The Dow Jones Industrial Average (DJIA) suffered its largest one-day drop in history Monday when it fell 1,175 points (-4.6%) and opened lower again on Tuesday, leading to losses of at least -10.8% and decimating the massive return on investment we’ve gotten used to seeing over the last couple of years. This is exactly the kind of volatility we’ve been warning investors about and should serve as a sharp reminder of how unstable the stock market really is, especially for investors who need retirement income they can rely on, or who don’t have huge amounts of money to gamble with.
Read on to learn why this happened and what investors should do about it now.
Stock Market Volatility Over Time
This week’s plunge has effectively put a stop to the stock rally that has placated investors and caused a sort of short-term financial amnesia in recent years, which made them reluctant to pull out gains or invest money elsewhere, despite the fact that history proves this stock market correction is inevitable.
“U.S. stocks were pummeled Monday, with the Dow falling almost 1,200 points, the biggest single-day drop in its history”, wrote Business Insider. “The S&P 500 and the Nasdaq were down 4.1% and 3.8%”.
The losses reflected the biggest three-day slide since 2015 and also spread to Asia and Europe. This plunge prompted the Cboe Volatility Index (VIX), which serves as the market’s main “fear gauge,” to reach 84% yesterday, which is the highest it’s ever been. So, what happened?
The recent slide began with rising bond yields but has turned into a sell-off that spans global markets in response to inflation fears and the idea that higher interest rates could decimate profitability for companies that are already trading at inflated valuations. Also, stock market margin debt is at an all-time high, and since global equities have not experienced any material weakness over the last couple of years, valuations have become stretched, causing technical, positioning and sentiment indicators to flash red over the last few weeks.
“The unwinding of this extreme bullishness could have a bit more to go in the future”, wrote Time. “As assets decline, volatility is surging, causing pain for investors who had positioned for price swings to remain muted”.
But what can you do about it now?
Alternative Investments to the Stock Market
Fortunately, we have a solution with one of the best ways to invest money for long-term financial security. Read on to see how we can help you combat market volatility with stable real estate investments that pay ongoing returns of 8-14%.
First, it’s important to understand that your investment advisor probably isn’t telling you about real estate investing, simply because he or she can’t collect a commission check from the sale of property. The reality is that, when inflation is factored in, real estate investment outperforms the stock market over time, every time. Here’s a simple graph that shows annual returns over the 10-year period between 2005-2015, comparing the DJIA and S&P 500 to real estate investing to clearly illustrate the stability of buying income producing investment property versus investing in the stock market:
The key to successfully buying investment property is to find a location that is in demand but still offers excellent value for the money. Turnkey vacation rentals in Mexico’s Riviera Maya make both financial and logistical sense, with professional on-site management to handle all of the day-to-day aspects of running the property, and ongoing stable return on investment of 8 -14% that is not tied to the ups and downs of global equity markets.
Here’s a glimpse of what Riviera Maya real estate can offer:
- 80-90% Occupancy Rates
- Amazing Location with Easy Access
- Fantastic Weather Year Round
- Modern Infrastructure
- Exceptional Lifestyle
- No Worries, No Hassles Ownership
- World-Class Services & Amenities
Are you concerned about stock market volatility? Share your thoughts in the comments!