What To Do During a Market Crash

By Matthew Milner, on Wednesday, August 26, 2015

Markets don’t just go up, or just go down…

As they reminded us this past week, they go up and down.

The ups and downs are part of a never-ending cycle—which presents a challenge when you’re trying to maintain or build your wealth.

Historically, unless you’re ultra-wealthy, your options for weathering these financial crises have been limited:

Some folks hold cash, for example. Others invest in bonds or gold.

But given the current environment for interest rates and commodities, these options aren’t practical.

As you’re about to learn, however, now you have a new set of options…

In fact, thanks to new legislation, now you can protect your portfolio like the ultra-rich do—

And today, we’ll show you how.

Non-Correlated Assets

On Monday of this week, the S&P 500 closed down nearly 4%.

From its high in May, it was off more than 11%.

If 100% of your assets are in the stock market, this is a scary time.

But what if you owned some assets that were going up right now, just as the market was going down?

If one asset “zigs” when another “zags,” those assets are said to be “non-correlated”…

And a portfolio that contains these non-correlated assets can help you survive market downturns and meltdowns.

Which Assets are Non-Correlated?

To build a portfolio of non-correlated assets, some folks invest in a mixture of stocks (U.S and international), bonds, real estate and cash. Others might add gold.

But since the financial crisis of 2008, many of these assets no longer provide the “diversification” they used to:

For example, as investment manager Fidelity has reported, U.S. Treasuries are now positively correlated to stocks—so if stocks dive, so might your Treasuries.

And while international stocks and bonds used to be non-correlated to the U.S. market, most big companies nowadays are global, so these markets have become intertwined.

To get access to truly non-correlated assets, you need to look for alternative options.

Historically, however, these alternatives have only been available to big institutions, or the country’s wealthiest “1%.”

But not anymore…

Three Investments That Zag

You see, there’s been a change in the investment landscape.

The change is part of a new set of laws called “The JOBS Act.”

The JOBS Act allows all U.S. citizens to invest small amounts of money into the “private markets”—in other words, into assets that aren’t traded on a public exchange.

These private assets were once reserved for our country’s wealthiest investors, but the JOBS Act is tearing down those walls.

Critically, these private assets tend to be non-correlated to the stock market.

Here are three of the many places you can find and invest in these assets:

Arthena.com: Thanks to hedge fund titans and super-wealthy citizens from around the globe, billions of dollars continue to be injected into the art market.

This influx of dollars, as well as the limited supply of high-end “masterpieces,” is leading to an unprecedented rise in art prices, and unprecedented profits.

Prices for Rodin sculptures and Dali paintings, for example, have recently gone up 3 to 4x, and prices for modern artists like Basquiat have risen nearly 10x.

And as it relates to our topic today, global art advisory service Art Trading and Finance reports the following:

“… art has outperformed other asset classes during all of the wars of the 20th century and during the last 27 recessions.”

And in CNBC’s Quarterly Investment Guide from May 2015, it wrote that, “as a non-correlated asset class, art provides portfolio diversification benefits.”

Arthena can help you enter this market:

It allows you to invest in investment-grade art that’s been selected by experts in the field—and since it allows investors like you to pool together your capital to own “shares” in individual pieces, you won’t need millions of dollars to get started:

You can learn more about it here »

SlicedInvesting.com: Hedge funds are like mutual funds (i.e., investors pool their money together, and a fund manager oversees it), with at least two important differences as it relates to our topic today:

1.  Hedge funds are private. In other words, they’re not traded on an exchange, so you can’t call your broker to invest in one.

2.  Hedge funds can be flexible with their capital. For example, while most mutual funds are not legally allowed to “short” the market (i.e., bet on the market going down), many hedge funds are in business to be short.

Being short the market could certainly come in handy right about now.

Unfortunately, the minimum investment for a hedge fund tends to be about $500,000 or so—so historically, this option has been out of reach for most individual investors.

But a new company called Sliced Investing is aiming to democratize this world.

Rather than a $500,000 minimum, you can invest on Sliced with as little as $20,000.

You can learn more about it here » 

LexShares.com: Business litigation, where one company sues another for such things as breach of contract, is an expensive proposition:

There are depositions, expert witnesses, and of course, legal fees.

But for the victor, the payouts can reach billions of dollars.

Now, a company called LexShares is offering “crowdfunded litigation finance.” Basically, many investors like you each contribute a minimum of $2,500. The capital is then pooled together to fund a specific litigation case.

Business litigation can be a good investment—a fund that one of LexShares’ founders ran previously had a 10-year annual rate of return that exceeded 50%)—

And it isn’t correlated to the market.

You can learn more about it here >>

In Good Times & Bad

To protect yourself from the ups and downs of the stock market, you need non-correlated assets in your portfolio.

Such a portfolio can help you reduce your risk and increase your returns.

To start exploring some of these non-correlated assets, check out the resources we showed you today, and keep reading Crowdability to discover more.

Best Regards,
Matthew Milner
Matthew Milner


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Tags: Sliced Investing Art Non-correlated Assets

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