe in the system and stick to your plan :)

Good stuff Angelo.  Really appreciate the feedback.  I'm likely suffering analysis paralysis and just need to get in the game.

Thanks again!

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