As a boutique financial consulting firm that guides institutional investors around the world, one of the main questions we often get is about choosing between investing in real estate vs stocks, and the short answer to this question is to choose both. This post touches a little more on that.
The overall allocation of capital should be thought of in terms of a group operation where capital is spread across undervalued securities of different asset classes that have low correlation or are inversely correlated in a diversified way.
For the astute long-term investor seeking safety of principle and favorable risk-adjusted returns, we recommend a diversified mix of the best quality undervalued dividend paying common stocks, undervalued real estate single-family rental properties, and cash equivalent securities. We have discussed in another blog post why bond investment is inherently flawed, and the limitations of bonds inclusion in portfolios.
The exact proportion of capital allocated should consider 5 factors.
1) The securities selected for investment.
2) The market price of securities.
3) The intrinsic value of securities.
4) The time when securities are selected.
5) The financial position and character of the investor.
At The Practical Contrarian we specialize in delivering customized investment solutions and market research tailored for each client to help hedge funds, family offices, and high-net-worth individuals maximize their potential. Let’s connect and explore.