Bank of America customers rushed to exit stocks and pull out their money in a big way last week. It seems that America is finally waking up to the reality of the situation, and where we are in the economic cycle.
The big question now is where to put that money.
The Runs On Banks & Markets Aren’t Over Yet
Even Warren Buffett recently said he expects more bank failures. In previous financial crises we’ve seen 1,000 or more banking institutions go down. So the couple that we’ve seen so far are probably just the tip of the iceberg as fear gets contagious and snowballs.
The same applies to not only pulling cash out of banks, but selling off stocks. So many big public companies are struggling. Many of the multi billion dollar companies that have popped over the past few years have poor fundamentals and are still actually losing money each year.
Where The Money Won’t Go
Places that are not attractive for that money right now include the following.
Gold. Prices are too high now, and the time to get into that run is probably past. Plus, it offers no income potential.
In the Great Recession we even saw local governments go bankrupt. So other investments like municipal bonds are going to become scary as well.
Cash is just as dangerous, whether it is cash on hand that is being devalued daily by hyper inflation, or on deposit in a bank you don’t know will be in business tomorrow.
VC funds are also scarier than ever after the Silicon Valley Bank collapse.
Investing In Real Estate
Real estate is looking more attractive than ever. We will soon see better deals than have been available in many years.
It also checks all the boxes for wealth preservation, great profit margins, and growing in line with real inflation. It also comes with tax benefits, which has never been more important in the face of the IRS’ new $80B in firepower, and new and rising taxes.
Perhaps most importantly for many today, it can offer passive and alternative sources of income to make up for the lost income and jobs many are bracing to experience in their lives.
The runs on banks and stocks seems to be just starting. There are a lot of places where it is obvious you do not want to risk putting your money today.
On the upside, real estate still stands out as a top choice, with many benefits, that check all the boxes most are looking for right now.